# Voyager Therapeutics, Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Voyager Therapeutics, Inc.](/companies/vygr.md) (CIK 1640266)
- Form: 10-Q
- Filed: 2023-11-06
- Accepted by EDGAR: Nov 6, 2023, 16:01 ET
- Period: 2023-09-30
- Accession: 0001558370-23-017754
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1640266/000155837023017754/vygr-20230930x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1640266/000155837023017754/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $4.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $159.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $25.9m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-01-01 to 2023-09-30 | $66.4m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$29.5m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $68.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | −$177.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $586.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$25.9m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $75.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.59 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $1.78 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.59 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $1.85 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 43,864,838 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 42,610,724 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $101.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $2.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-30 | $65.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $261.9m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $294.7m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $61.7m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $118.4m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $176.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 71,444 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission, or the SEC, on March 7, 2023.*

*Our actual results and timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, they may not be predictive of results or developments in future periods.*

*The following information and any forward-looking statements should be considered in light of factors discussed in Part I, Item 1A,"Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2022, and, if applicable, those included under Part II, Item 1A of our Quarterly Reports on Form 10-Q., that could cause actual future results or events to differ materially from the forward-looking statements that we make. Additional risk factors may be identified from time to time in our future filings with the SEC.*

*These forward-looking statements are made under the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are neither promises nor guarantees. We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.*

### Overview

We are a biotechnology company dedicated to breaking through barriers in gene therapy and neurology. We focus on leveraging our expertise in capsid discovery and neuropharmacology to address the delivery hurdles that have constrained the gene therapy and neurology disciplines, with the goal of either halting or slowing disease progression or reducing symptom severity, therefore providing clinically meaningful impact to patients. Our gene therapy platforms enable us to engineer, optimize, manufacture and deliver our adeno-associated virus, or AAV, based gene therapies that we believe have the potential to safely provide durable efficacy. Our team of experts in the fields of AAV gene therapy and neuroscience first identifies and selects diseases in which we believe an AAV gene therapy or other biological therapy will answer a high unmet medical need, be supported by target validation, offer an efficient path to human proof of biology, present robust preclinical pharmacology, and offer strong commercial potential. We then engineer and optimize an AAV vector or other biological therapy for activity in, efficacy in, or delivery to, the targeted tissue or cells.

We are identifying proprietary AAV capsids, the outer viral protein shells that enclose genetic material that makes up the vector payload. Our team has developed a proprietary AAV capsid discovery platform called TRACERTM (Tropism Redirection of AAV by Cell Type-Specific Expression of RNA) that employs directed evolution to facilitate the selection of AAV capsids with enhanced tissue delivery characteristics, such as more effective delivery across the blood-brain barrier, or BBB. The TRACER discovery platform is a broadly applicable, functional RNA-based AAV capsid discovery platform that allows for rapid *in vivo* evolution of AAV capsids with cell-specific transduction properties in multiple species, including non-human primates. We believe that capsids we discover through our TRACER discovery platform, which we refer to as TRACER Capsids, have the potential to significantly enhance the efficacy and safety of our single dose gene therapies, which we expect to be delivered with systemic infusions, as compared with conventional capsids. We have leveraged the TRACER discovery platform to generate multiple families of TRACER Capsids with robust central nervous system, or CNS, tropism following intravenous delivery. We have presented data at scientific conferences demonstrating strong transduction to multiple areas within the brain and activity across multiple species. We have identified receptors for some of our TRACER Capsid families as well as a ligand for a particular receptor and are conducting experiments to evaluate the potential to leverage our receptors to shuttle non-viral genetic medicines across the BBB.

In addition to leveraging TRACER Capsids in potential licensing arrangements, we are advancing our own proprietary pipeline of drug candidates for neurological diseases, with a focus on Alzheimer’s disease, or AD. Our wholly-owned prioritized pipeline programs include superoxide dismutase 1, or SOD1, gene therapy for amyotrophic lateral sclerosis, or ALS, and an anti-tau antibody for AD. We have identified a lead development candidate for our anti-tau antibody program in the first quarter of 2023, initiated good laboratory practices, or GLP, toxicology studies in the third quarter of 2023, and we expect to submit an investigational new drug application, or IND, to the U.S. Food and Drug Administration for this program in the first half of 2024. We continue to evaluate the data from preclinical studies for our SOD1 program and expect to identify a lead development candidate in 2023. We expect to submit the IND for our SOD1 program in mid-2025. Our pipeline also includes four early research initiatives to develop gene therapies for the treatment of AD, Huntington’s disease, and brain metastases from HER2+ metastatic breast cancer. In addition to these wholly-owned programs, we are actively advancing two later preclinical stage programs in collaboration with Neurocrine: a glucocerebrosidase 1, or GBA1, gene therapy program for Parkinson’s disease and other GBA1-mediated diseases, and a FXN gene therapy program for Friedreich’s ataxia.

### AAV Gene Therapy

Gene therapy is an approach whereby gene expression is directly altered in patients to address the underlying cause or predominant manifestations of disease. We believe that the targeted nature of gene therapy may enable powerful treatment options and provide these patients with meaningful and durable benefits.

While AAV gene therapy can potentially be harnessed for multiple treatment methods, we are currently focused on gene replacement, gene knockdown and vectorized antibody approaches. Gene replacement is intended to restore the expression of a protein that is not expressed, expressed at abnormally low levels or functionally mutated with loss of function. Gene knockdown, or gene silencing, is intended to reduce the expression of a pathologically mutated RNA or protein that has detrimental effects. Vectorizing an antibody for delivery using AAV has the ability to increase exposure of large antibodies in brain parenchyma and interstitial fluid that otherwise show minimal penetration across the BBB when administered passively. Our gene therapy approach uses AAV vectors which we believe are ideal vectors for gene therapy for several reasons:

- ***Broad Applicability.*** AAV is able to transduce, or transfer a therapeutic gene, into numerous cell types including target cells in the CNS, cardiac, and other tissues.
- ***Safety.*** We do not believe AAV is known to cause any disease in humans.
- ***Does Not Readily Integrate.*** AAV does not readily integrate into the genome of the target cell, an attribute which we believe reduces the potential for oncogenesis, or the induction of cancer.
- ***Scalability.*** AAV is able to be manufactured at commercial quality and scale.

We believe that neurological diseases are well-suited for treatment with AAV gene therapy for the following reasons:

- ***Validated Targets.*** Many neurological, cardiac, and other diseases are caused by well-defined mutations in genes and these genes represent genetically validated drug targets for AAV gene therapy.
- ***Targeted Delivery.*** We believe our TRACER Capsids may allow for significantly enhanced gene therapy delivery to specific types of cells and tissues at lower doses.
- ***Durable Expression.*** Long-term gene expression may be achievable in the CNS and other tissues following one-time dosing and transfer of the therapeutic gene with an AAV vector. Because repeated or continual dosing with direct injection of drugs into the CNS and other tissues is complex, a one-time AAV gene therapy has significant advantages.

### The Voyager Gene Therapy Platform

We have built a gene therapy platform that we believe positions us to be the leading company at the intersection of AAV gene therapy and neurological diseases. Our team of experts in the field of AAV gene therapy first identifies and selects diseases that are well-suited for treatment using AAV gene therapy. We then engineer and optimize AAV vectors, identifying a capsid for delivery of a payload, comprising a therapeutic gene, which we refer to as a transgene, and a promoter to drive expression of the transgene, to the targeted tissue or cells. Finally, we leverage established routes of administration and advances in dosing techniques to optimize delivery of our AAV vectors to target cells that are critical to the disease of interest. We believe that optimizing each of these parameters is a key factor for overall program success. We expect that our current and future pipeline programs will make use of technological advances generated with our gene therapy platform.

### Disease Selection

Following an internal review process, we have prioritized pipeline programs for our development. This review evaluated the opportunity presented by each prioritized program based on the following criteria: high unmet medical need, target validation, efficient path to human proof of biology, robust preclinical pharmacology, and strong commercial potential.

### Vector Engineering and Optimization

The key components of an AAV vector include: (a) the capsid; (b) the transgene; and (c) payload control elements, including the promoter or other DNA sequences that modulate the expression of the transgene. We have advanced or intend to advance our multiple preclinical programs towards selection of lead clinical candidates using AAV vectors that we believe are best suited for each of our programs either through use of our existing capsids, through exercising a non-exclusive worldwide commercial license to capsid sequences covered by third parties, or by engineering or optimizing TRACER Capsids. We have also built, or intend to build, capabilities to design, screen, and advance genetic sequences within our AAV vectors, including transgenes and payload control elements, to create optimized therapeutic candidates for each of our preclinical programs.

### TRACER Capsid Discovery

Our scientists have developed TRACER, a proprietary AAV capsid discovery platform to facilitate the selection of TRACER Capsids for particular therapeutic applications based on BBB-crossing and cell-specific transduction properties in multiple species, including non-human primates, or NHPs. We believe these TRACER Capsids may allow for significantly enhanced gene delivery to specific types of cells in the brain at lower doses and, potentially, with fewer safety and tolerability issues than first-generation therapies. These TRACER Capsids are now in advanced stages of characterization for deployment in our gene therapy development programs. We continue to perform screening campaigns with our TRACER discovery platform to identify additional proprietary AAV9- and AAV5-derived TRACER Capsids and to refine previously-identified TRACER Capsids to target or de-target multiple tissue and cell types. At the American Society of Gene & Cell Therapy 26th Annual Meeting in May 2023, or the ASGCT 2023

Meeting, we presented data demonstrating greater than 50% cell transduction in multiple areas of the brain at a dose of 2x1012 vector genomes per kilogram following intravenous administration of our VCAP-102 TRACER Capsid in marmosets.

We are actively engaged in discussions to make TRACER Capsids available to third parties for use in their drug development programs through potential option and license and other arrangements. We believe there is significant opportunity for option and license transactions related to our TRACER Capsids. To maximize the potential of our TRACER Capsids for both our own programs and option and license transactions, we have retained to date, and expect to retain in the future, all rights associated with such TRACER Capsids other than the rights specific to their use in combination with the optionee’s or licensee’s transgenes or collaborators’ programs.

### Collaboration Agreements

### 2019 Neurocrine Collaboration

In January 2019, we entered into a collaboration with Neurocrine, or the 2019 Neurocrine Collaboration Agreement, for the research, development and commercialization of certain of our AAV gene therapy products, or the 2019 Collaboration Products. Under the 2019 Neurocrine Collaboration Agreement, we agreed to collaborate on the conduct of four collaboration programs, which we refer to collectively as the 2019 Neurocrine Programs: the NBIb-1817 (VY-AADC) program for the treatment of Parkinson’s disease, or the VY-AADC Program, the program for the treatment of Friedreich’s ataxia, or the FA Program, including the development of the VY-FXN01 product candidate, and two undisclosed programs, or the 2019 Discovery Programs. In August 2021, the collaboration was terminated with respect to the VY-AADC Program. Under the FA Program, we and Neurocrine are currently developing a gene therapy for the treatment of Friedreich’s ataxia, a debilitating neurodegenerative disease resulting in poor coordination of legs and arms, progressive loss of the ability to walk, generalized weakness, loss of sensation, scoliosis, diabetes and cardiomyopathy as well as impaired vision, hearing, and speech. Development of the two targets approved by the joint steering committee under the 2019 Discovery Programs is ongoing.

Under the terms of the 2019 Neurocrine Collaboration Agreement, Neurocrine has paid us an upfront payment of $115.0 million. In connection with the 2019 Neurocrine Collaboration Agreement, Neurocrine also paid us $50.0 million as consideration for an equity purchase of 4,179,728 shares of our common stock. The 2019 Neurocrine Collaboration Agreement provides for aggregate development milestone payments from Neurocrine to us for 2019 Collaboration Products under (a) the VY-AADC Program of up to $170.0 million, which we are no longer eligible to receive in light of the partial termination of the 2019 Neurocrine Collaboration Agreement; (b) the FA Program of up to $195.0 million, and (c) each of the two 2019 Discovery Programs of up to $130.0 million per 2019 Discovery Program. We may be entitled to receive aggregate commercial milestone payments of up to $275.0 million, subject to an aggregate cap on commercial milestone payments across all 2019 Neurocrine Programs of $1.1 billion.

Neurocrine has also agreed to pay us royalties, based on future net sales of the 2019 Collaboration Products. Such royalty percentages, for net sales in and outside the United States, as applicable, range (a) for the VY-AADC Program, from the mid-teens to thirty and the low-teens to twenty, respectively, which we are no longer eligible to receive in light of the partial termination of the 2019 Neurocrine Collaboration Agreement; (b) for the FA Program, from the low-teens to high-teens and high-single digits to mid-teens, respectively; and (c) for each 2019 Discovery Program, from the high-single digits to mid-teens and mid-single digits to low-teens, respectively. On a country-by-country and program-by-program basis, royalty payments would commence on the first commercial sale of a 2019 Collaboration Product and terminate on the later of (x) the expiration of the last patent covering the 2019 Collaboration Product or its method of use in such country, (y) 10 years from the first commercial sale of the 2019 Collaboration Product in such country and (z) the expiration of regulatory exclusivity in such country, or the 2019 Royalty Term. Royalty payments may be reduced by up to 50% in specified circumstances, including expiration of patents rights related to a 2019 Collaboration Product, approval of biosimilar products in a given country or required payment of licensing fees to third parties related to the development and commercialization of any 2019 Collaboration Product. Additionally, the licenses granted to Neurocrine shall automatically convert to fully paid-up, non-royalty bearing, perpetual, irrevocable, exclusive licenses on a country-by-country and product-by-product basis upon the expiration of the 2019 Royalty Term applicable to such 2019 Collaboration Product in such country.

### 2023 Neurocrine Collaboration

On January 8, 2023, we entered into a second collaboration agreement, or the 2023 Neurocrine Collaboration Agreement, with Neurocrine for the research, development, manufacture and commercialization of gene therapy products directed to the gene that encodes glucosylceramidase beta 1, or GBA1, for the treatment of Parkinson’s disease and other diseases associated with GBA1, or the GBA1 Program, and three new programs focused on the research, development, manufacture and commercialization of gene therapies designed to address central nervous system diseases or conditions associated with rare genetic targets, or the 2023 Discovery Programs, and, collectively with the GBA1 Program, the 2023 Neurocrine Programs.

Under the terms of the 2023 Neurocrine Collaboration Agreement, in February 2023 Neurocrine paid us an upfront payment of approximately $136.0 million and approximately $39.0 million for the purchase of 4,395,588 shares of common stock at a price of $8.88 per share. The 2023 Collaboration Agreement also provides for aggregate development milestone payments from Neurocrine for gene therapy products arising under the 2023 Neurocrine Programs, or the 2023 Collaboration Products, under (a) the GBA1 Program of up to $985.0 million and (b) each of the three 2023 Discovery Programs of up to $175.0 million for each 2023 Discovery Program. We may be entitled to receive aggregate commercial milestone payments for up to two 2023 Collaboration Products under the GBA1 Program of up to $950.0 million per 2023 Collaboration Product and for one 2023 Collaboration Product under each 2023 Discovery Program of up to $275.0 million per 2023 Discovery Program.

The 2023 Neurocrine Collaboration Agreement became effective on February 21, 2023. On February 23, 2023, we received the upfront payment, and the shares of our commons stock were issued and sold to Neurocrine pursuant to the applicable stock purchase agreement.

### License Agreements

In October 2021, we entered into an option and license agreement with Pfizer, or the Pfizer Agreement, pursuant to which we granted Pfizer options to receive an exclusive license, or the Pfizer License Options, to certain TRACER Capsids to develop and commercialize certain AAV gene therapy candidates comprised of a capsid and specified Pfizer transgenes, or Pfizer Transgenes. Effective as of September 30, 2022, Pfizer exercised a Pfizer License Option with respect to a capsid for the specified Pfizer Transgene for potential treatment of a rare neurological disease. In connection with the exercise of the Pfizer License Option for a rare neurological disease, we granted Pfizer an exclusive, worldwide license, with the right to sublicense, under certain of our intellectual property, the rights to develop and commercialize rare neurological disease products utilizing the capsid candidate and incorporating the corresponding Pfizer Transgene, or the Pfizer Licensed CNS Products. Pfizer did not exercise its option to license a capsid for the potential treatment of a cardiovascular disease. As result, Pfizer’s right to exercise a Pfizer License Option for a cardiovascular disease has terminated in accordance with the terms of the Pfizer Agreement and all rights to capsids for that cardiovascular disease have reverted to us.

On July 28, 2023, Alexion, AstraZeneca Rare Disease, or Alexion, entered into a definitive purchase and license agreement for preclinical gene therapy assets and enabling technologies from Pfizer. Effective upon the closing of the transaction on September 20, 2023, Alexion acquired all of Pfizer’s rights under the Pfizer Agreement and became the successor-in-interest to Pfizer thereunder. We refer to the Pfizer Agreement following the acquisition, as the Alexion Agreement. The acquisition does not impact the material terms of the option and license agreement.

Under the terms of the Alexion Agreement, Pfizer has paid us an upfront payment of $30 million and a payment of $10 million in connection with the exercise of the Pfizer License Option, which we also refer to as the Alexion License Option, for a rare neurological disease during the fourth quarter of 2022. We are also eligible to receive specified development, regulatory, and commercialization milestone payments of up to an aggregate of $115 million for the first Pfizer Licensed CNS Product, which we also refer to as an Alexion Licensed CNS Product, to achieve the applicable milestone. On an Alexion Licensed CNS Product-by-Alexion Licensed CNS Product basis, we are also eligible to receive (a) specified sales milestone payments of up to an aggregate of $175 million per Alexion Licensed CNS Product and (b) tiered, escalating royalties in the mid- to high-single-digit percentages of annual net sales of each Alexion Licensed CNS Product. The royalties are subject to potential reductions in customary circumstances including patent claim expiration, payments for certain third-party licenses, and biosimilar market penetration, subject to specified limits. For a further description of the Alexion Agreement, refer to Note 8, *Significant agreements*, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q under the caption “—Alexion Option and License Agreement (Formerly Pfizer Option and License Agreement).”

In March 2022, we entered into an option and license agreement, or the Novartis Agreement, with our collaborative partner Novartis. Pursuant to the Novartis Agreement, we have granted Novartis options, or the Novartis License Options, to license TRACER Capsids, or the Novartis Licensed Capsids, for exclusive use with certain targets to develop and commercialize certain adeno-associated virus gene therapy candidates comprised of a Novartis Licensed Capsid and a payload directed to such target. Effective as of March 1, 2023, Novartis exercised its Novartis License Options to license novel capsids generated from our TRACER Capsid discovery platform for use in gene therapy programs against two undisclosed targets. Novartis elected not to license a capsid for a third target under the Novartis Agreement prior to the expiration of the applicable Novartis License Option. All capsid rights with respect to that target have reverted to us. For a further description of the Novartis Agreement, refer to Note 8, *Significant agreements*, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q under the caption “—Novartis Option and License Agreement.”

In November 2022, we and Touchlight IP Limited, or Touchlight, entered into a license agreement, or the Touchlight License Agreement, to authorize historical use by us of a certain DNA preparation process, or the Subject DNA Preparation Process, and to authorize the prospective exploitation of TRACER Capsids created with the use of the Subject DNA Preparation Process.

### Overview of Our Pipeline

We have leveraged our TRACER discovery platform and other gene therapy platforms, our expertise with proprietary antibodies, and our vectorized antibody platform to assemble a pipeline of proprietary AAV gene therapies and other genetic medicines for the treatment of neurological diseases which we believe have high unmet medical need. Depending on the disease, we are seeking to develop AAV gene therapies that will use a gene replacement or gene silencing approach, and antibodies that will use a passive administration or vectorized delivery approach. Our goal is to address the underlying causes or the predominant manifestations of specific diseases by significantly increasing or decreasing expression of the relevant proteins in targeted tissues.

Our pipeline of programs, all of which are in preclinical development, is summarized in the table below:

### Wholly-Owned Programs

### Anti-Tau Antibody Program for the Treatment of AD

#### Disease Overview

We are developing proprietary antibodies that selectively target and reduce the spread of pathological tau for the treatment of tauopathies, and our lead indication is AD. The spread of tau pathology closely correlates with disease progression and cognitive decline in AD, which affects approximately 6 million people in the United States and is a growing health care burden to society. Recently, anti-amyloid antibodies have been approved for treatment of AD, and there is substantial remaining unmet medical need.

#### Our Treatment Approach

We have maintained a long-standing focus on developing proprietary and complimentary approaches to disrupt the progression of tau pathology believed to be central to AD and other tauopathies. Reduction of toxic tau aggregates may slow disease progression and cognitive decline in these diseases. We are exploring passive administration of our anti-tau antibody. Our anti-tau antibodies have differentiated properties including improved targeting of specific regions of tau protein that could offer an improved profile compared to first-generation approaches. We believe that our antibody targeting the C-terminus is highly differentiated from other approaches. Further, we believe that following the clearance of an IND application, clinical assessments utilizing positron emission tomography (PET) imaging of human tau, together with measuring plasma and cerebrospinal fluid biomarkers, have the potential to enable an efficient and accelerated demonstration of human proof-of-biology.

#### Preclinical Studies

At the Alzheimer’s Association International Conference in August 2022, we presented data for our proprietary anti-tau antibodies, targeting the mid-domain and C-terminus with high affinity and showing favorable biophysical characteristics and strong activity in preclinical studies in mouse models. In the P301S seeding-propagation tauopathy mouse model, our C-terminal targeting anti-tau antibody blocked the seeding/propagation of filamentous tau and demonstrated substantial reduction of induced tau pathology. In March 2023, we presented new data at the AD/PD 2023 Conference highlighting the differentiating characteristics resulting in the selection of lead candidate VY-TAU01.

#### Program Status

In January 2023, we selected a lead humanized anti-tau antibody candidate to advance against AD. The lead candidate, VY-TAU01, targets the C-terminal domain. VY-TAU01 was selected for its affinity, selectivity, and biophysical characteristics. In April 2023, we received pre-IND written feedback from the FDA for VY-TAU01. Process development and manufacturing at a contracted manufacturer have been initiated, and we initiated a GLP toxicology study in the third quarter of 2023 to enable an IND submission in the first half of 2024.

### Early Research Programs for the Treatment of AD

During the first quarter of 2023, we announced an early research initiative investigating a gene therapy targeting tau for the treatment of AD. The program combines an siRNA tau knockdown payload with an intravenously delivered TRACER Capsid.

In August 2023, we announced a separate early research initiative investigating a gene therapy targeting anti-amyloid for the treatment of AD. The program combines a vectorized anti-amyloid antibody with an intravenously delivered TRACER Capsid.

### SOD1 Gene Silencing Program for the Treatment of ALS

#### Disease Overview

We are developing a gene therapy leveraging a BBB-penetrant, CNS-tropic TRACER Capsid to treat ALS caused by the SOD1 mutation via a gene silencing approach. SOD1 ALS is typically fatal within approximately three years of diagnosis and impacts approximately 800 patients in the United States, 1,000 patients in the European Union, and 500 patients in Japan. SOD1 mutations in ALS patients are thought to cause a toxic gain-of-function that leads to the degeneration of motor neurons along the entire length of the spinal cord, the brainstem, and the upper motor neurons in the cerebral cortex.

#### Our Treatment Approach

We believe that a therapeutic delivering a vectorized highly potent small interfering RNA, or siRNA, construct via intravenous administration of an AAV gene therapy may enable broad CNS knockdown of SOD1. This could potentially slow the decline of functional ability in ALS patients with the SOD1 mutation. We believe that a Phase 1 clinical trial to demonstrate reductions in SOD1 in the cerebrospinal fluid and in neurofilament light chain in the plasma will provide evidence of target engagement and the attenuation of motor neuron loss, respectively.

#### Preclinical Studies

At the American Society of Gene & Cell Therapy 25th Annual Meeting in May 2022, or the ASGCT 2022 Meeting, we presented preclinical data demonstrating robust SOD1 knockdown in all levels of the spinal cord and significant improvements in motor performance, body weight, and survival in an SOD1-ALS mouse model following intravenous delivery of a vectorized siRNA using a mouse BBB-penetrant capsid.

#### Program Status

We have identified a potent and specific vectorized siRNA transgene that resulted in substantially extended lifespan and motor function when delivered using a BBB-penetrant capsid in a mouse model. We continue to evaluate the data from preclinical studies for this program and expect to identify a lead development candidate in 2023. We expect to submit an IND for this program in mid-2025.

### Other Early Research Programs

In January 2023, we announced the launch of an updated early research initiative for the treatment of Huntington’s disease. The updated gene therapy program, which leverages the latest insights in disease biology, combines an intravenous TRACER Capsid with vectorized siRNAs to enable specific knockdown of mHTT and MSH3. Early data on the selection and vectorization of siRNAs targeting mHTT were presented at the 18th Annual Huntington's Disease Therapeutics Conference held in Dubrovnik, Croatia, in April 2023.

Our wholly-owned early research programs also include a program exploring a vectorized antibody against HER2 for the treatment of brain metastases from HER2+ metastatic breast cancer. Pre-clinical data has demonstrated that our vectorized antibody against HER2 inhibits proliferation and promote antibody-dependent cell cytotoxicity, a process that recruits natural killer cells, macrophages and/or brain-resident innate immune cells called microglia to eliminate tumor cells.

### Collaboration Programs

### GBA1 Gene Replacement Program for the Treatment of Parkinson’s Disease (2023 Neurocrine Collaboration)

#### Disease Overview

We are developing a gene therapy leveraging a BBB-penetrant, CNS-tropic TRACER Capsid to treat diseases linked to GBA1 mutations via a gene replacement approach. Our lead indication for this gene therapy is Parkinson’s disease with GBA1 mutations. Mutations in GBA1, the gene encoding the lysosomal glucocerebrosidase enzyme, or

Gcase, are the most common genetic risk factor for synucleinopathies such as Parkinson’s disease. Parkinson’s disease is among the most common neurodegenerative diseases, impacting about one million patients in the United States and more than 10.0 million patients worldwide. Up to 10% of Parkinson’s disease patients have a GBA1 mutation, and these mutations increase the risk of Parkinson’s disease by approximately 20-fold. GBA1 mutations can decrease the activity of Gcase, leading to the accumulation of Gcase substrates which is linked to alpha-synuclein aggregates, which are thought to be toxic to neurons.

#### Our Treatment Approach

We believe that restoring Gcase activity may attenuate disease progression and potentially slow neurodegeneration. We anticipate delivering GBA1 via intravenous administration of an AAV gene therapy to enable widespread distribution to multiple affected brain regions and to avoid the need for more invasive approaches. We believe that the measurement of the Gcase substrates such as glucosylsphingosine as cerebrospinal fluid biomarkers may facilitate efficient clinical demonstration of proof-of-biology. Such substrates of the Gcase enzyme are elevated in the cerebrospinal fluid of Parkinson’s disease patients who harbor the GBA1 mutation, and we expect that substrate levels would be normalized if our gene therapy restores Gcase enzyme expression in the brain. This gene therapy may also have potential utility in idiopathic Parkinson’s disease, where there is evidence of loss of Gcase activity in the substantia nigra in Parkinson’s disease patients even in the absence of GBA1 mutations as well as evidence of lysosomal dysfunction in general.

#### Preclinical Studies

At the ASGCT 2022 Meeting, we presented preclinical data demonstrating CNS target engagement and delivery of therapeutically relevant levels of Gcase in a GBA1 loss of function mouse model, as well as sustained expression for three or more months following intravenous administration. At the AD/PD 2023 Conference, we presented new data from additional mouse efficacy studies showing that three potential development candidates each demonstrated significant improvement in several efficacy biomarkers. We presented data at the ASGCT 2023 Meeting summarizing the mouse findings and additional data from a non-human primate study showing that the administration of a reporter transgene via a single, intravenous dose using two novel BBB-penetrant AAV capsids demonstrated substantially improved biodistribution and gene expression compared to conventional AAV9 in the putamen and substantia nigra, two areas of the brain that are affected in Parkinson’s disease.

#### Program Status

Under the 2023 Neurocrine Collaboration Agreement, we are developing gene therapy products directed to the gene that encodes GBA1 for the treatment of Parkinson’s disease and other diseases associated with GBA1. The GBA1 Program is currently in preclinical development. We and Neurocrine are in the process of identifying a lead candidate that will be comprised of a TRACER Capsid, promoter, and transgene. If we and Neurocrine successfully identify a lead development candidate for this program, we plan to complete IND enabling studies to evaluate its safety and efficacy.

### Friedreich’s Ataxia Program: VY-FXN01 (2019 Neurocrine Collaboration)

#### Disease Overview

Friedreich’s ataxia is a debilitating neurodegenerative disease resulting in poor coordination of legs and arms, progressive loss of the ability to walk, generalized weakness, loss of sensation, scoliosis, diabetes and cardiomyopathy as well as impaired vision, hearing and speech. The typical age of onset is 10 to 12 years, and life expectancy is severely reduced with patients generally dying of neurological and cardiac complications between the ages of 35 and 45. According to the Friedreich’s ataxia Research Alliance, there are approximately 6,400 patients living with the disease in the United States. While one treatment for Friedreich’s ataxia has recently been approved by the FDA, we believe there remains a significant unmet need.

Friedreich’s ataxia patients have mutations of the FXN gene that reduce production of the frataxin protein, resulting in the degeneration of sensory pathways and a variety of debilitating symptoms. Friedreich’s ataxia is an autosomal recessive disorder, meaning that a person must obtain a defective copy of the FXN gene from both parents in order to develop the condition. One healthy copy of the FXN gene, or 50% of normal frataxin protein levels, is sufficient to prevent the disease phenotype. We therefore believe that restoring FXN protein levels to at least 50% of normal levels by AAV gene therapy might lead to a successful therapy.

#### Our Treatment Approach

We are seeking to develop an AAV gene therapy approach that we believe will deliver a functional version of the FXN gene to the sensory pathways through intravenous injection. We think this approach has the potential to improve balance, ability to walk, sensory capability, coordination, strength and functional capacity of Friedreich’s ataxia patients. Most Friedreich’s ataxia patients produce low levels of the frataxin protein, which although insufficient to prevent the disease, exposes the patient’s immune system to frataxin. This reduces the likelihood that the FXN protein expressed by AAV gene therapy will trigger a harmful immune response.

#### Preclinical Studies

We initially conducted preclinical studies in non-human primates and achieved high FXN expression levels within the target sensory ganglia, or clusters of neurons, along the spinal region following intrathecal injection. More recently, we conducted preclinical studies in non-human primates with intravenous injection and achieved target FXN expression levels within sensory ganglia and the heart. The levels of FXN expression observed in the brain using an AAV vector were, on average, greater than FXN levels present in control normal human brain tissue. FXN expression was also observed in the cerebellar dentate nucleus, another area of the CNS that is often affected in Friedreich’s ataxia, and that is often considered difficult to target therapeutically.

#### Our Program Status

As part of the 2019 Neurocrine Collaboration Agreement, we are developing VY-FXN01 for the treatment of Friedreich’s ataxia. VY-FXN01 is currently in preclinical development. We and Neurocrine are in the process of identifying a lead candidate that will be comprised of a capsid, promoter, and FXN transgene and are evaluating the potential use of TRACER Capsids in the program. We are completing AAV capsid biodistribution experiments to confirm capsid serotypes that effectively transduce disease target tissues in non-human primates following intravenous injection. If we and Neurocrine successfully identify a development lead candidate for this program, we plan to complete IND enabling studies to evaluate its safety and efficacy.

### Accumulated Deficit

We have a history of incurring significant losses. As of September 30, 2023, we had an accumulated deficit of $317.6 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase substantially in connection with our ongoing activities, as we:

- conduct preclinical development activities and initiate GLP toxicology studies and clinical trials in connection with our tau antibody program and our SOD1 ALS gene therapy program;
- continue investing in our gene therapy platform to optimize capsid engineering and payload development, manufacturing, dosing, and delivery techniques by continuing to develop our proprietary antibodies and vectorized antibody platform;
- increase our investment in and support for our TRACER discovery platform to facilitate the selection of AAV capsids and expand our investment to discover TRACER Capsids with broad tropism in CNS and other tissues with cell-specific transduction properties for particular therapeutic applications;
- increase our investment in the identification of receptors for our TRACER Capsids and related initiatives to leverage these receptors for further novel capsid discovery and the delivery of non-viral genetic medicines;
- conduct joint research and development under our strategic collaborations for the research, development, and commercialization of certain of our pipeline programs, including our FA Program pursuant to the 2019 Neurocrine Collaboration Agreement, and our GBA1 gene therapy program pursuant to our 2023 Neurocrine Collaboration Agreement;
- continue to meet obligations set forth by our existing partners and any new partnerships we may enter into;
- initiate additional preclinical studies and clinical trials for, and continue research and development of, our other programs;
- continue our process research and development activities, as well as establish our research-grade and commercial manufacturing capabilities;
- identify additional diseases for treatment with our AAV gene therapies and develop additional programs or product candidates;
- seek marketing and regulatory approvals for any of our product candidates that successfully complete clinical development;
- maintain, expand, protect and enforce our intellectual property portfolio;
- identify, acquire or in-license other product candidates and technologies;
- expand our operational, financial and management systems and personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company;
- increase our product liability and clinical trial insurance coverage as we expand our clinical trials and commercialization efforts; and
- continue to operate as a public company.

### Financial Operations Overview

### Revenue

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the foreseeable future. For the three months ended September 30, 2023, we recognized $3.1 million of collaboration revenue from the 2023 Neurocrine Collaboration Agreement and $1.5 million of collaboration revenue from the 2019 Neurocrine Collaboration Agreement. For the nine months ended September 30, 2023, we recognized $79.0 million of collaboration revenue from the Novartis Agreement, $75.5 million of collaboration revenue from the 2023 Neurocrine Collaboration Agreement, $5.2 million of collaboration revenue from the 2019 Neurocrine Collaboration Agreement, and $0.3 million of other collaboration revenue.

For additional information about our revenue recognition policy related to collaborations and a description of the key terms of the 2023 Neurocrine Collaboration Agreement and the Novartis Agreement, refer to Note 8, *Significant agreements*, of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

For the foreseeable future, we expect substantially all of our revenue will be generated from the 2019 Neurocrine Collaboration Agreement and the 2023 Neurocrine Collaboration Agreement, the Alexion Agreement, the Novartis Agreement, and any other strategic collaborations and out-licensing arrangements we may enter into in the future. If our development efforts are successful, we may also generate revenue from product sales.

### Expenses

#### Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our program discovery efforts, and the development of our programs, gene therapy platform, proprietary antibodies, and vectorized antibody platform which include:

- employee-related expenses including salaries, benefits, and stock-based compensation expense;
- costs of funding research performed by third parties that conduct research and development, preclinical activities, manufacturing and production design on our behalf;
- the cost of purchasing laboratory supplies and non-capital equipment used in designing, developing and manufacturing preclinical study materials;
- consultant fees;
- facility costs including rent, depreciation and maintenance expenses;
- the cost of securing and protecting intellectual property rights associated with our research and development activities; and
- fees for maintaining licenses under our third-party licensing agreements.

Research and development costs are expensed as incurred. Costs for certain activities, such as manufacturing, preclinical studies, and clinical trials, are generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and collaborators.

Research and development activities are central to our business model. We are in the early stages of development of our product candidates. During the nine months ended September 30, 2023, our research and development expenses have increased as compared to the amounts recorded in the same period in the prior year. As our development programs progress and as we identify product candidates and initiate preclinical studies and clinical trials, we expect research and development costs to continue to increase. However, at this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of our product candidates.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses. Our expenses will increase if:

- we are required by the FDA or the European Medicines Agency or other regulatory agencies to redesign or modify trials or studies or to perform trials or studies in addition to those currently expected;
- there are any delays in the receipt of regulatory clearance to begin our planned clinical programs; or
- there are any delays in enrollment of patients in or completing our clinical trials or the development of our product candidates.

#### General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, accounting, business development, legal and human resource functions. Other significant costs include corporate facility costs not otherwise included in research and development expenses, legal fees related to patent and corporate matters and fees for accounting and consulting services.

During the nine months ended September 30, 2023, our general and administrative expenses have increased as compared to the amount recorded in the same period in prior year. As our development programs progress and we identify product candidates and initiate preclinical studies and clinical trials, we will continue to expect general and administrative expenses to increase to support these additional research and development activities.

#### Other Income, Net

Other income, net for the nine months ended September 30, 2023, consists primarily of interest income on our marketable securities.

### Critical Accounting Policies and Estimates

We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as critical because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate. There were no changes to our critical accounting policies during the nine months ended September 30, 2023, as compared to those identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. It is important that the discussion of our operating results that follow be read in conjunction with the critical accounting policies disclosed in our Annual Report on Form 10-K, as filed with the SEC on March 7, 2023.

### Results of Operations

### Comparison of the three months ended September 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended September 30, 2023 and 2022, together with the changes in those items in dollars:

*(in thousands)*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Three Months Ended September 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Change | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- |
| Collaboration revenue | ​ | $4,614 |  | $41,086 |  | $(36,472) | ​ |
| Operating expenses: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Research and development | ​ | 25,863 | ​ | 19,337 | ​ | 6,526 | ​ |
| General and administrative | ​ | 8,258 | ​ | 7,307 | ​ | 951 | ​ |
| Total operating expenses | ​ | 34,121 | ​ | 26,644 | ​ | 7,477 | ​ |
| Other income, net: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Interest income | ​ | ​ 3,429 | ​ | ​ 545 | ​ | ​ 2,884 | ​ |
| Other income | ​ | ​ — | ​ | ​ 2,637 | ​ | ​ (2,637) | ​ |
| Total other income, net | ​ | 3,429 | ​ | 3,182 | ​ | 247 | ​ |
| Net (loss) income before income taxes | ​ | $(26,078) | ​ | $17,624 | ​ | $(43,702) | ​ |

#### Collaboration Revenue

Collaboration revenue was $4.6 million and $41.1 million for the three months ended September 30, 2023 and 2022, respectively. The decrease in collaboration revenue was largely a result of $40.0 million of revenue recognized during the three months ended September 30, 2022 in connection with Pfizer’s decision to exercise the first material right for the Pfizer License Option, along with the expiration of the second material right associated with the Pfizer License Option. During the three months ended September 30, 2023, we recognized $3.1 million of revenue associated with the 2023 Neurocrine Collaboration Agreement and $1.5 million of revenue associated with the 2019 Neurocrine Collaboration Agreement.

#### Research and Development Expense

Research and development expenses increased by $6.5 million from $19.3 million for the three months ended September 30, 2022, to $25.9 million for the three months ended September 30, 2023. The following table summarizes our research and development expenses for the three months ended September 30, 2023 and 2022, together with the changes in those items in dollars:

*(in thousands)*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Three Months Ended September 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Change | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- |
| Employee and consultant | ​ | $11,264 | ​ | $7,804 | ​ | $3,459 | ​ |
| External research and development | ​ | ​ 10,663 |  | ​ 7,787 | ​ | ​ 2,876 | ​ |
| Facilities and other | ​ | 1,836 | ​ | 1,846 | ​ | (10) | ​ |
| Professional fees | ​ | 2,100 | ​ | 1,900 | ​ | 201 | ​ |
| Total research and development expenses | ​ | $25,863 | ​ | $19,337 | ​ | $6,526 | ​ |

The increase in research and development expenses for the three months ended September 30, 2023 was primarily attributable to the following:

- approximately $3.5 million for increased employee and consultant related costs associated with higher headcount in research and development functions, including targeted development team hires to support our advancing pipeline as compared to the three months ended September 30, 2022;
- approximately $2.9 million for external research and development costs related to increased program-related spending, particularly on manufacturing and IND-enabling studies for our anti-tau antibody program, along with increased Neurocrine program support during the third quarter of 2023; and
- approximately $0.2 million for increased professional fees primarily related to the increased program-related spend.

#### General and Administrative Expense

General and administrative expense increased by $1.0 million from $7.3 million for the three months ended September 30, 2022, to $8.3 million for the three months ended September 30, 2023. The increase in general and administrative expense was primarily attributable to the following:

- approximately $1.6 million of increased compensation costs and stock-based compensation associated with higher headcount in general and administrative functions as compared to the three months ended September 30, 2022;
- partially offset by approximately $0.4 million for decreased facility and other costs primarily related to decreased depreciation expense.
- partially offset by approximately $0.2 million for decreased legal and patent expenses.

#### Other Income, net

Other income, net of approximately $3.4 million was recognized during the three months ended September 30, 2023, as compared to $3.2 million during the three months ended September 30, 2022. Interest income was $3.4 million for the three months ended September 30, 2023, as compared to $0.5 million for the three months ended September 30, 2022. The increase was due to higher cash equivalents and marketable securities balances with increased interest rates during the three months ended September 30, 2023, as compared to the three months ended September 30, 2022. Other income of approximately $2.6 million was recognized during the three months ended September 30, 2022, primarily related to an employee retention tax credit under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act.

### Comparison of the nine months ended September 30, 2023 and 2022

The following table summarizes our results of operations for the nine months ended September 30, 2023 and 2022, together with the changes in those items in dollars:

*(in thousands)*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Nine Months Ended September 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Change | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- |
| Collaboration revenue | ​ | $159,947 |  | $42,457 |  | $117,490 | ​ |
| Operating expenses: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Research and development | ​ | 66,416 | ​ | 46,213 | ​ | 20,203 | ​ |
| General and administrative | ​ | 25,580 | ​ | 22,518 | ​ | 3,062 | ​ |
| Total operating expenses | ​ | 91,996 | ​ | 68,731 | ​ | 23,265 | ​ |
| Other income, net: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Interest income | ​ | ​ 8,567 | ​ | ​ 816 | ​ | ​ 7,751 | ​ |
| Other income | ​ | ​ 3 | ​ | ​ 2,676 | ​ | ​ (2,673) | ​ |
| Total other income, net | ​ | 8,570 | ​ | 3,492 | ​ | 5,078 | ​ |
| Net income (loss) before income taxes | ​ | $76,521 | ​ | $(22,782) | ​ | $99,303 | ​ |

#### Collaboration Revenue

Collaboration revenue was $159.9 million and $42.5 million for the nine months ended September 30, 2023 and 2022, respectively. The increase in collaboration revenue was the result of $79.0 million in revenue recognized during the nine months ended September 30, 2023, in connection with Novartis’ decision to exercise two Novartis License Options, along with the expiration of a third Novartis License Option. In addition, during the nine months ended September 30, 2023, we recognized $75.5 million of revenue associated with the 2023 Neurocrine Collaboration Agreement, $5.2 million of revenue associated with the 2019 Neurocrine Collaboration Agreement, and $0.3 million of other collaboration revenue. During the nine months ended September 30, 2022, collaboration revenue was primarily related to Pfizer’s decision to exercise the first material right for the Pfizer License Option, along with the expiration of the second material right associated with the Pfizer License Option, which resulted in revenue recognized of $40.0 million.

#### Research and Development Expense

Research and development expense increased by $20.2 million from $46.2 million for the nine months ended September 30, 2022, to $66.4 million for the nine months ended September 30, 2023. The following table summarizes our research and development expenses for the nine months ended September 30, 2023 and 2022, together with the changes in those items in dollars:

*(in thousands)*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Nine Months Ended September 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Change | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- |
| Employee and consultant | ​ | $31,280 |  | $21,370 | ​ | $9,910 | ​ |
| External research and development | ​ | ​ 24,051 | ​ | ​ 12,382 | ​ | ​ 11,669 | ​ |
| Facilities and other | ​ | 5,039 | ​ | 6,465 | ​ | (1,426) | ​ |
| Professional fees | ​ | 6,046 | ​ | 5,996 | ​ | 50 | ​ |
| Total research and development expenses | ​ | $66,416 | ​ | $46,213 | ​ | $20,203 | ​ |

The increase in research and development expenses for the nine months ended September 30, 2023 was primarily attributable to the following:

- approximately $9.9 million for increased employee and consultant related costs associated with higher headcount in research and development functions as compared to the same period in the prior year; and
- approximately $11.7 million for external research and development costs related to increased program-related spending, particularly on manufacturing and IND-enabling studies for our anti-tau antibody program, along with increased Neurocrine program support during the 2023 period, and the fee due to Touchlight in conjunction with Novartis’ exercise of two Novartis License Options;
- partially offset by approximately $1.4 million for decreased facility and other costs primarily related to the termination of the lease for office and laboratory space at 75 Sidney Street during the second quarter of 2022.

#### General and Administrative Expense

General and administrative expense increased by $3.1 million from $22.5 million for the nine months ended September 30, 2022, to $25.6 million for the nine months ended September 30, 2023. The increase in general and administrative expense was primarily attributable to approximately $3.1 million of increased compensation costs and stock-based compensation associated with higher headcount in general and administrative functions as compared to the same period in the prior year.

#### Other Income, net

Other income, net of approximately $8.6 million was recognized during the three months ended September 30, 2023, as compared to $3.5 million during the three months ended September 30, 2022. Interest income was $8.6 million for the nine months ended September 30, 2023, as compared to $0.8 million for the nine months ended September 30, 2022. The increase was due to higher cash equivalents and marketable securities balances with increased interest rates during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. Other income of approximately $2.7 million was recognized during the nine months ended September 30, 2022, primarily related to an employee retention tax credit under the CARES Act.

### Liquidity and Capital Resources

### Sources of Liquidity

We have funded our operations primarily through private placements of redeemable convertible preferred stock, public offerings of our common stock, strategic collaborations and option and license arrangements, including our 2019 Neurocrine Collaboration Agreement and 2023 Neurocrine Collaboration Agreement, our ongoing option and license arrangements with Alexion and Novartis under the Alexion Agreement and the Novartis Agreement, respectively, and with our prior collaboration agreements.

As of September 30, 2023, we had cash, cash equivalents, and marketable securities of $252.9 million. We are committed to maintaining a strong balance sheet that supports the advancement and growth of our platform and pipeline. We continue to assess our planned cash needs both during and in future periods. We expect our cash, cash equivalents, and marketable securities, along with amounts expected to be received as reimbursement for development costs under the Neurocrine collaborations and interest income, to be sufficient to meet our planned operating expenses and capital expenditure requirements into mid-2025.

#### Cash Flows

The following table provides information regarding our cash flows for the nine months ended September 30, 2023 and 2022:

*(in thousands)*

| ​ ​ ​ ​ ​ Net cash provided (used in) by: | ​ ​ ​ ​ ​ | ​ ​ Nine Months Ended September 30, 2023 ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- |
| Operating activities | ​ | $101,679 | ​ | $(265) | ​ |
| Investing activities | ​ | (168,476) | ​ | (21,406) | ​ |
| Financing activities | ​ | 33,185 | ​ | 834 | ​ |
| Net decrease in cash, cash equivalents, and restricted cash | ​ | $(33,612) | ​ | $(20,837) | ​ |

#### Net Cash Provided by (Used in) Operating Activities

Net cash provided by operating activities was $101.7 million during the nine months ended September 30, 2023, compared to $0.3 million of net cash used in operating activities during the nine months ended September 30, 2022. The increase was primarily due to our net income for the nine months ended September 30, 2023 of $75.9 million as compared to our net loss for the nine months ended September 30, 2022 of $22.8 million.

#### Net Cash Used in Investing Activities

Net cash used in investing activities was $168.5 million during the nine months ended September 30, 2023, compared to $21.4 million during the nine months ended September 30, 2022. The change was primarily due to increased purchases of marketable securities during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

#### Net Cash Provided by Financing Activities

Net cash provided by financing activities was $33.2 million during the nine months ended September 30, 2023, driven by proceeds from the issuance of common stock in connection with the 2023 Neurocrine Collaboration Agreement. Net cash provided by financing activities during the nine months ended September 30, 2022 was primarily attributable to the exercise of stock options.

#### Funding Requirements

Our expenses increased during the nine months ended September 30, 2023, as compared with the nine months ended September 30, 2022, as our development programs progressed and we increased headcount. We expect our expenses to continue to increase as we continue the research and development of, conduct clinical trials of, and seek marketing approval for, our product candidates and as we continue to enter into or conduct activities in connection with our collaboration agreements. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant expenses related to program sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Furthermore, we expect to incur increasing costs associated with operating as a public company, executing financial statement controls, satisfying regulatory and quality standards, fulfilling healthcare compliance requirements, and maintaining product, clinical trial and directors’ and officers’ liability insurance coverage. We also anticipate the cost of goods and services and the levels of compensation paid to employee will increase due to inflationary conditions existing in the general economy. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital or enter into business development transactions when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

Based upon our current operating plans, we expect that our existing cash, cash equivalents, and marketable securities at September 30, 2023, along with amounts expected to be received as reimbursement for development costs under our collaboration and license agreements with Neurocrine, will enable us to meet our planned operating expenses and capital expenditure requirements into mid-2025. Our future capital requirements will depend on many factors, including:

- the scope, progress, results, and costs of product discovery, preclinical studies and clinical trials for our product candidates;
- the scope, progress, results, costs, prioritization, and number of our research and development programs;
- the progress and status of our strategic collaborations and option and license agreements and any similar arrangements we may enter into in the future, including any research and development costs for which we are responsible, future additional obligations that may be committed to within or outside these agreements, and our receipt of any future milestone payments and royalties from our collaboration partners or licensors;
- the extent to which we are obligated to reimburse preclinical development and clinical trial costs, or the achievement of milestones or occurrence of other developments that trigger milestone and royalty payments, under any collaboration or license agreements to which we might become a party, such as the Touchlight License Agreement;
- the costs, timing and outcome of regulatory review of our product candidates;
- our ability to establish and maintain collaboration, distribution, or other marketing arrangements for our product candidates on favorable terms, if at all;
- the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
- the extent to which we acquire or in-license other product candidates and technologies, including any intellectual property associated with such candidates or technologies, acquire or invest in other businesses, or out-license our product candidates, capsids or other technologies;
- the costs of advancing our manufacturing capabilities and securing manufacturing arrangements for pre-commercial and commercial production;
- the level of product sales by us or our collaborators from any product candidates for which we obtain marketing approval in the future;
- the costs of operating as a public company and maintaining adequate product, clinical trial, and directors’ and officers’ liability insurance coverage; and
- the costs of establishing or contracting for sales, manufacturing, marketing, distribution, and other commercialization capabilities if we obtain regulatory approvals to market our product candidates.

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete. We may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our product revenues, if any, and any commercial milestone payments or royalty payments under our collaboration agreements, will be derived from sales of products that may not be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing and business development transactions to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.

Until such time, if ever, as we can generate product revenues sufficient to achieve consistent profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and option and license arrangements. We do not have any committed external source of funds other than the amounts we are entitled to receive from our collaboration partners and licensors for reimbursement of certain research and development expenses, potential option exercises, the achievement of specified regulatory and commercial milestones, and royalty payments under our collaboration, and option and license agreements, as applicable. To the extent that we raise additional capital through the sale of equity or equity-linked securities, including convertible debt, our stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our existing stockholders’ rights as holders of our common stock. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, obtaining additional capital, acquiring or divesting businesses, making capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances, or option and license arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

### Contractual Obligations

We enter into agreements in the normal course of business with clinical research organizations, contract manufacturing organizations, and institutions to license intellectual property. These contracts generally are cancelable at any time by us, upon 30 to 90 days prior written notice.

Our agreements to license intellectual property include potential milestone payments that are dependent upon the development of products using the intellectual property licensed under the agreements and contingent upon the achievement of clinical trial or regulatory approval milestones. We may also be required to pay annual maintenance fees or minimum amounts payable ranging from low-four digits to low five-digits depending upon the terms of the applicable agreement. In certain instances, we are also obligated to pay our licensors royalties based on sales of products, if approved, using the intellectual property licensed under the applicable agreement.

We also have non-cancelable operating lease commitments arising from our leases of office and laboratory space at our facilities in Cambridge and Lexington, Massachusetts. For more information, refer to Note 6 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

### Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

## Market risk

As filed, 1,270 characters.

We are exposed to market risk related to changes in interest rates. We have policies requiring us to invest in high-quality issuers, limit our exposure to any individual issuer, and ensure adequate liquidity. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments, including cash equivalents, are in the form of money market funds and marketable securities and are invested in U.S. Treasury notes. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our portfolio.

We are not currently exposed to market risk related to changes in foreign currency exchange rates; however, we may contract with vendors that are located in Asia and Europe in the future and may be subject to fluctuations in foreign currency rates at that time.

Inflation generally affects us by increasing our costs of labor, goods, and services. We do not believe that inflation had a material effect on our business, financial condition, or results of operations during the nine months ended September 30, 2023.

## Controls and procedures

As filed, 2,255 characters.

### Management’s Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act to mean controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and other procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2023. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of September 30, 2023, our disclosure controls and procedures were effective at the reasonable assurance level.

We continue to review and document our disclosure controls and procedures and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

### Changes in Internal Control over Financial Reporting

During the nine months ended September 30, 2023, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 1,131 characters.

We are subject to a number of risks that could adversely affect our business, results of operations financial condition and future prospects including those identified in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 7, 2023, or the 2022 10-K Risk Factors. We note that, on July 28, 2023, Alexion, Astrazeneca Rare Disease, or Alexion, entered into a definitive purchase and license agreement for preclinical gene therapy assets and enabling technologies from Pfizer, Inc., or Pfizer. Effective upon the closing of the transaction on September 20, 2023, Alexion acquired all of Pfizer’s rights under the option and license agreement we entered into with Pfizer on October 1, 2021, or the Pfizer Agreement, and became the successor-in-interest to Pfizer thereunder. The 10-K Risk Factors referring to Pfizer in the context of its ongoing rights and obligations under the Pfizer Agreement should be read to refer instead to Alexion as Pfizer’s successor-in-interest thereunder on and after September 20, 2023. There have been no other material changes to the 2022 10-K Risk Factors.

Filed Nov 6, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-017754. Last ingested by Listed: Nov 3, 2026, 18:52 ET. No prices; not investment advice.