Generation Bio Co. [GBIO] Filings

10-Q 1 gbio-20240930x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39319

GENERATION BIO CO.

(Exact name of registrant as specified in its charter)



Delaware		81-4301284
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

301 Binney Street Cambridge, Massachusetts		02142
(Address of principal executive offices)		(Zip Code)

(617) 655-7500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 Par Value	GBIO	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1, 2024 there were 66,792,822 shares of Common Stock, $0.0001 par value per share, outstanding.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or this Quarterly Report, of Generation Bio Co. contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this Quarterly Report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or the negative of these words or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report include, among other things, statements about:

●

our estimates regarding expenses, future revenue, capital requirements, need for additional financing and the period over which we believe that our existing cash, cash equivalents, and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements;

●

the potential achievement of milestones and receipt of payments under our collaboration with ModernaTX, Inc., or Moderna;

●

the potential advantages of our non-viral genetic medicine platforms;

●

the initiation, timing, progress and results of our research and development programs and preclinical studies and clinical trials;

●

the timing of and our ability to submit applications and obtain and maintain regulatory approvals for any product candidates we may develop;

●

our plans to develop and, if approved, subsequently commercialize any product candidates we may develop;

●

our estimates regarding the potential addressable patient populations for our programs;

●

our commercialization, marketing and manufacturing capabilities and strategy;

●

our expectations regarding our ability to obtain and maintain intellectual property protection;

●

our intellectual property position;

●

our ability to identify additional products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;

●

the impact of government laws and regulations;

●

our competitive position and expectations regarding developments and projections relating to our competitors and any competing therapies that are or may become available; and

●

our ability to maintain and establish collaborations or obtain additional funding.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and stockholders should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report, particularly in the “Risk Factors”

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section in this Quarterly Report and our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Moreover, we operate in a competitive and rapidly changing environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures, or investments we may make or enter into.

Stockholders should read this Quarterly Report and the documents that we file with the SEC with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report are made as of the date of this Quarterly Report, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Except where the context otherwise requires or where otherwise indicated, the terms “we,” “us,” “our,” “our company,” “the company,” and “our business” in this Quarterly Report refer to Generation Bio Co. and its consolidated subsidiary.

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Generation Bio Co.

INDEX

		Page(s)
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
	Signatures	36

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Generation Bio Co.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)


	September 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	21,657	$	66,446
Marketable securities		163,113		197,918
Collaboration receivable		2,212		—
Tenant receivable		—		3,960
Prepaid expenses and other current assets		4,272		4,294
Total current assets		191,254		272,618
Marketable securities, net of current portion		15,042		—
Property and equipment, net		16,010		25,799
Operating lease right-of-use assets		21,220		69,852
Restricted cash		2,152		5,791
Other long-term assets		3,106		698
Total assets	$	248,784	$	374,758
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,659	$	2,346
Accrued expenses and other current liabilities		6,197		16,529
Deferred revenue		11,512		12,919
Operating lease liability		10,797		8,120
Total current liabilities		30,165		39,914
Deferred revenue, net of current portion		31,195		41,942
Operating lease liability, net of current portion		82,982		89,774
Total liabilities		144,342		171,630
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized and no shares issued or outstanding at September 30, 2024 and December 31, 2023		—		—
Common stock, $0.0001 par value; 150,000,000 shares authorized at September 30, 2024 and December 31, 2023; 66,753,508 and 66,205,550 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		7		7
Additional paid-in capital		785,779		774,224
Accumulated other comprehensive income		319		274
Accumulated deficit		(681,663)		(571,377)
Total stockholders’ equity		104,442		203,128
Total liabilities and stockholders’ equity	$	248,784	$	374,758

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Generation Bio Co.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues:
Collaboration revenue	$	7,554	$	2,146		15,704	$	3,026
Operating expenses:
Research and development		15,088		21,862		45,811		65,694
General and administrative		9,181		11,641		29,124		37,474
Loss on lease termination		1,169		—		59,596		—
Total operating expenses		25,438		33,503		134,531		103,168
Loss from operations		(17,884)		(31,357)		(118,827)		(100,142)
Other income:
Other income and interest income, net		2,571		3,091		8,541		8,716
Net loss	$	(15,313)	$	(28,266)		(110,286)	$	(91,426)
Net loss per share, basic and diluted	$	(0.23)	$	(0.43)		(1.66)	$	(1.43)
Weighted average common shares outstanding, basic and diluted		66,738,468		65,907,000		66,568,326		63,951,508

Comprehensive loss:
Net loss	$	(15,313)	$	(28,266)		(110,286)	$	(91,426)
Other comprehensive (loss) income:
Unrealized gains on marketable securities		599		19		45		79
Comprehensive loss	$	(14,714)	$	(28,247)		(110,241)	$	(91,347)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Generation Bio Co.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		Equity
	Three Months Ended September 30, 2024
Balances at June 30, 2024	66,702,734	$	7	$	782,030	$	(280)	$	(666,350)	$	115,407
Issuance of common stock upon exercise of stock options	9,680		—		13		—		—		13
Vesting of restricted common stock	41,094		—		(16)		—		—		(16)
Stock-based compensation expense	—		—		3,752		—		—		3,752
Unrealized gains on marketable securities	—		—		—		599		—		599
Net loss	—		—		—		—		(15,313)		(15,313)
Balances at September 30, 2024	66,753,508	$	7	$	785,779	$	319	$	(681,663)	$	104,442


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		Equity
	Three Months Ended September 30, 2023
Balances at June 30, 2023	65,784,250	$	7	$	762,228	$	(23)	$	(507,925)	$	254,287
Vesting of restricted common stock	143,706		—		(130)		—		—		(130)
Stock-based compensation expense	—		—		6,004		—		—		6,004
Unrealized gains on marketable securities	—		—		—		19		—		19
Net loss	—		—		—		—		(28,266)		(28,266)
Balances at September 30, 2023	65,927,956	$	7	$	768,102	$	(4)	$	(536,191)	$	231,914

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Generation Bio Co.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Income		Deficit		Equity
	Nine Months Ended September 30, 2024
Balances at December 31, 2023	66,205,550	$	7	$	774,224	$	274	$	(571,377)	$	203,128
Issuance of common stock upon exercise of stock options	22,517		—		31		—		—		31
Vesting of restricted common stock	369,414		—		(172)		—		—		(172)
Issuance of common stock under ESPP	156,027		—		247		—		—		247
Stock-based compensation expense	—		—		11,449		—		—		11,449
Unrealized gains on marketable securities	—		—		—		45		—		45
Net loss	—		—		—		—		(110,286)		(110,286)
Balances at September 30, 2024	66,753,508	$	7	$	785,779	$	319	$	(681,663)	$	104,442


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		Equity
	Nine Months Ended September 30, 2023
Balances at December 31, 2022	59,505,437	$	6	$	727,335	$	(83)	$	(444,765)	$	282,493
Sale of common stock in connection with the Moderna Share Purchase Agreement	5,859,375		1		22,555		—		—		22,556
Vesting of restricted common stock	455,463		—		(448)		—		—		(448)
Issuance of common stock under ESPP	107,681		—		367		—		—		367
Stock-based compensation expense	—		—		18,293		—		—		18,293
Unrealized gains on marketable securities	—		—		—		79		—		79
Net loss	—		—		—		—		(91,426)		(91,426)
Balances at September 30, 2023	65,927,956	$	7	$	768,102	$	(4)	$	(536,191)	$	231,914

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Generation Bio Co.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(110,286)	$	(91,426)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on lease termination		59,085		—
Stock-based compensation expense		11,449		18,293
Depreciation and amortization expense		3,755		3,938
Amortization (accretion) of premium (discount) on marketable securities, net		(6,312)		(6,699)
Other		84		24
Changes in operating assets and liabilities:
Collaboration receivable		(2,212)		—
Tenant receivable		—		(265)
Prepaid expenses and other current assets		694		1,408
Operating lease right-of-use assets		2,799		4,794
Other noncurrent assets		(2,840)		931
Accounts payable		(79)		1,386
Accrued expenses and other current liabilities		(9,526)		(2,633)
Deferred revenue		(12,154)		44,474
Operating lease liability		(7,236)		(1,992)
Net cash used in operating activities		(72,779)		(27,767)
Cash flows from investing activities:
Purchases of property and equipment		(2,023)		(2,817)
Proceeds from sale of property and equipment		149		—
Purchases of marketable securities		(115,881)		(295,967)
Maturities of marketable securities		142,000		291,000
Net cash provided by (used in) investing activities		24,245		(7,784)
Cash flows from financing activities:
Payment of share issuance costs		—		(179)
Proceeds from sale of common stock in connection with the Moderna Share Purchase Agreement		—		36,000
Proceeds from exercise of stock options and ESPP, net		278		367
Tax withholding payments related to net share settlements of restricted stock units		(172)		(448)
Net cash provided by financing activities		106		35,740
Net (decrease) increase in cash, cash equivalents and restricted cash		(48,428)		189
Cash, cash equivalents and restricted cash at beginning of period		72,237		98,863
Cash, cash equivalents and restricted cash at end of period	$	23,809	$	99,052
Supplemental disclosure of noncash investing and financing information:
Purchases of property and equipment included in accounts payable and accrued expenses	$	47	$	1,330
Unrealized gains on marketable securities	$	45	$	79

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Generation Bio Co.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of the Business and Basis of Presentation

Generation Bio Co., or Generation Bio, was incorporated on October 21, 2016 as Torus Therapeutics, Inc. and subsequently changed its name to Generation Bio Co. Generation Bio Co. and its consolidated subsidiary, or the company, we, our or us, are innovating non-viral genetic medicines to provide durable, redosable treatments for potentially hundreds of millions of patients living with rare and prevalent diseases. We are developing two distinct and complementary platforms that we believe will enable highly differentiated therapeutic applications. Our first platform is a potent, highly selective cell-targeted lipid nanoparticle, or ctLNP, delivery system for nucleic acids, which is designed to avoid off-target clearance by the liver and spleen, enabling ctLNPs to persist in systemic circulation and allowing for highly selective and potent ligand-driven targeting to specific tissues and cell types. The identification and optimization of new ligands to target new tissues and cell types is an efficient, flexible, and modular process, which we believe will allow us to rapidly expand our portfolio. Our second platform is our novel immune-quiet DNA, or iqDNA, a partially single-stranded DNA, which is a variant of our closed-ended DNA, or ceDNA, designed to enable long-lasting high levels of gene expression from non-integrating episomes, while avoiding innate immune sensors that have long prevented DNA from use in non-viral systems. Underpinning the iqDNA platform is our highly scalable capsid-free manufacturing process that uses our proprietary cell-free rapid enzymatic synthesis, or RES, to produce highly pure iqDNA at scale. We are headquartered in Cambridge, Massachusetts.

We are subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, the ability to establish clinical- and commercial-scale manufacturing processes and the ability to secure additional capital to fund operations. Programs currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization of a product. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if our development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales.

The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Since inception, we have funded our operations with proceeds from the sale of instruments convertible into convertible preferred stock (which converted into convertible preferred stock in 2017), sales of convertible preferred stock (which converted into common stock in 2020), and sales of common stock in underwritten public offerings, “at-the-market” offerings, and in a private placement, as well as collaboration revenue under our collaboration with ModernaTX, Inc., or Moderna. We have incurred recurring losses, including net losses of $110.3 million for the nine months ended September 30, 2024 and $91.4 million for the nine months ended September 30, 2023. As of September 30, 2024, we had an accumulated deficit of $681.7 million. We expect to continue to generate operating losses in the foreseeable future. As of November 6, 2024, the issuance date of these condensed consolidated financial statements, we expect that our cash, cash equivalents, and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements for at least 12 months.

We will need to obtain additional funding through public or private equity offerings, debt financings, collaborations, strategic alliances and/or licensing arrangements. We may not be able to obtain financing on acceptable terms, or at all, and we may not be able to enter into additional collaborative or strategic alliances or licensing arrangements. The terms of any financing may adversely affect the holdings or the rights of our stockholders. Arrangements with collaborators or others may require us to relinquish rights to certain of our technologies or programs. If we are unable to obtain funding, we could be forced to delay, reduce or eliminate some or all of our research and development programs, pipeline expansion or commercialization efforts, which could adversely affect our business prospects. Although management will continue to pursue these plans, there is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations when needed or at all.

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The accompanying condensed consolidated financial statements reflect the operations of Generation Bio and our wholly owned subsidiary, Generation Bio Securities Corporation. Intercompany balances and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, or GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB.

2. Summary of Significant Accounting Policies

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the measurement of proportional performance of the performance obligation of our collaboration agreements, accrual of research, and development expenses and stock-based compensation expense. We base our estimates on historical experience, known trends and other market-specific or other relevant factors that we believe to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.

Unaudited interim financial information

The condensed consolidated balance sheet as of December 31, 2023 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K that was most recently filed with the SEC. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of our financial position as of September 30, 2024, the results of operations for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023 have been made. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2024 or any other period.

Our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K that was most recently filed with the SEC. Updates to our significant accounting policies are discussed below.

Employee Retention Credit

Under the provisions of the extension of the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, passed by the United States Congress and signed by the President, we are eligible for a refundable Employee Retention Credit, or ERC, subject to certain criteria. ASC 105, Generally Accepted Accounting Principles, describes the decision-making framework when no clear guidance exists in GAAP for a particular transaction. Specifically, ASC 105-10-05-2 instructs companies to look for guidance for a similar transaction within GAAP and apply that guidance by analogy. As such, forms of government assistance, such as the ERC, provided to business entities would not be within the scope of International Accounting Standards 20, or IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, but it may be applied by analogy under ASC 105-10-05-2. We accounted for the ERC as a government grant in accordance with IAS 20 by analogy under ASC 105-10-05-2.

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We recognized a $2.3 million ERC upon completion of an analysis providing reasonable assurance that we met the conditions set forth in the CARES Act and it was reasonably assured that we will receive the employee retention credit. We recorded the ERC in other long-term assets on our condensed consolidated balance sheet as of September 30, 2024 related to labor costs recognized during 2020 and 2021. The ERC was recorded in research and development expenses and general and administrative expenses proportionately in the manner in which the qualified wages and related costs were classified. We have filed for refunds of the ERC and as of the date of this Quarterly Report, we have not received any refunds.

3. Marketable Securities and Fair Value Measurements

The following tables present our marketable securities by security type:

As of September 30, 2024

Gross

Amortized

Unrealized

Fair

(in thousands)

Cost

Gains

Losses

Value

U.S. treasury securities

177,836

319

—

178,155

As of December 31, 2023

Gross

Amortized

Unrealized

Fair

(in thousands)

Cost

Gains

Losses

Value

U.S. treasury securities

197,644

274

—

197,918

The following table summarizes our marketable securities by contractual maturity as of September 30, 2024:


	As of September 30, 2024
	Amortized		Fair
(in thousands)	Cost		Value
Less than one year	$	162,932	$	163,113
Greater than one year but less than two years		14,904		15,042
Total	$	177,836	$	178,155

Our marketable securities as of December 31, 2023 consisted of investments that mature within one year of their purchase date.

We assess our available-for-sale securities under the available-for-sale security impairment model in ASC 326, “Financial Instruments - Credit Losses”, or ASC 326, as of each reporting date in order to determine if a portion of any decline in fair value below carrying value recognized on our available-for-sale securities is the result of a credit loss. We also evaluate our available-for-sale securities for impairment using a variety of factors including our intent to sell the underlying securities prior to maturity and whether it is more likely than not that we would be required to sell the securities before the recovery of their amortized basis. During the nine months ended September 30, 2024 and 2023, we did not recognize any impairment or realized gains or losses on sales of available-for-sale securities, and we did not record an allowance for, or recognize, any expected credit losses.

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The following tables present our assets that are measured at fair value on a recurring basis and indicate the level within the fair value hierarchy of the valuation techniques that we utilized to determine such fair value:


	Fair Value Measurements at September 30, 2024 Using:
(in thousands)	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	5,460	$	—	$	—	$	5,460
Marketable securities:
U.S. treasury securities		—		178,155		—		178,155
Totals	$	5,460	$	178,155	$	—	$	183,615


	Fair Value Measurements at December 31, 2023 Using:
(in thousands)	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	38,210	$	—	$	—	$	38,210
Marketable securities:
U.S. treasury securities		—		197,918		—		197,918
Totals	$	38,210	$	197,918	$	—	$	236,128

4. Collaboration and License Agreement

Moderna Collaboration and License Agreement

In March 2023, we entered into a Collaboration and License Agreement, or the Collaboration Agreement, with Moderna to collaborate on developing treatments for certain diseases by targeting delivery of nucleic acids to liver cells and certain cells outside of the liver.

Under the Collaboration Agreement, the parties have agreed to collaborate on preclinical research programs relating to lipid nanoparticle, or LNP, delivery systems and nucleic acid payloads, with each party obtaining certain rights to intellectual property used in and arising out of such research programs. Each party will be solely responsible for its own clinical development and commercialization of products under the Collaboration Agreement. Moderna will reimburse us for the internal and external costs incurred by us in conducting the research programs, to the extent consistent with such research plans and budgets.

Moderna has exclusive options, upon payment of option exercise fees, to obtain worldwide, exclusive, sublicensable licenses under specified company intellectual property to develop, manufacture and commercialize (a) products comprising LNP delivery systems and nucleic acid payloads that are directed to (i) up to two liver targets, (ii) up to two non-liver targets and (iii) a third liver or non-liver target and (b) Exclusive Targets, which are Independent Program Products (as defined below) that include messenger RNA, or mRNA, that are directed to gene and protein targets in any of certain agreed-upon immune cell types, referred to as the Cell Target Types. Subject to the exclusivity obligations described below, each party has granted to the other a worldwide, non-exclusive, sublicensable license under certain LNP-related intellectual property arising out of the non-liver ctLNP program, or the Joint Collaboration ctLNP Intellectual Property, to develop, manufacture and commercialize products comprising LNP delivery systems and nucleic acid payloads directed to gene and protein targets in any of the Cell Target Types, or Independent Program Products.

Each party is obligated to use commercially reasonable efforts to complete the activities assigned to it under the research plans, and Moderna is further obligated to use commercially reasonable efforts to develop, seek regulatory approval for and commercialize at least one product directed to each target for which Moderna exercises its exclusive license option in at least one indication in the United States and in specified European countries.

We have agreed not to, directly or indirectly, alone or with, for or through any third party, develop, manufacture, commercialize or exploit (a) products containing mRNA that are directed to any of the Cell Target Types, during an agreed-upon exclusivity period, which may be extended by payment of extension fees, (b) products directed to any liver

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target or non-liver target during the option periods for those targets, (c) products directed to any liver target or non-liver target for which Moderna has exercised its exclusive license option or (d) products containing mRNA that are directed to any Exclusive Target for which Moderna has exercised its exclusive license option.

Under the terms of the Collaboration Agreement, in April 2023, Moderna made an upfront payment to us of $40.0 million, and paid us $7.5 million in prepaid research funding. In addition, we are eligible to receive up to $1.8 billion in milestone payments upon the achievement of specified development, regulatory, commercial, and sales milestone events, research term extension fees and exclusivity extension fees. Subject to reductions in specified circumstances, we will also be entitled to receive tiered royalties: (i) ranging from high-single-digits to low-double-digits on sales of licensed products that are directed to any liver target or non-liver target with respect to which Moderna has exercised its exclusive license option, and (ii) in the single digits on sales of Independent Program Products, including the exclusively licensed Independent Program Products directed to the Exclusive Targets. In consideration for the non-exclusive license granted by Moderna to us under the Joint Collaboration ctLNP Intellectual Property, we have agreed to pay Moderna tiered royalties in the single digits on sales of Independent Program Products that include mRNA, subject to reductions in specified circumstances. Royalties will be paid by each party, on a licensed product-by-licensed product and country-by-country basis, until the latest to occur of: (i) expiration of the last-to-expire of specified licensed patent rights; (ii) expiration of regulatory exclusivity; or (iii) ten years after the first commercial sale of the applicable licensed product.

In addition, in connection with the execution of the Collaboration Agreement, we entered into a Share Purchase Agreement, or the Share Purchase Agreement, with Moderna, pursuant to which we issued and sold 5,859,375 shares of our common stock to Moderna, at a price of $6.14 per share, for an aggregate purchase price of $36.0 million, which closed concurrently with the execution of the Collaboration Agreement and resulted in Moderna becoming a related party. Under the Share Purchase Agreement, Moderna has the right, subject to certain terms and conditions, to purchase up to 3.06% of the outstanding shares of our common stock (on a post-closing basis) in connection with a future equity financing of at least $25.0 million by us.

Moderna Agreement Assessment

We assessed the promised goods and services under the Collaboration Agreement, in accordance with ASC 606. At inception, the Collaboration Agreement included one combined performance obligation, which includes the license to the ctLNP technology to target indications outside of the liver and the related research services to develop such technology, as the two items are not distinct in context of the contract. The Collaboration Agreement also provides Moderna with options to receive additional research services and options to receive exclusive licenses. The options to receive exclusive licenses allow Moderna to develop and commercialize product candidates that utilize our ctLNP and ceDNA technology for targets within the liver, as well as utilizing the ctLNP technology to be developed as part of the Collaboration Agreement and our ceDNA technology for targets outside the liver. These options are considered to be a priced at a discount to its standalone selling price and therefore are considered to be material rights.

The initial transaction price included a $40.0 million upfront fee, premium paid over the fair value of the common stock of $13.3 million in connection with shares issued and sold to Moderna under the Share Purchase Agreement, and estimated revenue associated with the payment for research services, including $7.5 million in prepaid research services. We utilized the expected amount method to determine the amount of reimbursement for these activities. We utilized the most likely amount method to determine the amount of consideration to include in the transaction price related to any variable consideration related to exclusivity fees, and milestones, and the royalty payments are constrained based on the royalty constraint. No amounts are included in the transaction price related to these elements.

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We initially allocated the transaction price to each unit of account as follows:


Performance Obligations (in thousands)	Standalone Selling Price		Transaction Price Allocated
ctLNP technology and research license	$	52,500	$	42,576
First liver program commercialization option license		7,000		5,677
Second liver program commercialization option license		7,000		5,677
First non-liver program commercialization option license		11,700		9,488
Second non-liver program commercialization option license		11,700		9,488
Third liver or non-liver program commercialization option license		6,150		4,987
Total	$	96,050	$	77,893

The transaction price was allocated to each unit of account based on the relative estimated standalone selling prices, over which management has applied significant judgment, of each element. We developed the estimated standalone selling price for combined performance obligation and each of the options to receive licenses primarily based on the probability-weighted present value of expected future cash flows associated with each license related to each specific program and an estimate of the costs to provide services including a reasonable return. In developing such estimate, we also considered applicable market conditions and relevant entity-specific factors, including those factors contemplated in negotiating the agreement, the probability of success and the time needed to commercialize a product candidate pursuant to the associated license.

On a quarterly basis, we measure proportional performance of the combined performance obligation over time using an input method based on cost incurred relative to the total estimated costs by determining the proportion of effort incurred as a percentage of total effort we expect to expend. This ratio is then applied to the transaction price allocated to the combined performance obligation and each of the options to receive licenses. Any changes to these estimates will be recognized in the period in which they change as a cumulative catch up. All allocated consideration for the material rights is deferred until such time that Moderna exercises its options or the right to exercise the options expires. Upon exercise, we will determine the appropriate revenue recognition methodology and any other implications on the accounting treatment for the arrangement.

During the three months ended September 30, 2024, we recorded additional revenue related to a change in estimate due to revisions in the research plan resulting in a reduction in the estimated timeline of future research services and total estimated costs. The change in estimate resulted in a $6.8 million decrease in the allocated transaction price and a $3.8 million increase in collaboration revenue, a $3.8 million decrease in deferred revenue and a $0.06 decrease in net loss per share, basic and diluted, for both the three and nine months ended September 30, 2024.

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The following table provides a summary of the transaction price allocated to each unit of account, in addition to revenue activity during the period:


Performance Obligations	Transaction Price Allocated		Revenue Recognized During		Revenue Recognized During		Deferred Revenue
(in thousands)	As of September 30, 2024		Three Months Ended September 30, 2024		Nine Months Ended September 30, 2024		As of September 30, 2024
ctLNP technology and research license	$	40,409	$	7,554	$	15,704	$	14,549
First liver program commercialization option license		5,388		—		—		4,526
Second liver program commercialization option license		5,388		—		—		4,526
First non-liver program commercialization option license		9,006		—		—		7,565
Second non-liver program commercialization option license		9,006		—		—		7,565
Third liver or non-liver program commercialization option license		4,734		—		—		3,976
Total	$	73,931	$	7,554	$	15,704	$	42,707

5. Property and equipment, net

Property and equipment, net consisted of the following:


	September 30,		December 31,
(in thousands)	2024		2023
Laboratory equipment	$	14,543	$	14,859
Computer equipment and software		1,422		1,447
Furniture and fixtures		1,293		1,293
Leasehold improvements		20,909		20,865
Construction in progress		112		7,030
		38,279		45,494
Less: Accumulated depreciation and amortization		(22,269)		(19,695)
Total	$	16,010	$	25,799

Depreciation and amortization expense for the three and nine months ended September 30, 2024 was 1.2 million and $3.8 million, respectively. Depreciation and amortization expense for the three and nine months ended September 30, 2023 was $1.3 million and $3.9 million, respectively.

In July 2021, we entered into a lease agreement for a manufacturing facility in Waltham, Massachusetts, or the Seyon Lease. On January 31, 2024, we notified Waltham CenterPoint I Investment Group, LLC, or Landlord, of termination of the Seyon Lease due to Landlord’s breach of its obligations to us under the Seyon Lease and returned possession of the premises to Landlord, effective January 31, 2024. On February 14, 2024, Landlord sent us a notice of the termination of the Seyon Lease due to our non-payment of rent. On February 20, 2024, Landlord served us with a complaint, filed in Massachusetts Superior Court, or the Court, with respect to the Seyon Lease. The complaint sought declaratory judgment that we unlawfully terminated the Seyon Lease and also asserted a claim for breach of contract damages. Following receipt of the complaint, we filed a counterclaim against Landlord asserting breach of contract and violation of Massachusetts General Law Chapter 93A. On October 29, 2024, the Court determined that although we did not have the right to terminate the Seyon Lease, Landlord’s subsequent termination was effective, and that we had alleged sufficient facts to state a claim for breach of contract and violation of Massachusetts General Law Chapter 93A by Landlord. We will continue to vigorously defend our rights with respect to this matter. During the nine months ended September 30, 2024, in connection with the termination of the Seyon Lease, we recorded a non-cash charge of $6.2 million in an impairment of construction in progress. For additional information, refer to Note 7, Leases.

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6. Accrued Expenses

Accrued expenses and other current liabilities consisted of the following:


	September 30,		December 31,
(in thousands)	2024		2023
Accrued employee compensation and benefits	$	4,505	$	13,208
Accrued external research and development expenses		600		1,169
Accrued professional fees		654		908
Property and equipment		33		838
Other		405		406
Total	$	6,197	$	16,529

In November 2023, following a review of strategic priorities and a determination by our management and board of directors to implement a strategic reorganization, to invest in our ctLNP delivery platform to develop wholly-owned programs for extrahepatic cell types and to develop our iqDNA platform for our lead program in hemophilia A and other programs, we announced a reduction in our workforce of approximately 40%, or RIF, and implemented reductions in operational expenditures including Good Manufacturing Practice readiness and manufacturing expenses. We completed the RIF during the second quarter of 2024.

In connection with the RIF, affected employees were eligible to receive one-time severance benefits, including cash severance, temporary healthcare coverage, to the extent they were eligible for and elected such coverage, and transition support services, subject to each such employee entering into an effective separation agreement, which included a general release of claims against us. We offered a retention bonus to certain affected employees if such employees remained in continuous employment with us through their respective separation dates and executed a general release of claims against us.

Below is a summary of accrued restructuring costs recorded and included in accrued expenses and other current liabilities during the year ended September 30, 2024:


(in thousands)		Severance and Benefits Costs
Balance at December 31, 2023	$	5,291
Cash payments		(5,055)
Restructuring expenses		380
Adjustments		(402)
Balance at September 30, 2024	$	214

During the nine months ended September 30, 2024, we recorded $0.4 million of restructuring expenses in our condensed consolidated statements of operation and comprehensive loss all of which was classified as general and administrative expense. We did not recognize any restructuring expense during the nine months ended September 30, 2023.

7. Leases

We lease our office and laboratory space under a noncancelable operating lease that expires in 2029, or the Office and Lab Lease. We have an option to extend the Office and Lab Lease term for one additional term of five years at the greater of the then-current base rent or the then-current fair market value. Exercise of this option was not determined to be reasonably certain and thus was not considered in determining the operating lease liability on the consolidated balance sheet as of September 30, 2024. We posted a letter of credit in the amount of approximately $2.1 million as a security deposit. The letter of credit is subject to increase if we were to sublease any portion of the leased premises. The Office and Lab Lease does not include any restrictions or covenants that had to be accounted for under the lease guidance.

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Future lease payments for our noncancelable operating leases as of September 30, 2024 and a reconciliation to the carrying amount of the operating lease liabilities presented in the condensed consolidated balance sheet as of September 30, 2024 are as follows:


Three Months Ended September 30,	(in thousands)
2024 (remaining 3 months)	$	1,935
2025		7,838
2026		8,059
2027		8,275
2028		8,535
Thereafter		2,834

Generation Bio Co. [GBIO] Filings
10-Q	[2024-11]
10-Q	[2024-08]
10-Q	[2024-05-13]
10-K	[2024-03-06]
10-Q	[2023-11-09]
10-Q	[2023-08-02]
10-Q	[2023-05-10]
10-K	[2023-02-23]
10-Q	[2022-11-03]
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-K	[2022-02-24]
10-Q	[2021-11-10]
10-Q	[2021-08-11]
10-Q	[2021-05-12]
10-K	[2021-03-18]
S-1	[2021-01-04]
10-Q	[2020-11-10]
10-Q	[2020-08-11]
S-1	[2020-05-22]