Solid Biosciences(SLDB) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents Solid Biosciences Inc.'s unaudited condensed consolidated financial statements, highlighting a decrease in cash, increased net loss, and significant cash usage for the periods ended September 30, 2023 - The company is a life sciences firm focused on gene therapies for neuromuscular and cardiac diseases, including SGT-003 for Duchenne muscular dystrophy, with its pipeline expanded through the acquisition of AavantiBio in December 2022[22][23] - The company believes its existing cash, cash equivalents, and available-for-sale securities of $142.9 million (as of Sept 30, 2023) are sufficient to fund operations into 2025, though it acknowledges the need for future financing[30][89] Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $49,037 | $155,384 | | Available-for-sale securities | $93,847 | $58,338 | | Total current assets | $148,346 | $219,638 | | Total assets | $184,728 | $260,252 | | Liabilities & Equity | | | | Total liabilities | $40,367 | $48,586 | | Total stockholders' equity | $144,361 | $211,666 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $0 | $0 | $8,094 | | Research and development | $16,702 | $14,005 | $61,110 | $57,130 | | General and administrative | $6,412 | $7,127 | $20,940 | $21,330 | | Loss from operations | $(23,114) | $(21,132) | $(81,987) | $(71,886) | | Net loss | $(20,980) | $(20,410) | $(75,679) | $(70,830) | | Net loss per share | $(1.05) | $(2.71) | $(3.83) | $(9.42) | Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(73,357) | $(63,497) | | Net cash used in investing activities | $(35,607) | $(6,943) | | Net cash provided by financing activities | $2,617 | $94 | | Net decrease in cash | $(106,347) | $(70,346) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's gene therapy pipeline, Q3 and YTD 2023 financial results, noting increased R&D expenses, decreased G&A, and liquidity sufficient into 2025 - The company is focused on advancing a diverse pipeline of gene therapy candidates for rare neuromuscular and cardiac diseases, including SGT-003 for Duchenne, SGT-501 for CPVT, AVB-401 for BAG3-mediated dilated cardiomyopathy, and AVB-202-TT for Friedreich's ataxia[80] - As of September 30, 2023, the company had cash, cash equivalents, and available-for-sale securities of $142.9 million, which is expected to fund operating expenses and capital expenditure requirements into 2025[89][121] Comparison of Operating Results (in thousands) | Metric | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Collaboration Revenue | $0 | $0 | $0 | $8,094 | | R&D Expenses | $16,702 | $14,005 | $61,110 | $57,130 | | G&A Expenses | $6,412 | $7,127 | $20,940 | $21,330 | | Net Loss | $(20,980) | $(20,410) | $(75,679) | $(70,830) | - The increase in R&D expenses for Q3 2023 was primarily due to a $1.5 million increase in costs for SGT-003 and a $0.8 million increase for other development programs, offset by a $1.3 million decrease in costs for SGT-001 as development of SGT-003 was prioritized[107] - For the nine months ended September 30, 2023, R&D expenses increased by $4.0 million, driven by a $13.0 million increase in SGT-003 costs and a $4.5 million increase in other programs, offset by a $16.5 million decrease in SGT-001 costs[114] - Net cash used in operating activities increased to $73.4 million for the first nine months of 2023 from $63.5 million in the same period of 2022, primarily due to a higher net loss and changes in operating assets and liabilities[122][123][124] Quantitative and Qualitative Disclosures About Market Risk The company's market risk primarily stems from interest rate changes affecting its short-term investment portfolio, with a 10% rate shift deemed immaterial - The company is exposed to market risk from changes in interest rates, primarily affecting interest income from its cash equivalents and available-for-sale securities (treasury bills and corporate bonds)[138] - Due to the short-term nature of its investment portfolio (contractual maturities of less than one year), the company states that an immediate 10% change in market interest rates would not materially impact the fair market value of its portfolio or its financial results[138] Controls and Procedures Management concluded disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during Q3 2023 - As of September 30, 2023, the company's President and Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective at the reasonable assurance level[139] - There were no changes in internal control over financial reporting during the three months ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[140] PART II. OTHER INFORMATION Legal Proceedings The company is not aware of any material legal proceedings or claims as of September 30, 2023 - The company states there are no material legal proceedings as of the reporting date[142] Risk Factors This section details risks including AavantiBio integration, significant net losses, future funding needs, gene therapy development challenges, and reliance on third-party manufacturing and IP - The company may fail to realize the anticipated benefits of its acquisition of AavantiBio and may encounter significant integration difficulties[145][146] - The company has a history of significant net losses ($75.7 million for the nine months ended Sep 30, 2023) and expects to continue incurring losses, requiring additional funding which may not be available[145][152] - The company's gene transfer candidates are based on novel technology, making it difficult to predict development time, cost, and regulatory approval; past clinical trials have been placed on hold by the FDA, and future trials may face similar issues or undesirable side effects[145][174][177] - The company has limited gene therapy manufacturing experience and relies on third-party manufacturers, which poses risks of production problems, delays, and unsatisfactory performance[146][256][265] - The business heavily relies on in-licensed patents and intellectual property; failure to maintain these licenses or protect its IP could allow competitors to develop similar products and adversely affect commercialization[146][343][349] - The company faces significant competition from larger, better-funded companies, including Sarepta Therapeutics, whose gene therapy ELEVIDYS received FDA accelerated approval in June 2023 for a similar patient population[242] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered equity securities were sold during the three months ended September 30, 2023 - No unregistered securities were sold during the three months ended September 30, 2023[424] Exhibits Exhibits include Gabriel Brooks' employment agreement and required CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906 - The exhibits filed with this report include an employment agreement for Gabriel Brooks and required CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906[426]