The following discussion and analysis of our financial condition and results ofoperations should be read in conjunction with our "Selected ConsolidatedFinancial Data" and our consolidated financial statements, related notes andother financial information included elsewhere in this Annual Report on Form10-K. This discussion contains forward-looking statements that involve risks anduncertainties such as our plans, objectives, expectations and intentions. As aresult of many important factors, including those set forth in the sectioncaptioned "Risk Factors" and elsewhere in this Annual Report on Form 10-K, ouractual results could differ materially from the results described in, or impliedby, these forward-looking statements.
Overview
We are a clinical-stage genetic medicines company dedicated to transforming thelives of patients suffering from rare genetic diseases with significant unmetmedical needs by addressing the underlying cause of the disease. Our proprietaryplatform is designed to utilize our human hematopoietic stem cell-derivedadeno-associated virus vectors, or AAVHSCs, to precisely and efficiently deliversingle administration genetic medicines in vivo through a nuclease-free geneediting modality, gene therapy, or gene therapy to express antibodies platform,or GTx-mAb, which is designed to produce antibodies throughout the body. Ourclinical programs include: HMI-103, an investigational gene editing candidate inclinical development for the treatment of patients with phenylketonuria, or PKU;HMI-203, an investigational gene therapy candidate in clinical development forthe treatment of patients with mucopolysaccharidosis type II (MPS II), or Huntersyndrome; and HMI-102, an investigational gene therapy candidate in clinicaldevelopment for the treatment of adult patients with PKU, for which patientenrollment is currently paused. We are in Investigational New Drug Application,or IND, -enabling studies with our lead GTx-mAb gene therapy candidate, HMI-104,for the treatment of patients with paroxysmal nocturnal hemoglobinuria, or PNH,and are actively seeking a partner for HMI-204, a gene therapy candidate formetachromatic leukodystrophy, or MLD. Our diverse set of AAVHSCs allows us toprecisely target, via a single injection, a wide range of disease-relevanttissues, including the liver, central nervous system, or CNS, including theability to cross the blood-brain-barrier, peripheral nervous system, or PNS,bone marrow, cardiac and skeletal muscle and the eye. Our genetic medicinesplatform is designed to provide us the flexibility to choose the method webelieve is best suited for each disease we pursue, based on factors such as thetargeted disease biology, the biodistribution of our AAVHSCs to key tissues andthe rate of cell division the disease-relevant tissues exhibit. Ourproduct-development strategy is to continue to develop in parallel gene therapyand gene editing product candidates. We believe our technology platform willallow us to provide transformative cures using either modality.
The unique properties of our proprietary family of 15 AAVHSCs enable us to focuson a method of gene editing called gene integration, through the replacement ofan entire diseased gene in the genome with a whole functional copy by harnessingthe naturally occurring deoxyribonucleic acid, or DNA, repair process ofhomologous recombination, or HR. We believe our HR-driven gene editing approachwill allow us to efficiently perform gene editing at therapeutic levels withoutunwanted on- and off-target modifications to the genome, and to directly measureand confirm those modifications in an unbiased manner to ensure only theintended changes are made. By utilizing the body's natural mechanism ofcorrecting gene defects, we also avoid the need for exogenous nucleases, orbacteria-derived enzymes used in other gene editing approaches to cut DNA, whichare known to significantly increase the risk of unwanted modifications to thegenome.
New preclinical data supporting the immunosuppression regimen incorporated inboth the HMI-103 and HMI-203 clinical trials was presented at WORLDSymposium in2023. In non-human primates, or NHPs, our data demonstrated that modulatingT-cell activity using tacrolimus together with dexamethasone is important inreducing B- and T-cell activity, nAb formation, and maintaining transgeneexpression following rAAV administration in NHPs. These results support the useof a dexamethasone and tacrolimus immunosuppressive regimen in our ongoing geneediting clinical trial with HMI-103 (pheEDIT) in adults with phenylketonuria(NCT05222178) and gene therapy trial with HMI-203 (juMPStart) in adults withHunter syndrome (MPS II) (NCT05238324).
Clinical-Stage Product Candidates
HMI-103: Gene Editing Candidate for the Treatment of Patients with PKU
In January 2023, we announced the dosing of the first participant in our Phase 1pheEDIT clinical trial with HMI-103, our lead gene editing candidate indevelopment for the treatment of classical PKU, with additional patients inscreening across ten active clinical trial sites with more expected to beinitiated throughout 2023. We expect to provide initial data from the pheEDITtrial mid-year 2023.
The pheEDIT clinical trial is an open-label, dose-escalation study evaluatingthe safety and efficacy of a single I.V. administration of HMI-103 and isexpected to enroll up to nine patients in up to three dose cohorts, ages 18-55years old, who have been diagnosed with classical PKU due to phenylalaninehydroxylase, or PAH, deficiency. In addition to safety endpoints, the trialmeasures serum phenylalanine, or Phe, changes. The trial incorporates animmunosuppressive regimen that includes a T-cell inhibitor used in combinationwith a steroid-sparing regimen. Prior to dosing, participants complete an 82-day
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screening/run-in period to help us account for and more closely understandday-to-day Phe fluctuations. If positive safety and efficacy results areestablished in adults, we plan to then enroll younger patients in subsequentHMI-103 clinical trials.
We have received Fast Track Designation for HMI-103 from the U.S. Food and DrugAdministration, or FDA, for the treatment of neurocognitive and neuropsychiatricmanifestations of PKU secondary to PAH deficiency. Also, we have received orphandesignation from the European Commission, or EC, and orphan drug designationfrom the FDA, for HMI-103 for the treatment of PAH deficiency.
We have presented preclinical data on the mechanism of action of our optimizedHMI-103 gene editing candidate, which is designed to harness the body's naturalDNA repair process of HR to replace the disease-causing PAH gene with afunctional PAH gene and liver-specific promoter and to maximize PAH expressionin all transduced liver cells through episomal expression. We observedsignificant Phe reduction following a single I.V. administration of the murinesurrogate of HMI-103 in the PKU disease model out to 43 weeks (end of study). Inthis preclinical PKU model, the murine surrogate of HMI-103 was ten times morepotent than non-integrating gene therapy vector HMI-102. Additionally, weobserved on-target integration and no off-target integration following a singleI.V. administration of HMI-103 in a humanized liver model, as determined by agenome-wide integration assay. Using quantitative molecular methods, we alsodemonstrated achievement of gene integration efficiencies in the humanizedmurine liver model that corresponded with Phe correction in the PKU murinemodel.
HMI-203: Investigational Gene Therapy for the Treatment of Adult Patients withMPS II (Hunter Syndrome)
In October 2021, we announced the initiation of a Phase 1 trial with HMI-203, aninvestigational gene therapy in development for the treatment of adults withHunter syndrome. The juMPStart trial currently has five clinical sites in theU.S. and Canada with more expected to be initiated, and initial data areexpected in the second half of 2023.
The juMPStart clinical trial is an open-label, dose-escalation study evaluatingthe safety and efficacy of a single I.V. administration of HMI-203 and isexpected to enroll up to nine male patients in up to three dose cohorts, ages18-45 years old, who have been diagnosed with Hunter syndrome and are currentlyreceiving enzyme replacement therapy, or ERT. Qualitative data on unmet medicalneeds obtained from ERT-treated adult MPS II patients and/or their caregivershelped inform our trial design. Patients and caregivers reported that weekly ERTinfusions, surgeries and supportive therapies inadequately address range ofmotion and mobility, pain, and hearing loss, that there are burdens associatedwith ERT and other therapies, including frequency and duration of treatment, andpainful and extended recoveries, that there is a high degree of anxietyregarding prognosis, longevity, need for more invasive surgeries, and financialchallenges and that the expectations for a potential one-time gene therapyinclude the ability to maintain their current quality of life with ERTindependence. Also, key opinion leaders surveyed supported our planned designfor the juMPStart clinical trial, including our plan to discontinue ERT. Inaddition to safety endpoints, the trial will measure plasma I2S activity,urinary glycosaminoglycan, or GAG, levels, ERT discontinuation and otherperipheral disease endpoints. If positive safety and efficacy results areestablished in adults, we plan to then enroll younger patients in subsequentHMI-203 clinical trials.
We have received orphan designation from the EC and orphan drug designation fromthe FDA, for HMI-203 for the treatment of mucopolysaccharidosis type II (Huntersyndrome).
Based on in vivo preclinical studies in a murine model of Hunter syndrome, asingle I.V. administration of HMI-203 resulted in robust biodistribution andhuman I2S enzyme expression, leading to significant reductions in heparansulfate GAG levels in the cerebrospinal fluid, brain, liver, heart, spleen, lungand kidney, compared with the vehicle-treated disease model. HMI-203 also led tosignificant reductions in skeletal deformities compared with vehicle.
HMI-102: Investigational Gene Therapy for the Treatment of Adult Patients withPKU
On August 15, 2022, we paused the enrollment of our pheNIX clinical trial withHMI-102, a gene therapy candidate in development for the treatment of adultswith PKU, in order to focus resources and efforts on our Phase 1 pheEDITclinical trial evaluating in vivo gene editing candidate HMI-103 for PKU, whichis currently recruiting for the adult PKU patient population. Though we haveobserved biologic activity in our pheNIX trial, including decreases in serum Pheand increases in tyrosine, or Tyr, this prioritization offers the potential forus to generate data, including with a new immunosuppression regimen with ashorter course of steroids and a T-cell inhibitor as part of the pheEDITprotocol, utilizing our product candidate HMI-103, sooner than would be possibleto resume enrollment at pheNIX trial sites. We will continue to monitor allpatients enrolled in the pheNIX long-term extension study.
Earlier-Stage Product Candidates
In August 2021, we named a clinical development candidate for PNH, HMI-104, fromour GTx-mAb platform. This platform represents an additional way that we areleveraging our AAVHSCs in an effort to deliver one-time in vivo gene
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therapy to express and secrete antibodies from the liver, which we believe mayallow us to target diseases with larger patient populations. In support of thisprogram, we generated and presented preclinical data targeting complementprotein 5, demonstrating preclinical proof-of-concept in PNH. A single I.V. doseof an AAVHSC GTx-mAb showed expression of full-length antibodies from the liverconsistent with levels associated with anti-C5 therapeutics, sustained androbust Immunoglobulin G, or IgG, expression in vivo in a humanized murine livermodel and a murine NOD-SCID model, and in vivo vector-expressed C5 mAb hadpotent functional activity as shown by an ex vivo hemolysis assay. Additionally,we observed sustained expression of C5 mAb in the presence of murine and humanneonatal fragment crystallizable (Fc) receptor, or FcRn. We continue to advanceHMI-104, which is currently in IND-enabling studies.
We completed IND-enabling studies with HMI-202, an investigational gene therapyfor the treatment of patients with MLD. Applying the learnings from theseIND-enabling studies, in August 2022, we announced the details of HMI-204, anoptimized, in vivo, one-time gene therapy product candidate for the treatment ofMLD. Following a single I.V. administration in the MLD murine model, thisoptimized candidate, which uses one of our proprietary AAVHSC capsids, crossedthe blood-brain-barrier to the CNS and reached key peripheral organs involved inMLD. This resulted in expression of human ARSA, or hARSA, levels in multiplebrain regions and cell types above the minimum level of enzyme needed to correctthe MLD disease phenotype, hARSA activity levels in the brain predictive offunctional assay improvements and hARSA activity in the serum. Additionally,these optimizations led to significant improvements in vector yield and superiorpackaging for the product candidate. We continue to actively seek a partner toadvance this program.
Oxford Biomedica Solutions Transaction
On March 10, 2022, we closed a transaction with Oxford Biomedica Solutions LLC(f/k/a Roadrunner Solutions LLC), or OXB Solutions, Oxford Biomedica (US), Inc.,or OXB, and Oxford Biomedica plc, or OXB Parent, and collectively with OXB,Oxford, pursuant to the Equity Securities Purchase Agreement, or the PurchaseAgreement, dated as of January 28, 2022, by and among Homology, OXB Solutionsand Oxford, whereby, among other things, we and Oxford agreed to collaborate tooperate OXB Solutions, which provides AAV vector process development andmanufacturing services to biotechnology companies, which we refer to as theOxford Biomedica Solutions Transaction, or the OXB Solutions Transaction. OXBSolutions incorporates our proven 'plug and play' process development andmanufacturing platform, as well as our experienced team and high-quality GMPvector production capabilities that we built and operated since 2019. Wecontinue to leverage these process development and manufacturing capabilitieswhile reducing our costs and maintaining preferred customer status for themanufacturing capacity to support our product candidates. We believe thequality, reliability and scalability of our gene therapy and gene editingmanufacturing approach is a core competitive advantage crucial to our long-termsuccess.
Pursuant to the terms of the Purchase Agreement and a contribution agreement, orthe Contribution Agreement, entered into between us and OXB Solutions prior tothe closing of the OXB Solutions Transaction, or the Closing, we agreed toassign and transfer to OXB Solutions all of our assets that are primarily usedin the manufacturing of AAV vectors for use in gene therapy or gene editingproducts, but excluding certain assets related to manufacturing or testing ofour proprietary AAV vectors, or collectively, the Transferred Assets, inexchange for 175,000 common equity units in OXB Solutions, or Units, and OXBSolutions assumed from us, and agreed to pay, perform and discharge when due,all of our duties, obligations, liabilities, interests and commitments of anykind under, arising out of or relating to the Transferred Assets.
Effective as of the Closing, we sold to OXB, and OXB purchased from us, 130,000Units, or the Transferred Units, in exchange for $130.0 million. In connectionwith the Closing, OXB contributed $50.0 million in cash to OXB Solutions inexchange for an additional 50,000 Units. Immediately following the Closing, (i)OXB owned 180,000 Units, representing 80 percent (80%) of the fully dilutedequity interests in OXB Solutions, and (ii) we owned 45,000 Units, representing20 percent (20%) of the fully diluted equity interests in OXB Solutions.
Pursuant to the Amended and Restated Limited Liability Company Agreement of OXBSolutions, or the OXB Solutions Operating Agreement, which was executed inconnection with the Closing, at any time following the three-year anniversary ofthe Closing, (i) OXB will have an option to cause us to sell and transfer toOXB, and (ii) we will have an option to cause OXB to purchase from us, in eachcase all of our equity ownership interest in OXB Solutions at a price equal to5.5 times the revenue for the immediately preceding 12-month period, subject toa maximum amount of $74.1 million. Pursuant to the terms of the OXB SolutionsOperating Agreement, we are entitled to designate one director on the board ofdirectors of OXB Solutions, currently Albert Seymour, our President and ChiefExecutive Officer. Further, Tim Kelly, our former Chief Operating Officer,serves as the Chief Executive Officer and chairman of the board of OXBSolutions.
Concurrently with the Closing, we entered into certain ancillary agreements withOXB Solutions including a license and patent management agreement whereby OXBSolutions granted certain licenses to us, a supply agreement, or the SupplyAgreement, for a term of three years which includes certain annual minimumpurchase commitments, a lease assignment pursuant to which we assigned all ofour right, title and interest in, to and under our facility lease to OXBSolutions, a sublease
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agreement whereby OXB Solutions subleased certain premises in its facility tous, as well as several additional ancillary agreements.
License Agreements
In April 2016, we entered into an exclusive license agreement with City of Hope,or COH, pursuant to which COH granted us an exclusive, sublicensable, worldwidelicense, or the COH License, to certain AAV vector-related patents and know-howowned by COH to develop, manufacture, use and commercialize products andservices covered by such patents and know-how in any and all fields. On August6, 2021, we received notice from COH that we did not accomplish at least one ofthe partnering milestones by the applicable deadline, as set forth in the COHLicense. This notice does not affect our exclusive license in the field ofmammalian therapeutics, including all human therapeutics, associateddiagnostics, and target validation, or the Mammalian Therapeutic Field, where weretain exclusive rights. Instead, the notice served as written notice that theexclusive license granted pursuant to the COH License in all fields except theMammalian Therapeutic Field converted from exclusive to non-exclusive effectiveas of September 20, 2021, which was forty-five days from the receipt of notice.In connection with the conversion, any royalty obligations and sublicensee feesrelating to fields outside of the Mammalian Therapeutic Field shall be reducedby a certain percentage. This change to our exclusive worldwide license with COHdoes not impact any of our current therapeutic product development candidates indevelopment, including HMI-102, HMI-103, HMI-203, HMI-204 and HMI-104, nor willit impact any potential future therapeutic product development candidates.
Management Team and Financial Overview
Our management team has a successful track record of discovering, developing andcommercializing therapeutics with a particular focus on rare diseases. Since ourinception in 2015, we have raised approximately $721 million in aggregate netproceeds through our initial public offering, or IPO, in April 2018, follow-onpublic offerings of common stock in April 2019 and April 2021, proceeds from thesale of common stock under an "at-the-market" sales agreement, equityinvestments from pharmaceutical companies, preferred stock financings and ouragreement with Oxford. Included in our net proceeds is a $130.0 million up-frontcash payment from our agreement with Oxford, $50.0 million from a formercollaboration partner, comprised of an up-front payment of $35.0 million and a$15.0 million equity investment, and a $60.0 million equity investment fromPfizer Inc., or Pfizer, through a private placement transaction. We will requireadditional capital in order to advance our product candidates through clinicaldevelopment and commercialization. We believe that our compelling preclinicaldata, initial positive clinical data with HMI-102, scientific expertise,product-development strategy, manufacturing platform and process which weleveraged to establish OXB Solutions, and robust intellectual propertystrengthen our position as a leader in the development of genetic medicines.
On April 6, 2021, we completed a follow-on public offering of our common stock.We sold 6,596,306 shares of our common stock at a price of $7.58 per share andreceived net proceeds of $49.7 million, after deducting offering expenses. Underthe terms of the underwriters' agreement, we also granted an option exercisablefor 30 days to purchase up to an additional 989,445 shares of our common stockat a price of $7.58 per share. The underwriters did not exercise this option.The offering closed on April 9, 2021. The shares were sold pursuant to oureffective shelf registration statement on Form S-3, as amended, and a relatedprospectus supplement filed with the SEC on April 8, 2021.
We were incorporated and commenced operations in 2015. Since our incorporation,we have devoted substantially all of our resources to organizing and staffingour Company, business planning, raising capital, developing our technologyplatform, advancing HMI-102, HMI-103 and HMI-203 through IND-enabling studiesand into clinical trials, advancing HMI-202 and HMI-104 into IND-enablingstudies, researching and identifying additional product candidates, developingand implementing manufacturing processes and manufacturing capabilities,building out our manufacturing and research and development space, enhancing ourintellectual property portfolio and providing general and administrative supportfor these operations. To date, we have financed our operations primarily throughthe sale of common stock, through the sale of preferred stock, through fundingfrom our collaboration partner and through proceeds received as a result of ourtransaction with OXB Solutions.
To date, we have not generated any revenue from product sales and do not expectto generate any revenue from the sale of products in the foreseeable future, ifat all. We recognized $3.2 million and $34.0 million in collaboration revenuefor the years ended December 31, 2022 and 2021, respectively. Collaborationrevenue for the year ended December 31, 2021 included the recognition ofapproximately $30.8 million of deferred revenue and reimbursements incurredunder the collaboration and license agreement with Novartis, for which Novartisgave written notice of termination on February 26, 2021.
Since inception, we have incurred significant operating losses. Our net lossesfor the years ended December 31, 2022 and 2021 were $5.0 million and $95.8million, respectively. On March 10, 2022, we closed our transaction with OXBSolutions and recorded a gain of $131.2 million on the sale of our manufacturingbusiness (see Note 6 to our consolidated financial statements included elsewherein this Annual Report on Form 10-K for additional information regarding the OXBSolutions
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Transaction). As of December 31, 2022 and December 31, 2021, we had anaccumulated deficit of $429.1 million and $424.1 million, respectively.
Our total operating expenses were $136.5 million and $129.9 million for theyears ended December 31, 2022 and 2021, respectively. As a result of the OXBSolutions Transaction, our quarterly operating expenses did decrease in thesecond quarter of 2022 and for the remaining quarters of 2022 as we implementedour program prioritization plan and experienced operational cost savings relatedto personnel expenses, professional fees, consulting expenses and other costs.As a result of our agreement with Oxford, we are purchasing process developmentservices and manufacturing production runs from OXB Solutions. Therefore, weexperienced an increase in these costs with an offsetting decrease in the totalcosts to run our previously-owned manufacturing facility, includingemployee-related costs for the manufacturing employees who transitioned to thenew company. We also had a modest workforce reduction commensurate with thepipeline prioritization in the second half of 2022.
In 2023, we expect our total operating expenses to decrease over the prior yearas we continue to implement our program prioritization plan. However, researchand development expenses associated with our ongoing development activitiesrelated to our product candidates will increase. For instance, we anticipatethat expenses associated with our Phase 1 pheEDIT clinical trial with HMI-103,our Phase 1 juMPStart clinical trial with HMI-203, and development activitiesassociated with HMI-104, our GTx-mAb product candidate for PNH, will increase.However, we anticipate reduced research and development expenses associated withour Phase 1/2 pheNIX clinical trial with HMI-102 as we have paused futurepatient enrollment, as well as reduced expenses associated with our optimizedMLD program which we have paused and are actively pursuing partneringopportunities, and reductions in other operational costs includingpersonnel-related expenses, professional fees, consulting and other costs. Wewill continue to incur costs associated with operating as a public company.
Because of the numerous risks and uncertainties associated with the developmentof our current and any future product candidates and our platform and technologyand because the extent to which we may enter into collaborations with thirdparties for development of any of our product candidates is unknown, we areunable to predict the timing and amount of increased operating expenses andcapital expenditures associated with completing the research and development ofour product candidates. Our future operating requirements will depend on manyfactors, including:
the costs, timing, and results of our ongoing research and development efforts,including clinical trials;
the costs, timing, and results of our research and development efforts forcurrent and future product candidates in our gene therapy and gene editingpipeline;
the costs and timing of process development scale-up activities, and theadequacy of supply of our product candidates for preclinical studies andclinical trials through CMOs, including OXB Solutions;
the costs and timing of preparing, filing, and prosecuting patent applications,maintaining and enforcing our intellectual property rights and defending anyintellectual property-related claims, including any claims by third parties thatwe are infringing upon their intellectual property rights;
the effect of competitors and market developments; and
our ability to establish and maintain strategic collaborations, licensing orother agreements and the financial terms of such agreements for our productcandidates.
We believe that our existing cash, cash equivalents and short-term investmentsas of December 31, 2022 will enable us to fund our current projected operatingexpenses and capital expenditure requirements into the fourth quarter of 2024,including additional development activities related to our Phase 1 pheEDITclinical trial with HMI-103, our Phase 1 juMPStart clinical trial with HMI-203,IND-enabling activities relating to HMI-104, the continued optimization of ourmanufacturing processes through process development services with OXB Solutionsand the expansion of our intellectual property portfolio. We have based theseestimates on assumptions that may prove to be imprecise, and we may use ouravailable capital resources sooner than we currently expect. See "Liquidity andCapital Resources." Adequate additional funds may not be available to us onacceptable terms, or at all. For example, the trading prices for our and otherbiopharmaceutical companies' stock have been highly volatile as a result ofmacroeconomic conditions, developments in our industry and the COVID-19pandemic. As a result, we may face difficulties raising capital through sales ofour common stock and any such sales may be on unfavorable terms. See "RiskFactors-The COVID-19 pandemic has and could continue to adversely impact ourbusiness, including our preclinical studies and clinical trials." in Item 1A ofthis Annual Report on Form 10-K. Additionally, our ability to raise capital maybe further impacted by global macroeconomic conditions including as a result ofinternational political conflict, supply chain issues and rising inflation andinterest rates. To the extent that we raise additional capital through the saleof equity or convertible debt securities, the ownership interests of ourstockholders will be diluted, and the terms of these securities may includeliquidation or other preferences that adversely affect rights as a stockholder.Any future debt financing or preferred equity or other financing, if available,may involve agreements that include covenants limiting or restricting ourability to take
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specific actions, such as incurring additional debt, making capital expendituresand may require the issuance of warrants, which could potentially dilute theownership interests of our stockholders.
If we raise additional funds through collaborations, strategic alliances, orlicensing arrangements with third parties, we may have to relinquish valuablerights to our technologies, future revenue streams, research programs or productcandidates or grant licenses on terms that may not be favorable to us. If we areunable to raise additional funds through equity or debt financings when needed,we may be required to delay, limit, reduce, or terminate our product developmentprograms or any future commercialization efforts or grant rights to develop andmarket product candidates that we would otherwise prefer to develop and marketourselves.
Because of the numerous risks and uncertainties associated with drugdevelopment, we are unable to predict when or if we will be able to achieve ormaintain profitability. Even if we are able to generate revenue from productsales, we may not become profitable. If we fail to become profitable or areunable to sustain profitability on a continuing basis, then we may be unable tocontinue our operations at planned levels and be forced to reduce or terminateour operations.
Impact of the COVID-19 Pandemic
As the COVID-19 pandemic affected global healthcare systems as well as majoreconomic and financial markets, we adopted several procedures focused onensuring the continued development of our product candidates and protecting thehealth, wellbeing and safety of our workforce. We continue to work with trialsites to mitigate COVID-19-related disruptions to our clinical trials. However,despite our best efforts, disruptions caused by the COVID-19 pandemic resultedin delays in enrolling our Phase 1/2 pheNIX clinical trial, and may result indelays or disruptions to any of our other current or planned clinical trials inthe future. In addition, many clinical sites are under-resourced as a result ofthe COVID-19 pandemic and other factors, impacting the sites ability to advanceclinical trials in a timely manner.
While the pandemic has not significantly impacted our results of operations, thesituation remains dynamic and it is difficult to reasonably assess or predictthe full extent of the negative impact that the COVID-19 pandemic may have onour business, financial condition, results of operations and cash flows. See"Risk Factors- The COVID-19 pandemic has and could continue to adversely impactour business, including our preclinical studies and clinical trials." in Item 1Aof this Annual Report on Form 10-K.
Components of Our Results of Operations
Revenue
To date, we have not generated any revenue from product sales and do not expectto generate any revenue from the sale of products in the foreseeable future. Werecorded $3.2 million in collaboration revenue for the year ended December 31,2022, related to the Stock Purchase Agreement with Pfizer (see Note 15 to ourconsolidated financial statements included elsewhere in this Annual Report onForm 10-K for additional information regarding revenue recognition discussions).
Operating Expenses
Our operating expenses since inception have consisted solely of research anddevelopment costs and general and administrative costs.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for ourresearch activities, including our discovery efforts, and the development of ourproduct candidates, and include:
salaries, benefits and other related costs, including stock-based compensationexpense, for personnel engaged in research and development functions;
expenses incurred under agreements with third parties, including contractresearch organizations, or CROs, and other third parties that conduct research,preclinical activities and clinical trials on our behalf as well as CMOs,including OXB Solutions, that manufacture our product candidates for use in ourpreclinical testing, our clinical trials with HMI-102, HMI-103 and HMI-203 andadditional potential future clinical trials;
costs of outside consultants, including their fees and related travel expenses;
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the costs of laboratory supplies and acquiring, developing and manufacturingpreclinical study and clinical trial materials; and
allocated expenses for rent and other operating costs.
We expense research and development costs as incurred.
Research and development activities are central to our business model. We expecttotal research and development expenses in 2023 to decrease compared to ourresearch and development expenses incurred in 2022 as we continue to implementour program prioritization plan. However, we expect our research and developmentexpenses associated with our ongoing development programs and initiatives willincrease. For instance, we anticipate that expenses associated with pheEDIT, ourPhase 1 clinical trial with HMI-103 for the treatment of PKU will increase,expenses associated with juMPStart, our Phase 1 clinical trial with HMI-203 forthe treatment of Hunter syndrome will increase, and IND-enabling activitiesassociated with HMI-104, our GTx-mAb product candidate for the treatment of PNH,will increase. However, we anticipate reduced research and development expensesassociated with our Phase 1/2 pheNIX clinical trial with HMI-102 as we havepaused future patient enrollment, as well as reduced expenses associated withour optimized MLD program for which we are actively pursuing partneringopportunities, and reductions in other operational costs includingpersonnel-related expenses, consulting and other costs. As a result of ouragreement with Oxford, we will incur expenses for process development servicesand manufacturing product runs provided by OXB Solutions.
We cannot determine with certainty the duration and costs of future clinicaltrials or preclinical studies of our product candidates in development or anyother future product candidate we may develop or if, when, or to what extent wewill generate revenue from the commercialization and sale of any productcandidate for which we obtain marketing approval. We may never succeed inobtaining marketing approval for any product candidate. The duration, costs andtiming of clinical trials and development of our product candidates indevelopment and any other future product candidate we may develop will depend ona variety of factors, including:
the scope, rate of progress, expense and results of current clinical trials, aswell as of any future clinical trials, and other research and developmentactivities that we may conduct;
uncertainties in clinical trial design and patient enrollment rates;
any delays in clinical trials as a result of the COVID-19 pandemic;
the actual probability of success for our product candidates, including thesafety and efficacy results, early clinical data, competition, manufacturingcapability and commercial viability;
significant and changing government regulation and regulatory guidance;
the timing and receipt of any marketing approvals; and
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HOMOLOGY MEDICINES, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-K) - Marketscreener.com
