Sangamo Therapeutics Inc.
11/06/2025 | Press release | Distributed by Public on 11/06/2025 07:07
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains trend analysis, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements include, without limitation, statements containing the words "anticipates," "believes," "continues," "could," "estimates," "expects," "intends," "may," "plans," "seeks," "should," "will," and other words of similar import or the negative of those terms or expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties, estimates and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results could differ materially from those set forth in such forward-looking statements as a result of, but not limited to, the "Risk Factors" described in Part I, Item 1A our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission on March 17, 2025, or the 2024 Annual Report, as supplemented by the risks described under "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q. All forward-looking statements about our future plans and expectations are subject to our ability to secure adequate additional funding. You should also read the following discussion and analysis in conjunction with our Condensed Consolidated Financial Statements and accompanying notes included in this Quarterly Report and the Consolidated Financial Statements and accompanying notes thereto included in our 2024 Annual Report.
Overview
We are a genomic medicine company committed to translating ground-breaking science into medicines that transform the lives of patients and families afflicted with serious neurological diseases. We believe our zinc finger epigenetic regulators are ideally suited to potentially address devastating neurology disorders and our capsid engineering platform has demonstrated the ability to expand delivery beyond currently available intrathecal delivery capsids, including in the central nervous system, or CNS, in preclinical studies.
Recent Business Highlights
Corporate Updates
Pfizer Exercise of Buy Out Option for License to Certain Zinc Finger Modified Cell Lines
In October 2025, we received $6.0 million from Pfizer Inc., or Pfizer, upon Pfizer's exercise of a buyout option for a license to use certain zinc finger modified cell lines, pursuant to a 2008 license agreement between Pfizer and Sangamo, which was amended in 2023.
Nasdaq Extension Notice
On October 29, 2025, we received a letter from The Nasdaq Stock Market LLC, or the Extension Notice, advising that the Company has been granted a 180-day extension, or until April 27, 2026, to regain compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, or the Minimum Bid Price Requirement. If at any time prior to April 27, 2026, the bid price of our common stock closes at $1.00 per share or more for a minimum of 10 consecutive trading days, we will regain compliance with the Minimum Bid Price Requirement. The Extension Notice has no immediate effect on the listing of our common stock on The Nasdaq Capital Market and does not affect our reporting requirements with the Securities and Exchange Commission.
Financial Position - Going Concern
Based on our current operating plan, we estimate that our cash and cash equivalents as of September 30, 2025, together with the $6.0 million license fee we received from Pfizer in October 2025, and $9.1 million generated through our at-the-market offering program since September 30, 2025, will be sufficient to meet our liquidity requirements only into the first quarter of 2026. Our history of significant losses, negative cash flows from operations, limited liquidity resources currently on hand and dependence on our ability to obtain substantial additional financing to fund our operations have resulted in management's assessment that there is substantial doubt about our ability to continue as a going concern for at least the next 12 months from the date the financial statements included in this Quarterly Report are issued. Our ability to continue to operate as a going concern is dependent upon our ability to raise substantial additional capital to fund our operations and support our research and development endeavors, including to progress our preclinical and clinical programs as described in our 2024 Annual Report and in this Quarterly Report. We have been actively seeking, and continue to actively seek, additional capital, including through additional strategic collaborations and other direct investments in our programs, public or private equity or debt financing, and other sources. The substantial additional capital needed to support our operations and to continue to operate as a going concern may not be available on acceptable terms or at all. In particular, the perception of our ability to continue to operate as a going concern has
made and will continue to make it more difficult to obtain financing for the continuation of our operations, particularly in light of currently challenging macroeconomic and market conditions. We may be unable to attract new investments as a result of the speculative nature of our newly reprioritized core neurology preclinical programs and the absence of partners to progress our more advanced clinical programs. In particular, we are engaged in business development discussions with potential counterparties concerning a commercialization agreement for our Fabry disease program, but have been unsuccessful in consummating any such transaction to date. There can be no assurance that we will be able to secure a commercialization partner for our Fabry disease program in a timely manner, on acceptable terms, or at all, and if the Company is unable to execute such an agreement in the near term, our ability to raise additional capital needed to support our operations will be substantially impaired. If adequate funds are not available to us on a timely basis, or at all, we will be required to take significant additional actions to address our liquidity needs, including substantial additional cost reduction measures such as further reducing operating expenses and further delaying, reducing the scope of, altering or discontinuing entirely our research and development activities, which would have a material adverse effect on our business and prospects, or we may be required to cease operations entirely, liquidate all or a portion of our assets, and/or seek protection under the U.S. Bankruptcy Code, and you may lose all or part of your investment. We have explored, and will continue to explore, whether filing for bankruptcy protection is in the best interest of our Company and our stakeholders.
Core Preclinical Neurology Programs and Technology
Our neurology development is focused on two innovative areas: (i) development of epigenetic regulation therapies to treat serious neurological diseases and (ii) development of novel engineered adeno-associated virus, or AAV, capsids to deliver our therapies to the intended neurological targets. Initial indications for our wholly owned preclinical programs include small fiber neuropathy, or SFN, a type of chronic neuropathic pain, and prion disease. As we estimate that our cash and cash equivalents as of September 30, 2025, together with the $6.0 million license fee we received from Pfizer in October 2025, and $9.1 million generated through our at-the-market offering program since September 30, 2025, will be sufficient to meet our liquidity requirements only into the first quarter of 2026, our plans and expectations discussed below are subject to our ability to secure adequate additional funding, which we may be unable to do in a timely manner or at all.
Chronic Neuropathic Pain - ST-503
•Patient enrollment and recruitment have now commenced following the activation of the first two clinical sites for the Phase 1/2 STAND study evaluating ST-503, an investigational epigenetic regulator for the treatment of intractable pain due to SFN a type of chronic neuropathic pain.
•In September, we presented updated nonclinical data at the 9thInternational Congress on Neuropathic Pain in Berlin, Germany, which demonstrated the durability, potency and selectivity of, and favorable safety profile for, ST-503 in nonhuman primates.
•We expect to dose the first patient in the STAND study in the coming months.
Prion Disease - ST-506
•Clinical Trial Application, or CTA, enabling activities continue to advance for ST-506, an investigational epigenetic regulator for the treatment of prion disease, leveraging STAC-BBB, our novel proprietary neurotropic AAV capsid.
•We had a productive interaction with the Medicines and Healthcare products Regulatory Agency, or MHRA, including alignment on the Chemistry, Manufacturing and Controls, or CMC, strategy.
•In November, we presented updated preclinical data at the Prion 2025 Conference, in Rio de Janeiro, Brazil, which demonstrated a profound survival extension observed in disease mouse models and widespread brain delivery and prion reduction in nonhuman primates, or NHPs, treated with ST-506.
•A CTA submission for ST-506 is expected as early as mid-2026.
Clinical Programs
Fabry Disease
•In September, we presented detailed clinical data from the registrational Phase 1/2 STAAR study evaluating isaralgagene civaparvovec, or ST-920, a wholly owned investigational gene therapy for the treatment of adults with Fabry disease, at the International Congress of Inborn Errors of Metabolism 2025, or ICIEM2025, in Kyoto, Japan.
•A positive mean annualized estimated glomerular filtration rate, or eGFR, slope of 1.965 mL/min/1.73m2/year (95% confidence interval, or CI: -0.153, 4.083) at 52-weeks was observed across all 32 dosed patients.
•Furthermore, a mean annualized eGFR slope at Week 104 of 1.747 mL/min/1.73m2/year (95% CI: -0.106, 3.601) was observed for the 19 patients who had achieved 104-weeks of follow-up.
•Supportive mean annualized eGFR slopes were also observed across a variety of patient subgroups, including gender, baseline Enzyme Replacement Therapy, or ERT, status, Fabry disease type and baseline eGFR, showing consistency in effect across Fabry patients in the study.
•Stable cardiac function was observed, including left ventricular mass, or LVM, left ventricular mass index, or LVMI, left ventricular myocardial global longitudinal strain, or GLS, T1 and T2 mapping, end-diastolic and end-systolic volumes that remained stable over at least one year.
•Durability of effect was demonstrated in the study with elevated expression of alpha-galactosidase A, or α-Gal A, activity maintained for up to 4.5 years for the longest treated patient.
•All 18 patients who began the study on ERT had been withdrawn from ERT and remained off ERT as of the data cutoff date. Plasma lyso-Gb3 levels in these patients remained generally stable following ERT withdrawal. Since the data cutoff date, a physician has decided to resume ERT for one of their treated Fabry patients who had withdrawn from ERT. This patient, who received isaralgagene civaparvovec more than two and a half years ago, maintained supraphysiological levels of a-Gal A activity, and their lyso-Gb3 levels were generally stable as of the data cutoff date.
•Of the 10 patients who had measurable titers of total antibodies, or Tab, or neutralizing antibodies, or Nab, against α-Gal A associated with ERT at baseline, TAb or NAb titers decreased markedly in nine patients and became undetectable in eight following treatment.
•Improvements in disease severity were reported in the Fabry Outcome Survey adaptation of the Mainz Severity Score Index, or FOS-MSSI, age-adjusted score, with 22 patients showing improvements in their total MSSI score at 12 months and nine patients improving their FOS-MSSI disease category at the last assessment.
•Statistically and clinically significant improvements in the short form-36, or SF-36, quality of life scores were also observed, alongside statistically significant improvements in the gastrointestinal symptom rating scale, or GSRS, compared to baseline.
•Isaralgagene civaparvovec demonstrated a favorable safety and tolerability profile in the study, without the requirement for preconditioning.
•In October, we held a Type B meeting with the U.S. Food and Drug Administration, or FDA, to discuss the proposed efficacy and safety data package ahead of the planned Biologics License Application, or BLA, submission for isaralgagene civaparvovec. In the meeting minutes, the FDA reiterated its October 2024 agreement that we may use eGFR slope as an endpoint to support an accelerated approval pathway, agreed on the adequacy of the safety package to support the BLA submission and provided input on the clinical data package.
•In October, we attended and presented at the 15thAnnual Fabry Family Education Conference, bringing together over 200 Fabry patients, family members and volunteers to provide educational presentations and gather insights from Fabry patients.
•We are preparing for an anticipated BLA submission as early as the first quarter of 2026, while continuing business development discussions for a potential Fabry commercialization agreement.
Collaborations
Our collaborations with biopharmaceutical companies bring us important financial and strategic benefits and reinforce the potential of our research and development efforts and our zinc finger, or ZF, technology platform. They leverage our collaborators' therapeutic and clinical expertise and commercial resources with the goal of bringing our medicines more rapidly to patients. We believe these collaborations will potentially expand the addressable markets of our product candidates. To date, we have received approximately $910.0 million in upfront licensing fees, milestone payments and proceeds from sale of our common stock to collaborators and have the opportunity to earn up to $5.9 billion in potential future milestone payments from our ongoing collaborations, in addition to potential product royalties.
Manufacturing & Process Development
We expect to be substantially reliant on external partners to manufacture clinical supply for our neurology portfolio. We retain our in-house analytical and process development capabilities.
Macroeconomic Conditions
Our business and operations and those of our collaborators may be affected by financial instability and declining economic conditions in the United States and other countries, whether caused by political instability and conflict, including the ongoing conflicts between Russia and Ukraine, the current and potential future government shutdowns, by general health crises, or by global trade issues and changes in and ongoing uncertainties with respect to tariffs and international trade disputes, which has led to market disruptions, including significant volatility in commodity prices, credit and capital markets instability, including disruptions in access to bank deposits and lending commitments, supply chain interruptions, fluctuations in interest rates, the imposition of tariffs and global inflationary pressures. These macroeconomic factors could materially and adversely affect our ability to continue to operate as a going concern and could otherwise have a material adverse effect on our business, operations, operating results and financial condition as well as the price of our common stock. In particular, our ability to raise the substantial additional capital we need in order to fund our business and to continue to operate as a going concern may be adversely impacted by these macroeconomic factors, and we cannot be certain that we will be able to obtain the substantial additional capital that we need to support our operations and to continue to operate as a going concern on terms acceptable to us, or at all.
Certain Components of Results of Operations
Our revenues have consisted primarily of revenues from collaboration agreements, including upfront license fees, reimbursements for research services, and milestone achievements, and research grant funding. In April 2024, the collaboration agreement with Kite Pharma, Inc., a Gilead Sciences, Inc. subsidiary, or Kite, expired pursuant to its terms, and in December 2024, Pfizer notified us of its termination for convenience of the global collaboration and license agreement effective April 21, 2025. In 2024, we entered into license agreements for STAC-BBB with Genentech Inc., a member of the Roche Group, or Genentech, and Astellas Gene Therapies, Inc., or Astellas, and in April 2025, we entered into a license agreement for STAC-BBB with Eli Lilly and Company, or Lilly. Under these license agreements, we earned upfront license fees and are eligible to earn potential future payments for additional license targets or upon successful achievement of certain development and/or commercial milestones. We expect revenues to continue to fluctuate from period to period and there can be no assurance that our collaborations or partner reimbursements will continue beyond their initial terms or that we are able to meet the milestones specified in these agreements, or that we will be able to secure additional collaborations. For additional information concerning the terms of our ongoing collaboration agreements, see Note 5 - Major Customers, Partnerships and Strategic Alliances in the accompanying notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
We have historically incurred net losses since inception and expect to incur losses for at least the next several years as we continue our research and development activities. To date, we have funded our operations primarily through the issuance of equity securities and revenues from collaborations and research grants.
We expect research and development expenses to increase in the near-term due to Fabry disease program BLA readiness activities, and we expect to continue to devote substantial resources to research and development in the future and expect research and development expenses to increase in the next several years if we are successful in raising substantial additional capital to advance our research and clinical pipeline.
General and administrative expenses consist primarily of salaries and personnel related expenses for executive, finance and administrative personnel, stock-based compensation expense, professional fees, allocated facilities and information technology expenses, patent prosecution expenses and other general corporate expenses. Although we expect general and administrative expenses to remain relatively consistent in the near term, we expect the growth of our business to require increased general and administrative expenses if we are successful in raising substantial additional capital to advance our research and clinical pipeline.
Critical Accounting Policies and Estimates
Our Condensed Consolidated Financial Statements and the related disclosures have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our Condensed Consolidated Financial Statements requires us to make estimates, assumptions and judgments that affect the reported amounts in our Condensed Consolidated Financial Statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following policies to be the most critical to an understanding of our financial condition and results of operations because they require us to make estimates, assumptions and judgments about matters that are inherently uncertain.
We believe our critical accounting policies and estimates relating to revenue recognition and valuation of long-lived assets are the most significant estimates and assumptions used in the preparation of our Condensed Consolidated Financial
Statements. See Note 1 - Organization, Basis of Presentation and Summary of Significant Accounting Policiesin the accompanying notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
There have been no significant changes in our critical accounting policies and estimates during the three and nine months ended September 30, 2025, as compared to the critical accounting policies and estimates disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Part II, Item 7 of the 2024 Annual Report.
Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024
Revenues
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentage values) | (in thousands, except percentage values) | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | % | 2025 | 2024 | Change | % | ||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 581 | $ | 49,412 | $ | (48,831) | (98.8%) | $ | 25,324 | $ | 50,249 | $ | (24,925) | (50%) | |||||||||||||||||||||||||||||||||
Revenues in 2025 primarily consisted of revenues from the collaboration agreements with Lilly and Pfizer, and royalties from our license agreements with Sigma-Aldrich Corporation, or Sigma, and Open Monoclonal Technology, Inc. (now Ligand Pharmaceuticals Inc.), or Ligand. We anticipate revenues in the future will be derived primarily from our license agreements. In December 2024, Pfizer notified us of its termination for convenience of the collaboration agreement effective April 21, 2025, and we are not entitled to receive any further milestone payments or royalties from Pfizer.
The decrease of $48.8 million in revenues for the three months ended September 30, 2025, compared to the same period in 2024, was primarily attributable to revenue relating to our collaboration agreement with Genentech recorded in 2024.
The decrease of $24.9 million in revenues for the nine months ended September 30, 2025, compared to the same period in 2024, was primarily attributable to a decrease of $49.2 million in revenue relating to our collaboration agreement with Genentech. This decrease was offset by $18.0 million in revenue relating to our capsid license agreement with Lilly, $5.0 million in revenue relating to our collaboration agreement with Pfizer upon transfer of a specified sublicense and an increase of $1.1 million in revenue relating to our license agreement with Sigma.
Operating expenses
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentage values) | (in thousands, except percentage values) | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | % | 2025 | 2024 | Change | % | ||||||||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Research and development | $ | 28,142 | $ | 27,732 | $ | 410 | 1% | $ | 81,232 | $ | 87,846 | $ | (6,614) | (8%) | |||||||||||||||||||||||||||||||||
| General and administrative | 7,992 | 11,049 | (3,057) | (28%) | 27,128 | 34,861 | (7,733) | (22%) | |||||||||||||||||||||||||||||||||||||||
| Impairment of long-lived assets | - | - | - | - | - | 5,521 | (5,521) | (100%) | |||||||||||||||||||||||||||||||||||||||
| Total operating expenses | $ | 36,134 | $ | 38,781 | $ | (2,647) | (7%) | $ | 108,360 | $ | 128,228 | $ | (19,868) | (15%) | |||||||||||||||||||||||||||||||||
Research and Development Expenses
Research and development expenses consisted primarily of compensation related expenses, including restructuring charges and stock-based compensation, laboratory supplies, preclinical and clinical studies, manufacturing clinical supply, contracted research and development, and allocated facilities and information technology expenses.
The increase of $0.4 million in research and development expenses for the three months ended September 30, 2025, compared to the same period in 2024, was primarily attributable to an increase of $8.3 million in clinical and manufacturing expenses due to BLA readiness activities for our Fabry disease program. These increases were partially offset by lower compensation and other personnel costs of $5.9 million due to changes in variable compensation and lower headcount, and lower licensing and patent related expenses of $1.7 million. Stock-based compensation expense included in research and development expenses was $0.9 million and $1.5 million for the three months ended September 30, 2025 and 2024, respectively.
The decrease of $6.6 million in research and development expenses for the nine months ended September 30, 2025, compared to the same period in 2024, was primarily attributable to lower compensation and other personnel costs of $11.8 million due to changes in variable compensation and lower headcount, lower facilities, infrastructure related expenses and allocated overheads of $4.2 million, and lower licensing and patent related expenses of $2.0 million. These decreases were partially offset by an increase of $10.0 million in clinical and manufacturing expenses, primarily due to BLA readiness activities for our Fabry disease program, and a decrease of $1.5 million in reimbursement of certain research and development expenses by Sanofi S.A.
Stock-based compensation expense included in research and development expenses was $3.2 million and $4.2 million for the nine months ended September 30, 2025 and 2024, respectively.
We expect research and development expenses to increase in the near-term due to Fabry disease program BLA readiness activities and advancement of our other research and development programs. We expect to continue to devote substantial resources to research and development in the future and expect research and development expenses to increase in the next several years if we are successful in raising substantial additional capital to advance our research and clinical pipeline.
The length of time required to complete our development programs and our development costs for those programs may be impacted by the results of preclinical testing, scope and timing of enrollment in clinical trials for our product candidates, our decisions to pursue development programs in other therapeutic areas, whether we pursue development of our product candidates with a partner or collaborator or independently and our ability to secure the necessary funding to progress the development of our programs. In addition, we are actively seeking commercialization and collaboration partners or a direct external investment, as applicable, to progress our Fabry disease and hemophilia A programs, STAC-BBB capsid and modular integrase platforms. Furthermore, the scope and number of clinical trials required to obtain regulatory approval for each pursued therapeutic area is subject to the input of the applicable regulatory authorities, and we have not yet sought such input for all potential therapeutic areas that we may elect to pursue, and even after having given such input, applicable regulatory authorities may subsequently require additional clinical studies prior to granting regulatory approval based on new data generated by us or other companies, or for other reasons outside of our control. As a condition to any regulatory approval, we may also be subject to post-marketing development commitments, including additional clinical trial requirements. As a result of the uncertainties discussed above, we are unable to determine the duration of or complete costs associated with our development programs.
Our potential therapeutic products are subject to a lengthy and uncertain regulatory process that may not result in our receipt of any necessary regulatory approvals. Failure to receive the necessary regulatory approvals would prevent us from commercializing the product candidates affected. In addition, clinical trials of our product candidates may fail to demonstrate safety and efficacy, which could prevent or significantly delay regulatory approval. A discussion of the risks and uncertainties with respect to our research and development activities, including completing the development of our product candidates, and the consequences to our business, financial position and growth prospects can be found in "Risk Factors" in Part I, Item 1A of the 2024 Annual Report, as supplemented by the risks described under "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q.
General and Administrative Expenses
General and administrative expenses consist primarily of compensation related expenses including restructuring charges and stock-based compensation for executive, legal, finance and administrative personnel, professional fees, allocated facilities and information technology expenses, and other general corporate expenses.
The decrease of $3.1 million in general and administrative expenses for the three months ended September 30, 2025, compared to the same period in 2024, was primarily attributable to lower compensation and other personnel costs of $3.8 million due to changes in variable compensation and lower headcount, lower external professional services expenses of $0.9 million, and lower allocated overhead costs of $0.5 million. These decreases were partially offset by an adjustment of $2.2 million to expense relating to settlement of obligations under a manufacturing agreement in 2024. Stock-based compensation expense included in general and administrative expenses was $1.2 million and $1.8 million for the three months ended September 30, 2025 and 2024, respectively.
The decrease of $7.7 million in general and administrative expenses for the nine months ended September 30, 2025, compared to the same period in 2024, was primarily attributable to lower compensation and other personnel costs of $6.2 million due to changes in variable compensation and lower headcount, and lower external professional services expenses of $3.8 million. These decreases were partially offset by an adjustment of $2.2 million to expense relating to settlement of obligations under a manufacturing agreement in 2024. Stock-based compensation expense included in general and administrative expenses was $3.7 million and $4.9 million for the nine months ended September 30, 2025 and 2024, respectively.
Impairment of long-lived assets
During the three and nine months ended September 30, 2025, no additional impairment was recorded. During the three and nine months ended September 30, 2024, we recognized impairment charges of zero and $5.5 million, respectively. During the nine months ended September 30, 2024, our Board of Directors approved the wind-down of research and development activities in France and corresponding reduction in workforce, including closure of our cell therapy manufacturing facility and research labs in Valbonne, France, or the France Restructuring, and we initiated actions to commence the closure of our facility in Brisbane, California, and we faced a sustained decline in our stock price and related market capitalization. There was also a decline in the market rates for facility subleases, indicating the carrying values of right of use and leasehold improvement assets could be
impaired. As a result of these factors, we concluded certain long-lived assets, primarily comprising right-of-use assets, related leasehold improvements, and certain manufacturing and laboratory equipment, were impaired.
For more information see Note 6 - Impairment of Long-Lived Assets and Write-Down of Assets Held For Salein the accompanying notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Other income (expense), net
The increase of $0.3 million for the three months ended September 30, 2025, compared to the same period in 2024, was primarily attributable to an increase of $0.9 million related to fluctuations in foreign currency exchange rates, partially offset by a decrease of $0.7 million in research income tax credits.
The decrease of $6.0 million for the nine months ended September 30, 2025, compared to the same period in 2024, was primarily attributable to a decrease of $3.4 million related to fluctuations in foreign currency exchange rates, and a decrease of $2.6 million in research income tax credits.
Liquidity and Capital Resources
Liquidity
Since inception, we have incurred significant net losses, and we have funded our operations primarily through the issuance of equity securities, payments from corporate collaborators and strategic partners and research grants.
As of September 30, 2025, we had cash and cash equivalents of $29.6 million, compared to cash and cash equivalents of $41.9 million as of December 31, 2024. Our most significant use of capital during the quarter was for external research and development expenses, such as manufacturing, clinical trials and preclinical activity related to our therapeutic programs, and employee compensation.
We are party to an Open Market Sale Agreement℠, or, as amended, the sales agreement, with Jefferies LLC, providing for the sale of up to $325.0 million of our common stock from time to time in "at-the-market" offerings under an existing shelf registration statement. Approximately $148.7 million remained available under the sales agreement as of September 30, 2025. We sold 36.4 million and 57.2 million shares of our common stock under the sales agreement for net proceeds of approximately $19.6 million and $37.2 million, respectively, during the three and nine months ended September 30, 2025. No shares were sold during the three and nine months ended September 30, 2024. Additionally, in May 2025, we issued 12.2 million shares of common stock, pre-funded warrants to purchase 34.4 million shares of common stock and accompanying warrants to purchase an aggregate of 46.6 million shares of common stock at a price per share of common stock (or pre-funded warrant in lieu thereof) and accompanying warrant of $0.50 per share, for total net proceeds of approximately $21.1 million, after deducting underwriting discounts and commissions and other offering costs. Additionally, in March 2024, we issued 24.8 million shares of common stock, pre-funded warrants to purchase 3.8 million shares of common stock and accompanying warrants to purchase an aggregate of 28.6 million shares of common stock at a price per share of common stock (or pre-funded warrant in lieu thereof) and accompanying warrant of $0.84 per share, for total net proceeds of approximately $21.9 million, after deducting placement agent fees and other offering costs. Subsequent to September 30, 2025, we sold 14.5 million shares of our common stock under the sales agreement for net proceeds of approximately $9.1 million.
Under Accounting Standard Codification Topic 205-40, Presentation of Financial Statements-Going Concern, or ASC Topic 205-40, we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet our future financial obligations as they become due within one year after the date that the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q are issued. As required under ASC Topic 205-40, management's evaluation should initially not take into consideration the potential mitigating effects of management's plans that have not been fully implemented as of the date the Condensed Consolidated Financial Statements are issued. When substantial doubt exists, management evaluates whether the mitigating effects of its plans sufficiently alleviate the substantial doubt about the company's ability to continue as a going concern. The mitigating effects of management's plans, however, are only considered if both (i) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (ii) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. Generally, to be considered probable of being effectively implemented, the plans must have been approved by the company's board of directors before the date that the financial statements are issued.
Based on our current operating plan, we estimate that our cash and cash equivalents as of September 30, 2025, together with the $6.0 million license fee we received from Pfizer in October 2025, and $9.1 million generated through our at-the-market offering program since September 30, 2025, will be sufficient to meet our liquidity requirements only into the first quarter of 2026. Our history of significant losses, negative cash flows from operations, limited liquidity resources currently on hand and
dependence on our ability to obtain additional financing to fund our operations have resulted in management's assessment that there is substantial doubt about our ability to continue as a going concern for at least the next 12 months from the date the financial statements included in this Quarterly Report are issued. Our ability to continue to operate as a going concern is dependent upon our ability to raise substantial additional capital to fund our operations and support our research and development endeavors, including to progress our preclinical and clinical programs as described in the 2024 Annual Report and this Quarterly Report. We have been actively seeking, and continue to actively seek, additional capital, including through additional strategic collaborations and other direct investments in our programs, public or private equity or debt financing, and other sources. The substantial additional capital needed to support our operations and to continue to operate as a going concern may not be available on acceptable terms or at all. In particular, the perception of our ability to continue to operate as a going concern has made and will continue to make it more difficult to obtain financing for the continuation of our operations, particularly in light of currently challenging macroeconomic and market conditions. Further, we may be unable to attract new investments as a result of the speculative nature of our newly reprioritized core neurology preclinical programs and the absence of partners to progress our more advanced clinical programs. In particular, we are engaged in business development discussions with potential counterparties concerning a commercialization agreement for our Fabry disease program, but have been unsuccessful in consummating any such transaction to date. There can be no assurance that we will be able to secure a commercialization partner for our Fabry disease program in a timely manner, on acceptable terms, or at all, and if we are unable to execute such an agreement in the near term, our ability to raise additional capital needed to support our operations will be substantially impaired. If adequate funds are not available to us on a timely basis, or at all, we will be required to take significant additional actions to address our liquidity needs, including substantial additional cost reduction measures such as further reducing operating expenses and further delaying, reducing the scope of, altering or discontinuing entirely our research and development activities, which would have a material adverse effect on our business and prospects, or we may be required to cease operations entirely, liquidate all or a portion of our assets, and/or seek protection under the U.S. Bankruptcy Code, and you may lose all or part of your investment. We have explored, and will continue to explore, whether filing for bankruptcy protection is in the best interest of our Company and our stakeholders.
Moreover, we rely in part on our collaboration partners to provide funding for and otherwise advance our preclinical and clinical programs. While we continue to advance ongoing business development discussions with potential commercialization and collaboration partners, we may not be successful in doing so in a timely manner, on acceptable terms or at all, and we may otherwise fail to raise sufficient additional capital to advance our programs, in which case, we may not receive the expected return on our investments in these programs, platforms and technologies. In any event, we need substantial additional funding in order to execute on our current operating plan, and our ability to raise such funding and to continue our operations will be substantially impaired if we are not able to secure a commercialization partner for our Fabry disease program in the near term. If we raise additional capital through public or private equity offerings, including sales pursuant to our at-the-market offering program with Jefferies LLC, the ownership interest of our existing stockholders will be diluted, and such dilution may be substantial given our current stock price decline, and the terms of any new equity securities may have a preference over, and include rights superior to, our common stock. If we raise additional capital through collaborations, strategic alliances or licensing arrangements with third parties, we may need to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable. If we raise additional capital through debt financing, we may be subject to specified financial covenants or covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or pursuing certain transactions, any of which could restrict our ability to commercialize our product candidates or operate our business.
In addition, as we focus our efforts on proprietary human therapeutics, we will need to seek regulatory approvals of our product candidates from the FDA or other comparable foreign regulatory authorities, a process that could cost in excess of hundreds of millions of dollars per product. We may experience difficulties in accessing the capital markets due to external factors beyond our control, such as volatility in the equity markets for emerging biotechnology companies and general economic and market conditions both in the United States and abroad. In particular, our ability to raise the substantial additional capital we need in order to fund our business may be adversely impacted by global economic conditions and disruptions to and volatility in the credit and financial markets in the United States and worldwide, such as has been experienced recently due in part to, among other things, the ongoing conflict between Russia and Ukraine, and geopolitical challenges arising from the imposition of tariffs and escalating trade tensions. We cannot be certain that we will be able to obtain the substantial additional capital that we need to support our operations and to continue to operate as a going concern on terms acceptable to us, or at all.
Cash Flows
Operating activities
Net cash used in operating activities was $72.8 million for the nine months ended September 30, 2025, primarily due to:
•a net loss of $85.5 million, adjusted for non-cash expenses related to stock-based compensation of $6.9 million, depreciation and amortization of $3.0 million, and amortization of operating lease right-of-use assets of $2.7 million; and
•a decrease in lease liabilities by $3.6 million, and an increase in prepaid expenses and other assets by $3.2 million. These were partially offset by an increase in accounts payable and other accrued liabilities by $4.3 million, and an increase in accrued compensation and employee benefits by $2.5 million.
Net cash used in operating activities was $63.8 million for the nine months ended September 30, 2024, primarily due to:
•a net loss of $74.5 million, adjusted for non-cash long-lived asset impairment charges of $5.5 million, other non-cash expenses related to stock-based compensation of $9.1 million, depreciation and amortization of $3.9 million, and amortization of operating lease right-of-use assets of $3.4 million, offset partially by accretion of discounts and impairment of marketable securities of $0.3 million; and
•an increase in accounts receivable by $9.6 million, a decrease in accounts payable and other accrued liabilities by $6.9 million, and a decrease in lease liabilities by $4.1 million. These were partially offset by a decrease in prepaid expenses and other assets by $6.4 million, an increase in accrued compensation and employee benefits by $2.1 million, an increase in deferred revenue by $0.8 million, and a decrease in interest receivable by $0.4 million.
Investing activities
Net cash used in investing activities was not material for the nine months ended September 30, 2025.
Net cash provided by investing activities was $36.2 million for the nine months ended September 30, 2024, related to sales of marketable securities of $34.7 million, maturities of marketable securities of $1.1 million, and sales of assets classified as held for sale of $0.5 million.
Financing activities
Net cash provided by financing activities was $56.0 million for the nine months ended September 30, 2025, related to $37.2 million of proceeds from our at-the-market offering, net of offering expenses of $1.0 million, $21.5 million of proceeds from issuance of common stock, net of offering expenses of $1.9 million, and proceeds from issuance of common stock under our employee stock purchase plan of $0.2 million, partially offset by taxes paid related to net share settlement of equity awards of $2.9 million.
Net cash provided by financing activities was $21.4 million for the nine months ended September 30, 2024, related to $21.9 million of proceeds from issuance of common stock, net of offering expenses of $2.1 million, and proceeds from issuance of common stock under our employee stock purchase plan of $0.1 million, partially offset by taxes paid related to net share settlement of equity awards of $0.7 million.
Operating Capital and Capital Expenditure Requirements
We anticipate continuing to incur operating losses for at least the next several years and need to raise substantial additional capital. The effects of the current macroeconomic and regulatory environment, including evolving staff and policy changes at the FDA, the current and potential future government shutdowns, the effects of the ongoing conflicts between Russia and Ukraine, global trade issues and changes in and uncertainties with respect to tariffs and international trade disputes, inflation, climate change, fluctuations in interest rates and other economic uncertainty and volatility, has resulted and may continue to result in significant disruption of global financial markets, which could continue to impair our ability to access substantial additional capital on terms that are acceptable or at all, and in turn could negatively affect our liquidity and our ability to continue to operate as a going concern. Future capital requirements beyond the period into which we expect our existing cash and cash equivalents will be sufficient to fund our planned operations, will be substantial, and we otherwise need to raise substantial additional capital to continue to operate as a going concern and to fund the development, manufacturing and potential commercialization of our product candidates (see "-Financial Position-Going Concern" and "-Liquidity and Capital Resources-Liquidity" above).
As we focus our efforts on proprietary human therapeutics, we will need to seek FDA approvals of our product candidates, a process that could cost in excess of hundreds of millions of dollars per product. Our future capital requirements will depend on many forward-looking factors, including the following:
•the results of preclinical testing of our early-stage core neurology program product candidates;
•the initiation, progress, timing and completion of clinical trials for our product candidates and potential product candidates;
•the outcome, timing and cost of regulatory approvals;
•the success of our existing collaboration agreements and our ability to secure additional collaborations;
•delays that may be caused by changing regulatory requirements, including the evolving staff and policy changes at the FDA;
•the number of product candidates that we pursue;
•the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims;
•the timing and terms of future in-licensing and out-licensing transactions;
•the cost and timing of establishing sales, marketing, manufacturing and distribution capabilities;
•the cost of procuring clinical and commercial supplies of our product candidates;
•the extent to which we acquire or invest in businesses, products or technologies, including the costs associated with such acquisitions and investments; and
•the costs of potential disputes and litigation.
Contractual Obligations
Our future minimum contractual obligations as of December 31, 2024 were reported in the 2024 Annual Report. During the nine months ended September 30, 2025, there have been no material changes outside the ordinary course of our business from the contractual obligations previously disclosed in our 2024 Annual Report.
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