WALTHAM, Mass., Sept. 10, 2024 /PRNewswire/ -- Spyre Therapeutics, Inc. (NASDAQ: SYRE), a clinicalstage biotechnology company utilizing best-in-class antibody engineering, rational therapeutic combinations, and precision medicine approaches to target improved efficacy and convenience in the treatment of Inflammatory Bowel Disease ("IBD"), today announced that management will participate in a fireside chat and investor meetings at the Stifel 2024 Virtual Immunology and Inflammation Summit. Details of the fir ...

Exhibit 99.1 Spyre Therapeutics Reports Second Quarter 2024 Financial Results and Provides Corporate Update Initiated dosing in Phase 1 trial of SPY001, an anti-α4β7 antibody engineered for infrequent, subcutaneous maintenance dosing, with interim proof-of-concept data on track for year-end 2024 SPY002, an anti-TL1A antibody program designed for enhanced potency to both TL1A monomers and trimers, and extended half-life compared to existing molecules, remains on track to begin first-in-human trials in the se ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ____________________________ FORM 10-Q ____________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37722 ____________________________ SPYRE THERAPEUTICS, INC. (Exact Name ...

Initiated dosing in Phase 1 trial of SPY001, an anti-α4β7 antibody engineered for infrequent, subcutaneous maintenance dosing, with interim proof-of-concept data on track for year-end 2024 SPY002, an anti-TL1A antibody program designed for enhanced potency to both TL1A monomers and trimers, and extended half-life compared to existing molecules, remains on track to begin first-in-human trials in the second half of 2024 Nominated a development candidate for SPY003, a highly potent anti-IL-23 antibody with an ...

Exhibit 99.1 SPY001, an anti-α4β7 antibody engineered for infrequent, subcutaneous dosing successfully completed a 28- day GLP toxicity study and remains on track to begin first-in-human studies in the second quarter of 2024, with interim proof-of-concept data expected year-end 2024 SPY002, an anti-TL1A antibody designed for enhanced potency to both TL1A monomers and trimers, and extended half-life compared to existing molecules, remains on track to begin first-in-human studies in the second half of 2024 Ra ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ____________________________ FORM 10-Q ____________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR For the transition period from to Commission File Number: 001-37722 SPYRE THERAPEUTICS, INC. (Exact Name of Registrant as Specified in its Charter) ____________________________ Delaware 46-4312787 (State or other jurisdictio ...

Exhibit 99.1 Spyre Therapeutics Reports Fourth Quarter and Full Year 2023 Financial Results and Provides Corporate Update Announced corporate name change to Spyre Therapeutics; appointment of Cameron Turtle, DPhil, as Chief Executive Officer; and began trading on Nasdaq under the symbol "SYRE" SPY001, an anti-α4β7 antibody engineered for infrequent, subcutaneous dosing, demonstrated an updated half-life of 22 days, a greater than three-fold increase relative to vedolizumab in non-human primate pharmacokinet ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 _________________________________________________________ FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from______ to Commission file number 001-37722 _________________________________________________________ SPY ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ____________________________ FORM 10-Q ____________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact Name of Registrant as Specified in its Charter) ____________________________ Delaware 46-4312787 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 221 Crescent Street Building 23, Suite 105 Waltham, MA 02453 For the ...

Report Information [Filing Details](index=1&type=section&id=Filing%20Details) This 10-Q quarterly report for AEGLEA BIOTHERAPEUTICS, INC. covers the period ended June 30, 2023, with the company listed on Nasdaq as AGLE and classified as a non-accelerated filer and smaller reporting company - The company is AEGLEA BIOTHERAPEUTICS, INC., submitting its 10-Q quarterly report for the period ended June 30, 2023[2](index=2&type=chunk) Filing Details | Metric | Details | | :--- | :--- | | Jurisdiction of Incorporation | Delaware | | Stock Symbol | AGLE | | Exchange | Nasdaq Capital Market | | Filing Status | Non-accelerated filer, Smaller reporting company | | Common Stock Outstanding (as of August 4, 2023) | 101,192,921 shares | [Note About Forward-Looking Statements](index=3&type=section&id=Note%20About%20Forward-Looking%20Statements) This report contains forward-looking statements on future operations, finances, and product development, subject to risks and uncertainties, with no commitment for public updates - This report contains numerous forward-looking statements covering shareholder approval, CVR payments, Spyre asset acquisition benefits, future operating results, financial condition, business strategy, cash resources, market size, growth opportunities, preclinical and clinical development, product candidate efficacy and safety, regulatory approvals, and commercialization[10](index=10&type=chunk) - Forward-looking statements are subject to various risks, uncertainties, and assumptions, including those in the 'Risk Factors' section, where actual results may differ materially from expectations[11](index=11&type=chunk) - The company undertakes no obligation to publicly update any forward-looking statements, except as required by law[12](index=12&type=chunk) PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section provides the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, equity changes, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (as of June 30, 2023, and December 31, 2022, in thousands of USD) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $235,358 | $34,863 | | Marketable securities | — | $20,848 | | Total assets | $243,529 | $71,144 | | **Liabilities and stockholders' (deficit) equity** | | | | Forward contract liability | $164,382 | — | | CVR liability | $10,500 | — | | Total liabilities | $253,575 | $20,839 | | Series A non-voting convertible preferred stock | $197,323 | — | | Total stockholders' (deficit) equity | $(207,369) | $50,305 | | Accumulated deficit | $(661,127) | $(425,624) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (for the periods ended June 30, 2023, in thousands of USD) | Item | Three Months Ended 2023 | Three Months Ended 2022 | Six Months Ended 2023 | Six Months Ended 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $688 | $625 | $886 | $1,987 | | Research and development expenses | $17,386 | $15,373 | $31,162 | $32,351 | | General and administrative expenses | $12,062 | $7,675 | $17,290 | $16,500 | | Acquired in-process research and development expenses | $130,486 | — | $130,486 | — | | Operating loss | $(159,246) | $(22,423) | $(178,052) | $(46,864) | | Change in fair value of forward contract liability | $(58,170) | — | $(58,170) | — | | Net loss | $(217,081) | $(22,323) | $(235,503) | $(46,759) | | Net loss per share (basic and diluted) | $(2.27) | $(0.27) | $(2.48) | $(0.63) | | Weighted-average common shares outstanding (basic and diluted) | 95,565,118 | 82,209,032 | 94,917,487 | 73,650,146 | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Condensed Consolidated Statements of Comprehensive Loss (for the periods ended June 30, 2023, in thousands of USD) | Item | Three Months Ended 2023 | Three Months Ended 2022 | Six Months Ended 2023 | Six Months Ended 2022 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(217,081) | $(22,323) | $(235,503) | $(46,759) | | Foreign currency translation adjustment | $18 | $(36) | $28 | $(49) | | Unrealized (loss) gain on marketable securities | $(1) | $(31) | $31 | $(151) | | Total comprehensive loss | $(217,064) | $(22,390) | $(235,444) | $(46,959) | [Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' (Deficit) Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20(Deficit)%20Equity) Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' (Deficit) Equity (as of June 30, 2023, in thousands of USD) | Item | Series A Non-Voting Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders' (Deficit) Equity | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance as of December 31, 2022 | — | $6 | $475,971 | $(48) | $(425,624) | $50,305 | | Issuance of Series A preferred stock | $197,323 | — | — | — | — | — | | Issuance of common stock (Spyre acquisition) | — | — | $3,768 | — | — | $3,768 | | CVR distribution to common stockholders | — | — | $(29,500) | — | — | $(29,500) | | Net loss | — | — | — | — | $(217,081) | $(217,081) | | Balance as of June 30, 2023 | $197,323 | $6 | $453,741 | $11 | $(661,127) | $(207,369) | Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' (Deficit) Equity (as of June 30, 2022, in thousands of USD) | Item | Series A Non-Voting Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders' (Deficit) Equity | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance as of December 31, 2021 | — | $5 | $425,765 | $(20) | $(341,809) | $83,941 | | Issuance of common stock and pre-funded warrants | — | $1 | $42,872 | — | — | $42,873 | | Net loss | — | — | — | — | $(22,323) | $(22,323) | | Balance as of June 30, 2022 | — | $6 | $472,939 | $(220) | $(388,568) | $84,157 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (for the periods ended June 30, 2023, in thousands of USD) | Item | Six Months Ended 2023 | Six Months Ended 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(34,277) | $(46,936) | | Net cash provided by investing activities | $24,510 | $26,509 | | Net cash provided by financing activities | $210,002 | $42,816 | | Net increase in cash, cash equivalents, and restricted cash | $200,259 | $22,294 | | Cash, cash equivalents, and restricted cash at end of period | $236,675 | $39,274 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. The Company and Basis of Presentation](index=10&type=section&id=1.%20The%20Company%20and%20Basis%20of%20Presentation) The company, a preclinical IBD biotechnology firm, restructured and acquired Spyre assets in June 2023, raising $210 million, but faces going concern uncertainty from accumulated deficit and potential Series A preferred stock redemption - The company is a preclinical-stage biotechnology company focused on developing next-generation therapies for inflammatory bowel disease (IBD)[31](index=31&type=chunk) - In April 2023, following an evaluation of pegtarviliase clinical trial results, the company initiated a strategic alternatives exploration and implemented a restructuring plan involving an approximate **83% reduction in workforce**[32](index=32&type=chunk)[38](index=38&type=chunk) - On June 22, 2023, the company acquired assets of Spyre Therapeutics, Inc. through a stock transaction, completed a private placement of approximately **$210 million** in Series A preferred stock on June 26, and distributed contingent value rights (CVRs) to existing stockholders[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) Liquidity Position (as of June 30, 2023, in millions of USD) | Metric | Amount | | :--- | :--- | | Accumulated deficit | $661.1 | | Cash and cash equivalents | $235.4 | - If stockholders do not timely approve the conversion of Series A preferred stock, the company may be required to redeem it for cash, posing significant uncertainty about its ability to continue as a going concern[40](index=40&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines key accounting policies for financial statements, covering convertible preferred stock, asset acquisition, CVR derivatives, and estimates, with early adoption of ASU 2020-06 - The company prepares its financial statements in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and SEC interim financial information instructions[42](index=42&type=chunk) - Series A convertible preferred stock is classified outside of stockholders' (deficit) equity because it is redeemable for cash at the holder's option if stockholders do not approve conversion into common stock, and conversion and redemption are not solely within the company's control[43](index=43&type=chunk) - The company accounted for the Spyre acquisition as an asset acquisition rather than a business combination, as the fair value of the acquired assets was concentrated in a single identifiable asset (IPR&D option), and this IPR&D asset had no alternative future use, thus expensed on the acquisition date[44](index=44&type=chunk)[47](index=47&type=chunk) - Certain contingent payments under the contingent value rights (CVR) agreement are identified as derivatives, measured at fair value, recorded as a liability, with changes in fair value recognized in other income or expense[48](index=48&type=chunk) - The company early adopted ASU 2020-06, which eliminates separate accounting for embedded conversion features in certain convertible debt and preferred stock, and changes the accounting for diluted earnings per share for convertible instruments[51](index=51&type=chunk)[52](index=52&type=chunk) [3. Fair Value Measurements](index=13&type=section&id=3.%20Fair%20Value%20Measurements) The company measures financial assets and liabilities using a three-level fair value hierarchy, with Level 1 for money market funds, Level 2 for forward contract and Parapyre option liabilities, and Level 3 for CVR liabilities based on unobservable inputs Fair Value of Financial Assets and Liabilities (as of June 30, 2023, in thousands of USD) | Item | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **Financial Assets** | | | | | | Money market funds | $18,861 | — | — | $18,861 | | **Liabilities** | | | | | | Forward contract liability | — | $164,382 | — | $164,382 | | Parapyre option obligation | — | $279 | — | $279 | | CVR liability | — | — | $29,500 | $29,500 | | Total Liabilities | — | $164,661 | $29,500 | $194,161 | - The forward contract liability and Parapyre option obligation are considered Level 2 liabilities, with changes in fair value recognized in other income (expense)[54](index=54&type=chunk) - The CVR liability is considered a Level 3 liability, with its value based on unobservable market inputs such as estimated cash flows, probability of success, and risk-adjusted discount rates[55](index=55&type=chunk)[60](index=60&type=chunk) - The forward contract liability's fair value was **$106.2 million** at the acquisition date (June 22, 2023), increasing to **$164.4 million** as of June 30, 2023, resulting in a **$58.2 million** fair value change expense[57](index=57&type=chunk) CVR Liability Changes (as of June 30, 2023, in thousands of USD) | Item | Amount | | :--- | :--- | | Initial balance as of December 31, 2022 | $— | | Fair value at CVR issuance | $29,500 | | Ending balance as of June 30, 2023 | $29,500 | [4. Cash Equivalents and Marketable Securities](index=15&type=section&id=4.%20Cash%20Equivalents%20and%20Marketable%20Securities) As of June 30, 2023, the company held money market funds as cash equivalents but no marketable securities, classifying all as current assets and assessing credit losses due to market conditions Cash Equivalents and Marketable Securities (as of June 30, 2023, in thousands of USD) | Item | Amortized Cost | Fair Value | | :--- | :--- | :--- | | **June 30, 2023** | | | | Money market funds | $18,861 | $18,861 | | **December 31, 2022** | | | | Money market funds | $15,250 | $15,250 | | Commercial paper | $7,021 | $7,020 | | U.S. government securities | $3,736 | $3,735 | | **Total cash equivalents** | $26,007 | $26,005 | | **Marketable securities** | | | | Commercial paper | $16,644 | $16,621 | | Corporate bonds | $3,738 | $3,732 | | U.S. government securities | $495 | $495 | | **Total marketable securities** | $20,877 | $20,848 | - As of June 30, 2023, the company held no available-for-sale securities and assessed credit losses, concluding that market value declines were primarily due to economic and market conditions, not credit losses[62](index=62&type=chunk) - As of June 30, 2023, **$215.6 million** of the company's cash deposits at U.S. banking institutions exceeded FDIC insurance limits[63](index=63&type=chunk) Marketable Securities Contractual Maturities (in thousands of USD) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Due within one year | $— | $20,848 | | Due after one year | $— | $— | | **Total marketable securities** | $— | $20,848 | [5. Accrued and Other Current Liabilities](index=16&type=section&id=5.%20Accrued%20and%20Other%20Current%20Liabilities) As of June 30, 2023, accrued and other current liabilities totaled **$28.427 million**, a significant increase from **$12.837 million** on December 31, 2022, primarily due to higher PIPE-related accrued financing fees and accrued compensation Accrued and Other Current Liabilities (in thousands of USD) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | PIPE accrued financing fees | $12,677 | $— | | Accrued compensation | $7,240 | $4,589 | | Accrued contractual research and development costs | $4,450 | $6,972 | | Accrued professional and consulting fees | $3,674 | $946 | | Other accrued expenses | $386 | $330 | | **Total accrued and other current liabilities** | $28,427 | $12,837 | [6. Related Party Transactions](index=16&type=section&id=6.%20Related%20Party%20Transactions) Paragon and Parapyre, affiliates, collectively hold over 5% of the company's equity, and the company assumed Spyre's Paragon Agreement obligations, including R&D service fees and Parapyre option obligations, with **$20.8 million** owed to Paragon as of June 30, 2023 - Paragon and Parapyre (affiliates of Paragon) collectively hold over **5%** of the company's capital stock, and Fairmount Funds Management LLC also holds over **5%** of the company's capital stock and has a board seat[67](index=67&type=chunk) - Following the Spyre asset acquisition, the company assumed Spyre's rights and obligations under the Paragon Agreement, including payments to Paragon for R&D services, with **$19.3 million** in unpaid fees incurred by Spyre as of the acquisition date, now assumed by the company[68](index=68&type=chunk) - In July 2023, the company exercised its option for the SPY001 program, requiring payments of up to **$22.0 million** to Paragon upon achieving specific development and clinical milestones[69](index=69&type=chunk) Reimbursable Costs Under Paragon Agreement (in millions of USD) | Item | Three Months Ended 2023 | Three Months Ended 2022 | Six Months Ended 2023 | Six Months Ended 2022 | | :--- | :--- | :--- | :--- | :--- | | Reimbursable costs under Paragon Agreement | $1.2 | — | $1.2 | — | Summary of Related Party Payables (in millions of USD) | Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Reimbursable costs under Paragon Agreement | $20.5 | $— | | Parapyre option obligation liability | $0.3 | $— | | **Total related party payables** | $20.8 | $— | [7. Asset Acquisition](index=17&type=section&id=7.%20Asset%20Acquisition) On June 22, 2023, the company acquired Spyre's assets via a stock transaction, issuing common and Series A preferred shares and assuming options; this **$113.3 million** asset acquisition, focused on Spyre's IPR&D license option, was expensed as acquired IPR&D - On June 22, 2023, the company acquired Spyre's assets, issuing **12,945,385** shares of common stock and **364,887** shares of Series A preferred stock to its former stockholders, and assumed unexercised stock options for **68,365** shares of common stock[75](index=75&type=chunk) - The company accounted for this acquisition as an asset acquisition, not a business combination, because the fair value of the acquired assets was concentrated in Spyre's IPR&D exclusive license option, and no substantive processes, employees, or output capabilities were acquired[77](index=77&type=chunk) Asset Acquisition Costs (as of June 22, 2023, in millions of USD) | Item | Amount | | :--- | :--- | | Series A preferred stock and common stock consideration transferred | $110.0 | | Transaction costs assumed by the company | $3.2 | | Fair value of Parapyre option obligation assumed | $0.1 | | **Total asset acquisition costs** | $113.3 | Allocation of Purchase Price to Net Assets (as of June 22, 2023, in millions of USD) | Item | Amount | | :--- | :--- | | Acquired in-process research and development (IPR&D) | $130.5 | | Cash acquired | $3.0 | | Liabilities assumed | $(20.2) | | **Total asset acquisition costs** | $113.3 | [8. Paragon Agreement](index=18&type=section&id=8.%20Paragon%20Agreement) After acquiring Spyre assets, the company assumed Spyre's Paragon Agreement obligations, including R&D service compensation and **$19.3 million** in unpaid fees; the SPY001 option was exercised in July 2023, with potential **$22.0 million** milestone payments - The company assumed Spyre's rights and obligations under the Paragon Agreement with Paragon, including quarterly compensation for Paragon's R&D service costs[80](index=80&type=chunk) - As of the acquisition date, Spyre had incurred **$19.3 million** in unpaid fees (including **$3.0 million** in research initiation fees and **$16.3 million** in reimbursable costs), which were assumed by the company[80](index=80&type=chunk)[83](index=83&type=chunk) - On July 12, 2023, the company exercised its option for the SPY001 research program and expects to pay Paragon up to **$22.0 million** in milestone payments under the SPY001 license agreement upon achieving specific development and clinical milestones[81](index=81&type=chunk)[82](index=82&type=chunk) [9. Series A Non-Voting Convertible Preferred Stock](index=18&type=section&id=9.%20Series%20A%20Non-Voting%20Convertible%20Preferred%20Stock) Established June 22, 2023, Series A preferred stock, with 1,086,341 authorized shares, lacks voting rights but holds veto power; if conversion is unapproved, holders can demand **$325 million** cash redemption, with **$197.3 million** net proceeds from a June 26 private placement - On June 22, 2023, the company established Series A preferred stock, authorizing **1,086,341** shares with a par value of **$0.0001** per share[84](index=84&type=chunk) - Series A preferred stock has no voting rights but possesses veto power over certain corporate actions, such as amending the certificate of incorporation, issuing more preferred stock, or engaging in significant transactions[85](index=85&type=chunk) - If stockholders do not approve conversion into common stock, Series A preferred stock will be redeemable for cash at the holder's option, with a redemption price equal to the common stock's closing price, valued at **$325 million** as of June 30, 2023[86](index=86&type=chunk) - On June 26, 2023, the company issued **721,452** shares of Series A preferred stock through a private placement, generating gross proceeds of **$210 million** and net proceeds of **$197.3 million**[88](index=88&type=chunk) - On July 7, 2023, the company issued **364,887** shares of Series A preferred stock as consideration for the asset acquisition[88](index=88&type=chunk) [10. Liabilities, Convertible Preferred Stock and Stockholders' (Deficit) Equity](index=20&type=section&id=10.%20Liabilities%2C%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20(Deficit)%20Equity) This section details liabilities, convertible preferred stock, and equity, including **$42.9 million** net proceeds from a May 2022 offering, **13,281,250** outstanding pre-funded warrants, and disclosures on stock options, restricted stock units, and related compensation expenses - In May 2022, the company completed a registered direct offering of common stock and pre-funded warrants, generating approximately **$42.9 million** in net proceeds[91](index=91&type=chunk) Pre-Funded Warrants (as of June 30, 2023) | Issuance Date | Expiration Date | Exercise Price | Number of Unexercised Warrants | | :--- | :--- | :--- | :--- | | February 8, 2019 | None | $0.0001 | — | | April 30, 2020 | None | $0.0001 | — | | May 20, 2022 | None | $0.0001 | 13,281,250 | | **Total Pre-Funded Warrants** | | | 13,281,250 | - On June 22, 2023, the company's board of directors approved an increase of **70,000,000** shares under the 2018 Equity Incentive Plan and granted **63,417,415** incentive options to new employees[98](index=98&type=chunk) - The company assumed unexercised stock options under the Spyre 2023 Equity Incentive Plan, which converted into options to purchase **68,365** shares of the company's common stock[100](index=100&type=chunk) Stock-Based Compensation Expense (in thousands of USD) | Item | Three Months Ended 2023 | Three Months Ended 2022 | Six Months Ended 2023 | Six Months Ended 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $394 | $691 | $1,171 | $1,392 | | General and administrative | $1,517 | $1,327 | $2,449 | $2,726 | | **Total stock-based compensation expense** | $1,911 | $2,018 | $3,620 | $4,118 | [11. Strategic License Agreements](index=22&type=section&id=11.%20Strategic%20License%20Agreements) In March 2021, the company licensed pegzilarginase commercialization rights to Immedica, receiving a **$21.5 million** upfront payment and potential milestones/royalties, recognizing **$0.7 million** (three months) and **$0.9 million** (six months) in revenue as of June 30, 2023; the agreement was terminated in July 2023 with global rights sold to Immedica - In March 2021, the company entered into an exclusive license and supply agreement with Immedica Pharma AB, granting rights to develop and commercialize pegzilarginase in the European Economic Area, UK, Switzerland, and the Middle East[106](index=106&type=chunk) - The agreement included a **$21.5 million** non-refundable upfront payment and reimbursement for **50%** of PIP trial costs (up to **$1.8 million**); the company is also eligible for regulatory and commercial milestone payments and mid-**20%** range net sales royalties[108](index=108&type=chunk) - The company identified the agreement as a customer contract with three performance obligations: the license, the PEACE trial and BLA package, and the PIP trial[109](index=109&type=chunk) Immedica Agreement Revenue Recognition (in millions of USD) | Period | Revenue | | :--- | :--- | | Three Months Ended 2023 | $0.7 | | Six Months Ended 2023 | $0.9 | | Three Months Ended 2022 | $0.6 | | Six Months Ended 2022 | $2.0 | - On July 27, 2023, the company announced an agreement to sell the global rights to pegzilarginase to Immedica, simultaneously terminating the existing agreement[116](index=116&type=chunk) [12. Net Loss Per Share](index=24&type=section&id=12.%20Net%20Loss%20Per%20Share) Net loss per share is calculated using the two-class method, treating convertible preferred stock as participating securities; diluted and basic net loss per share are equal due to anti-dilutive effects - The company calculates net loss per share using the two-class method, treating convertible preferred stock as participating securities[119](index=119&type=chunk) - As the company incurred net losses in all periods presented, diluted net loss per share is the same as basic net loss per share because the effect of potentially dilutive securities (such as stock options, restricted stock units, and Series A preferred stock) is anti-dilutive[121](index=121&type=chunk)[122](index=122&type=chunk) [13. Restructuring Charges](index=24&type=section&id=13.%20Restructuring%20Charges) In April 2023, the company restructured, cutting **83%** of its workforce, recognizing **$6.4 million** in severance and **$1.0 million** in stock-based compensation, plus **$2.6 million** in lease asset impairment from abandoning its Austin office, and selling lab equipment - In April 2023, due to uncertainties in pegtarviliase clinical trial results and other business considerations, the company implemented a restructuring plan, reducing its workforce by approximately **83%**[123](index=123&type=chunk)[125](index=125&type=chunk) Restructuring Charges (as of June 30, 2023, in thousands of USD) | Item | Severance and Related Costs | Stock-Based Compensation Expense | Loss on Disposal of Long-Lived Assets | Lease Asset Impairment | Total Restructuring Costs | | :--- | :--- | :--- | :--- | :--- | :--- | | Research and development | $3,182 | $123 | $749 | $1,405 | $5,459 | | General and administrative | $3,266 | $870 | $182 | $1,175 | $5,493 | | **Total** | $6,448 | $993 | $931 | $2,580 | $10,952 | - The company sold various laboratory equipment, supplies, and furniture for a total consideration of **$0.5 million**, recognizing **$0.7 million** in R&D long-lived asset disposal losses and **$0.2 million** in G&A long-lived asset disposal losses[127](index=127&type=chunk) - The company recognized **$2.6 million** in impairment losses for lease right-of-use assets and leasehold improvements due to abandoning its Austin leased office space[128](index=128&type=chunk) [14. Subsequent Events](index=25&type=section&id=14.%20Subsequent%20Events) Post-period, the company settled its forward contract liability via Series A preferred stock on July 7, 2023, and sold global pegzilarginase rights to Immedica for **$15 million** upfront and up to **$100 million** in milestones, with proceeds for CVR holders; the Austin office lease was terminated for a **$2 million** fee on August 7 - On July 7, 2023, the company settled its forward contract liability by issuing Series A preferred stock[130](index=130&type=chunk) - On July 27, 2023, the company announced the sale of global rights to pegzilarginase to Immedica for a **$15 million** upfront payment and up to **$100 million** in contingent milestone payments, terminating the original license agreement[131](index=131&type=chunk) - The upfront and contingent milestone payments from the pegzilarginase sale (net of expenses and adjustments) will be distributed to CVR holders[132](index=132&type=chunk) - On August 7, 2023, the company terminated its Austin office lease, incurring a **$2.0 million** termination fee[133](index=133&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition and operating results as of June 30, 2023, focusing on its business transformation post-Spyre asset acquisition, new IBD treatment strategy, product pipeline, related party relationships, regulatory environment, restructuring activities, and critical accounting policies and liquidity [Acquisition of Spyre](index=26&type=section&id=Acquisition%20of%20Spyre) On June 22, 2023, the company acquired Spyre Therapeutics, Inc.'s assets, making Spyre a wholly-owned subsidiary, gaining IPR&D license options for four programs, and exercising the SPY001 option on July 12, 2023, to develop IBD-targeting antibodies - On June 22, 2023, the company acquired the assets of Spyre Therapeutics, Inc. through a merger agreement, making Spyre a wholly-owned subsidiary[135](index=135&type=chunk) - Through this asset acquisition, the company obtained IPR&D license options for four research programs; on July 12, 2023, the company exercised its option for the SPY001 program, focusing on developing antibodies targeting α4β7 integrin for IBD treatment[136](index=136&type=chunk) [Overview](index=26&type=section&id=Overview) Post-Spyre asset acquisition, the company transformed into a preclinical IBD biotechnology firm, acquiring novel monoclonal antibody candidates via the Paragon Agreement, but faces significant going concern uncertainty if Series A preferred stock conversion is not approved - Following the Spyre asset acquisition, the company has transformed into a preclinical-stage biotechnology company focused on developing next-generation therapies for inflammatory bowel disease (IBD)[137](index=137&type=chunk) - The company acquired a portfolio of novel monoclonal antibody product candidates through the Paragon Agreement, aiming to address unmet needs in IBD treatment by improving efficacy, safety, and convenience of administration[137](index=137&type=chunk) - If stockholders do not timely approve the conversion of Series A preferred stock, the company may face the risk of cash redemption, posing significant uncertainty about its ability to continue as a going concern[138](index=138&type=chunk) [Our Strategy](index=27&type=section&id=Our%20Strategy) The company is committed to developing next-generation IBD therapies through three strategic pillars: advancing long-acting antibodies, evaluating optimal combination therapies, and developing gene or biomarker-based companion diagnostics, addressing growing market needs and unmet demands - The company is committed to developing next-generation IBD therapies, with strategic pillars including: advancing novel long-acting antibodies, evaluating rational therapeutic combinations, and developing gene or biomarker-based companion diagnostics[144](index=144&type=chunk) - IBD, including ulcerative colitis and Crohn's disease, affects millions globally, with approximately **1.7 million** patients in the U.S., and the market demand for IBD therapies continues to grow[141](index=141&type=chunk) - Unmet needs in existing IBD treatments include inadequate response to current therapies, side effects from long-term use, limited options for refractory or severe patients, and adherence issues with frequent dosing regimens[145](index=145&type=chunk) [Inflammatory Bowel Disease (IBD) Overview](index=27&type=section&id=Inflammatory%20Bowel%20Disease%20(IBD)%20Overview) - IBD is a chronic inflammatory disease, encompassing ulcerative colitis (UC) and Crohn's disease (CD), affecting millions worldwide, with approximately **1.7 million** patients in the U.S[140](index=140&type=chunk)[141](index=141&type=chunk) - Existing treatment options include anti-inflammatory drugs, immunosuppressants, and biologics, but unmet needs persist, such as inadequate response to current therapies, side effects, limited choices, and inconvenient administration[142](index=142&type=chunk)[145](index=145&type=chunk) [Our Portfolio of Product Candidates](index=27&type=section&id=Our%20Portfolio%20of%20Product%20Candidates) - The company is advancing a portfolio of potentially best-in-class monoclonal antibody (mAb) product candidates and plans to develop companion diagnostics for each program[143](index=143&type=chunk) - SPY001, the company's most advanced candidate, is a potent, highly selective, fully human monoclonal antibody designed to selectively bind α4β7 integrin, reducing inflammation by blocking lymphocyte migration to the gut, with First-in-Human (FIH) studies anticipated in the first half of **2024**[146](index=146&type=chunk)[151](index=151&type=chunk) - SPY002, the company's co-lead candidate, is a potent, highly selective, fully human monoclonal antibody designed to bind TL1A, blocking TL1A-DR3 interaction to inhibit inflammatory responses, with FIH studies anticipated in the second half of **2024**[152](index=152&type=chunk)[154](index=154&type=chunk) - SPY003 is an IL-23 antibody program in discovery, and SPY004 is an undisclosed novel mechanism of action (MOA) antibody, both incorporating half-life extension technology[155](index=155&type=chunk)[158](index=158&type=chunk) - The company plans to advance combination therapies such as SPY120 (α4β7 + TL1A), SPY130 (α4β7 + IL-23), and SPY230 (TL1A + IL-23) to achieve higher remission rates in IBD[159](index=159&type=chunk) - The company aims to develop gene or biomarker-based companion diagnostics to help patients and physicians select optimal treatment regimens and is discussing establishing an IBD biobank with potential partners[161](index=161&type=chunk) [Our Team and Investors](index=30&type=section&id=Our%20Team%20and%20Investors) The company's antibody portfolio, discovered by Paragon and licensed by Spyre, is supported by a **$210 million** private placement and an experienced management team with extensive biopharmaceutical expertise - The company's antibody portfolio was discovered and developed by Paragon, with rights acquired by Spyre from Paragon[162](index=162&type=chunk) - The company has completed a **$210 million** private placement of Series A preferred stock[163](index=163&type=chunk) - The company possesses an experienced management team and workforce with extensive discovery, development, and commercialization experience in the biopharmaceutical sector[164](index=164&type=chunk) [Our Relationship with Paragon and Parapyre](index=30&type=section&id=Our%20Relationship%20with%20Paragon%20and%20Parapyre) Paragon and Parapyre are related parties holding over 5% of the company's equity; the company assumed Spyre's Paragon Agreement obligations, with **$20.5 million** owed to Paragon as of June 30, 2023, and the SPY001 option exercised in July - Paragon and Parapyre (affiliates of Paragon) collectively hold over **5%** of the company's capital stock[165](index=165&type=chunk) - The company assumed Spyre's rights and obligations under the Paragon Agreement, including quarterly compensation for Paragon's R&D service costs; as of the acquisition date, Spyre had incurred **$19.3 million** in unpaid fees, which were assumed by the company[166](index=166&type=chunk) - As of June 30, 2023, the company owed Paragon **$20.5 million**[166](index=166&type=chunk) - The company exercised its option for the SPY001 program in July 2023, while options for SPY002, SPY003, and SPY004 programs remain unexercised[167](index=167&type=chunk) [Commercial Strategy](index=31&type=section&id=Commercial%20Strategy) The company plans to commercialize its product candidates in the U.S. and other key markets via internal infrastructure or external collaborations, but currently lacks a commercial organization or distribution capabilities - The company plans to commercialize its product candidates in the U.S. and other major markets through internal infrastructure and/or external collaborations[169](index=169&type=chunk) - The company is currently in the development stage and has not yet established a commercial organization or distribution capabilities[169](index=169&type=chunk) [Manufacturing Strategy](index=31&type=section&id=Manufacturing%20Strategy) The company relies on third-party contract manufacturers for product manufacturing, testing, storage, and distribution, and is transferring and revising future clinical manufacturing and toxicology agreements from Paragon as development progresses - The company currently does not own or operate facilities for product manufacturing, testing, storage, and distribution, relying instead on third-party contract manufacturers[170](index=170&type=chunk) - The company is transferring agreements for future clinical manufacturing and toxicology activities with third parties from Paragon, which will be revised to specify deliverables and costs once clinical development activities commence[170](index=170&type=chunk) [Competition](index=31&type=section&id=Competition) The company anticipates intense competition from other biopharmaceutical firms developing inflammatory disease treatments; approved IBD candidates will compete with various marketed and late-stage TNF, IL-12/23, IL-23, α4β7 antibodies, JAK inhibitors, S1P1 receptor modulating therapies, and other pipeline candidates - The company anticipates intense competition from other biopharmaceutical companies developing treatments for inflammatory diseases[171](index=171&type=chunk) - If the company's IBD product candidates are approved, they will compete with various marketed and late-stage therapies, including TNF antibodies (e.g., Humira, Remicade), IL-12/23 and IL-23 antibodies (e.g., Stelara, Skyrizi), α4β7 antibodies (e.g., Entyvio), JAK inhibitors (e.g., Xeljanz, Rinvoq), and S1P1 receptor modulating therapies (e.g., Zeposia)[171](index=171&type=chunk) - The company also faces competition from other pipeline TL1A antibodies, IL-23s, S1P1 modulators, and oral anti-integrin drugs[172](index=172&type=chunk) [Government Regulation](index=31&type=section&id=Government%20Regulation) The company's product development, approval, and commercialization are subject to stringent regulation by the U.S. FDA and other domestic and international bodies, covering preclinical and clinical development, BLA submission, expedited programs, post-market requirements, biosimilars, healthcare laws, data privacy, coverage, reimbursement, and healthcare reform - The company's products are subject to extensive regulation by the U.S. FDA and other domestic and international regulatory bodies, covering research and development, testing, manufacturing, quality control, import/export, safety, efficacy, labeling, packaging, storage, distribution, record-keeping, approval, advertising, promotion, marketing, post-market surveillance, and reporting[173](index=173&type=chunk) - Non-compliance with applicable requirements may result in administrative or judicial sanctions, including FDA refusal to approve, withdrawal of approval, clinical holds, product recalls, fines, and denial of government contracts[174](index=174&type=chunk) [United States Biologics Regulation](index=32&type=section&id=United%20States%20Biologics%20Regulation) - In the U.S., biological products are regulated under the Federal Food, Drug, and Cosmetic Act (FDCA) and the Public Health Service Act (PHSA) and their implementing regulations[175](index=175&type=chunk) - FDA approval for biological products requires a series of steps, including preclinical testing, IND submission, IRB approval, cGMP manufacturing, clinical trials, BLA submission, FDA advisory committee review, facility inspection, and user fee payment[175](index=175&type=chunk) [Preclinical and Clinical Development](index=32&type=section&id=Preclinical%20and%20Clinical%20Development) - Before conducting First-in-Human clinical trials, an Investigational New Drug (IND) application must be submitted to the FDA, which automatically becomes effective after **30 days** unless the FDA raises safety concerns[175](index=175&type=chunk) - Clinical trials must be conducted under the supervision of qualified investigators, in accordance with cGCPs, and with independent IRB approval, progressing through three phases: Phase 1 (safety, dose tolerance), Phase 2 (preliminary efficacy, optimal dose), and Phase 3 (statistically significant efficacy, safety)[176](index=176&type=chunk)[180](index=180&type=chunk)[182](index=182&type=chunk) - Regulatory authorities, IRBs, or sponsors may suspend clinical trials at any time due to reasons such as subject health risks or failure to achieve trial objectives[178](index=178&type=chunk) [BLA Submission and Review](index=34&type=section&id=BLA%20Submission%20and%20Review) - Upon successful completion of all testing, a Biologics License Application (BLA) must be submitted to the FDA to request product marketing approval, including preclinical and clinical trial data, manufacturing information, and proposed labeling[183](index=183&type=chunk) - The FDA reviews BLA completeness within **60 days** of receipt and, if accepted, aims to complete its review within **10 months** (or **6 months** for priority review)[185](index=185&type=chunk) - Before approving a BLA, the FDA typically inspects manufacturing facilities for cGMP compliance and may request additional testing or information[186](index=186&type=chunk) - The FDA may issue an approval letter or a complete response letter, which lists all deficiencies and may require additional data or studies[187](index=187&type=chunk) [Expedited Development and Review Programs](index=35&type=section&id=Expedited%20Development%20and%20Review%20Programs) - The FDA offers expedited development and review programs, such as Fast Track and Breakthrough Therapy designations, to accelerate the market entry of products meeting specific criteria[189](index=189&type=chunk)[190](index=190&type=chunk) - Fast Track designation applies to products treating serious or life-threatening conditions that address unmet medical needs, offering more frequent interactions and rolling review[189](index=189&type=chunk) - Breakthrough Therapy designation is for products with preliminary clinical evidence showing substantial improvement over existing therapies, providing more intensive FDA interaction and guidance[190](index=190&type=chunk) - Accelerated approval may be granted based on surrogate or early clinical endpoints, but typically requires post-marketing studies to verify clinical benefit[192](index=192&type=chunk) [Post-Approval Requirements](index=36&type=section&id=Post-Approval%20Requirements) - Even after product approval, ongoing FDA regulation requires compliance with record-keeping, adverse event reporting, periodic reporting, product sampling and distribution, and advertising and promotion requirements[194](index=194&type=chunk) - Manufacturers must register their establishments and undergo regular FDA inspections to ensure compliance with cGMP requirements[194](index=194&type=chunk) - The FDA may withdraw approval due to non-compliance or post-market issues, potentially leading to revised labeling, mandatory post-marketing studies, distribution restrictions, fines, product recalls, or criminal prosecution[195](index=195&type=chunk) - The FDA strictly regulates the marketing, labeling, advertising, and promotion of biological products, prohibiting the promotion of unapproved indications (off-label uses)[196](index=196&type=chunk) [Biosimilars and Reference Product Exclusivity](index=36&type=section&id=Biosimilars%20and%20Reference%20Product%20Exclusivity) - The Biologics Price Competition and Innovation Act (BPCIA) established an abbreviated approval pathway for biosimilars, requiring them to demonstrate no clinically meaningful differences in safety, purity, and potency from a reference product[197](index=197&type=chunk)[199](index=199&type=chunk) - The BPCIA stipulates that biosimilar applications can be submitted four years after the reference product's initial approval, but approval cannot be effective until **12 years** later[200](index=200&type=chunk) - Pediatric market exclusivity can add **six months** to existing exclusivity and patent periods[201](index=201&type=chunk) - The Inflation Reduction Act of **2022** (IRA) aims to promote generic and biosimilar competition and reduce drug and biological product costs[203](index=203&type=chunk) [Other Healthcare Laws and Compliance Requirements](index=37&type=section&id=Other%20Healthcare%20Laws%20and%20Compliance%20Requirements) - Pharmaceutical companies are subject to additional federal and state healthcare regulations and enforcement, including the Anti-Kickback Statute (AKS), the False Claims Act (FCA), and the Health Insurance Portability and Accountability Act (HIPAA)[204](index=204&type=chunk) - The AKS prohibits offering remuneration to induce referrals or purchases of items or services payable by federal healthcare programs[205](index=205&type=chunk) - The FCA prohibits knowingly presenting false or fraudulent claims for payment to the federal government[207](index=207&type=chunk) - HIPAA establishes federal criminal statutes for healthcare benefit program fraud[208](index=208&type=chunk) - The Physician Payments Sunshine Act requires manufacturers to report payments made to healthcare professionals to CMS[210](index=210&type=chunk) [Data Privacy and Security](index=38&type=section&id=Data%20Privacy%20and%20Security) - The company is subject to numerous state, federal, and foreign laws and regulations governing the collection, dissemination, use, access, confidentiality, and security of personal information, including health-related information[212](index=212&type=chunk) - HIPAA imposes privacy, security, and breach notification obligations on covered entities and their business associates[212](index=212&type=chunk) - Violations of consumer privacy rights or failure to protect personal information may constitute unfair acts under Section 5(a) of the Federal Trade Commission Act[214](index=214&type=chunk) - The California Consumer Privacy Act (CCPA) imposes new data privacy obligations on covered companies and grants new privacy rights to California residents[215](index=215&type=chunk) [Coverage and Reimbursement](index=39&type=section&id=Coverage%20and%20Reimbursement) - In the U.S. and other markets, patients typically rely on third-party payers for treatment reimbursement; obtaining adequate coverage and reimbursement from government healthcare programs and commercial payers is crucial for new product market acceptance[216](index=216&type=chunk) - Payers consider whether a product is a covered benefit, safe, effective, medically necessary, appropriate for specific patients, cost-effective, and not experimental or investigational when making reimbursement decisions[218](index=218&type=chunk) - Third-party payers increasingly challenge the price of medical products and services, scrutinizing their medical necessity and cost-effectiveness[217](index=217&type=chunk) - In some foreign countries, drug pricing must be approved before legal marketing, and pricing requirements vary by country[221](index=221&type=chunk) [Healthcare Reform](index=40&type=section&id=Healthcare%20Reform) - The U.S. and some foreign jurisdictions are considering or have enacted various healthcare reform proposals aimed at controlling healthcare costs, improving quality, or expanding access[222](index=222&type=chunk) - The Affordable Care Act (ACA) has significantly impacted healthcare financing and the pharmaceutical industry[223](index=223&type=chunk) - The Inflation Reduction Act of **2022** (IRA) includes provisions that may affect the company's business, such as lowering the Medicare Part D out-of-pocket cap, imposing new manufacturer financial responsibility for certain drugs, allowing government negotiation of Medicare price caps for high-cost drugs and biologics, and requiring rebates for drugs with price increases exceeding inflation[228](index=228&type=chunk) - President Biden has issued several executive orders aimed at lowering prescription drug costs, and HHS has proposed new prescription drug pricing models[229](index=229&type=chunk) [Other Government and Regulation Outside of the United States](index=41&type=section&id=Other%20Government%20and%20Regulation%20Outside%20of%20the%20United%20States) - Beyond U.S. regulations, the company is subject to various regulations in other jurisdictions governing research and development, clinical trials, testing, manufacturing, safety, efficacy, quality control, labeling, packaging, storage, record-keeping, distribution, reporting, import/export, advertising, marketing, and other promotional activities for biological products[232](index=232&type=chunk) - Before conducting clinical trials or marketing products in foreign countries, approval from relevant regulatory authorities is required, with requirements and processes varying by country[233](index=233&type=chunk)[234](index=234&type=chunk) - Non-compliance with applicable foreign regulatory requirements may result in fines, clinical trial suspension, suspension or withdrawal of regulatory approval, product recalls, product seizures, operating restrictions, and criminal prosecution[277](index=277&type=chunk) [Regulation in the European Union](index=42&type=section&id=Regulation%20in%20the%20European%20Union) - The processing of personal health data in the EU is strictly governed by the General Data Protection Regulation (GDPR) and related national data protection laws, including additional requirements for health, genetic, and biometric data[236](index=236&type=chunk) - The EU Clinical Trials Regulation (CTR), effective January 31, 2022, fundamentally reformed existing EU drug clinical trial regulation by introducing a unified application procedure[242](index=242&type=chunk)[244](index=244&type=chunk) - In the EU, medicinal products require marketing authorization (MA) through either a centralized or national procedure; the centralized procedure, applicable to certain drug types, involves scientific assessment by the EMA and MA issuance by the European Commission[247](index=247&type=chunk)[248](index=248&type=chunk) - All new MAAs must include a Risk Management Plan (RMP) describing the risk management system and measures to prevent or minimize product risks[252](index=252&type=chunk) - Innovative medicinal products in the EU typically benefit from **eight years** of data exclusivity and **ten years** of market exclusivity[256](index=256&type=chunk) - Pharmaceutical advertising and promotion in the EU are governed by EU law and national legislation of member states, prohibiting direct-to-consumer advertising for prescription-only medicines and promotions inconsistent with the Summary of Product Characteristics (SmPC)[269](index=269&type=chunk) - EU anti-corruption laws prohibit offering benefits or advantages to physicians to induce prescription or recommendation of medicinal products[270](index=270&type=chunk) [Other Markets (UK & International)](index=47&type=section&id=Other%20Markets%20(UK%20%26%20International)) - Post-Brexit, the UK's regulatory regime largely aligns with EU pharmaceutical regulations but may diverge in the future; the MHRA will consider approval decisions from the EMA and other regulatory bodies starting January 1, 2024[273](index=273&type=chunk)[274](index=274&type=chunk) - The Windsor Framework will alter pharmaceutical regulation under the Northern Ireland Protocol, with the MHRA responsible for approving all medicines sold in the UK market, including Great Britain and Northern Ireland[275](index=275&type=chunk) - Clinical trial, product licensing, pricing, and reimbursement requirements vary in other countries outside the EU, such as Eastern Europe, Latin America, or Asia[276](index=276&type=chunk) [Employees and Human Capital Resources](index=48&type=section&id=Employees%20and%20Human%20Capital%20Resources) As of June 30, 2023, the company had **14** non-unionized full-time employees, relying on key personnel expertise and planning to recruit high-quality talent for business growth - As of June 30, 2023, the company had **14** full-time employees, none of whom were unionized[278](index=278&type=chunk) [Corporate Developments](index=48&type=section&id=Corporate%20Developments) In Q2 2023, the company explored strategic alternatives, implemented layoffs, saw executive departures, appointed Jonathan Alspaugh as President and CFO, acquired Spyre's net assets on June 22, 2023, appointed Cameron Turtle as COO, and increased total employees to **14** - In the second quarter of **2023**, the company began exploring strategic alternatives and engaged Wedbush Securities Inc. as its exclusive financial advisor[279](index=279&type=chunk) - The company reduced its workforce, retaining approximately **10** employees to support strategic evaluation and ongoing business; several executives departed, and Jonathan Alspaugh was appointed President and Chief Financial Officer[279](index=279&type=chunk) - On June 22, 2023, the company acquired Spyre's net assets, appointed Cameron Turtle as Chief Operating Officer, and increased its total employee count to **14**[279](index=279&type=chunk) [Restructuring Activities](index=48&type=section&id=Restructuring%20Activities) In Q2 2023, the company restructured, cutting **83%** of its workforce, recognizing **$6.4 million** in severance and **$1.0 million** in stock-based compensation, plus **$2.6 million** in lease asset impairment from abandoning its Austin office, and selling lab equipment - The company implemented a restructuring plan in the second quarter of **2023**, resulting in an approximate **83%** reduction in workforce[280](index=280&type=chunk) Summary of Restructuring Charges (as of June 30, 2023, in thousands of USD) | Item | Severance and Related Costs | Stock-Based Compensation Expense | Loss on Disposal of Long-Lived Assets | Lease Asset Impairment | Total Restructuring Costs | | :--- | :--- | :--- | :--- | :--- | :--- | | Research and development | $3,182 | $123 | $749 | $1,405 | $5,459 | | General and administrative | $3,266 | $870 | $182 | $1,175 | $5,493 | | **Total** | $6,448 | $993 | $931 | $2,580 | $10,952 | - The company sold various laboratory equipment, supplies, and furniture for a total consideration of **$0.5 million**, recognizing **$0.7 million** in R&D long-lived asset disposal losses and **$0.2 million** in G&A long-lived asset disposal losses[281](index=281&type=chunk) - The company recognized **$2.6 million** in impairment losses for lease right-of-use assets and leasehold improvements due to abandoning its Austin leased office space[282](index=282&type=chunk) [Licensing of Pegzilarginase](index=49&type=section&id=Licensing%20of%20Pegzilarginase) In March 2021, the company licensed pegzilarginase commercialization rights to Immedica, receiving a **$21.5 million** upfront payment and potential milestones/royalties; in July 2023, global rights were sold to Immedica, terminating the original agreement, with **$0.7 million** (three months) and **$0.9 million** (six months) in revenue recognized as of June 30, 2023 - In March 2021, the company licensed the commercialization rights for pegzilarginase to Immedica, receiving a **$21.5 million** upfront payment and potential milestone and sales royalties[283](index=283&type=chunk) - In July 2023, the company announced the sale of global rights to pegzilarginase to Immedica and the termination of the original license agreement[284](index=284&type=chunk) Immedica Agreement Revenue Recognition (in millions of USD) | Period | Revenue | | :--- | :--- | | Three Months Ended 2023 | $0.7 | | Six Months Ended 2023 | $0.9 | | Three Months Ended 2022 | $0.6 | | Six Months Ended 2022 | $2.0 | [Critical Accounting Policies and Estimates](index=49&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's financial statements rely on critical accounting policies and estimates, including accrued R&D costs, IPR&D valuation, CVR liability discount rates, stock-based compensation inputs, lease ROU asset impairment, and revenue recognition, where actual results may differ significantly from estimates - The company relies on critical accounting policies and estimates in preparing its financial statements, including accrued research and development costs, valuation of acquired in-process research and development (IPR&D), CVR liability discount rates and probability of success, Black-Scholes model inputs for stock-based compensation expense, impairment of lease right-of-use assets, and cost to complete performance obligations for revenue recognition[287](index=287&type=chunk) - These estimates significantly impact financial statement amounts, and actual results may differ materially from estimates[286](index=286&type=chunk) [Impairment of ROU Assets and Leasehold Improvements](index=50&type=section&id=Impairment%20of%20ROU%20Assets%20and%20Leasehold%20Improvements) - The company's abandonment of its Austin leased office space triggered an impairment test for long-lived assets, which was evaluated using a discounted future cash flow model[289](index=289&type=chunk) [Convertible Preferred Stock Issued through PIPE](index=50&type=section&id=Convertible%20Preferred%20Stock%20Issued%20through%20PIPE) - The company classifies convertible preferred stock outside of stockholders' (deficit) equity because it is redeemable for cash at the holder's option if stockholders do not approve conversion into common stock, and conversion and redemption are not solely within the company's control[290](index=290&type=chunk) [Contingent Value Rights Liability](index=50&type=section&id=Contingent%20Value%20Rights%20Liability) - The contingent value rights (CVR) liability is considered a Level 3 instrument, initially measured at estimated fair value, and subsequently remeasured at each reporting period end, with changes recognized in the statements of operations[291](index=291&type=chunk) - Determining the fair value of the CVR liability requires significant management judgment, and any changes in input parameters could lead to material fair value adjustments, impacting current operating results[291](index=291&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) The company experienced significant operating changes in Q2 and H1 2023, with acquired IPR&D expenses from the Spyre asset acquisition leading to a wider net loss; R&D and G&A expenses increased due to restructuring and Paragon Agreement fees, while fair value changes in forward contract liability also contributed to non-cash expenses [Comparison of the Three Months Ended June 30, 2023 and 2022](index=51&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202023%20and%202022) Summary of Results of Operations (for the three months ended June 30, 2023, in thousands of USD) | Item | Three Months Ended 2023 | Three Months Ended 2022 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $688 | $625 | $63 | 10% | | Research and development expenses | $17,386 | $15,373 | $2,013 | 13% | | General and administrative expenses | $12,062 | $7,675 | $4,387 | 57% | | Acquired in-process research and development expenses | $130,486 | — | $130,486 | * | | Operating loss | $(159,246) | $(22,423) | $(136,823) | * | | Change in fair value of forward contract liability | $(58,170) | — | $(58,170) | * | | Net loss | $(217,081) | $(22,323) | $(194,758) | * | | * Percentage not meaningful | | | | | - Revenue increased by **10%** to **$0.7 million**, primarily from drug supply under the Immedica agreement and royalties from the French early access program[292](index=292&type=chunk) - Research and development expenses increased by **$2.0 million** (**13%**) to **$17.4 million**, primarily due to a **$2.4 million** increase in restructuring costs and a **$1.2 million** increase in Paragon Agreement fees, partially offset by a **$1.6 million** decrease in pegtarviliase toxicology costs[293](index=293&type=chunk) - General and administrative expenses increased by **$4.4 million** (**57%**) to **$12.1 million**, primarily due to a **$5.3 million** increase in restructuring costs, partially offset by a **$0.9 million** decrease in commercial activities[293](index=293&type=chunk) - Acquired in-process research and development expenses totaled **$130.5 million**, primarily resulting from the Spyre asset acquisition being accounted for as an asset acquisition[294](index=294&type=chunk) - A **$58.2 million** non-cash expense resulted from the change in fair value of the forward contract liability[295](index=295&type=chunk) [Comparison of the Six Months Ended June 30, 2023 and 2022](index=52&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Summary of Results of Operations (for the six months ended June 30, 2023, in thousands of USD) | Item | Six Months Ended 2023 | Six Months Ended 2022 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $886 | $1,987 | $(1,101) | (55)% | | Research and development expenses | $31,162 | $32,351 | $(1,189) | (4)% | | General and administrative expenses | $17,290 | $16,500 | $790 | 5% | | Acquired in-process research and development expenses | $130,486 | — | $130,486 | * | | Operating loss | $(178,052) | $(46,864) | $(131,188) | * | | Change in fair value of forward contract liability | $(58,170) | — | $(58,170) | * | | Net loss | $(235,503) | $(46,759) | $(188,744) | * | | * Percentage not meaningful | | | | | - Revenue decreased by **55%** to **$0.9 million**, primarily due to reduced revenue related to the PEACE Phase 3 trial and BLA package under the Immedica agreement[296](index=296&type=chunk) - Research and development expenses decreased by **$1.2 million** (**4%**) to **$31.9 million**, primarily due to a **$3.2 million** reduction in pegtarviliase activities and a **$1.6 million** decrease in toxicology costs, partially offset by a **$2.4 million** increase in restructuring costs and a **$1.2 million** increase in Paragon Agreement fees[297](index=297&type=chunk)[298](index=298&type=chunk) - General and administrative expenses increased by **$0.8 million** (**5%**) to **$17.3 million**, primarily due to a **$2.6 million** increase in restructuring costs, partially offset by a **$1.8 million** decrease in pegtarviliase commercialization preparedness activities[299](index=299&type=chunk) - Acquired in-process research and development expenses totaled **$130.5 million**, primarily resulting from the Spyre asset acquisition being accounted for as an asset acquisition[300](index=300&type=chunk) - A **$58.2 million** non-cash expense resulted from the change in fair value of the forward contract liability[301](index=301&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The company has incurred operating losses since inception, with an accumulated deficit of **$661.1 million** as of June 30, 2023, funding operations through equity, debt, grants, and licensing, holding **$235.4 million** in cash, but faces going concern uncertainty if Series A preferred stock conversion is not approved, and anticipates continued losses requiring additional financing - The company has incurred operating losses since its inception, with an accumulated deficit of **$661.1 million** as of June 30, 2023[302](index=302&type=chunk)[310](index=310&type=chunk) - The company has primarily funded operations through equity and debt financing, research grants, and collaboration and license agreements, totaling approximately **$716.2 million**[302](index=302&type=chunk) - As of June 30, 2023, the company had **$235.4 million** in cash and cash equivalents[306](index=306&type=chunk)[311](index=311&type=chunk) - If stockholders do not timely approve the conversion of Series A preferred stock, the company may face the risk of cash redemption, posing significant uncertainty about its ability to continue as a going concern[311](index=311&type=chunk) - The company anticipates continued losses and will require additional financing to support product candidate development and commercialization[309](index=309&type=chunk)[310](index=310&type=chunk) [Sources of liquidity](index=53&type=section&id=Sources%20of%20liquidity) - Since inception, the company has primarily raised funds through the sale and issuance of convertible preferred stock and common stock, pre-funded warrants, receipt of grants, and licensing product rights, totaling approximately **$716.2 million**[302](inde