SEC Filing - Regenxbio Inc

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2019

☐	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 001-37553

REGENXBIO Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware		47-1851754
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9600 Blackwell Road, Suite 210 Rockville, MD		20850
(Address of principal executive offices)		(Zip Code)

(240) 552-8181

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class	Ticker symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	RGNX	The 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, 2019, there were 36,874,282 outstanding shares of the registrant’s common stock, par value $0.0001 per share.

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REGENXBIO INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019

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	PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	3
	Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2019 and 2018	4
	Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2019 and 2018	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	48
Signatures		49

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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These statements express a belief, expectation or intention and are generally accompanied by words that convey projected future events or outcomes such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “assume,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would” or by variations of such words or by similar expressions. We have based these forward-looking statements on our current expectations and assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, uncertainties, assumptions and other important factors, including, but not limited to:

•

the timing of enrollment, commencement and completion and the success of our clinical trials;

•

the timing of commencement and completion and the success of preclinical studies conducted by us and our development partners;

•

the timely development and launch of new products;

•

our expectations regarding the imposition by the U.S. Food and Drug Administration (the FDA) of a partial clinical hold on our investigational new drug application for RGX-314 for the treatment of wet age-related macular degeneration, including our ability to resolve issues raised by the FDA and the timing of any lifting of the hold by the FDA;

•

the ability to obtain and maintain regulatory approval of our product candidates, and the labeling for any approved products;

•

the scope, progress, expansion and costs of developing and commercializing our product candidates;

•

our ability to obtain and maintain intellectual property protection for our product candidates and technology;

•

our anticipated growth strategies;

•

our expectations regarding competition;

•

the anticipated trends and challenges in our business and the market in which we operate;

•

our ability to attract or retain key personnel;

•

the size and growth of the potential markets for our product candidates and the ability to serve those markets;

•

the rate and degree of market acceptance of any of our product candidates;

•

our ability to establish and maintain development partnerships;

•

our expectations regarding our expenses and revenue;

•

our expectations regarding regulatory developments in the United States and foreign countries; and

•

the use or sufficiency of our cash and cash equivalents and needs for additional financing.

You should carefully read the factors discussed in the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2018 and in our other filings with the U.S. Securities and Exchange Commission (the SEC) for additional discussion of the risks, uncertainties, assumptions and other important factors that could cause our actual results or developments to differ materially and adversely from those projected in the forward-looking statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on us or our businesses or operations. Such statements are not guarantees of future performance and actual results or developments may differ materially and adversely from those projected in the forward-looking statements. These forward-looking statements speak only as of the date of this report. Except as required by law, we disclaim any duty to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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Available Information

We file annual, quarterly, and current reports, proxy statements, and other documents with the SEC under the Exchange Act. You may obtain any reports, proxy and information statements, and other information that we file electronically with the SEC at www.sec.gov.

You also may view and download copies of our SEC filings free of charge at our website, www.regenxbio.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information contained on, or that can be accessed through, our website will not be deemed to be incorporated by reference in, and is not considered part of, this Quarterly Report on Form 10-Q. Investors should also note that we use our website, as well as SEC filings, press releases, public conference calls and webcasts, to announce financial information and other material developments regarding our business. We use these channels, as well as any social media channels listed on our website, to communicate with investors and members of the public about our business. It is possible that the information that we post on our social media channels could be deemed material information. Therefore, we encourage investors, the media and others interested in our company to review the information that we post on our social media channels.

As used in this Quarterly Report on Form 10-Q, the terms “REGENXBIO,” “we,” “us,” “our” or the “Company” mean REGENXBIO Inc. and its subsidiaries, on a consolidated basis, unless the context indicates otherwise.

NAV, REGENXBIO and the REGENXBIO logos are our registered trademarks. Any other trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

REGENXBIO INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except per share data)

	September 30, 2019			December 31, 2018
Assets
Current assets
Cash and cash equivalents	$	79,594		$	75,561
Marketable securities		252,125			244,200
Accounts receivable		19,175			8,587
Prepaid expenses		6,920			5,734
Other current assets		2,414			3,831
Total current assets		360,228			337,913
Marketable securities		85,408			150,819
Accounts receivable		24,345			23,012
Property and equipment, net		28,287			28,702
Operating lease right-of-use assets		5,905			—
Restricted cash		1,053			1,053
Other assets		4,011			2,315
Total assets	$	509,237		$	543,814
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	9,608		$	4,412
Accrued expenses and other current liabilities		19,231			17,164
Deferred revenue		—			600
Operating lease liabilities		2,506			—
Total current liabilities		31,345			22,176
Deferred revenue		3,333			3,333
Operating lease liabilities		4,320			—
Deferred rent		—			1,098
Financing lease obligations		—			5,854
Other liabilities		1,844			2,505
Total liabilities		40,842			34,966
Commitments and contingencies (Note 7)
Stockholders’ equity
Preferred stock; $0.0001 par value; 10,000 shares authorized, and no shares issued and outstanding at September 30, 2019 and December 31, 2018		—			—
Common stock; $0.0001 par value; 100,000 shares authorized at September 30, 2019 and December 31, 2018; 36,840 and 36,120 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		4			4
Additional paid-in capital		619,386			592,580
Accumulated other comprehensive income (loss)		363			(720	)
Accumulated deficit		(151,358	)		(83,016	)
Total stockholders’ equity		468,395			508,848
Total liabilities and stockholders’ equity	$	509,237		$	543,814

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

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REGENXBIO INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues
License and royalty revenue	$	14,700		$	5,306		$	23,465		$	177,728
Total revenues		14,700			5,306			23,465			177,728
Operating Expenses
Cost of revenues		2,494			517			4,450			6,797
Research and development		35,692			18,508			90,378			59,544
General and administrative		12,402			9,008			37,365			25,706
Other operating expenses (income)		8			(2	)		(54	)		31
Total operating expenses		50,596			28,031			132,139			92,078
Income (loss) from operations		(35,896	)		(22,725	)		(108,674	)		85,650
Other Income
Interest income from licensing		716			109			2,091			8,362
Investment income		431			2,122			37,950			4,177
Total other income		1,147			2,231			40,041			12,539
Income (loss) before income taxes		(34,749	)		(20,494	)		(68,633	)		98,189
Income Tax Benefit (Expense)		165			1,292			364			(2,558	)
Net income (loss)	$	(34,584	)	$	(19,202	)	$	(68,269	)	$	95,631
Other Comprehensive Income (Loss)
Unrealized gain (loss) on available-for-sale securities, net of reclassifications and income tax expense		(108	)		(103	)		1,043			(159	)
Total other comprehensive income (loss)		(108	)		(103	)		1,043			(159	)
Comprehensive income (loss)	$	(34,692	)	$	(19,305	)	$	(67,226	)	$	95,472
Net income (loss) applicable to common stockholders	$	(34,584	)	$	(19,202	)	$	(68,269	)	$	95,631
Net income (loss) per share:
Basic	$	(0.94	)	$	(0.56	)	$	(1.86	)	$	2.94
Diluted	$	(0.94	)	$	(0.56	)	$	(1.86	)	$	2.67
Weighted-average common shares outstanding:
Basic		36,813			33,988			36,618			32,576
Diluted		36,813			33,988			36,618			35,875

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

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REGENXBIO INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands)

	Three Months Ended September 30, 2019
							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income			Deficit			Equity
Balances at June 30, 2019		36,752	$	4	$	610,891	$	471		$	(116,774	)	$	494,592
Exercise of stock options		62		—		384		—			—			384
Issuance of common stock under employee stock purchase plan		26		—		949		—			—			949
Stock-based compensation expense		—		—		7,162		—			—			7,162
Unrealized loss on available-for-sale securities, net of reclassifications and income tax expense		—		—		—		(108	)		—			(108	)
Net loss		—		—		—		—			(34,584	)		(34,584	)
Balances at September 30, 2019		36,840	$	4	$	619,386	$	363		$	(151,358	)	$	468,395

	Three Months Ended September 30, 2018
							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Loss			Deficit			Equity
Balances at June 30, 2018		32,275	$	3	$	386,110	$	(771	)	$	(68,120	)	$	317,222
Issuance of common stock upon public offering, net of transaction costs of $12,728		3,105		1		189,096		—			—			189,097
Exercise of stock options		307		—		2,053		—			—			2,053
Issuance of common stock under employee stock purchase plan		17		—		507		—			—			507
Stock-based compensation expense		—		—		4,483		—			—			4,483
Unrealized loss on available-for-sale securities, net of reclassifications and income tax expense		—		—		—		(103	)		—			(103	)
Net loss		—		—		—		—			(19,202	)		(19,202	)
Balances at September 30, 2018		35,704	$	4	$	582,249	$	(874	)	$	(87,322	)	$	494,057

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

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REGENXBIO INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands)

	Nine Months Ended September 30, 2019
							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balances at December 31, 2018		36,120	$	4	$	592,580	$	(720	)	$	(83,016	)	$	508,848
Adoption of ASU 2016-02 (Topic 842)		—		—		—		—			(33	)		(33	)
Adoption of ASU 2018-02		—		—		—		40			(40	)		—
Exercise of stock options		684		—		5,513		—			—			5,513
Issuance of common stock under employee stock purchase plan		36		—		1,314		—			—			1,314
Stock-based compensation expense		—		—		19,979		—			—			19,979
Unrealized gain on available-for-sale securities, net of reclassifications and income tax expense		—		—		—		1,043			—			1,043
Net loss		—		—		—		—			(68,269	)		(68,269	)
Balances at September 30, 2019		36,840	$	4	$	619,386	$	363		$	(151,358	)	$	468,395

Nine Months Ended September 30, 2018

Accumulated