Passage BIO(US:PASG)2021-03-03 13:01Part I Business Passage Bio is a clinical-stage genetic medicines company focused on rare, monogenic CNS disorders, leveraging a strategic collaboration with the University of Pennsylvania's Gene Therapy Program (GTP) Overview and Pipeline The company develops therapies for rare, monogenic CNS disorders through a strategic collaboration with the University of Pennsylvania's Gene Therapy Program (GTP), with three lead candidates and a deep pipeline - The company focuses on rare, monogenic CNS disorders with limited or no approved treatments, leveraging a strategic research collaboration with the University of Pennsylvania's Gene Therapy Program (GTP)16 Lead Product Candidates | Product Candidate | Indication | Development Stage | Key Milestone | | :--- | :--- | :--- | :--- | | PBGM01 | GM1 Gangliosidosis | Phase 1/2 | IND active; CTA from UK & Canada; Enrollment expected Q1 2021 | | PBFT02 | Frontotemporal Dementia (FTD-GRN) | Phase 1/2 | IND active; Enrollment expected H1 2021 | | PBKR03 | Krabbe Disease | Phase 1/2 | IND active; Enrollment expected H1 2021 | - Beyond the three lead candidates, the company has four research programs for Metachromatic Leukodystrophy (MLD), Amyotrophic Lateral Sclerosis (ALS), Charcot-Marie-Tooth Type 2A (CMT2A), and an undisclosed target, and holds an option to license ten additional programs from Penn21 Our Strategy and Approach The company's strategy focuses on rapidly advancing transformative therapies for rare CNS indications, expanding its pipeline, engaging patient groups, and developing proprietary manufacturing capabilities - Key strategic pillars include focusing on rare CNS diseases, rapidly advancing lead candidates, expanding the pipeline via the GTP collaboration, engaging with patient groups, and developing manufacturing capabilities3136 - The company's scientific approach prioritizes optimal route of administration (ICM), capsid and transgene selection, leveraging cross-correction for broader effect, and using measurable biomarkers for efficient development404148 - A strategic collaboration with Catalent provides access to a dedicated manufacturing suite, with plans to open an in-house analytical lab in Q2 2021 and eventually establish a proprietary manufacturing facility for commercial supply36 PBGM01 for GM1 Gangliosidosis PBGM01 is an AAVhu68-based gene therapy for infantile GM1 gangliosidosis, showing promising preclinical results and cleared for a Phase 1/2 trial in Q1 2021 - PBGM01 utilizes an AAVhu68 capsid to deliver the GLB1 gene via ICM injection to treat infantile GM1, a rapidly progressive neurodegenerative disease with a life expectancy of two to four years2449 - In a GLB1 knockout mouse model, PBGM01 treatment led to increased β-gal enzyme activity in the brain, CSF, and peripheral organs, normalized brain abnormalities, improved neurological function (gait), and significantly increased survival587277 - A 120-day NHP toxicology study found ICM administration of PBGM01 to be well-tolerated, with high gene transfer to the brain and spinal cord, though the primary adverse finding was asymptomatic degeneration of dorsal root ganglia (DRG) sensory neurons9096 - The FDA cleared the IND for PBGM01 in December 2020, and the company received CTA approvals from the UK and Canada, with a Phase 1/2 trial set to begin in Q1 2021 and initial 30-day safety and biomarker data expected mid-year 202125102 PBFT02 for Frontotemporal Dementia (FTD-GRN) PBFT02 is an AAV1-based gene therapy for FTD-GRN, showing preclinical efficacy in increasing PGRN levels and cleared for a Phase 1/2 trial in H1 2021 - PBFT02 is an AAV1-based gene therapy delivered via ICM injection to treat FTD-GRN, a form of early-onset dementia caused by a deficiency in the progranulin (PGRN) protein26110111 - In a GRN knockout mouse model, PBFT02 administration corrected key neuropathological features, including reducing lipofuscin accumulation and neuroinflammation131 - NHP studies showed that the AAV1 vector resulted in robust PGRN expression in the CSF, over 50-fold higher than normal human levels, with superior transduction of ependymal cells compared to other capsids125126 - The FDA cleared the IND for PBFT02 in January 2021, with a Phase 1/2 dose-escalation trial planned to begin in the first half of 2021 and initial data expected in late 2021 or early 2022150155 PBKR03 for Krabbe Disease PBKR03 is an AAVhu68-based gene therapy for infantile Krabbe disease, demonstrating improved motor function and survival in preclinical models, and cleared for a Phase 1/2 trial in H1 2021 - PBKR03 is an AAVhu68-based gene therapy delivered via ICM injection to treat infantile Krabbe disease, a fatal disorder caused by mutations in the GALC gene, leading to widespread death of myelin-producing cells27156157 - In a twitcher mouse model, PBKR03 administration improved clinical scores, motor coordination (rotarod test), and sciatic nerve histology compared to vehicle-treated mice168170174 - In a Krabbe dog model, PBKR03-treated dogs maintained normal motor function, had normalized nerve conduction velocities, and showed increased survival compared to vehicle-treated dogs, which were euthanized due to disease progression184190 - The FDA cleared the IND for PBKR03 in February 2021, with a Phase 1/2 dose-escalation trial planned to begin in the first half of 2021 and initial data expected in late 2021 or early 2022212217 Manufacturing, Competition, and Agreements The company leverages a platform manufacturing approach with Catalent, plans internal lab capabilities, faces competition in gene therapy, and operates under an exclusive license agreement with the University of Pennsylvania - The company has a collaboration with Catalent for cGMP manufacturing of clinical supplies in a dedicated suite and plans to open its own analytical lab in Q2 2021, with a long-term goal of building its own commercial manufacturing facility227229231 - Key competitors include Sio Gene Therapies and Lysogene (GM1), Alector and Prevail Therapeutics (FTD-GRN), and Forge Biologics (Krabbe disease)234235236 - The company's core technology is licensed from the University of Pennsylvania under an agreement covering up to 17 rare monogenic CNS indications, including obligations for up to $16.5 million in development milestones and $55.0 million in commercial milestones per product, plus tiered mid-single-digit royalties239244 Intellectual Property and Government Regulation The company's intellectual property is based on in-licensed patents from the University of Pennsylvania, and its gene therapies are subject to extensive FDA regulation, with lead candidates receiving Orphan Drug and Rare Pediatric Disease Designations - The company's patent protection is derived from an exclusive license from the University of Pennsylvania for patent applications covering AAVhu68 capsids and specific rAAVs for treating GM1, Krabbe, FTD, and MLD249250 - The company's products, as gene therapies, are regulated as biologics by the FDA and require a Biologics License Application (BLA) for approval, following extensive preclinical and clinical testing to establish safety and efficacy256257 - PBGM01, PBFT02, and PBKR03 have received Orphan Drug Designation, which provides potential for seven years of market exclusivity upon approval, and PBGM01 and PBKR03 also received Rare Pediatric Disease Designation, making them eligible for a priority review voucher108154216 Risk Factors The company faces substantial risks including operating losses, high development risks for novel gene therapies, reliance on third parties, potential adverse side effects, and intellectual property challenges - The company has a history of operating losses of $112.2 million in 2020 and will require substantial additional funding to advance its clinical programs, which may not be available on acceptable terms317319324 - The business is highly dependent on the success of its early-stage product candidates, which are based on novel gene therapy technology with a lengthy, expensive, and uncertain development and regulatory approval process338341351 - The company relies exclusively on its collaboration with the University of Pennsylvania for its preclinical pipeline and on third-party manufacturers like Catalent for clinical supply, making it vulnerable to disruptions in these relationships380412 - Preclinical NHP studies for lead candidates have shown asymptomatic trigeminal and dorsal root ganglia (DRG) toxicity, an AAV platform risk that requires careful clinical monitoring and could impact future development218354 - The company received a letter from Regenxbio Inc. in February 2020 claiming that the use of the AAVhu68 capsid infringes on its licensed patents, which could lead to litigation or require a license463 Properties The company is expanding its physical footprint with new executive offices in Philadelphia and a significant laboratory space in Hopewell, New Jersey - The company is expanding its physical footprint with a new approximately 37,000 sq. ft. principal executive office in Philadelphia, PA, expected to commence in March 2021573 - A new 15-year lease for approximately 62,000 sq. ft. of laboratory space at the Princeton West Innovation Campus in Hopewell, NJ, has been signed to support CMC and analytical capabilities574 Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business - As of the report date, the company is not involved in any material legal proceedings576 Part II Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The company's common stock began trading on Nasdaq in February 2020, has not paid dividends, and raised approximately $227.7 million from its IPO - The company's common stock has been listed on The Nasdaq Global Market under the symbol "PASG" since its IPO on February 28, 2020580 - The company has never paid cash dividends and intends to retain any future earnings to fund business operations and growth582 - The company completed its IPO on March 9, 2020, raising net proceeds of approximately $227.7 million584585 Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported a net loss of $112.2 million in 2020, driven by increased R&D and G&A expenses, but maintains strong liquidity with $304.8 million in cash and equivalents as of year-end Results of Operations (2020 vs. 2019) | (in thousands) | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Research and development | $ 81,788 | $ 29,738 | $ 52,050 | | General and administrative | $ 30,114 | $ 6,951 | $ 23,163 | | Loss from operations | $ (112,902) | $ (37,189) | $ (75,713) | | Net loss | $ (112,232) | $ (45,634) | $ (66,598) | - The increase in R&D expenses was primarily driven by a $24.7 million increase in clinical manufacturing costs, a $6.6 million increase in preclinical R&D, and a $12.5 million increase in personnel-related costs as the company prepared for its clinical trials614 - The increase in G&A expenses was mainly due to a $15.3 million increase in personnel and share-based compensation from higher headcount, along with higher professional fees and facility costs to support expanded operations617 - As of December 31, 2020, the company had $304.8 million in cash, cash equivalents, and marketable securities, with a follow-on offering in January 2021 adding net proceeds of $165.9 million594621 Quantitative and Qualitative Disclosures About Market Risk The company's market risk is primarily interest rate sensitivity on its marketable securities, considered minimal due to short-term, low-risk investments, with immaterial foreign currency exposure - The primary market risk is interest rate sensitivity on the company's $304.8 million portfolio of cash, cash equivalents, and marketable securities, which is considered minimal due to the short-term nature of the investments658659 - Exposure to foreign currency exchange rate risk is not material, as the majority of expenditures are denominated in U.S. dollars660 Financial Statements and Supplementary Data This section presents the audited financial statements for Passage Bio, Inc. for 2020 and 2019, including Balance Sheets, Statements of Operations, and Cash Flows, with an unqualified opinion from KPMG LLP Key Balance Sheet Data (as of Dec 31, 2020) | (in thousands) | Amount | | :--- | :--- | | Assets | | | Cash and cash equivalents | $ 135,002 | | Marketable securities | $ 169,815 | | Total Assets | $ 328,007 | | Liabilities & Equity | | | Total Liabilities | $ 23,293 | | Total Stockholders' Equity | $ 304,714 | Key Statement of Operations Data (Year ended Dec 31, 2020) | (in thousands) | Amount | | :--- | :--- | | Research and development | $ 81,788 | | General and administrative | $ 30,114 | | Loss from operations | $ (112,902) | | Net loss | $ (112,232) | Key Cash Flow Data (Year ended Dec 31, 2020) | (in thousands) | Amount | | :--- | :--- | | Cash used in operating activities | $ (80,520) | | Cash used in investing activities | $ (172,106) | | Cash provided by financing activities | $ 228,754 | Controls and Procedures As a newly public company, Passage Bio is not yet required to provide management's assessment or auditor attestation on internal controls over financial reporting until the 2021 Annual Report - The company is not yet required to provide a management assessment or auditor attestation on internal control over financial reporting due to its status as a newly public company773 - The first management report on internal controls will be required for the fiscal year ending December 31, 2021773 Part III Directors, Executive Compensation, Security Ownership, and Related Transactions Information for Items 10-14, covering directors, executive compensation, security ownership, and related transactions, is incorporated by reference from the company's forthcoming 2021 Proxy Statement - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and principal accountant fees is incorporated by reference from the company's forthcoming 2021 Proxy Statement780782783785787 Part IV Exhibits and Financial Statement Schedules This section lists exhibits filed with the Form 10-K, including corporate governance documents and key agreements, with financial statement schedules omitted as not applicable - Financial statement schedules required by Item 15(a) are omitted because they are not applicable or the information is already included in the financial statements790 - Key filed exhibits include corporate governance documents, material contracts such as the license agreement with the University of Pennsylvania and the manufacturing agreement with Catalent, and executive employment agreements791792