Passage BIO(US:PASG)2022-08-04 11:15PART I. FINANCIAL INFORMATION Interim Financial Statements (Unaudited) Unaudited interim financial statements for June 30, 2022, reveal a net loss, accumulated deficit, and decreased total assets Balance Sheets Balance sheets as of June 30, 2022, show decreased total assets to $299.4 million and increased total liabilities to $51.4 million Balance Sheet Summary (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $91,129 | $128,965 | | Marketable securities | $148,121 | $186,808 | | Total Assets | $299,416 | $355,076 | | Total current liabilities | $27,133 | $29,498 | | Total Liabilities | $51,370 | $36,419 | | Total Stockholders' Equity | $248,046 | $318,657 | Statements of Operations and Comprehensive Loss Statements of operations report a net loss of $39.5 million for Q2 2022 and $82.4 million for H1 2022, primarily due to lower R&D expenses Operating Results (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $26,821 | $33,112 | $53,034 | $58,082 | | General and administrative | $12,991 | $15,422 | $28,090 | $27,886 | | Loss from operations | $(39,812) | $(48,534) | $(82,624) | $(87,468) | | Net loss | $(39,542) | $(48,435) | $(82,353) | $(87,317) | | Net loss per share | $(0.73) | $(0.90) | $(1.52) | $(1.66) | Statements of Stockholders' Equity Stockholders' equity decreased to $248.0 million by June 30, 2022, primarily due to the $82.4 million net loss - The primary driver for the reduction in stockholders' equity during the first six months of 2022 was the net loss of $82.4 million2223 Statements of Cash Flows Cash flows for H1 2022 show $70.8 million net cash used in operations, leading to a $37.8 million net decrease in cash Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(70,794) | $(55,048) | | Net cash provided by (used in) investing activities | $33,315 | $(30,654) | | Net cash provided by financing activities | $(357) | $166,157 | | Net increase (decrease) in cash | $(37,836) | $80,455 | | Cash and cash equivalents at end of period | $91,129 | $215,457 | Notes to Unaudited Interim Financial Statements Notes detail the company's CNS therapy focus, $438.6 million accumulated deficit, sufficient cash for 12 months, and a patent claim - The company is a clinical-stage genetic medicines company focused on developing therapies for CNS disorders through a strategic research collaboration with the University of Pennsylvania's Gene Therapy Program (GTP)31 - As of June 30, 2022, the company had an accumulated deficit of $438.6 million and expects existing cash to fund operations for at least the next twelve months3236 - The company has an annual funding commitment of $5.0 million to Penn and an annual minimum commitment of $10.6 million to Catalent for manufacturing7891 - REGENXBIO Inc. claims the company's use of the AAVhu68 capsid infringes its licensed patents, a claim the company believes it has valid defenses against94 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the CNS gene therapy pipeline, a reduced net loss of $82.4 million for H1 2022, and a cash runway into Q2 2024 - The company is advancing a portfolio of gene therapies for CNS disorders, with three programs in clinical trials: PBGM01, PBFT02, and PBKR03113115119123 - In March 2022, the company implemented a 13% workforce reduction and prioritized R&D programs to extend its cash runway142 Comparison of Operating Results (in thousands) | Period | Research & Development Expense | General & Administrative Expense | Net Loss | | :--- | :--- | :--- | :--- | | Q2 2022 | $26,821 | $12,991 | $(39,542) | | Q2 2021 | $33,112 | $15,422 | $(48,435) | | H1 2022 | $53,034 | $28,090 | $(82,353) | | H1 2021 | $58,082 | $27,886 | $(87,317) | - As of June 30, 2022, the company had $239.3 million in cash, cash equivalents, and marketable securities, expected to fund operations into the second quarter of 2024143177 Quantitative and Qualitative Disclosures About Market Risk The company states this item is not applicable, indicating no significant exposure to market risks requiring disclosure - This section is not applicable to the company for the reporting period197 Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting - Disclosure controls and procedures were effective as of June 30, 2022, as concluded by the Interim Principal Executive Officer and Principal Financial and Accounting Officer198 - No material changes occurred in internal control over financial reporting during the quarter ended June 30, 2022199 PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceedings that would materially adversely affect its business - The company is not presently a party to any legal proceedings that would materially and adversely affect its business202 Risk Factors Key risks include operating losses, funding needs, clinical trial dependence, third-party reliance, manufacturing delays, competition, and intellectual property claims - The company has a history of operating losses, with a $438.6 million accumulated deficit as of June 30, 2022, necessitating additional funding208214 - The business depends on advancing product candidates through a lengthy, expensive clinical development process with uncertain outcomes, especially for novel gene therapies228234249 - The company relies exclusively on its collaboration with the University of Pennsylvania for preclinical R&D and on third-party manufacturers like Catalent for clinical supply281321 - The company faces a patent infringement claim from Regenxbio Inc. regarding its AAVhu68 capsid, potentially requiring a license or halting development if successful377378 Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the reporting period - None518 Defaults Upon Senior Securities The company reports no defaults upon senior securities - None520 Mine Safety Disclosures The company states that this item is not applicable - Not applicable522 Other Information The company reports no other information required for disclosure under this item - None523 Exhibits This section provides an index of exhibits filed with the Form 10-Q, including executive agreements and certifications - The report includes an index of exhibits filed, such as executive certifications and amendments to key agreements525526