Generation Bio(GBIO) - 2022 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2022, highlighting a net loss of $35.0 million and a strong cash position of $337.0 million sufficient for at least 12 months of operations Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $336,978 | $375,145 | | Total assets | $444,026 | $476,771 | | Total liabilities | $91,111 | $95,025 | | Total stockholders' equity | $352,915 | $381,746 | Condensed Consolidated Statements of Operations and Comprehensive Loss Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Research and development | $25,554 | $18,753 | | General and administrative | $9,790 | $6,902 | | Loss from operations | $(35,344) | $(25,655) | | Net loss | $(34,999) | $(25,562) | | Net loss per share | $(0.61) | $(0.46) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(35,435) | $(23,027) | | Net cash (used in) provided by investing activities | $(2,784) | $113,485 | | Net cash provided by financing activities | $52 | $212,957 | Notes to Condensed Consolidated Financial Statements - The company is an early-stage biotech focused on non-viral genetic medicines using closed-ended DNA (ceDNA) and a cell-targeted lipid nanoparticle (ctLNP) delivery system[24] - As of March 31, 2022, the company had an accumulated deficit of $343.1 million, and management expects existing cash and cash equivalents are sufficient to fund operations and capital expenditures for at least 12 months from the report's issuance date[27] - In January 2021, the company raised net proceeds of $211.3 million from a follow-on public offering, and an "at-the-market" sales agreement for up to $250.0 million was established in August 2021, with no shares sold under it as of May 5, 2022[36] - Total unrecognized stock-based compensation cost as of March 31, 2022, was $61.2 million, expected to be recognized over a weighted-average period of 2.8 years for stock options and 2.0 years for restricted stock[48] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's non-viral genetic medicine focus, increased operating expenses, and strong liquidity with $337.0 million cash sufficient into 2024 Results of Operations Comparison of Operating Results (in thousands) | Metric | Q1 2022 | Q1 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $25,554 | $18,753 | $6,801 | | General and administrative | $9,790 | $6,902 | $2,888 | | Total operating expenses | $35,344 | $25,655 | $9,689 | | Net loss | $(34,999) | $(25,562) | $(9,437) | - The $6.8 million increase in R&D expenses was primarily driven by a $3.1 million increase in facilities costs related to the manufacturing facility lease, a $2.4 million increase in personnel costs, and a $1.3 million increase in stock-based compensation, partly offset by a $1.2 million decrease in external manufacturing costs due to the transition to an in-house process[86] - The $2.9 million increase in G&A expenses was mainly due to a $1.3 million rise in stock-based compensation and a $1.0 million increase in personnel-related costs, both resulting from higher headcount[88] Liquidity and Capital Resources - As of March 31, 2022, the company had cash and cash equivalents of $337.0 million[90] - Management believes that existing cash and cash equivalents will be sufficient to fund operating expenses and capital expenditures into 2024[67][102] - Net cash used in operating activities increased to $35.4 million in Q1 2022 from $23.0 million in Q1 2021, primarily due to the higher net loss[91][92][94] - Net cash provided by financing activities was only $0.1 million in Q1 2022, compared to $213.0 million in Q1 2021, which included $211.9 million in net proceeds from a follow-on public offering[98] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $337.0 million cash and cash equivalents, with no marketable securities or hedging instruments used - The company's primary market risk is interest rate sensitivity on its cash and cash equivalents, which totaled $337.0 million as of March 31, 2022[108] - The company did not hold any marketable securities as of March 31, 2022, and does not currently use hedging instruments to manage interest rate risk[108] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal controls during the quarter - Based on an evaluation as of March 31, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[110] - There were no changes in internal control over financial reporting during Q1 2022 that have materially affected, or are reasonably likely to materially affect, these controls[111] PART II – OTHER INFORMATION Item 1A. Risk Factors This section directs readers to the detailed discussion of risk factors in the company's Annual Report on Form 10-K, which could materially affect future results - The report directs investors to carefully consider the risk factors discussed in Part I, Item 1A of the company's Annual Report on Form 10-K[112] Item 6. Exhibits This section lists all exhibits filed with the quarterly report, including a lease amendment and certifications from the Principal Executive and Financial Officers - Exhibits filed with the report include a Third Amendment to the Lease with BMR-Rogers Street LLC, and certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002[114] Signatures The report is formally signed and authorized by the company's principal executive and financial officers - The report was signed on May 5, 2022, by Geoff McDonough, President and Chief Executive Officer, and Matthew Norkunas, Chief Financial Officer[119]