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Item 2. |
Management’s Discussion and
Analysis of Financial Condition and Results of Operations
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You
should read the following discussion and analysis of our financial
condition and results of operations together with the consolidated
financial statements and related notes that are included elsewhere
in this Quarterly Report on Form 10-Q and our 2021 Form 10-K. This
discussion contains forward-looking statements based upon current
plans, expectations and beliefs that involve risks and
uncertainties. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of
various factors, including, but not limited to, those discussed in
the section entitled “Risk Factors” and elsewhere in this Quarterly
Report on Form 10-Q. In preparing this MD&A, we presume that
readers have access to and have read the MD&A in our 2021 Form
10-K, pursuant to Instruction 2 to paragraph of Item 303 of
Regulation S-K. Unless stated otherwise, references in this
Quarterly Report on Form 10-Q to “us,” “we,” “our,” or our
“Company” and similar terms refer to Rocket Pharmaceuticals,
Inc.
We are a
clinical-stage, multi-platform biotechnology company focused on the
development of first, only and best-in-class gene therapies, with
direct on-target mechanism of action and clear clinical endpoints,
for rare and devastating diseases. We have three clinical-stage
ex vivo lentiviral vector
(“LVV”) programs. These include programs for Fanconi Anemia (“FA”),
a genetic defect in the bone marrow that reduces production of
blood cells or promotes the production of faulty blood cells,
Leukocyte Adhesion Deficiency-I (“LAD-I”), a genetic disorder that
causes the immune system to malfunction and Pyruvate Kinase
Deficiency (“PKD”), a rare red blood cell autosomal recessive
disorder that results in chronic non-spherocytic hemolytic anemia.
Of these, both the Phase 2 FA program and the Phase 1/2 LAD-I
program are in potentially registration-enabling studies in the
United States (“U.S.”) and Europe (“EU”). In addition, in the U.S.,
we have a clinical stage in
vivo adeno-associated virus (“AAV”) program for Danon
disease, a multi-organ lysosomal-associated disorder leading to
early death due to heart failure. Additional work on a gene therapy
program for the less common FA subtypes C and G is ongoing. We have
global commercialization and development rights to all of these
product candidates under royalty-bearing license agreements.
Effective
December 2021, a decision was made to no longer pursue
Rocket-sponsored clinical evaluation of RP-L401; this program was
returned to academic innovators. Although we believe that gene
therapy may be beneficial to patients afflicted with this disorder,
we have opted to focus available resources towards advancement of
RP-A501, RP-L102, RP-L201 and RP-L301, based on the compelling
clinical data to date and potential for therapeutic advancement in
these severe disorders of childhood and young adulthood.
Recent Developments
At-the-Market
Offering Program
On February 28,
2022, we entered into the Sales Agreement with Cowen with respect
to an at-the-market offering program pursuant to which the Company
may offer and sell, from time to time at its sole discretion,
shares through Cowen as its sales agent. The shares to be offered
and sold under the Sales Agreement, if any, will be offered and
sold pursuant to the Company’s shelf registration statement on Form
S-3 (File No. 333-253756), which was filed with the SEC on March 2,
2021 and which became effective on September 10, 2021. We filed a
prospectus supplement with the SEC on February 28, 2022 in
connection with the offer and sale of the shares pursuant to the
Sales Agreement. We will pay Cowen a cash commission of up to
3.0% of gross proceeds from the sale of the shares pursuant to the
Sales Agreement. We also agreed to provide Cowen with customary
indemnification and contribution rights and will also reimburse
Cowen for certain expenses incurred in connection with the Sales
Agreement. As of March 31, 2022, the Company did not sell any
shares under the at-the-market offering program. In April 2022, we sold 1.3
million shares of common stock pursuant to the at-the-market
offering program for gross proceeds of $17.8 million, less
commissions of $0.5 million for net proceeds of $17.3
million.
Gene Therapy
Overview
Genes are
composed of sequences of deoxyribonucleic acid (“DNA”), which code
for proteins that perform a broad range of physiologic functions in
all living organisms. Although genes are passed on from generation
to generation, genetic changes, also known as mutations, can occur
in this process. These changes can result in the lack of production
of proteins or the production of altered proteins with reduced or
abnormal function, which can in turn result in disease.
Gene
therapy is a therapeutic approach in which an isolated gene
sequence or segment of DNA is administered to a patient, most
commonly for the purpose of treating a genetic disease that is
caused by genetic mutations. Currently available therapies for many
genetic diseases focus on administration of large proteins or
enzymes and typically address only the symptoms of the disease.
Gene therapy aims to address the disease-causing effects of absent
or dysfunctional genes by delivering functional copies of the gene
sequence directly into the patient’s cells, offering the potential
for curing the genetic disease, rather than simply addressing
symptoms.
We are
using modified non-pathogenic viruses for the development of our
gene therapy treatments. Viruses are particularly well suited as
delivery vehicles because they are adept at penetrating cells and
delivering genetic material inside a cell. In creating our viral
delivery vehicles, the viral (pathogenic) genes are removed and are
replaced with a functional form of the missing or mutant gene that
is the cause of the patient’s genetic disease. The functional form
of a missing or mutant gene is called a therapeutic gene, or the
“transgene.” The process of inserting the transgene is called
“transduction.” Once a virus is modified by replacement of the
viral genes with a transgene, the modified virus is called a “viral
vector.” The viral vector delivers the transgene into the targeted
tissue or organ (such as the cells inside a patient’s bone marrow).
We have two types of viral vectors in development, LVV and AAV. We
believe that our LVV and AAV-based programs have the potential to
offer a significant therapeutic benefit to patients that is durable
(long-lasting).
The gene
therapies can be delivered either (1) ex vivo (outside the body), in which
case the patient’s cells are extracted and the vector is delivered
to these cells in a controlled, safe laboratory setting, with the
modified cells then being reinserted into the patient, or (2)
in vivo (inside the body),
in which case the vector is injected directly into the patient,
either intravenously (“IV”) or directly into a specific tissue at a
targeted site, with the aim of the vector delivering the transgene
to the targeted cells.
We believe
that scientific advances, clinical progress, and the greater
regulatory acceptance of gene therapy have created a promising
environment to advance gene therapy products as these products are
being designed to restore cell function and improve clinical
outcomes, which in many cases include prevention of death at an
early age. The FDA approval of several gene therapies in recent
years indicates that there is a regulatory pathway forward for gene
therapy products.
Pipeline
Overview
The chart below shows the current
phases of development of Rocket’s programs and product
candidates:
AAV Program:
Danon
Disease:
Danon
disease (“DD”) is a multi-organ lysosomal-associated disorder
leading to early death due to heart failure. DD is caused by
mutations in the gene encoding lysosome-associated membrane protein
2 (“LAMP-2”), a mediator of autophagy. This mutation results in the
accumulation of autophagic vacuoles, predominantly in cardiac and
skeletal muscle. Male patients often require heart transplantation
and typically die in their teens or twenties from progressive heart
failure. Along with severe cardiomyopathy, other DD-related
manifestations can include skeletal muscle weakness, liver disease,
and intellectual impairment. There are no specific therapies
available for the treatment of DD and medications typically
utilized for the treatment of congestive heart failure (CHF) are
not believed to modify progression to end-stage CHF. Patients with
end-stage CHF may undergo heart transplant, which currently is
available to a minority of patients, is associated with short- and
long-term complications and is not curative of the disorder in the
long-term. RP-A501 is in clinical trials as an in vivo therapy for Danon disease,
which is estimated to have a prevalence of 15,000 to 30,000
patients in the U.S. and the EU.
Danon
disease is an autosomal dominant, rare inherited disorder
characterized by progressive cardiomyopathy which is almost
universally fatal in males even in settings where cardiac
transplantation is available. Danon disease predominantly affects
males early in life and is characterized by absence of LAMP2B expression in the heart and
other tissues. Pre-clinical models of Danon disease have
demonstrated that AAV-mediated transduction of the heart results in
reconstitution of LAMP2B
expression and improvement in cardiac function.
We
currently have one adeno-associated viral vector program targeting
DD, RP-A501. We have treated six patients in the RP-A501 Phase 1
clinical trial, which enrolled for adult and pediatric male DD
patients. This includes a first cohort evaluating a low-dose
(6.7e13 genome copies (vg)/kilogram (kg)) in adult/older adolescent
patients aged 15 or greater (n=3), a second cohort evaluating a
higher dose (1.1e14 vg/kg) in adult/older adolescent patients aged
15 or greater (n=2), and we have initiated treatment in a pediatric
cohort at a low dose level (6.7e13 vg/kg; n=1).
Data disclosed
from our Phase 1 study of RP-A501 in November 2021 and January 2022
included safety and clinical activity results from the three
patients treated with the low dose of 6.7e13 vg/kg and from two
patients treated with the higher dose of 1.1e14 vg/kg, and early
safety information from the initial pediatric patient (pediatric
cohort is age 8-14 years) treated with the low dose of 6.7e13
vg/kg.
Efficacy
assessments include evaluation of New York Heart Association
(“NYHA”) Functional Classification, which is the most commonly used
heart failure classification system. NYHA Class II is where a
patient exhibits a slight limitation of physical activity, is
comfortable at rest, and ordinary physical activity results in
fatigue, palpitation and/or dyspnea. Class I is where a patient
exhibits no limitation of physical activity and ordinary physical
activity does not cause undue fatigue, palpitation and/or dyspnea.
Brain natriuretic peptide (BNP) is a blood-based evaluation and a
key marker of heart failure with prognostic significance in CHF and
cardiomyopathies. Other efficacy parameters include
echocardiographic measurements of heart thickness, most notably the
thickness of the left ventricular posterior wall (LVPW), and
importantly, measurement of LAMP2B gene expression both via
immunohistochemistry and Western blot, as obtained via
endomyocardial biopsy. Biopsied heart tissue is also evaluated on
electron microscopy for evidence of DD-associated tissue
derangements, including the presence of autophagic vacuoles and
disruption of myofibrillar architecture, each of which are
characteristic of DD-related myocardial damage.
In November
2021 and January 2022, data for the ongoing Phase 1 trial of
RP-A501 was presented, including efficacy parameters for the low
and high dose cohorts in patients aged 15 and older with at least
12 months follow-up (n=5). An improvement in NYHA Class (from II to
I) was observed in three patients (two low-dose and one high-dose)
who had closely monitored immunosuppression with follow-up greater
than one year and stabilization was observed in one low-dose
patient without a closely monitored immunosuppressive regimen. A
substantial improvement in BNP, a key marker of heart failure, was
observed in all three low-dose patients and one high-dose patient.
Among the three low-dose patients, BNP decreased from a
pretreatment baseline by 57% at 24 months, 79% at 18 months, and
75% at 15 months, respectively. In one high-dose patient, BNP
decreased from a pretreatment baseline by 67% at 12 months. In
patients with closely monitored immunosuppression (two low-dose and
one high-dose) left ventricular (LV) posterior wall thickness
improved (average 23% decrease compared to pretreatment baseline)
and ejection fraction improved or stabilized (average 20% increase
compared to pretreatment baseline) at 12 to 18 months on
echocardiography. Severe and progressive wall thickening is a
hallmark of the hypertrophic cardiomyopathy of Danon Disease and is
a major contributor to early mortality in male patients. Cardiac
output remained normal for all patients with improved or stable
left heart filling pressures as measured by cardiac
catheterization. Three low-dose patients and one high-dose patient
demonstrated improvements in the 6-minute walk test (6MWT). One
low-dose patient improved from a pretreatment baseline of 443
meters (m) to 467 m at 24 months. The second low-dose patient
improved from a pretreatment baseline of 405 m to 410 m at 18
months. The third low-dose patient improved from a pretreatment
baseline of 427 m to 435 m at 15 months. One high-dose patient
improved from a pretreatment baseline of 436 m to 492 m at 12
months. Evidence of sustained cardiac LAMP2B gene expression by
immunohistochemistry and Western blot with qualitative improvement
of vacuoles and cardiac tissue architecture on electron microscopy
was observed at both dose levels. Sustained cardiac LAMP2B gene
expression by immunohistochemistry was observed in all three
patients with a closely monitored immunosuppressive regimen.
Specifically, LAMP2B gene expression by immunohistochemistry in the
low-dose (6.7e13 vg/kg) was 68% in one patient at Month 12 and 92%
in another patient at Month 9. In one patient who received the
high-dose (1.1e14 vg/kg), LAMP2B gene expression by
immunohistochemistry was 100% at Month 12.
One of the
patients receiving therapy on the high dose cohort had progressive
heart failure and underwent a heart transplant at Month 5 following
therapy. This patient had more advanced disease than the 4 other
adult/older adolescent patients who received treatment in the low
and high dose cohorts, as evidenced by diminished LV ejection
fraction (35%) on echocardiogram and markedly elevated LV filling
pressure prior to treatment. His clinical course was characteristic
of DD progression. Assessments regarding gene transduction from the
explanted heart are summarized below:
Explanted
Heart
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Analysis of the explanted heart revealed significant fibrosis
consistent with advanced DD.
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•
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Myocardial tissue from the explanted heart at 5 months
post-treatment displayed 100% LAMP2B protein expression by
immunohistochemistry throughout non-fibrotic cardiac regions
including the ventricles and other essential targeted areas
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RP-A501 was
generally well tolerated at the 6.7e13 vg/kg dose level, or lower
dose. All observed adverse effects were reversible with no lasting
sequelae. Early transaminase and creatinine kinase elevations
returned to baseline or decreased. No unexpected and serious drug
product-related adverse events or severe adverse events were
observed in this low dose cohort. The most common adverse events
were predominantly mild, not associated with clinical symptoms and
were related to elevated transaminases post-treatment. Elevation in
transaminases and creatinine kinases was observed in all three
low-dose patients and returned to baseline levels within the first
one to two months post-treatment. There was also a transient and
reversible decline in platelets observed in these three patients.
These changes were largely responsive to corticosteroids and other
immunosuppressive therapies. All patients were given oral steroids
to prevent or minimize potential immune-related events.
Corticosteroids were associated with transient exacerbation of
DD-associated skeletal myopathy, which resolved upon
discontinuation of steroid therapy. At the higher dose administered
(1.1e14 vg/kg), additional immunosuppressive therapies were
stipulated and administered to mitigate the immune response
associated with RP-A501. As disclosed in December 2020, one of the
two patients receiving the 1.1e14 vg/kg dose had more advanced
heart failure than the others, and was the heaviest patient treated
to-date (receiving the highest absolute AAV9 dose). This patient
experienced a non-persistent, immune-related event that was
classified as a drug product-related serious adverse event. This
thrombotic microangiopathy (“TMA”) event (which was later
reclassified as a Sudden Unexpected Serious Adverse Reaction
(“SUSAR”) was believed to be likely due to immune-mediated
complement activation, resulting in reversible thrombocytopenia and
acute kidney injury requiring eculizumab and transient
hemodialysis. This patient regained normal kidney function within
three weeks. (This event occurred in the same patient in whom
RP-A501 was not associated with clinical stabilization or
improvement, and who required a heart transplant 5 months
post-therapy).
Following
transplant, this patient has been clinically stable and reports
resolution of a baseline skeletal myopathy that was present prior
to treatment. Analysis of the explanted heart is described above.
Of note, this patient had more advanced heart failure at time of
treatment; the clinical protocol has been modified to exclude
enrollment of DD with end-stage CHF/cardiomyopathy. In May 2021, 5
months after details of this event were disclosed and after
recognition of complement-mediated TMA in other systemic AAV
programs, the FDA placed the study on clinical hold. In response to
the FDA’s clinical hold, we amended the trial protocol in order to
enable more defined mechanisms for prevention, early recognition
and management of complement-mediated adverse events. The FDA
lifted the clinical hold on August 16, 2021 and dosing of the
pediatric cohort was initiated in the fourth quarter of 2021.
Based on the
activity observed in the low dose cohort and to mitigate
complement-mediated TMA (safety concerns observed in the high dose
cohort) and in agreement with the FDA, we are focusing on the low
dose (6.7e13 vg/kg) and we will no longer administer doses of
1.1e14 vg/kg or higher in this trial. Additional safety measures
have been implemented and are reflected in the updated trial
protocol. These measures include exclusion of patients with
end-stage heart failure, and a refined immunosuppressive regimen
involving transient B- and T-cell mediated inhibition, with
emphasis on preventing complement activation, while also enabling
lower steroid doses and earlier steroid taper, with all
immunosuppressive therapy discontinued 2-3 months following
therapy. As announced in January 2022, the initial pediatric
patient received RP-A501 therapy (6.7e13 vg/kg dose level) without
evidence of significant complement activation and with stable
platelet levels; there was no worsening of the patient’s baseline
DD-related skeletal myopathy during the weeks following
RP-A501.
Fanconi Anemia
Complementation Group A (FANCA):
FA, a rare and
life-threatening DNA-repair disorder, generally arises from a
mutation in a single FA gene. An estimated 60 to 70% of cases arise
from mutations in the Fanconi-A (“FANCA”) gene, which is the focus
of our program. FA results in bone marrow failure, developmental
abnormalities, myeloid leukemia, and other malignancies, often
during the early years and decades of life. Bone marrow aplasia,
which is bone marrow that no longer produces any or very few red
and white blood cells and platelets leading to infections and
bleeding, is the most frequent cause of early morbidity and
mortality in FA, with a median onset before 10 years of age.
Leukemia is the next most common cause of mortality, ultimately
occurring in about 20% of patients later in life. Solid organ
malignancies, such as head and neck cancers, can also occur,
although at lower rates during the first two to three decades of
life.
Although
improvements in allogeneic (donor-mediated) hematopoietic stem cell
transplant (“HSCT”), currently the most frequently utilized therapy
for FA, have resulted in more frequent hematologic correction of
the disorder, HSCT is associated with both acute and long-term
risks, including transplant-related mortality, graft versus host
disease (“GVHD”), a sometimes fatal side effect of allogeneic
transplant characterized by painful ulcers in the GI tract, liver
toxicity and skin rashes, as well as increased risk of subsequent
cancers. Our gene therapy program in FA is designed to enable a
minimally toxic hematologic correction using a patient’s own stem
cells during the early years of life. We believe that the
development of a broadly applicable autologous gene therapy can be
transformative for these patients.
Each of
our LVV-based programs utilize third-generation, self-inactivating
lentiviral vectors to correct defects in patients’ HSCs, which are
the cells found in bone marrow that are capable of generating blood
cells over a patient’s lifetime. Defects in the genetic coding of
HSCs can result in severe, and potentially life-threatening anemia,
which is when a patient’s blood lacks enough properly functioning
red blood cells to carry oxygen throughout the body. Stem cell
defects can also result in severe and potentially life-threatening
decreases in white blood cells resulting in susceptibility to
infections, and in platelets responsible for blood clotting, which
may result in severe and potentially life-threatening bleeding
episodes. Patients with FA have a genetic defect that prevents the
normal repair of genes and chromosomes within blood cells in the
bone marrow, which frequently results in the development of acute
myeloid leukemia (“AML”), a type of blood cancer, as well as bone
marrow failure and congenital defects. The average lifespan of an
FA patient is estimated to be 30 to 40 years. The prevalence of FA
in the U.S. and EU is estimated to be approximately 4,000 patients
in total. In light of the efficacy seen in non-conditioned
patients, the addressable annual market opportunity is now believed
to be 400 to 500 patients collectively in the U.S. and EU.
We currently
have one ex-vivo LVV-based program targeting FA, RP-L102. RP-L102
is our lead lentiviral vector-based program that we in-licensed
from Centro de Investigaciones Energéticas, Medioambientales y
Tecnológicas (“CIEMAT”), which is a leading research institute in
Madrid, Spain. RP-L102 is currently being studied in our Phase 2
registrational enabling clinical trials treating FA patients at the
Center for Definitive and Curative Medicine at Stanford University
School of Medicine (“Stanford”), the University of Minnesota, Great
Ormond Street Hospital (“GOSH”) in London and Hospital Infantil de
Nino Jesus (“HNJ”) in Spain. The trial is expected to enroll a
total of ten patients from the U.S. and EU with the first patient
in this Phase 2 trial treated in December 2019. Patients will
receive a single intravenous infusion of RP-L102 that utilizes
fresh cells and “Process B” which incorporates a modified stem cell
enrichment process, transduction enhancers, as well as
commercial-grade vector and final drug product.
Resistance to
mitomycin-C, a DNA damaging agent, in bone marrow stem cells at a
minimum time point of one year post treatment is the primary
endpoint for our ongoing Phase 2 study. Per agreement with the FDA
and EMA, engraftment leading to bone marrow restoration exceeding a
10% mitomycin-C resistance threshold could support a marketing
application for approval.
In December
2020, we presented updated interim data from our FA at the 62nd
American Society of Hematology (“ASH”) Annual Meeting. The FA data
presented at the ASH Annual Meeting were from seven of the nine
patients treated (out of twelve patients enrolled) as of October
2020 in both the U.S. Phase 1 and global Phase 2 studies of RP-L102
for FA. Patients in these studies received a single intravenous
infusion of “Process B” RP-L102 which incorporates a modified stem
cell enrichment process, transduction enhancers, as well as
commercial-grade vector. Preliminary data from these studies
support “Process B” as a consistent and reproducible improvement
over “Process A” which was used in earlier academic FA
studies.
Seven patients
had follow-up data of at least two-months and three of the seven
patients had been followed for twelve-months or longer. As patients
are treated with gene therapy product without the use of a
conditioning regimen, the data indicated that RP-L102 was generally
well-tolerated with no significant safety issues reported with
infusion or post-treatment. One drug related serious adverse event
of Grade 2 transient infusion-related reaction was observed. In
five out of the seven patients for whom there was follow-up data,
evidence of preliminary engraftment was observed, with bone marrow
(“BM”) vector copy numbers (“VCNs”) from 0.16 to 0.22 (long-term
follow-up only) and peripheral VCNs ranging from 0.01 (2-month
follow-up) to 0.11 (long-term follow-up). Further, two of the three
patients with greater than 12-months follow-up showed evidence of
increasing engraftment, mitomycin-C (“MMC”) resistance and stable
blood counts, which suggests a halt in the progression of bone
marrow failure. The third patient with greater than 12-month
follow-up contracted Influenza
B nine months post-treatment resulting in progressive BM
failure, for which, such patient received a successful bone marrow
transplant at 18 months post-treatment.
In May 2021,
we presented positive clinical data at the 24th Annual Meeting of
the American Society of Gene and Cell Therapy (“ASGCT”). The
preliminary data from the Phase 1/2 trials presented in a poster at
ASGCT were from nine pediatric patients and showed increasing
evidence of engraftment in at least six of the nine patients,
including two patients with at least 15-months of follow-up and
four patients with at least 6-months of follow-up. RP-L102
demonstrated a highly favorable tolerability profile with all
subjects being treated without conditioning and with no sign of
dysplasia. One patient experienced a Grade 2 transient
infusion-related reaction.
In December
2021, we presented encouraging clinical data at the 63rd Annual
Meeting of the American Society of Hematology (ASH). The
preliminary results from the Phase 1/2 trials were presented in a
poster at ASH were from eleven pediatric patients and showed
increasing evidence of engraftment in at least six of eight
patients for whom there are at least 12 months of follow-up,
including bone marrow progenitor cell resistance to mitomycin-C
(MMC) ranging from 16-63% in six patients (bone marrow cells in FA
patients are highly sensitive to DNA-damaging agents including MMC;
this susceptibility to DNA damage is believed to mediate the
FA-associated bone marrow failure and predisposition to malignancy.
In addition to the development of MMC-resistance in BM
hematopoietic cells, sustained peripheral VCN levels were seen in
six of seven patients with at least 12-months of follow-up. One
patient experienced an Influenza B infection approximately 9 months
following treatment with concomitant progressive hematologic
failure requiring allogeneic hematopoietic stem cell transplant,
which was administered successfully; the remaining patients have
not required transfusions. RP-L102 demonstrated a highly favorable
tolerability profile with all subjects being treated without
cytotoxic conditioning and no signs of dysplasia. The only RP-L102
related serious adverse event to-date has been a Grade 2 transient
infusion-related reaction in one patient.
Leukocyte
Adhesion Deficiency-I (LAD-I):
LAD-I is a rare autosomal recessive disorder of white blood cell
adhesion and migration, resulting from mutations in the ITGB2 gene
encoding for the Beta-2 Integrin component, CD18. Deficiencies in
CD18 result in an impaired ability for neutrophils (a subset of
infection-fighting white blood cells) to leave blood vessels and
enter tissues where these cells are needed to combat infections. As
is the case with many rare diseases, accurate estimates of
incidence are difficult to confirm; however, several hundred cases
have been reported to date. Most LAD-I patients are believed
to have the severe form of the disease. Severe LAD-I is notable for
recurrent, life-threatening infections and substantial infant
mortality in patients who do not receive an allogeneic HSCT.
Mortality for severe LAD-I has been reported as 60 to 75% by age
two in the absence of allogeneic HCST.
We currently
have one ex-vivo program
targeting LAD-I, RP-L201. RP-L201 is a clinical program that we
in-licensed from CIEMAT. We have partnered with UCLA to lead U.S.
clinical development efforts for the LAD-I program. UCLA and its
Eli and Edythe Broad Center of Regenerative Medicine and Stem Cell
Research is serving as the lead U.S. clinical research center for
the registrational clinical trial for LAD-I, and HNJ and GOSH
serving as the lead clinical sites in Spain and London,
respectively. This study has received a $6.5 million CLIN2 grant
award from the California Institute for Regenerative Medicine
(“CIRM”) to support the clinical development of gene therapy for
LAD-I.
The
ongoing open-label, single-arm, Phase 1/2 registration-enabling
clinical trial of RP-L201 has treated four severe LAD-I patients to
assess the safety and tolerability of RP-L201 to date. The first
patient was treated at UCLA with RP-L201 in the third quarter 2019.
Enrollment is now complete in both the Phase 1 and 2 portions of
the study; 9 patients have received RP-L102 at 3 investigative
centers in the U.S. and Europe.
In December
2021, we presented positive clinical data at the 63rd Annual
Meeting of ASH. The ASH oral presentation included preliminary data
from eight of nine severe LAD-I patients, as defined by CD18
expression of less than 2%, who received RP-L201 treatment as of
the November 8, 2021, data cut-off date. Eight patients had
follow-up data of at least three months, and four of the eight
patients had been followed for 12 months or longer. All infusions
of RP-L201 were well tolerated and no drug product-related serious
adverse events were reported. Evidence of preliminary efficacy was
observed in all eight evaluable patients. All eight patients
demonstrated neutrophil CD18 expression that exceeded the 4-10%
threshold associated with survival into adulthood and consistent
with reversal of the severe LAD-I phenotype including six patients
with at least 6 months of follow-up. Peripheral blood VCN levels
have been stable and in the 0.54 – 2.94 copies per genome range. No
patients had LAD-I related infections requiring hospitalization
after hematopoietic reconstitution post-RP-L201. Additional updates
presented in January 2022 included a ninth patient achieving CD18
expression of 61% at 3 months, with the preliminary observation
that all nine of nine patients have demonstrated 26% to 87% CD18
expression at timepoints ranging from 3 to 24 months following
RP-L102, with stable CD18 expression levels for each patient
subsequent to month 3.
Pyruvate Kinase
Deficiency (PKD):
Red blood cell
PKD is a rare autosomal recessive disorder resulting from mutations
in the pyruvate kinase L/R (“PKLR”) gene encoding for a component
of the red blood cell (“RBC”) glycolytic pathway. PKD is
characterized by chronic non-spherocytic hemolytic anemia, a
disorder in which RBCs do not assume a normal spherical shape and
are broken down, leading to decreased ability to carry oxygen to
cells, with anemia severity that can range from mild (asymptomatic)
to severe forms that may result in childhood mortality or a
requirement for frequent, lifelong RBC transfusions. The pediatric
population is the most commonly and severely affected subgroup of
patients with PKD, and PKD often results in splenomegaly (abnormal
enlargement of the spleen), jaundice and chronic iron overload
which is likely the result of both chronic hemolysis and the RBC
transfusions used to treat the disease. The variability in anemia
severity is believed to arise in part from the large number of
diverse mutations that may affect the PKLR gene. Estimates of
disease incidence have ranged between 3.2 and 51 cases per million
in the white U.S. and EU population. Industry estimates suggest at
least 2,500 cases in the U.S. and EU have already been diagnosed
despite the lack of FDA-approved molecularly targeted therapies.
Market research indicates the application of gene therapy to
broader populations could increase the market opportunity from
approximately 250 to 500 patients per year.
We
currently have one ex-vivo
LVV-based program targeting PKD, RP-L301. RP-L301 is a clinical
stage program that we in-licensed from CIEMAT. The IND for RP-L301
to initiate the global Phase 1 study cleared in October 2019. This
program has been granted US and EMA orphan drug disease
designation.
This global
Phase 1 open-label, single-arm, clinical trial is expected to
enroll six adult and pediatric PKD patients in the U.S. and Europe.
The trial will be comprised of three cohorts to assess RP-L301 in
young pediatric (age 8-11), older pediatric (age 12-17) and adult
populations. The trial is designed to assess the safety,
tolerability, and preliminary activity of RP-L301, and initial
safety evaluation will occur in the adult cohort before evaluation
in pediatric patients. Stanford will serve as the lead site in the
U.S. for adult and pediatric patients, HNJ will serve as the lead
site in Europe for pediatrics, and Hospital Universitario Fundación
Jiménez Díaz will serve as the lead site in Europe for adult
patients. In July 2020, we treated the first patient in our
clinical trial of RP-L301.
In December
2021, we presented positive clinical data at the 63rd Annual
Meeting of ASH. The ASH poster presentation included preliminary
data from two adult patients with severe anemia and substantial
transfusion requirements who were treated as of the November 3,
2021 cut-off date. Each of these patients had experience extensive
PKD-related disease complications including hepatic iron overload.
Both patients have had marked improvement in hemoglobin levels,
from baselines of 7.4 and 7.0 g/dL to 12-month values of 13.3 and
14.8 g/dL respectively; this represents an improvement from severe
(Hb <8g/dL) to normal levels. Both patients have been
transfusion independent subsequent to post-treatment hematopoietic
reconstitution. Anemia resolution has been accompanied by marked
improvement in additional markers of hemolysis, including
bilirubin, erythropoietin, and reticulocyte counts. RP-L301 has
been well tolerated in these adult patients, with no drug product
related serious adverse events or infusion-related complications
observed through 12-months post-treatment. Both patients have
reported improved quality of life (QOL) following treatment with
increases on FACT-An and additional designated QOL evaluations
sustained through 12 months following therapy.
Infantile
Malignant Osteopetrosis (IMO):
IMO is a
genetic disorder characterized by increased bone density and bone
mass secondary to impaired bone resorption. During normal growth
and development small areas of bone are constantly being broken
down by special cells called osteoclasts, then made again by cells
called osteoblasts. In IMO, the cells that break down bone
(osteoclasts) do not work properly, which leads to the bones
becoming thicker and not as healthy. Untreated IMO patients may
suffer from a compression of the bone-marrow space, which results
in bone marrow failure, anemia, and increased infection risk due to
the lack of production of white blood cells. Untreated IMO patients
may also suffer from a compression of cranial nerves, which
transmit signals between vital organs and the brain, resulting in
blindness, hearing loss and other neurologic deficits.
IMO represents
the autosomal recessive, severe variants of a group of disorders
characterized by increased bone density and bone mass secondary to
impaired bone resorption. IMO typically presents in the first year
of life and is associated with severe manifestations leading to
death within the first decade of life in the absence of allogeneic
HSCT, although HSCT results have been limited to-date and notable
for frequent graft failure, GVHD and other severe
complications.
Approximately
50% of IMO results from mutations in the TCIRG1 gene, resulting in
cellular defects that prevent osteoclast bone resorption. As a
result of this defect, bone growth is markedly abnormal. It is
estimated that IMO occurs in 1 out of 250,000-300,000 within the
general global population, although incidence is higher in specific
geographic regions including Costa Rica, parts of the Middle East,
the Chuvash Republic of Russia, and the Vasterbotten Province of
Northern Sweden.
Effective
December 2021, the Company made a decision to no longer pursue
Rocket-sponsored clinical evaluation of RP-L401; this program was
returned to academic innovators. The Company has opted to focus
available resources towards advancement of RP-A501, RP-L102,
RP-L201 and RP-L301, based on the compelling clinical data to date
and potential for therapeutic advancement in these severe disorders
of childhood and young adulthood.
Strategy
We seek to
bring hope and relief to patients with devastating, undertreated,
rare pediatric diseases through the development and
commercialization of potentially curative first-in-class gene
therapies. To achieve these objectives, we intend to develop into a
fully-integrated biotechnology company. In the near- and
medium-term, we intend to develop our first-in-class product
candidates, which are targeting devastating diseases with
substantial unmet need, develop proprietary in-house analytics and
manufacturing capabilities and continue to commence registration
trials for our currently planned programs. In the medium and
long-term, we expect to submit our first biologics license
applications (“BLAs”) and establish our gene therapy platform and
expand our pipeline to target additional indications that we
believe to be potentially compatible with our gene therapy
technologies. In addition, during that time, we believe that our
currently planned programs will become eligible for priority review
vouchers from the FDA that provide for expedited review. We have
assembled a leadership and research team with expertise in cell and
gene therapy, rare disease drug development and product
approval.
We
believe that our competitive advantage lies in our disease-based
selection approach, a rigorous process with defined criteria to
identify target diseases. We believe that this approach to asset
development differentiates us as a gene therapy company and
potentially provides us with a first-mover advantage.
Financial Overview
Since our
inception, we have devoted substantially all of our resources to
organizing and staffing the company, business planning, raising
capital, acquiring or discovering product candidates and securing
related intellectual property rights, conducting discovery, R&D
activities for our product candidates and planning for potential
commercialization. We do not have any products approved for sale
and have not generated any revenue from product sales. From
inception through March 31, 2022, we raised net cash proceeds of
approximately $680.5 million from investors through both equity and
convertible debt financing to fund operating activities.
Revenue
To date, we
have not generated any revenue from any sources, including from
product sales, and we do not expect to generate any revenue from
the sale of products in the near future. If our development efforts
for product candidates are successful and result in regulatory
approval or license agreements with third parties, we may generate
revenue in the future from product sales.
Operating
Expenses
Research and
Development Expenses
Our R&D program expenses
consist primarily of external costs incurred for the development of
our product candidates. These expenses include:
|
• |
expenses incurred under agreements with research institutions
and consultants that conduct R&D activities including process
development, preclinical, and clinical activities on our
behalf;
|
|
• |
costs related to process development, production of
preclinical and clinical materials, including fees paid to contract
manufacturers and manufacturing input costs for use in internal
manufacturing processes;
|
|
• |
consultants supporting process development and regulatory
activities;
|
|
• |
costs related to in-licensing of rights to develop and
commercialize our product candidate portfolio.
|
We
recognize external development costs based on contractual payment
schedules aligned with program activities, invoices for work
incurred, and milestones which correspond with costs incurred by
the third parties. Nonrefundable advance payments for goods or
services to be received in the future for use in R&D activities
are recorded as prepaid expenses.
Our direct
R&D expenses are tracked on a program-by-program basis for
product candidates and consist primarily of external costs, such as
research collaborations and third-party manufacturing agreements
associated with our preclinical research, process development,
manufacturing, and clinical development activities. Our direct
R&D expenses by program also include fees incurred under
license agreements. Our personnel, non-program and unallocated
program expenses include costs associated with activities performed
by our internal R&D organization and generally benefit multiple
programs. These costs are not separately allocated by product
candidate and consist primarily of:
|
• |
salaries and personnel-related costs, including benefits,
travel, and stock-based compensation, for our scientific personnel
performing R&D activities;
|
|
• |
facilities and other expenses, which include expenses for rent
and maintenance of facilities, and depreciation expense; and
|
|
• |
laboratory supplies and equipment used for internal R&D
activities.
|
Our direct
R&D expenses consist principally of external costs, such as
fees paid to investigators, consultants, laboratories and CROs in
connection with our clinical studies, and costs related to
acquiring and manufacturing clinical study materials. We allocate
salary and benefit costs directly related to specific programs. We
do not allocate personnel-related discretionary bonus or
stock-based compensation costs, costs associated with our general
discovery platform improvements, depreciation or other indirect
costs that are deployed across multiple projects under development
and, as such, the costs are separately classified as other R&D
expenses.
The following
table presents R&D expenses tracked on a program-by-program
basis as well as by type and nature of expense for the three months
ended March 31, 2022 and 2021.
| |
|
Three
Months Ended March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Direct Expenses:
|
|
|
|
|
|
|
|
Danon
Disease (AAV) RP-A501
|
|
$
|
6,374
|
|
|
$
|
3,799
|
|
|
Leukocyte
Adhesion Deficiency (LVV) RP-L201
|
|
|
3,051
|
|
|
|
6,406
|
|
|
Fanconi
Anemia (LVV) RP-L102
|
|
|
4,530
|
|
|
|
3,595
|
|
|
Pyruvate
Kinase Deficiency (LVV) RP-L301
|
|
|
854
|
|
|
|
1,859
|
|
|
Infantile
Malignant Osteopetrosis (LVV) RP-L401 (1)
|
|
|
190
|
|
|
|
796
|
|
|
Other
product candidates
|
|
|
3,254
|
|
|
|
692
|
|
|
Total direct
expenses
|
|
|
18,253
|
|
|
|
17,147
|
|
|
Unallocated Expenses
|
|
|
|
|
|
|
|
|
|
Employee
compensation
|
|
|
5,549
|
|
|
|
4,664
|
|
|
Stock based
compensation expense
|
|
|
2,318
|
|
|
|
2,916
|
|
|
Depreciation
and amortization expense
|
|
|
827
|
|
|
|
1,176
|
|
|
Laboratory
and related expenses
|
|
|
1,226
|
|
|
|
647
|
|
|
Legal and
patent fees
|
|
|
-
|
|
|
|
59
|
|
|
Professional
Fees
|
|
|
561
|
|
|
|
466
|
|
|
Other
expenses
|
|
|
2,060
|
|
|
|
1,234
|
|
|
Total other
research and development expenses
|
|
|
12,540
|
|
|
|
11,162
|
|
|
Total
research and development expense
|
|
$
|
30,794
|
|
|
$
|
28,309
|
|
(1) Effective December 2021, a
decision was made to no longer pursue Rocket-sponsored clinical
evaluation of RP-L401; this program was returned to academic
innovators.
We cannot
determine with certainty the duration and costs to complete current
or future clinical studies of product candidates or if, when, or to
what extent we will generate revenues from the commercialization
and sale of any of our product candidates that obtain regulatory
approval. We may never succeed in achieving regulatory approval for
any of our product candidates. The duration, costs, and timing of
clinical studies and development of product candidates will depend
on a variety of factors, including:
|
• |
the scope, rate of progress, and expense of ongoing as well as
any clinical studies and other R&D activities that we
undertake;
|
|
• |
future clinical study results;
|
|
• |
uncertainties in clinical study enrollment rates;
|
|
• |
changing standards for regulatory approval; and
|
|
• |
the timing and receipt of any regulatory approvals.
|
We expect
R&D expenses to increase for the foreseeable future as we
continue to invest in R&D activities related to developing
product candidates, including investments in manufacturing, as our
programs advance into later stages of development and as we conduct
additional clinical trials. The process of conducting the necessary
clinical research to obtain regulatory approval is costly and
time-consuming, and the successful development of product
candidates is highly uncertain. As a result, we are unable to
determine the duration and completion costs of R&D projects or
when and to what extent we will generate revenue from the
commercialization and sale of any of our product candidates.
Our future
R&D expenses will depend on the clinical success of our product
candidates, as well as ongoing assessments of the commercial
potential of such product candidates. In addition, we cannot
forecast with any degree of certainty which product candidates may
be subject to future collaborations, when such arrangements will be
secured, if at all, and to what degree such arrangements would
affect our development plans and capital requirements. We expect
our R&D expenses to increase in future periods for the
foreseeable future as we seek to further development of our product
candidates.
The successful
development and commercialization of our product candidates is
highly uncertain. This is due to the numerous risks and
uncertainties associated with product development and
commercialization, including the uncertainty of:
|
• |
the scope, progress, outcome and costs of our clinical trials
and other R&D activities;
|
|
• |
the efficacy and potential advantages of our product
candidates compared to alternative treatments, including any
standard of care;
|
|
• |
the market acceptance of our product candidates;
|
|
• |
obtaining, maintaining, defending, and enforcing patent claims
and other intellectual property rights;
|
|
• |
significant and changing government regulation; and
|
|
• |
the timing, receipt, and terms of any marketing
approvals.
|
A change in
the outcome of any of these variables with respect to the
development of our product candidates that we may develop could
mean a significant change in the costs and timing associated with
the development of our product candidates. For example, if the FDA
or another regulatory authority were to require us to conduct
clinical trials or other testing beyond those that we currently
contemplate for the completion of clinical development of any of
our product candidates that we may develop or if we experience
significant delays in enrollment in any of our clinical trials, we
could be required to expend significant additional financial
resources and time on the completion of clinical development of
that product candidate.
General
and Administrative Expenses
General and
administrative expenses consist primarily of salaries and related
benefit costs for personnel, including stock-based compensation and
travel expenses for our employees in executive, operational,
finance, legal, business development, and human resource functions.
In addition, other significant general and administrative expenses
include professional fees for legal, consulting, investor and
public relations, auditing, and tax services as well as other
expenses for rent and maintenance of facilities, insurance and
other supplies used in general and administrative activities. We
expect general and administrative expenses to increase for the
foreseeable future due to anticipated increases in headcount to
support the continued advancement of our product candidates. We
also anticipate that as we continue to operate as a public company
with increasing complexity, we will continue to incur increased
accounting, audit, legal, regulatory, compliance and director and
officer insurance costs as well as investor and public relations
expenses.
Interest Expense
Interest
expense for the three months ended March 31, 2022, is related to
our financing lease obligation for the Cranbury, NJ facility.
Interest expense for the three months ended March 31, 2021, related
to the Convertible Notes and our financing lease obligation for the
Cranbury, NJ facility.
Interest Income
Interest income is related to
interest earned from investments and cash equivalents.
Critical
Accounting Policies and Significant Judgments and Estimates
Our
management’s discussion and analysis of our financial condition and
results of operations is based on our consolidated financial
statements, which have been prepared in in conformity with
accounting principles generally accepted in the United States (“US
GAAP”). The preparation of these consolidated financial statements
requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial
statements, as well as the reported expenses incurred during the
reporting periods. Our estimates are based on our historical
experience and on various other factors that we believe are
reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different
assumptions or conditions. We periodically review our estimates as
a result of changes in circumstances, facts and experience. The
effects of material revisions in estimates are reflected in the
financial statements prospectively from the date of the change in
estimate.
Our
significant accounting policies are described in more detail in our
2021 Form 10-K.
Results of Operations
Comparison of the Three Months
Ended March 31, 2022 and 2021
| |
|
Three Months
Ended March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Change
|
|
| |
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
$
|
30,794
|
|
|
$
|
28,309
|
|
|
$
|
2,485
|
|
|
General and
administrative
|
|
|
11,770
|
|
|
|
10,913
|
|
|
|
857
|
|
|
Total
operating expenses
|
|
|
42,564
|
|
|
|
39,222
|
|
|
|
3,342
|
|
|
Loss from
operations
|
|
|
(42,564
|
)
|
|
|
(39,222
|
)
|
|
|
(3,342
|
)
|
|
Research and
development incentives
|
|
|
-
|
|
|
|
500
|
|
|
|
(500
|
)
|
|
Interest
expense
|
|
|
(464
|
)
|
|
|
(1,729
|
)
|
|
|
1,265
|
|
|
Interest and
other income, net
|
|
|
623
|
|
|
|
911
|
|
|
|
(288
|
)
|
|
Amortization
of premium on investments - net
|
|
|
(577
|
)
|
|
|
(639
|
)
|
|
|
62
|
|
|
Total other
expense, net
|
|
|
(418
|
)
|
|
|
(957
|
)
|
|
|
539
|
|
|
Net
loss
|
|
$
|
(42,982
|
)
|
|
$
|
(40,179
|
)
|
|
$
|
(2,803
|
)
|
Research and Development
Expenses
R&D
expenses increased $2.5 million to $30.8 million for the three
months ended March 31, 2022 compared to the three months ended
March 31, 2021. The increase in R&D expenses was primarily
driven by an increase in laboratory supplies of $1.3 million, an
increase in compensation and benefits of $0.8 million due to
increased R&D headcount, an increase in manufacturing and
development costs of $0.6 million, offset by a decrease in R&D
non-cash stock-based compensation expense of $0.6 million.
General and Administrative
Expenses
G&A
expenses increased $0.9 million to $11.8 million for the three
months ended March 31, 2022, compared to the three months ended
March 31, 2021. The increase in G&A expenses was primarily
driven by an increase in commercial preparation expenses
which consists of commercial
strategy, medical affairs, market development and pricing
analysis of $1.1 million, an increase in compensation and
benefits of $0.3 million due to increased G&A headcount, an
increase in legal expense of $0.2 million, offset by a decrease of
$1.0 million in G&A stock-based compensation expense.
Other Expense, Net
Other
expense, net decreased by $0.5 million to $0.4 million for the
three months ended March 31, 2022, compared to the three months
ended March 31, 2021. The decrease in other expense, net was
primarily driven by reduced interest expense of $1.3 million
associated with the 2022 Convertible Notes that were redeemed in
April 2021 and the 2021 Convertible Notes that were converted in
August 2021, as well as a decrease of $0.5 million in research and
development incentives due to the receipt of the New York State
R&D tax credit in 2021.
Liquidity, Capital Resources and
Plan of Operations
We have not
generated any revenue and have incurred losses since inception.
Operations of the Company are subject to certain risks and
uncertainties, including, among others, uncertainty of drug
candidate development, technological uncertainty, uncertainty
regarding patents and proprietary rights, having no commercial
manufacturing experience, marketing or sales capability or
experience, dependency on key personnel, compliance with government
regulations and the need to obtain additional financing. Drug
candidates currently under development will require significant
additional R&D efforts, including extensive preclinical and
clinical testing and regulatory approval, prior to
commercialization. These efforts require significant amounts of
additional capital, adequate personnel infrastructure and extensive
compliance-reporting capabilities.
Our drug
candidates are in the development and clinical stage. There can be
no assurance that our R&D will be successfully completed, that
adequate protection for our intellectual property will be obtained,
that any products developed will obtain necessary government
approval or that any approved products will be commercially viable.
Even if our product development efforts are successful, it is
uncertain when, if ever, we will generate significant revenue from
product sales. We operate in an environment of rapid change in
technology and substantial competition from pharmaceutical and
biotechnology companies.
Our
consolidated financial statements have been prepared on the basis
of continuity of operations, realization of assets and the
satisfaction of liabilities in the ordinary course of business.
Rocket has incurred net losses and negative cash flows from its
operations each year since inception. We had net losses of $42.9
million for the three months ended March 31, 2022, and $169.1
million for the year ended December 31, 2021. As of March 31, 2022
and December 31, 2021, we had an accumulated deficit of $534.9
million and $491.9 million, respectively. As of March 31, 2022, we had $346.6 million
of cash, cash equivalents and investments. We expect such resources
would be sufficient to fund our operating expenses and capital
expenditure requirements into the first half of 2024. We have
funded our operations primarily through the sale of our equity and
debt securities.
In the longer
term, our future viability is dependent on our ability to generate
cash from operating activities or to raise additional capital to
finance our operations. If we raise additional funds by issuing
equity securities, our stockholders will experience dilution. Any
future debt financing into which we enter may impose upon us
additional covenants that restrict our operations, including
limitations on our ability to incur liens or additional debt, pay
dividends, repurchase our common stock, make certain investments
and engage in certain merger, consolidation, or asset sale
transactions. Any debt financing or additional equity that we raise
may contain terms that are not favorable to us or our stockholders.
Our failure to raise capital as and when needed could have a
negative impact on our financial condition and ability to pursue
our business strategies.
| |
|
Three Months
Ended March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Net
cash used in operating activities
|
|
$
|
(39,223
|
)
|
|
$
|
(24,283
|
)
|
|
Net
cash used in investing activities
|
|
|
(62,995
|
)
|
|
|
(29,174
|
)
|
|
Net
cash provided by financing activities
|
|
|
76
|
|
|
|
8,792
|
|
|
Net decrease in cash, cash equivalents and restricted cash
|
|
$
|
(102,142
|
)
|
|
$
|
(44,665
|
)
|
Operating
Activities
During the
three months ended March 31, 2022, operating activities used $39.2
million of cash, primarily resulting from our net loss of $43.0
million offset by net non-cash charges of $8.2 million, including
non-cash stock-based compensation expense of $6.3 million,
accretion of discount on investments of $0.6 million, and
depreciation and amortization expense of $1.3 million. Changes in
our operating assets and liabilities for the three months ended
March 31, 2022, consisted of a decrease in accounts payable and
accrued expenses of $0.5 million and a decrease in our prepaid
expenses of $3.9 million.
During the
three months ended March 31, 2021, operating activities used $24.3
million of cash, primarily resulting from our net loss of $40.2
million offset by net non-cash charges of $9.8 million, including
non-cash stock-based compensation expense of $7.9 million and
depreciation of $0.7 million. Changes in our operating assets and
liabilities for the three months ended March 31, 2021 consisted of
an increase in accounts payable and accrued expenses for $7.0
million and a decrease in our prepaid expenses of $0.8
million.
Investing
Activities
During the
three months ended March 31, 2022, investing activities used $63.0
million of cash, primarily resulting from proceeds of $82.0 million
from the maturities of investments, offset by purchases of
investments of $143.0 million, and purchases of property and
equipment of $2.0 million.
During the
three months ended March 31, 2021, investing activities used $29.2
million of cash, primarily resulting from proceeds of $75.0 million
from the maturities of investments, offset by purchases of
investments of $103.8 million, and purchases of property and
equipment of $0.3 million.
Financing
Activities
During the
three months ended March 31, 2022, financing activities provided
$0.1 million of cash, consisting of issuance of common stock,
pursuant to exercises of stock options and restricted stock
units.
During the
three months ended March 31, 2021, financing activities provided
$8.8 million of cash, consisting of issuance of common stock,
pursuant to exercises of stock options.
Contractual Obligations and
Commitments
There were
no material changes outside the ordinary course of our business to
the contractual obligations specified in the table of contractual
obligations included in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in our 2021 Form
10-K. Information regarding contractual obligations and commitments
may be found in Note 10 of our unaudited consolidated condensed
financial statements in this Quarterly Report on Form 10-Q.
We do not have any off-balance
sheet arrangements that are material or reasonably likely to become
material to our financial condition or results of
operations.
Recently Issued Accounting
Pronouncements
A
description of recently issued accounting pronouncements that may
potentially impact our financial position and results of operations
is disclosed in Note 3 of our unaudited consolidated condensed
financial statements in this Quarterly Report on Form 10-Q.
|
Item 3 |
Quantitative and Qualitative
Disclosures About Market Risk
|
Not
Applicable
|
Item 4 |
Controls and Procedures
|
Evaluation of
Disclosure Controls and Procedures
Our
management, with the participation of our principal executive
officer and our principal financial officer, evaluated, as of the
end of the period covered by this Quarterly Report on Form 10-Q,
the effectiveness of our disclosure controls and procedures. Based
on that evaluation of our disclosure controls and procedures as of
March 31, 2022, our principal executive officer and principal
financial officer concluded that our disclosure controls and
procedures as of such date are effective at the reasonable
assurance level. The term “disclosure controls and procedures,” as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,
means 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 are
recorded, processed, summarized, and reported within the time
periods specified in the SEC’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and 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. Management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only
reasonable assurance of achieving their objectives and our
management necessarily applies its judgment in evaluating the
cost-benefit relationship of possible controls and
procedures.
Inherent
Limitations of Internal Controls
Because of
its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation and
presentation. Projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Changes in
Internal Control over Financial Reporting
There were no changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the three months ended March 31, 2022, that
have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
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Item 1. |
Legal Proceedings
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From time to
time, the Company may be subject to various legal proceedings and
claims that arise in the ordinary course of its business
activities. Although the results of litigation and claims cannot be
predicted with certainty, the Company does not believe it is party
to any other claim or litigation the outcome of which, if
determined adversely to the Company, would individually or in the
aggregate be reasonably expected to have a material adverse effect
on its business. Regardless of the outcome, litigation can have an
adverse impact on the Company because of defense and settlement
costs, diversion of management resources and other factors.
Our material
risk factors are disclosed in Item 1A of our 2021 Form 10-K. There
have been no material changes from the risk factors previously
disclosed in such filing.
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Item 2. |
Unregistered Sales of Equity
Securities and Use of Proceeds
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None.
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Item 3. |
Defaults Upon Senior
Securities
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None.
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Item 4. |
Mine Safety Disclosures
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Not applicable.
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Item 5. |
Other Information
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None
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Exhibit
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Number
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Description of
Exhibit
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|
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Agreement and
Plan of Merger and Reorganization, dated as of September 12, 2017,
by and among Inotek Pharmaceuticals Corporation, Rocket
Pharmaceuticals, Ltd. and Rome Merger Sub (incorporated by
reference to Exhibit 2.1 to the Company’s Current Report on Form 8-
K (001-36829), filed with the SEC on September 13, 2017)
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|
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Seventh Amended
and Restated Certificate of Incorporation of Rocket
Pharmaceuticals, Inc., effective as of February 23,
2015(incorporated by reference to Exhibit 3.1 to the Company’s
Annual Report on Form 10-K (001-36829), filed with the SEC on
March31, 2015)
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|
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Certificate of
Amendment (Reverse Stock Split) to the Seventh Amended and Restated
Certificate of Incorporation of the Registrant, effective as of
January 4, 2018 (incorporated by reference to Exhibit 3.1 to the
Company’s Current Report on Form 8-K (001-36829), filed with the
SEC on January 5, 2018)
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|
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Certificate of
Amendment (Name Change) to the Seventh Amended and Restated
Certificate of Incorporation of the Registrant, effective January
4, 2018 (incorporated by reference to Exhibit 3.2 to the Company’s
Current Report on Form 8-K (001-36829), filed with the SEC on
January 5, 2018)
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|
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Certificate of
Amendment to the Seventh Amended and Restated Certificate of
Incorporation of the Registrant, effective as of June 25, 2018
(incorporated by reference to Exhibit 3.1 to the Company’s Current
Report on Form 8-K (001-36829), filed with the SEC on June 25,
2019
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|
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Amended and
Restated By-Laws of Rocket Pharmaceuticals, Inc., effective as of
March 29, 2018 (incorporated by reference to Exhibit3.2 to the
Company’s Current Report on Form 8-K (001-36829), filed with the
SEC on April 4, 2018)
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|
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Sales
Agreement, dated February 28, 2022, by and between the Registrant
and Cowen and Company, LLC (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K (001-36829), filed
with the SEC on March 1, 2022).
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|
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Certification
of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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|
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Certification
of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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|
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Certification
of Principal Executive Officer and Principal Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
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101.INS
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Inline XBRL Instance Document.
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101.SCH
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Inline XBRL Taxonomy Extension
Schema Document.
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101.CAL
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Inline XBRL Taxonomy Extension
Calculation Document.
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101.DEF
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Inline XBRL Taxonomy Extension
Definition Linkbase Document.
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101.LAB
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Inline XBRL Taxonomy Extension
Labels Linkbase Document.
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|
101.PRE
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Inline XBRL Taxonomy Extension
Presentation Link Document.
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|
104
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Cover Page Interactive Data File
(the cover page XBRL tags are embedded within the Inline XBRL
document)
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* Filed herewith.
** The
certification furnished in Exhibit 32.1 hereto are deemed to be
furnished with this Quarterly Report on Form 10-Q and will not be
deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, except to the extent that the
Registrant specifically incorporates it by reference.
Pursuant to the requirements of
the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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ROCKET
PHARMACEUTICALS, INC.
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May 6,
2022
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By:
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/s/
Gaurav Shah, MD
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Gaurav
Shah, MD
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Chief Executive Officer and Director
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(Principal Executive Officer)
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May 6,
2022
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By:
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/s/ John
Militello
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John
Militello
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VP of Finance, Senior Controller and Treasurer
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(Interim Principal Financial Officer and Principal Accounting
Officer)
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