Passage Bio, Inc. — FY2023 Form 10-K
Reporting period: Year ended December 31, 2023; filed March 4, 2024. Passage Bio is a clinical-stage genetic medicines company with no approved products and no commercial product revenue. Its lead and sole active clinical-stage candidate is PBFT02 for progranulin-deficient frontotemporal dementia (FTD-GRN).
Financial results and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | None from product sales | None from product sales |
| Research and development expense | $61.4 million | $86.1 million |
| General and administrative expense | $41.6 million | $49.3 million |
| Operating loss | $108.4 million | $138.4 million |
| Net loss | $102.1 million | $136.1 million |
| Net loss per share | $1.86 | $2.50 |
| Operating cash used | $78.3 million | $118.2 million |
At December 31, 2023, cash and cash equivalents were $21.7 million and marketable securities were $92.6 million, totaling $114.3 million. Current assets were $118.0 million and current liabilities $16.3 million. The company reported no borrowings in the supplied balance sheet; operating lease liabilities totaled $26.3 million, including $3.4 million current. Accumulated deficit was $594.5 million. Management expects available cash, cash equivalents and marketable securities to fund operating and capital needs into Q4 2025, but cautions that this estimate depends on assumptions and that additional capital will be needed.
No meaningful product gross margin is reported because the company has no product sales. Other income, net was $6.3 million, including $5.6 million from interest and marketable-security premium/discount amortization and $0.7 million from selling tax credits. Cash and marketable securities declined from $189.6 million at year-end 2022 to $114.3 million at year-end 2023.
Material changes versus FY2022
- Net loss narrowed by $34.1 million, principally as R&D expense fell $24.6 million and G&A fell $7.8 million. The reductions reflected lower manufacturing activity, workforce reductions, lower share-based compensation and reduced spending on discontinued or paused programs.
- FY2023 included $5.4 million of long-lived-asset impairment tied to office-space subleases, versus none in FY2022, and $11.3 million of Catalent-related G&A expense. The latter comprised $6.0 million of payments under amended agreements and a $5.3 million write-off of a prepaid clean-room asset.
- Operating cash use decreased by $39.9 million year over year. Investing cash inflow was $65.2 million, primarily reflecting marketable-security maturities and sales exceeding purchases; financing provided $0.1 million.
- In July 2023, Passage Bio reduced headcount by approximately 26%. In December 2023 it reset priorities around PBFT02 and the Huntington’s disease preclinical program, while seeking out-licensing for pediatric programs.
Pipeline, outlook and key risks
- PBFT02 / FTD-GRN: The Phase 1/2 upliFT-D trial is an open-label, single-arm, dose-escalation study. Initial biomarker data from three Cohort 1 patients showed cerebrospinal-fluid progranulin above healthy-control levels after Dose 1; one patient had a reported six-month level of 27.3 ng/mL. These early biomarker observations do not establish clinical benefit.
- One patient treated under the original, lower steroid regimen experienced two serious adverse events—hepatotoxicity and venous sinus thrombosis—described as asymptomatic and likely consistent with an immune response. The patient withdrew at week 10, with no further follow-up available. After the protocol was amended to use enhanced immunosuppression, the other two patients had no reported SAEs; their treatment-emergent events were mild to moderate. The small sample and limited follow-up leave safety and efficacy uncertain.
- Management planned two additional Dose 1 treatments, Cohort 2 dosing in the first half of 2024, six-month Cohort 1 safety and biomarker data in the second half of 2024, and further follow-up and Cohort 2 data in the first half of 2025. These are forward-looking plans, not reported outcomes. PBFT02 has FDA Fast Track and Orphan Drug designations and European Orphan designation.
- Passage Bio intends to explore PBFT02 for FTD-C9orf72 and ALS, with regulatory feedback anticipated in the second half of 2024, and plans preclinical work in Alzheimer’s disease. The Huntington’s disease program remains preclinical.
- To reduce costs, the company paused enrollment in the GM1 Imagine-1 trial and is pursuing out-licensing; it terminated further Krabbe clinical development and has not initiated MLD clinical development. It is also pursuing out-licensing for those programs. Development of the separate PBAL05 and temporal-lobe-epilepsy research programs is paused.
- Key risks include dependence on PBFT02, clinical and regulatory uncertainty in gene therapy, potential immune, liver, neurologic or administration-related adverse effects, small and difficult-to-identify patient populations, reliance on Penn and third-party manufacturers, and the need for additional financing. The company relies on Catalent for clinical supply and has not secured commercial-scale manufacturing. Amended Catalent terms removed prior minimum annual commitments but retain a limited exclusive manufacturing relationship for specified programs.
- A former employee’s lawsuit seeks an amount in the mid-single-digit millions of dollars; the court denied both parties’ summary-judgment motions, and a 2024 trial was anticipated. The company disputed the claim, said it intended to defend it, and recorded no loss contingency at year-end.
Important facts for investors to verify
- Whether PBFT02’s early biomarker response persists and whether longer-term clinical outcomes support meaningful benefit, alongside the safety results under the amended steroid regimen.
- Actual cash burn, financing actions and updated runway assumptions relative to management’s Q4 2025 estimate; the company had no committed external source of funds.
- Progress and terms of out-licensing efforts for GM1, Krabbe and MLD, and any resulting costs, proceeds or retained obligations.
- Clinical-supply capacity and commercial manufacturing plans, including implications of Catalent’s acquisition and the amended agreement’s exclusivity and termination provisions.
- Outcome and financial exposure from the former-employee litigation, and the continuing costs of leases, Penn research funding and other contractual commitments.
Audit and controls: KPMG issued an unqualified opinion on the financial statements. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not attest to internal-control effectiveness.