Solid Biosciences(US:SLDB)2024-03-13 11:30PART I This part provides an overview of the company's business, pipeline, intellectual property, competition, and regulatory environment, along with key risk factors, corporate information, and legal disclosures Item 1. Business Solid Biosciences develops gene therapies for rare neuromuscular and cardiac diseases, expanding its pipeline through innovation and acquisitions - Solid Biosciences is a life sciences company focused on advancing gene therapy candidates for Duchenne muscular dystrophy (SGT-003), Catecholaminergic polymorphic ventricular tachycardia (SGT-501), and other rare neuromuscular and cardiac diseases22550 - The company's corporate vision is to build an innovation platform for high-value genetic medicines, integrating internal capabilities (vector core, animal models, optimized expression cassettes, novel capsids, regulatory expertise) and external collaborations23551 - In December 2022, Solid Biosciences acquired AavantiBio, Inc., adding gene therapy programs for Friedreich's ataxia (AVB-202-TT) and BAG3-mediated dilated cardiomyopathy (AVB-401), along with related platform technologies23551 Overview Solid Biosciences develops gene therapies for rare neuromuscular and cardiac diseases, driven by patient needs and strategic acquisitions - Solid Biosciences is focused on advancing gene therapy candidates for Duchenne muscular dystrophy (SGT-003), Catecholaminergic polymorphic ventricular tachycardia (SGT-501), and other cardiac/neuromuscular diseases22550 - The company's mission is to improve the daily lives of patients with devastating neuromuscular and cardiac diseases, guided by fundamental principles including identifying meaningful therapies and collaborating with leading experts2225550553 - The acquisition of AavantiBio, Inc. in December 2022 expanded Solid's pipeline to include AVB-202-TT for Friedreich's ataxia and AVB-401 for BAG3-mediated dilated cardiomyopathy, along with related platform technologies23551 Our Pipeline The pipeline features gene transfer products for rare neuromuscular and cardiac diseases, utilizing modified AAV capsids for functional gene delivery - The company's current programs are gene transfer products designed to treat rare neuromuscular and cardiac diseases by delivering functional transgenes using viral capsids (vectors)24552 - Adeno-associated virus (AAV) capsids are used as vehicles to deliver transgenes, modified to no longer self-replicate but retain the ability to introduce new genetic material into patient cells24552 - AAV capsids have been approved for systemic delivery of transgenes and extensively studied in human clinical trials for multiple disease indications by third parties24552 Lead Neuromuscular Program The lead neuromuscular program, SGT-003 for Duchenne, cleared IND in November 2023, with Phase 1/2 trial dosing expected in Q2 2024 - Duchenne muscular dystrophy is a progressive, ultimately fatal genetic muscle-wasting disease affecting approximately 1 in 3,500 to 5,000 live male births, with no cure and limited satisfactory treatments252627 - SGT-003 is designed to address the underlying genetic cause of Duchenne by delivering a synthetic microdystrophin transgene, expressed only in skeletal, cardiac, and respiratory muscles, using a novel AAV-SLB101 capsid for enhanced muscle tropism and reduced liver uptake303334 - The IND for SGT-003 was cleared in November 2023, and the Phase 1/2 INSPIRE Duchenne trial is expected to dose its first patient in Q2 2024, with initial safety updates in mid-2024 and initial data in H2 2024. SGT-003 has Orphan Drug and Fast Track designations3738 Lead Cardiac Program The lead cardiac program, SGT-501 for CPVT, aims to prevent arrhythmias with an AAV8 capsid, with IND submission anticipated in early 2025 - CPVT is a rare, life-threatening inherited arrhythmia syndrome, primarily affecting children, characterized by stress-induced arrhythmias and high mortality (up to 50%)4041 - SGT-501 is a gene therapy candidate for CPVT-1 (RYR2 gene mutation) and CPVT-2 (CASQ2 gene mutation), using an AAV8 capsid to deliver a functional CASQ2 transgene to regulate cardiac calcium and prevent arrhythmias444546 - Preclinical data supports SGT-501's development, with an IND submission for CPVT-1 anticipated in early 2025. SGT-501 has Orphan Drug designation from the FDA and EMA48 Other Candidates The company is developing preclinical candidates for rare cardiac diseases (AVB-401, SGT-601, SGT-701) and Friedreich's ataxia - Preclinical cardiac candidates include AVB-401 for BAG3-mediated DCM (using AAVrh74 capsid), SGT-601 for TNNT2 DCM, and SGT-701 for RBM20 DCM4950 - A neuromuscular gene transfer program for Friedreich's ataxia (FA) is in preclinical development, aiming to target neurological and cardiac impairments through dual intravenous and intrathecal administration51 Platform Technologies Platform technologies, including novel capsid libraries and dual gene expression, aim to enhance muscle tropism and reduce liver biodistribution - The company is developing novel capsid libraries and dual gene expression technology to package multiple transgenes into one capsid, aiming to enhance skeletal and/or cardiac muscle tropism5253 - Preclinical data from novel capsid programs, including AAV-SLB101 (used in SGT-003), demonstrated increased muscle tropism, decreased liver biodistribution, and improved efficiency compared to AAV9535455 Manufacturing and Supply Solid Biosciences is optimizing its transient transfection manufacturing process for gene therapy candidates and relies on third-party CMOs for drug product production, aiming for commercial-scale supply - The company is developing and optimizing a transient transfection manufacturing process for SGT-003, SGT-501, and other candidates to increase yield, robustness, and scalability5758 - Solid Biosciences relies on third-party CMOs for clinical stage manufacture and plans to continue this reliance for future candidates, with a goal to establish commercial-scale supply capability5960 Intellectual Property Solid Biosciences' commercial success depends on obtaining and maintaining intellectual property protection for its gene therapy candidates and platform technologies through patents and trade secrets - The company's commercial success depends on obtaining and maintaining intellectual property protection for its pipeline programs and platform technologies, operating without infringement, and preventing others from infringing its rights61 - As of February 29, 2024, the patent portfolio includes owned and in-licensed patent families for Duchenne (microdystrophin, promoter sequences), CPVT, and modified AAV capsids62686971 - Patent prosecution is a lengthy process, and there is no guarantee that pending applications will result in issued patents or effectively prevent competitors. Patent terms are generally 20 years from filing, with potential for extensions upon FDA approval636465 Strategic Partnerships and Collaborations/Licenses Solid Biosciences has licensing agreements with various institutions and a key collaboration with Ultragenyx for Duchenne gene therapies, involving milestones and royalties - Solid Biosciences has licensing agreements with the University of Washington, University of Missouri, University of Florida, and Maugeri, involving annual fees, milestone payments, and royalties for its gene therapy candidates7275818794796801811817 - The collaboration with Ultragenyx Pharmaceutical Inc. (October 2020) granted an exclusive worldwide license for AAV8-based microdystrophin constructs for Duchenne, with Solid retaining rights for SGT-00396103741 - The Ultragenyx collaboration includes up to $255.0 million in cumulative milestone payments per product and tiered royalties. Solid has options to co-fund development for profit sharing or increased royalties9899100745746747 Competition The biotechnology industry is highly competitive, with Solid Biosciences facing larger, better-funded competitors in Duchenne (Sarepta, Pfizer) and CPVT (Armgo, Cardurion) - The biotechnology and pharmaceutical industries are highly competitive, with Solid Biosciences facing competition from larger, better-funded companies, academic institutions, and research institutions104105351352 - In Duchenne, Sarepta Therapeutics received accelerated FDA approval for ELEVIDYS in June 2023 and is seeking to broaden its indication. Pfizer and Genethon also have product candidates in Phase 3 and Phase 1/2/3 clinical development, respectively106353 - For CPVT, competitors include Armgo Pharmaceuticals, Inc. and Cardurion Pharmaceuticals, Inc., both with small molecule product candidates in Phase 2 clinical trials107353 Government regulation and product licensure Biologic product development is subject to extensive U.S., EU, and UK regulations, including preclinical testing, multi-phase clinical trials, manufacturing compliance, and post-approval oversight - Biologic products, including gene therapies, are licensed by the FDA under the PHS Act and regulated under the FD&C Act, governing testing, manufacturing, safety, efficacy, labeling, and promotion108 - The U.S. biologic product development process involves preclinical studies (GLP), IND submission, IRB/IBC approval, human clinical trials (GCPs) in phases (1, 2, 3), BLA submission, FDA review, manufacturing facility inspection (cGMP), and post-approval requirements109110111114117145 - Special regulations for gene therapy products include CBER oversight, NIH Guidelines, specific FDA guidance documents (e.g., for rare diseases, neurodegenerative diseases), and recommendations for long-term patient monitoring (up to 5-15 years for AAV capsids)133134137 - Expedited programs like Fast Track, Breakthrough Therapy, Accelerated Approval, and Regenerative Advanced Therapy designations exist but do not change approval standards or guarantee faster development/approval169171172 - Orphan Drug Designation provides 7 years of market exclusivity in the U.S. and 10 years in the EU for rare diseases, but does not guarantee approval or prevent competition from clinically superior or different products164165167207208209 - Post-approval, products are subject to ongoing regulatory requirements for manufacturing (cGMP), labeling, advertising, safety reporting, and potential REMS. Non-compliance can lead to severe penalties176177301302303 - The company is subject to federal and state data privacy laws (HIPAA, CCPA, CPRA) in the U.S. and GDPR in the EU/UK, which impose strict requirements on personal data processing and transfers, with potential for significant fines for non-compliance181182183184216217219 - Healthcare reform laws (e.g., Health Care Reform Law, IRA) and government initiatives in the U.S. and abroad aim to control pharmaceutical pricing and reimbursement, potentially impacting product demand and revenue223224229232234235239 Human Capital Solid Biosciences prioritizes attracting and retaining diverse talent, offering competitive compensation and fostering an inclusive environment, with 88 full-time employees as of December 31, 2023 - Solid Biosciences prioritizes attracting, motivating, and retaining talented and diverse employees, offering competitive compensation and benefits, and fostering an equitable, inclusive, and empowering environment241242 - As of December 31, 2023, the company employed 88 full-time employees, with 65 in research and development and 23 in general and administrative positions; 19 employees hold Ph.D. or M.D. degrees243 Corporate Information Solid Biosciences Inc. maintains its principal executive offices in Charlestown, Massachusetts, and makes its SEC filings available free of charge on its website - The company's principal executive offices are located at 500 Rutherford Avenue, Third Floor, Charlestown, MA 02129, with telephone number (617) 337-4680244 - Solid Biosciences makes its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments available free of charge on its website (www.solidbio.com) as soon as practicable after SEC filing244245 Item 1A. Risk Factors The company faces numerous risks, including acquisition integration challenges, substantial net losses, funding needs, development uncertainties for novel gene therapies, intense competition, and complex regulatory landscapes - The company's business is subject to risks including failure to realize anticipated benefits from the AavantiBio acquisition, significant net losses, and the need for additional funding19247253256 - Key risks in product development include the novel technology of gene transfer candidates, potential undesirable side effects, clinical holds, difficulties in patient enrollment, and the uncertainty of regulatory approval19273276282288295 - The company faces significant competition, manufacturing challenges, difficulties in establishing sales and marketing capabilities, and uncertainties regarding market acceptance and reimbursement for its products20351365379384391 - Intellectual property risks include reliance on in-licensed patents, challenges to patent validity, and the difficulty of protecting trade secrets globally. Regulatory risks involve evolving gene therapy requirements, potential changes in orphan drug exclusivity, and the impact of healthcare reform on pricing20317323454460494 Risks related to the Acquisition Risks from the AavantiBio acquisition include failure to realize anticipated benefits, integration difficulties, and potential stock price impact without commensurate stockholder benefits - The company may fail to realize anticipated benefits from the AavantiBio acquisition, or these benefits may take longer to achieve than expected, due to integration difficulties247 - Potential integration difficulties include combining businesses, managing expanded operations, assimilating employees, maintaining morale, and attracting/retaining key personnel247 - Stockholders may not realize benefits from the acquisition and related private placement commensurate with the ownership dilution experienced250 Risks related to our financial position and need for capital requirements Solid Biosciences has incurred significant net losses and requires substantial additional funding beyond current capital, with future profitability being uncertain - The company has incurred significant net losses since inception, with $96.0 million in 2023, $86.0 million in 2022, and $72.2 million in 2021, and an accumulated deficit of $658.8 million as of December 31, 2023253553554 - The company anticipates continued net losses and expects expenses to increase substantially due to advancing clinical trials (SGT-003), preclinical development, regulatory filings, manufacturing, and potential commercialization253254554608610 - Additional funding will be required beyond current capital, which is estimated to last into 2026. Failure to obtain necessary capital may force delays, limits, or termination of product development efforts256555557608 - The company has never generated revenue from product sales and does not expect to for the foreseeable future, with profitability dependent on successful development and commercialization of product candidates260559 Risks related to the development of our product candidates Developing novel gene therapies is high-risk, expensive, and time-consuming, with uncertainties in safety, efficacy, patient enrollment, and regulatory approval, potentially leading to delays or termination - Gene transfer candidates are based on novel technology, making development time and cost difficult to predict, with a high risk of failure and potential for unforeseen toxicity or lack of efficacy273274275 - SGT-001 previously experienced a clinical hold due to a serious adverse event, and similar events could occur in future trials for SGT-003 or other candidates, leading to delays or termination276282283 - The company has never completed a clinical trial and faces challenges in initiating and completing trials, including difficulties in patient enrollment, which could delay or prevent commercialization284295296 - Preliminary or interim clinical data may change as more data becomes available, and success in early trials is not indicative of later-stage results, posing risks for regulatory approval286287 - Regulatory approval is uncertain and may be for narrower indications or subject to significant limitations (e.g., REMS, post-marketing studies), impacting commercial value298300 - The regulatory landscape for gene therapy is constantly evolving, with new guidelines and potential changes (e.g., FDORA, EU CTR) that could lengthen review processes and increase development costs317318319321322 Risks related to the manufacturing and commercialization of our product candidates Commercialization depends on successful collaborations, overcoming manufacturing challenges, establishing sales capabilities, and securing market acceptance and reimbursement, all subject to significant risks - Collaborations, including with Ultragenyx, may not be successful, as collaborators have discretion over resource allocation and may not perform as expected, potentially delaying or terminating development360361362 - The company has limited gene therapy manufacturing experience and relies on third-party CMOs, facing risks of production problems, delays, and non-compliance with cGMP requirements365367368375376 - Establishing internal sales, distribution, marketing, and medical affairs capabilities is expensive and time-consuming, and failure to do so or secure favorable third-party agreements could prevent product revenue generation379380 - Commercial success depends on market acceptance by physicians, patients, and third-party payors, which is uncertain due to ethical, social, medical, and legal concerns about gene therapy, and potential unforeseen adverse events384387388 - Insurance coverage and reimbursement for gene therapy products are uncertain and critical for patient access. Governments outside the U.S. often impose strict price controls, potentially limiting revenue391392393394395 - International commercialization involves additional risks, including differing regulatory requirements, reduced intellectual property protection, economic instability, and compliance with foreign laws396397398 Risks related to our business operations Business operations face risks from retaining key personnel, managing growth, employee misconduct, and cybersecurity breaches, all potentially leading to liabilities and reputational harm - The company's future success is highly dependent on retaining key executive team members, consultants, and advisors, and attracting qualified scientific and technical personnel in a competitive market401402404 - Strategic plans involving workforce reductions (e.g., 35% in April 2022, 18% in December 2022) may not yield anticipated savings, could incur greater costs, and disrupt business operations and talent retention405 - Employee misconduct, including non-compliance with regulatory standards (FDA, healthcare fraud laws) or improper use of clinical trial information, could lead to significant liability and reputational harm407 - Internal computer systems and those of collaborators are vulnerable to security breaches and cyber-attacks, which could disrupt product development, lead to loss of proprietary information, and incur liability452453 Risks related to our intellectual property Intellectual property risks include reliance on in-licensed patents, challenges to validity, expensive litigation, changes in patent law, and difficulties in protecting trade secrets globally - The company heavily relies on in-licensed patents and intellectual property, which may be subject to disagreements over contract interpretation, potentially narrowing rights or increasing financial obligations454474475 - Obtaining and maintaining patent protection for candidates is uncertain; pending applications may not issue, and issued patents may be challenged, narrowed, or invalidated by competitors460461463466468470 - Third parties may initiate legal proceedings alleging infringement, misappropriation, or violation of their intellectual property rights, leading to substantial liabilities, injunctions, or cessation of commercialization482485487 - Changes in U.S. patent law (e.g., Leahy-Smith Act, Supreme Court decisions like Prometheus and Myriad) and evolving USPTO guidance could diminish patent value and impact the ability to protect product candidates500501502503504 - Failure to protect trade secrets through confidentiality agreements or independent discovery by competitors could harm the business and competitive position494495496 - Some in-licensed intellectual property from government-funded programs may be subject to 'march-in' rights, reporting requirements, and a preference for U.S. manufacturing, potentially limiting exclusive rights or ability to use non-U.S. manufacturers491 Risks related to ownership of our common stock Common stock ownership concentration, potential future share sales, stock price volatility, and anti-takeover provisions pose risks to investors and corporate control - Executive officers, directors, and principal stockholders collectively own a significant percentage of common stock, enabling them to control or significantly influence all matters submitted for stockholder approval512 - Sales of a substantial number of shares in the public market, including those from private placements and equity compensation plans, could cause the market price of common stock to drop significantly513514515516 - The company's stock price has been and is likely to remain volatile, influenced by factors such as clinical trial results, competition, regulatory developments, and general market conditions518519 - The company does not anticipate paying cash dividends in the foreseeable future, making capital appreciation the sole source of gain for investors528 - Provisions in the company's certificate of incorporation, bylaws, and Delaware law (Section 203 DGCL) could discourage or prevent mergers, acquisitions, or changes in control, and limit stockholders' ability to replace management526527 Item 1B. Unresolved Staff Comments. The company has no unresolved staff comments from the SEC Item 1C. Cybersecurity Solid Biosciences manages cybersecurity risks through safeguards, training, and board oversight, with no known material risks to business strategy or financial condition - The company has processes for assessing, identifying, and managing cybersecurity risks, including physical, procedural, and technical safeguards, employee training, and incident simulations531532 - The Audit Committee of the Board of Directors provides oversight of cybersecurity risk, receiving periodic updates from management533 - The company does not believe there are currently any known cybersecurity risks reasonably likely to materially affect its business strategy, results of operations, or financial condition533 Item 2. Properties Solid Biosciences leases its corporate headquarters in Charlestown, Massachusetts, and additional lab/office spaces in North Carolina and Florida - The company leases its corporate headquarters in Charlestown, Massachusetts, consisting of approximately 49,869 square feet of office, laboratory, R&D, and manufacturing space534 - The headquarters lease has an initial term of approximately ten years, expiring in 2032, with an option to extend for an additional five years534 - Additional smaller laboratory and office spaces are leased in North Carolina and Florida534 Item 3. Legal Proceedings As of December 31, 2023, Solid Biosciences is not aware of any material legal proceedings or claims - The company is not aware of any material legal proceedings or claims as of December 31, 2023535794 Item 4. Mine Safety Disclosures Mine Safety Disclosures are not applicable to Solid Biosciences Inc PART II This part details the company's common stock market, financial condition, results of operations, market risk, and internal controls Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Solid Biosciences' common stock trades on Nasdaq under 'SLDB', with approximately 57 holders of record as of February 13, 2024, and no equity security purchases or unregistered sales in 2023 - Solid Biosciences' common stock has traded on the Nasdaq Global Select Market under 'SLDB' since January 26, 2018539 - As of February 13, 2024, the company had approximately 57 holders of record for its common stock543 - The company did not purchase any of its registered equity securities during the reporting period and had no unregistered securities sales in 2023 not previously disclosed544545 Market Information Solid Biosciences' common stock has been listed on the Nasdaq Global Select Market since January 2018, with performance compared against key indices - Common stock has been publicly traded on the Nasdaq Global Select Market under 'SLDB' since January 26, 2018539 - A performance graph compares the company's common stock performance to The Nasdaq Composite Index and The Nasdaq Biotechnology Index from December 31, 2018, through December 31, 2023540541 Holders As of February 13, 2024, Solid Biosciences had approximately 57 holders of record for its common stock, with a higher actual number of beneficial owners - As of February 13, 2024, the company had approximately 57 holders of record of its common stock543 - The actual number of common stock holders is greater than the record holders, including beneficial owners whose shares are held in street name by brokers or other nominees543 Purchase of Equity Securities Solid Biosciences did not purchase any of its registered equity securities during the period covered by this Annual Report on Form 10-K - The company did not purchase any of its registered equity securities during the period covered by this Annual Report on Form 10-K544 Recent Sales of Unregistered Securities Solid Biosciences did not sell any unregistered securities during 2023 that had not been previously disclosed in SEC reports - The company did not sell any securities during the year ended December 31, 2023, that were not registered under the Securities Act or previously described in a Form 10-Q or Form 8-K545 Item 6. Reserved This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Solid Biosciences' financial condition and results, highlighting substantial operating losses, funding needs, R&D expenses, and critical accounting policies - Solid Biosciences is a life sciences company focused on advancing gene therapy candidates for rare neuromuscular and cardiac diseases, including SGT-003 for Duchenne and SGT-501 for CPVT550 - The company has generated substantial operating losses since inception, with net losses of $96.0 million in 2023, $86.0 million in 2022, and $72.2 million in 2021, and an accumulated deficit of $658.8 million as of December 31, 2023553554 - The company expects to incur significant expenses and operating losses for the foreseeable future, requiring substantial additional funding to support continuing operations beyond 2026555557608 Overview Solid Biosciences, a gene therapy company for rare neuromuscular and cardiac diseases, incurred significant losses but expects current capital to fund operations into 2026 - Solid Biosciences is a life sciences company focused on advancing gene therapy candidates for rare neuromuscular and cardiac diseases, including SGT-003 for Duchenne and SGT-501 for CPVT550 - The company completed the acquisition of AavantiBio, Inc. in December 2022, adding gene therapy programs for Friedreich's ataxia and BAG3-mediated dilated cardiomyopathy551 Net Losses and Accumulated Deficit | Metric | 2023 (in millions) | 2022 (in millions) | 2021 (in millions) | | :----- | :----------------- | :----------------- | :----------------- | | Net Loss | $(96.0) | $(86.0) | $(72.2) | | Accumulated Deficit (as of Dec 31) | $(658.8) | N/A | N/A | - As of December 31, 2023, cash, cash equivalents, and available-for-sale securities totaled $123.6 million. With net proceeds of approximately $104.0 million from a January 2024 private placement, the company expects to fund operations into 2026557 Financial operations overview The company's financial operations are characterized by a lack of product revenue and significant operating expenses, primarily in R&D and G&A, with personnel costs as a major component - The company has not generated any product revenue to date and does not expect to for the foreseeable future559 - Operating expenses are classified into research and development, and general and administrative, with personnel costs (salaries, benefits, bonuses, equity-based compensation) being a significant component of both560 Research and development expenses R&D expenses, central to Solid Biosciences, decreased slightly in 2023 to $76.6 million due to reduced SGT-001 costs, offset by increases for other programs - Research and development expenses primarily include costs for discovery efforts, and the development of SGT-003 and other candidates561 - Key components of R&D expenses are third-party agreements (CROs, CMOs), personnel costs, laboratory supplies, regulatory approval costs, and intellectual property license expenses561565 Research and Development Expenses by Program | Program | 2023 (in thousands) | 2022 (in thousands) | Change (2023 vs 2022) | | :-------- | :------------------ | :------------------ | :-------------------- | | SGT-001 | $3,432 | $24,844 | $(21,412) (↓86%) | | SGT-003 | $20,856 | $9,995 | $10,861 (↑109%) | | SGT-501 | $3,200 | $- | $3,200 (↑100%) | | Other development programs | $7,439 | $3,450 | $3,989 (↑116%) | | Unallocated R&D expenses | $41,636 | $40,131 | $1,505 (↑4%) | | Total R&D expenses | $76,563 | $78,420 | $(1,857) (↓2%) | General and administrative expenses G&A expenses decreased to $27.8 million in 2023 due to lower legal fees and insurance, partially offset by increased personnel, IT, recruiting, and facilities costs - General and administrative expenses primarily consist of salaries, benefits, and equity-based compensation for executive, finance, business development, and administrative personnel567 - Other G&A costs include legal fees, professional fees (accounting, auditing, tax, consulting), insurance, travel, acquisition costs, and facility-related expenses567 - General and administrative expenses decreased by $1.1 million from $28.9 million in 2022 to $27.8 million in 2023, primarily due to lower legal fees and insurance premiums, partially offset by increases in personnel, IT, recruiting, and facilities costs590 Restructuring charges Restructuring charges significantly decreased to $(0.1) million in 2023 from $7.2 million in 2022, primarily due to severance from workforce reductions Restructuring Charges | Metric | 2023 (in millions) | 2022 (in millions) | | :----- | :----------------- | :----------------- | | Restructuring Charges | $(0.1) | $7.2 | - Restructuring charges in 2022 and 2023 were primarily due to severance and employee-related costs from workforce reductions (approximately 35% in April 2022 and 18% in December 2022)569591 Other income (expense), net Total other income, net, decreased to $8.2 million in 2023 from $20.5 million in 2022, mainly due to a non-recurring gain on acquisition in 2022 - Other income (expense), net, consists of interest income from cash, cash equivalents, and available-for-sale securities, and amortization/accretion of investment premiums/discounts570 Other Income (Expense), Net | Metric | 2023 (in millions) | 2022 (in millions) | | :----- | :----------------- | :----------------- | | Total Other Income, Net | $8.2 | $20.5 | | Interest Income, Net | $7.1 | $2.6 | | Gain on Acquisition | $- | $18.2 | - The decrease in total other income in 2023 was primarily due to the absence of an $18.2 million gain on acquisition recorded in 2022, partially offset by a $4.5 million increase in interest income592 Income taxes The company uses an asset and liability approach for income taxes, recognizing deferred tax assets and liabilities with a valuation allowance for estimated realizable value - The company accounts for income taxes using an asset and liability approach, recognizing deferred tax assets and liabilities for future tax consequences571 - A valuation allowance is established to reduce deferred tax assets to their estimated realizable value571 - Uncertainty in income taxes is assessed using a two-step process: evaluating the likelihood of a tax position being sustained and determining the largest benefit with over 50% likelihood of realization572 Critical accounting policies and use of estimates Financial statement preparation requires significant management estimates and assumptions, particularly for revenue recognition, R&D expenses, and equity-based compensation - Preparation of consolidated financial statements requires significant estimates and assumptions affecting reported asset/liability amounts and expense disclosures573 - Critical accounting policies involve estimates related to revenue recognition, research and development expenses, and equity-based compensation574 - Estimates are based on historical experience, known trends, and events, and are evaluated ongoingly, but actual results may differ573 Revenue recognition Revenue is recognized when control of promised goods or services transfers to the customer, following a five-step model requiring significant judgment for performance obligations and variable consideration - Revenue is recognized when the customer obtains control of promised goods or services, in an amount reflecting expected consideration, following a five-step model under ASC 606575576709 - Significant judgment is required to determine distinct performance obligations, measure transaction price (including variable consideration like milestones), and allocate price to obligations577578710711 - For licenses, revenue is recognized when the license is transferred if distinct. For research and development services, revenue is generally recognized over time using a cost-to-cost input method579581715716 Accrued research and development expenses Accrued R&D expenses are estimated based on services received from third-party providers, with estimates subject to adjustment but historically not materially different from actual costs - Accrued research and development expenses are estimated by reviewing open contracts, communicating with personnel, and estimating service levels and costs for services not yet invoiced582 - Estimates are based on services received and efforts expended under contracts with CROs and CMOs, considering the time period and level of effort for performance582 - Adjustments are made if actual timing or effort varies from estimates, though historical accrual estimates have not been materially different from actual costs582 Equity-based compensation Equity-based compensation is measured at fair value on the grant date and expensed over the vesting period, totaling $7.6 million in 2023 - Equity-based compensation for employees, directors, and non-employees is measured at fair value on the grant date and expensed over the vesting period, generally using the straight-line method583726 - Stock option fair values are estimated using the Black-Scholes option-pricing model, with expected volatility based on publicly traded peer companies and a 'simplified' method for expected term585727 Equity-Based Compensation Expense | Expense Category | 2023 (in thousands) | 2022 (in thousands) | 2021 (in thousands) | | :--------------- | :------------------ | :------------------ | :------------------ | | Research and development | $3,094 | $2,756 | $6,289 | | General and administrative | $4,531 | $4,781 | $7,084 | | Total | $7,625 | $7,537 | $13,373 | Results of operations Solid Biosciences reported a net loss of $96.0 million in 2023, an increase from $86.0 million in 2022, driven by reduced collaboration revenue and a non-recurring gain Consolidated Statements of Operations Summary | Metric | 2023 (in thousands) | 2022 (in thousands) | Change (2023 vs 2022) | | :-------------------------- | :------------------ | :------------------ | :-------------------- | | Collaboration revenue - related party | $0 | $8,094 | $(8,094) (↓100%) | | Total operating expenses | $104,252 | $114,546 | $(10,294) (↓9%) | | Loss from operations | $(104,252) | $(106,452) | $2,200 (↑2%) | | Total other income, net | $8,237 | $20,471 | $(12,234) (↓60%) | | Net loss | $(96,015) | $(85,981) | $(10,034) (↓12%) | - Collaboration revenue decreased by $8.1 million (100%) in 2023 due to the completion of research and development services under the Ultragenyx Collaboration Agreement in Q2 2022587 - Other income, net, decreased by $12.2 million (60%) in 2023, primarily due to the absence of an $18.2 million gain on acquisition recorded in 2022, partially offset by a $4.5 million increase in interest income592 Liquidity and capital resources Solid Biosciences financed operations through equity sales, raising $546.8 million net proceeds through 2023, with $123.6 million in cash and securities, supplemented by a January 2024 private placement - The company has financed operations primarily through sales of redeemable preferred units, member units, common stock, and prefunded warrants, raising an aggregate of $546.8 million net proceeds through December 31, 2023594 - As of December 31, 2023, cash, cash equivalents, and available-for-sale securities totaled $123.6 million (excluding $1.8 million restricted cash), with no outstanding debt598 - In January 2024, the company completed a private placement, raising approximately $104.0 million in net proceeds from the sale of common stock and pre-funded warrants599834 Cash Flow Summary | Activity | 2023 (in thousands) | 2022 (in thousands) | | :-------------------------- | :------------------ | :------------------ | | Net cash used in operating activities | $(94,180) | $(97,977) | | Net cash provided by investing activities | $9,689 | $59,157 | | Net cash provided by financing activities | $3,122 | $74,831 | Funding requirements Solid Biosciences anticipates substantial expense increases for development and commercialization, requiring significant additional funds beyond 2026, with no committed external sources - Expenses are expected to increase substantially due to advancing clinical development of SGT-003, initiating trials for other candidates, preclinical research, regulatory interactions, and establishing commercial infrastructure608610 - Current cash, cash equivalents, and available-for-sale securities, combined with January 2024 private placement proceeds, are projected to fund operating expenses and capital requirements into 2026608 - The company will need substantial additional funds beyond 2026, with no committed external sources. Failure to raise capital could force delays, reductions, or termination of development programs or commercialization efforts608612613614 Contractual obligations and commitments Solid Biosciences has lease obligations for office and lab space and potential future milestone payments and royalties under licensing agreements, totaling $12.0 million in potential milestones as of December 31, 2023 - The company has lease obligations for office and lab space in Massachusetts, North Carolina, and Florida615 - Under third-party licensing agreements, the company has agreed to make milestone payments and pay royalties based on specified milestones616 - As of December 31, 2023, potential future milestone payments under these agreements totaled an aggregate of $12.0 million, none of which were assessed to be probable819 Recently issued accounting pronouncements The company reviewed recently issued accounting standards and determined they will not materially impact its consolidated financial statements or operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Solid Biosciences is exposed to interest rate risk from short-term investments, but a 10% change would not materially impact its financial position; inflation has not been material - The company is exposed to market risk from changes in interest rates, primarily affecting interest income from cash equivalents (money market accounts) and investments (treasury bills)619 - Due to the short-term nature of its investment portfolio (maturities less than one year), an immediate 10% change in market interest rates would not materially impact the fair value of the portfolio or financial results619 - Inflation generally affects the company by increasing labor, research, manufacturing, and development costs. While not material in the last three years, future inflation could adversely affect operations620 Item 8. Financial Statements and Supplementary Data This item incorporates by reference the company's audited consolidated financial statements and supplementary data, included at the end of this Annual Report on Form 10-K - The required financial statements and supplementary data are included at the end of this Annual Report on Form 10-K, beginning on page F-1622 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure This item states that there have been no changes in or disagreements with accountants on accounting and financial disclosure matters - There are no changes in and disagreements with accountants on accounting and financial disclosure623 Item 9A. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with no independent auditor attestation required - As of December 31, 2023, management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at the reasonable assurance level624626 - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023, based on the COSO framework627628 - As a non-accelerated and smaller reporting company, an attestation report on internal control over financial reporting from the independent registered public accounting firm is not required629 Evaluation of Disclosure Controls and Procedures Management assessed the effectiveness of disclosure controls and procedures as of December 31, 2023, concluding they were effective at a reasonable assurance level - Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of December 31, 2023624 - Disclosure controls and procedures are designed to ensure timely recording, processing, summarizing, and reporting of information required by the Exchange Act624 - Management concluded that disclosure controls and procedures were effective at the reasonable assurance level, recognizing inherent limitations of control systems625626 Management's Annual Report on Internal Control over Financial Reporting Management concluded that internal control over financial reporting was effective as of December 31, 2023, based on the COSO framework, with no independent auditor attestation required - Management is responsible for establishing and maintaining adequate internal control over financial reporting, designed to provide reasonable assurance regarding financial reporting reliability627 - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023, based on the COSO framework628 - As a non-accelerated filer and smaller reporting company, an attestation report from the independent registered public accounting firm on internal control over financial reporting is not required629 Changes in Internal Control over Financial Reporting There have been no material changes in Solid Biosciences' internal control over financial reporting during the three months ended December 31, 2023 - No changes in internal control over financial reporting occurred during the three months ended December 31, 2023, that materially affected or are reasonably likely to materially affect it630 Item 9B. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q4 2023 - None of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fourth quarter of 2023631 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to Solid Biosciences Inc PART III This part incorporates by reference information on directors, executive officers, compensation, security ownership, related transactions, and principal accountant fees Item 10. Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Annual Meeting of Stockholders proxy statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders635 - The company has adopted a Code of Business Conduct and Ethics, available on its website, which applies to directors, executive officers, and employees636 Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information on executive compensation is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders637 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information on security ownership of beneficial owners and management is incorporated by reference from the 2024 Annual Meeting of Stockholders proxy statement - Information on security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders638 Item 13. Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2024 Annual Meeting of Stockholders proxy statement - Information on certain relationships and related transactions, and director independence, is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders639 Item 14. Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders - Information on principal accountant fees and services is incorporated by reference from the definitive proxy statement for the 2024 Annual Meeting of Stockholders640 PART IV This part details the exhibits and financial statement schedules included in the Annual Report on Form 10-K Item 15. Exhibits and Financial Statement Schedules This section lists the financial statements and supplementary data, along with a comprehensive list of exhibits filed as part of the Annual Report on Form 10-K - The item includes a list of financial statements (Consolidated Balance Sheets, Statements of Operations, Comprehensive Loss, Stockholders' Equity, Cash Flows, and Notes) and supplementary data643 - All financial statement schedules have been omitted because they are not applicable, not required, or the information is shown in the financial statements or notes643 - A comprehensive list of exhibits filed as part of this Annual Report on Form 10-K is provided, including agreements, certificates, and plans644646647648 Item 16. Form 10-K Summary This item states that a Form 10-K Summary is not applicable SIGNATURES This section contains the required signatures for the Annual Report on Form 10-K from key executives and directors, all dated March 13, 2024 - The report is signed by the President, Chief Executive Officer and Director (Alexander Cumbo), Chief Financial Officer (Kevin Tan), Chairman of the Board (Ian F. Smith), and other Directors656 - All signatures are dated March 13, 2024656 CONSOLIDATED FINANCIAL STATEMENTS This section presents the company's audited consolidated financial statements, including the balance sheets, statements of operations, comprehensive loss, stockholders' equity, cash flows, and detailed notes Report of Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP issued an unqualified opinion on Solid Biosciences' consolidated financial statements, noting high auditor effort for external R&D costs - PricewaterhouseCoopers LLP issued an unqualified opinion on the consolidated financial statements for the period ended December 31, 2023 and 2022660 - The audit was conducted in accordance with PCAOB standards, but an audit of internal control over financial reporting was not performed661662 - A critical audit matter identified was the high degree of auditor effort in performing procedures related to the company's external research and development costs664666 Consolidated Balance Sheets Total assets decreased from $260.3 million in 2022 to $164.9 million in 2023, primarily due to reductions in cash and available-for-sale securities Consolidated Balance Sheet Summary (in thousands) | Metric | December 31, 2023 | December 31, 2022 | | :-------------------------- | :------------------ | :------------------ | | Assets: | | | | Cash and cash equivalents | $74,015 | $155,384 | | Available-for-sale securities | $49,625 | $58,338 | | Total current assets | $129,734 | $219,638 | | Total assets | $164,939 | $260,252 | | Liabilities: | | | | Total current lia