Passage Bio, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing; it does not provide standalone fourth-quarter financial results. Filed March 3, 2022.
Business context
Passage Bio is a clinical-stage genetic medicines company developing gene therapies for central nervous system disorders. It had three clinical-stage candidates—PBGM01 for GM1 gangliosidosis, PBFT02 for frontotemporal dementia caused by progranulin deficiency, and PBKR03 for Krabbe disease—plus research-stage programs. The company reported no approved products or product-sales revenue and relies heavily on its research collaboration with the University of Pennsylvania and manufacturing arrangements with Catalent.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue from product sales | None | None |
| Research and development expense | $117.7 million | $81.8 million |
| Acquired in-process R&D expense | $8.0 million | $1.0 million |
| General and administrative expense | $60.1 million | $30.1 million |
| Loss from operations | $185.7 million | $112.9 million |
| Net loss | $185.4 million | $112.2 million |
| Net loss per share, basic and diluted | $3.48 | $2.91 |
| Cash used in operating activities | $126.9 million | $80.5 million |
- At December 31, 2021, cash and cash equivalents were $129.0 million and marketable securities were $186.8 million, totaling $315.8 million. Current assets were $325.1 million against current liabilities of $29.5 million.
- Total assets were $355.1 million, total liabilities $36.4 million, and stockholders’ equity $318.7 million. The balance sheet reports no borrowings; liabilities included deferred rent.
- Cash provided by financing activities was $166.7 million, primarily from a January 2021 follow-on offering that generated $165.8 million net proceeds. Cash used in investing activities was $45.8 million, including $17.6 million for property and equipment and $8.0 million for technology rights.
- The company reported an accumulated deficit of $356.3 million. Profitability and operating margins are not meaningful given the absence of product revenue and continuing development-stage losses.
Changes versus 2020
- Net loss increased by $73.2 million. R&D expense rose $35.9 million and G&A expense rose $29.9 million, reflecting increased staffing, clinical operations and manufacturing activity, and expanded facilities.
- Share-based compensation increased to $32.7 million from $14.6 million; 2021 included $7.4 million of expense related to award modifications.
- Operating cash use increased by $46.4 million. The January 2021 equity offering supported liquidity, while cash and cash equivalents alone declined $6.0 million; total cash, cash equivalents and marketable securities remained $315.8 million at year-end.
Outlook, commentary and key risks
- Management expected year-end 2021 cash, cash equivalents and marketable securities to fund operating expenses and capital expenditures through the end of 2023. This is an estimate based on assumptions; the company said it would need additional funding and had no committed external source of capital.
- PBGM01’s first two-patient cohort was dosed in 2021. Interim data reported in December showed increased CSF beta-galactosidase activity and no serious adverse events; February 2022 company updates reported developmental gains and dosing in additional cohorts. These are early, small-cohort results and are not evidence of confirmed efficacy.
- PBFT02 and PBKR03 trials were expected to begin dosing in early 2022. COVID-19-related site and ethics-review delays had substantially affected their initiation and could further delay timelines.
- Preclinical studies of all three clinical candidates found dorsal root and trigeminal ganglia toxicity in nonhuman primates, generally described as minimal to mild and without clinical signs. The company planned clinical monitoring for sensory and peripheral nerve effects.
- Key risks include clinical and regulatory uncertainty, rare-disease enrollment challenges, manufacturing dependence and scale-up, reliance on Penn for preclinical research, need for additional capital, and competition. Regenxbio had asserted potential patent claims concerning the AAVhu68 capsid and intrathecal administration; Passage Bio disputed the claims and disclosed that an adverse outcome could require a license.
- The Penn agreement entails ongoing research funding of about $5.0 million annually through 2026, alongside potential development, sales milestone and royalty obligations. Catalent commitments include a minimum of $10.6 million annually through November 2025, subject to adjustments.
- No formal financial guidance was provided. The company stated it expected significant expenses and losses to continue. Its financial statements received an unqualified audit opinion; management concluded disclosure controls and internal control over financial reporting were effective, and the auditor did not attest to internal-control effectiveness.
Investor verification priorities
- Confirm subsequent clinical-trial updates, including full safety, biomarker and developmental data, cohort sizes, and whether early PBGM01 findings are sustained.
- Track cash burn, the assumptions behind the stated runway through 2023, and any additional financing or dilution.
- Assess emerging clinical evidence for ganglia or other toxicities and the monitoring or mitigation plans for each candidate.
- Review trial-start and enrollment timelines, especially the effects of COVID-19 and competition for rare-disease patients.
- Monitor manufacturing capacity, Catalent commitments, Penn-related obligations, and the status or resolution of the Regenxbio patent dispute.