Source: sec
Source ID: 0001193125-26-337935
URL: https://www.sec.gov/Archives/edgar/data/1707502/000119312526337935/sldb-20260630.htm
Symbol: (SLDB)
Published: 2026-08-06 16:04:10 EDT
Time precision: minute
Title: 10-Q 10-Q

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30,
2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number:
001-38360
Solid Biosciences Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware
90-0943402
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
500 Rutherford Avenue, Third Floor
Charlestown
,
MA
02129
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (
617
)
337-4680
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of exchange on which registered
Common Stock, $0.001 par value per share
SLDB
The Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
As of August 4, 2026, the registrant had
107,225,238
shares of common stock, $0.001 par value per share, outstanding.
SOLID BIOSCIENCES INC.
TABLE OF CONTENTS
Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
1
PART I.
FINANCIAL INFORMATION
3
Item 1.
Financial Statements (Unaudited)
3
Condensed Consolidated Balance Sheets at June 30, 2026 and December 31, 2025
3
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025
4
Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2026 and 2025
5
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2026 and 2025
6
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025
8
Notes to the Condensed Consolidated Financial Statements
10
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
20
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
31
Item 4.
Controls and Procedures
31
PART II.
OTHER INFORMATION
33
Item 1.
Legal Proceedings
33
Item 1A.
Risk Factors
33
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
87
Item 5.
Other Information
87
Item 6.
Exhibits
88
SIGNATURES
89
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Quarterly Report on Form 10-Q includes forward-looking statements, which involve risks and uncertainties. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believe,” “estimate,” “project,” “anticipate,” “expect,” “seek,” “predict,” “aim,” “continue,” “possible,” “intend,” “may,” “might,” “will,” “could,” “would” or “should” or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report on Form 10-Q. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are based upon information available to us on the date of this Quarterly Report on Form 10-Q.
The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:
•
the timing, progress, design and results of ongoing and planned preclinical studies and clinical trials for our neuromuscular (e.g., SGT-003, SGT-212), cardiac (e.g., SGT-501, SGT-601) or other future candidates;
•
our ability to establish or maintain collaborations or strategic relationships;
•
our ability to obtain and maintain U.S. and foreign regulatory approval of our neuromuscular (e.g., SGT-003, SGT-212), cardiac (e.g., SGT-501, SGT-601) or other future candidates, and the timing and scope thereof;
•
the timing and outcomes of regulatory interactions;
•
the size of the patient populations and potential market opportunity for our neuromuscular (e.g., SGT-003, SGT-212), cardiac (e.g., SGT-501, SGT-601) or other future candidates, if approved for commercial use;
•
our manufacturing capabilities and strategy, including capacity constraints and the scalability and commercial viability of our manufacturing methods and processes;
•
our plans to develop and commercialize our neuromuscular (e.g., SGT-003, SGT-212), cardiac (e.g., SGT-501, SGT-601) or other future candidates, if approved;
•
the pricing and reimbursement of our neuromuscular (e.g., SGT-003, SGT-212), cardiac (e.g., SGT-501, SGT-601) or other future candidates we may develop, if approved;
•
the establishment of sales, marketing and distribution capabilities and entry into agreements with third parties to market and sell our neuromuscular (e.g., SGT-003, SGT-212), cardiac (e.g., SGT-501, SGT-601) or other future candidates, if approved;
•
the rate and degree of market acceptance and clinical utility of our neuromuscular (e.g., SGT-003, SGT-212), cardiac (e.g., SGT-501, SGT-601) or other future candidates, if approved;
•
our plans to develop our platform technologies;
•
our expectations related to our use of capital resources;
•
our estimates regarding expenses, ongoing losses, future revenue, capital requirements, and need for and ability to obtain additional financing;
•
our intellectual property position;
•
our competitive and market position;
•
developments relating to our competitors and our industry;
•
our ability to continue as a going concern; and
•
the impact of laws, regulations, and global political and economic developments, including the imposition of tariffs or other trade restrictions, on our business, operations, strategy and goals.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, business and prospects may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results of operations, financial condition, business and prospects are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results may not be indicative of results to be expected in subsequent periods.
1
You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
This Quarterly Report on Form 10-Q includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties as well as our own estimates of potential market opportunities based on our analysis of these data, research, surveys and studies. All of the market data used in this Quarterly Report on Form 10-Q involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such data. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Our estimates of the potential market opportunities for our candidates include a number of key assumptions based on our industry knowledge, industry publications and third-party research, surveys and studies, which may be based on a small sample size and fail to accurately reflect market opportunities. While we believe that our internal assumptions are reasonable, no independent source has verified such assumptions.
As used in this Quarterly Report on Form 10-Q, the terms “Solid,” “the Company,” “we,” “us” and “our” refer to Solid Biosciences Inc., and its consolidated subsidiaries, unless the context indicates otherwise. Solid Biosciences Inc. was organized in March 2013 under the name SOLID Ventures Management, LLC and operated as a Delaware limited liability company until immediately prior to the effectiveness of its registration statement on Form S-1 on January 25, 2018, at which time it completed a statutory corporate conversion into a Delaware corporation and changed its name to Solid Biosciences Inc.
2
PART I—FINANCIA
L INFORMATION
Item 1. F
inancial Statements (unaudited)
SOLID BIOSCIENCES INC.
CONDENSED CONSOLIDA
TED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share data)
June 30,
December 31,
2026
2025
Assets
Current assets:
Cash and cash equivalents
$
159,394
$
59,900
Available-for-sale securities
218,284
127,950
Prepaid expenses and other current assets
16,792
16,384
Restricted cash, current
638
1,222
Total current assets
395,108
205,456
Non-current assets:
Operating lease, right-of-use assets
20,667
21,924
Property and equipment, net
3,959
4,169
Other non-current assets
138
223
Restricted cash, net of current portion
708
768
Total non-current assets
25,472
27,084
Total assets
$
420,580
$
232,540
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
4,360
$
3,224
Accrued expenses and other current liabilities
17,790
18,945
Operating lease liabilities, current
2,234
2,103
Derivative liabilities
4,200
9,200
Total current liabilities
28,584
33,472
Non-current liabilities:
Operating lease liabilities, net of current portion
17,921
19,058
Total non-current liabilities
17,921
19,058
Total liabilities
46,505
52,530
Commitments and contingencies
(Note 10)
Stockholders' equity:
Preferred stock, $
0.001
par value;
10,000,000
shares authorized at June 30, 2026 and December 31, 2025;
no
shares issued or outstanding at June 30, 2026 and December 31, 2025
—
—
Common stock, $
0.001
par value;
480,000,000
and
240,000,000
shares authorized at June 30, 2026 and December 31, 2025;
105,125,366
and
78,967,888
shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively
105
79
Additional paid-in capital
1,443,394
1,137,654
Accumulated other comprehensive (loss) income
(
113
)
52
Accumulated deficit
(
1,069,311
)
(
957,775
)
Total stockholders’ equity
374,075
180,010
Total liabilities and stockholders’ equity
$
420,580
$
232,540
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
SOLID BIOSCIENCES INC.
CONDENSED CONSOLIDATED S
TATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Operating expenses:
Research and development
$
44,265
$
32,415
$
90,405
$
63,329
General and administrative
13,119
9,278
24,287
18,416
Total operating expenses
57,384
41,693
114,692
81,745
Loss from operations
(
57,384
)
(
41,693
)
(
114,692
)
(
81,745
)
Other income, net:
Interest income
3,221
2,966
5,285
5,266
Interest expense
—
(
60
)
—
(
128
)
Change in fair value of derivative liabilities
(
850
)
(
900
)
(
2,500
)
(
2,550
)
Other income, net
214
207
371
395
Total other income, net
2,585
2,213
3,156
2,983
Net loss
$
(
54,799
)
$
(
39,480
)
$
(
111,536
)
$
(
78,762
)
Net loss per share, basic and diluted
$
(
0.38
)
$
(
0.42
)
$
(
0.88
)
$
(
0.98
)
Weighted average shares of common stock
outstanding, used to compute basic and
diluted net loss per share
143,688,701
94,140,286
126,843,665
80,317,588
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
SOLID BIOSCIENCES INC.
CONDENSED CONSOLIDATED ST
ATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Net loss
$
(
54,799
)
$
(
39,480
)
$
(
111,536
)
$
(
78,762
)
Other comprehensive loss:
Unrealized loss on available-for-sale securities
(
100
)
(
40
)
(
165
)
(
85
)
Comprehensive loss
$
(
54,899
)
$
(
39,520
)
$
(
111,701
)
$
(
78,847
)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
SOLID BIOSCIENCES INC.
CONDENSED CONSOLIDATED STATEMENTS O
F CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share data)
Six Months Ended
June 30, 2026
Common
Stock
Additional
Paid-in
Accumulated
Other
Comprehensive
Accumulated
Total
Stockholders'
Shares
Amount
Capital
(Loss) Income
Deficit
Equity
Balance at January 1, 2026
78,967,888
$
79
$
1,137,654
$
52
$
(
957,775
)
$
180,010
Issuance of common stock in private placement, net of issuance costs of $
4,776
14,973,257
15
79,209
—
—
79,224
Issuance of pre-funded warrants in private placement, net of issuance costs of $
8,868
—
—
147,104
—
—
147,104
Issuance of common stock in private placement for payment of developmental milestone consideration
1,316,899
1
7,499
—
—
7,500
Issuance of common stock in at-the-market public offering, net of sales commissions of $
275
1,937,623
2
11,925
—
—
11,927
Vesting of restricted and performance stock units
1,193,931
1
(
1
)
—
—
—
Exercise of common stock options
5,122
—
17
—
—
17
Unrealized loss on available-for-sale securities
—
—
—
(
65
)
—
(
65
)
Equity-based compensation expense
—
—
5,152
—
—
5,152
Net loss
—
—
—
—
(
56,737
)
(
56,737
)
Balance at March 31, 2026
98,394,720
98
1,388,559
(
13
)
(
1,014,512
)
374,132
Issuance of common stock in at-the-market public offering, net of sales commissions of $
1,125
6,578,364
7
48,867
—
—
48,874
Vesting of restricted stock units
65,198
—
—
—
—
—
Exercise of common stock options
8,889
—
61
—
—
61
Issuance of common stock under employee stock purchase plan
78,195
—
291
—
—
291
Unrealized loss on available-for-sale securities
—
—
—
(
100
)
—
(
100
)
Equity-based compensation expense
—
—
5,616
—
—
5,616
Net loss
—
—
—
—
(
54,799
)
(
54,799
)
Balance at June 30, 2026
105,125,366
$
105
$
1,443,394
$
(
113
)
$
(
1,069,311
)
$
374,075
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
SOLID BIOSCIENCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share data)
Six Months Ended
June 30, 2025
Common
Stock
Additional
Paid-in
Accumulated
Other
Comprehensive
Accumulated
Total
Stockholders'
Shares
Amount
Capital
(Loss) Income
Deficit
Equity
Balance at January 1, 2025
40,468,141
$
40
$
920,609
$
47
$
(
783,450
)
$
137,246
Issuance of common stock in public offering, net of issuance costs of $
8,665
35,739,810
36
135,331
—
—
135,367
Issuance of pre-funded warrants in public offering, net of issuance costs of $
3,366
—
—
52,590
—
—
52,590
Issuance of common stock in private placement for payment of developmental milestone consideration
975,496
1
4,999
—
—
5,000
Issuance of common stock in at-the-market public offering, net of sales commissions of $
6
61,542
—
246
—
—
246
Vesting of restricted stock units
247,970
—
—
—
—
—
Unrealized loss on available-for-sale securities
—
—
—
(
45
)
—
(
45
)
Equity-based compensation expense
—
—
3,341
—
—
3,341
Net loss
—
—
—
—
(
39,282
)
(
39,282
)
Balance at March 31, 2025
77,492,959
77
1,117,116
2
(
822,732
)
294,463
Vesting of restricted stock units
32,189
—
—
—
—
—
Issuance of common stock under employee stock purchase plan
74,860
1
196
—
—
197
Exercise of common stock options
2,733
—
6
—
—
6
Unrealized loss on available-for-sale securities
—
—
—
(
40
)
—
(
40
)
Equity-based compensation expense
—
—
3,145
—
—
3,145
Net loss
—
—
—
—
(
39,480
)
(
39,480
)
Balance at June 30, 2025
77,602,741
$
78
$
1,120,463
$
(
38
)
$
(
862,212
)
$
258,291
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
SOLID BIOSCIENCES INC.
CONDENSED CONSOLIDATED S
TATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2026
2025
Cash flows from operating activities:
Net loss
$
(
111,536
)
$
(
78,762
)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on available-for-sale securities
(
1,984
)
(
800
)
Equity-based compensation expense
10,768
6,486
Depreciation and amortization expense
786
793
Non-cash lease expense
1,257
1,162
Change in fair value of derivative liabilities
2,500
2,550
Other
25
55
Changes in operating assets and liabilities:
Prepaid expenses and other assets
(
324
)
(
2,060
)
Accounts payable
1,139
467
Change in operating lease liability
(
1,006
)
(
848
)
Accrued expenses and other liabilities
(
1,442
)
1,695
Net cash used in operating activities
(
99,817
)
(
69,262
)
Cash flows from investing activities:
Purchases of property and equipment
(
315
)
(
503
)
Proceeds from maturities of available-for-sale securities
146,880
69,000
Purchases of available-for-sale securities
(
235,396
)
(
128,777
)
Other
—
85
Net cash used in investing activities
(
88,831
)
(
60,195
)
Cash flows from financing activities:
Proceeds from issuance of common stock and pre-funded warrants in public offering, net of underwriting discounts and commissions
—
189,637
Payments of common stock and pre-funded warrants issuance costs in public offering
—
(
1,681
)
Proceeds from issuance of common stock and pre-funded warrants in private placement
239,972
—
Payments of common stock and pre-funded warrants issuance costs in private placement
(
13,644
)
—
Proceeds from issuance of common stock in at-the-market public offering, net of sales commissions
60,801
246
Proceeds from exercises of common stock options
78
6
Employee stock purchase plan purchases
291
196
Payments of principal portion of finance lease obligations
—
(
277
)
Net cash provided by financing activities
287,498
188,127
Net increase in cash, cash equivalents, and restricted cash
98,850
58,670
Cash, cash equivalents, and restricted cash at beginning of period
61,890
82,187
Cash, cash equivalents, and restricted cash at end of period
$
160,740
$
140,857
Six Months Ended
June 30,
2026
2025
Supplemental disclosure of cash flow information:
Cash paid for interest
$
—
$
128
Supplemental disclosure of non-cash investing, financing and operating activities:
Common stock issued as payment for developmental milestone consideration
$
7,500
$
5,000
Property and equipment purchases included in accounts payable and accrued expenses
$
285
$
—
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
SOLID BIOSCIENCES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
(in thousands)
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the amounts reported in the condensed consolidated statements of cash flows:
June 30,
2026
2025
Cash and cash equivalents
$
159,394
$
138,933
Restricted cash, current
638
—
Restricted cash, net of current portion
708
1,924
Total cash, cash equivalents, and restricted cash, as reported in
the condensed consolidated statements of cash flows
$
160,740
$
140,857
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9
SOLID BIOSCIENCES INC.
NOTES TO CONDENSED CONSOLID
ATED FINANCIAL STATEMENTS
(Unaudited)
(amounts in thousands, except share and per share data and where otherwise noted)
1. Nature of the Business and Basis of Presentation
Nature of Business
Solid Biosciences Inc. (the “Company”) is a life sciences company focused on advancing a portfolio of current and future gene therapy candidates (collectively “Candidates”), including SGT-003 for the treatment of Duchenne muscular dystrophy (“Duchenne”), SGT-212 for the treatment of Friedreich’s ataxia (“FA”), SGT-501 for the treatment of catecholaminergic polymorphic ventricular tachycardia, SGT-601 for the treatment of TNNT2-mediated dilated cardiomyopathy, and additional assets for the treatment of genetic cardiac and neuromuscular diseases, at different stages of development with varying levels of investment. The Company is advancing its diverse pipeline across rare neuromuscular and cardiac diseases, bringing together experts in science, technology, disease management and care. Patient-focused and founded by those directly impacted by Duchenne, the Company’s mission is to improve the daily lives of patients living with these devastating diseases.
The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on licenses, protection of proprietary technology, dependence on key personnel, compliance with government regulations, and the need to obtain additional financing to fund operations. Candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies and clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure, and extensive compliance and reporting capabilities.
The Company’s Candidates are in development. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval, or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from, among others, other pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, partners, and consultants.
Liquidity
Based upon its current operating plan, the Company expects that its cash, cash equivalents and available-for-sale securities of $
377.7
million, excluding restricted cash of $
1.3
million, as of June 30, 2026, will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of these condensed consolidated financial statements. However, the Company has based this estimate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to it. As a result, the Company could deplete its capital resources sooner than it currently expects.
Through June 30, 2026, the Company has funded its operations primarily with the proceeds from the sale of redeemable preferred units and member units prior to its initial public offering, as well as the sale of common stock and pre-funded warrants to purchase shares of its common stock in private placements (including the March 2026 Private Placement (as defined below)), the sale of common stock in its initial public offering, follow-on public offerings in March 2021 and February 2025 and under its “at-the-market offering” sales agreement, between the Company and Jefferies LLC (the “ATM Sales Agreement”). In July 2026, the Company sold
2,012,500
shares of its common stock, pursuant to its ATM Sales Agreement for net proceeds of $
15.7
million.
The Company expects to continue to generate operating losses for the foreseeable future and to finance its future cash needs through a combination of equity offerings, debt financings, collaborations, strategic partnerships and alliances or licensing arrangements. If the Company is unable to obtain funding, the Company would be forced to delay, reduce or eliminate some or all of its research and development programs, preclinical and clinical testing or commercialization efforts, which could adversely affect its business prospects.
Basis of Presentation
These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) along with the rules and regulations of the Securities and Exchange Commission for interim financial information and include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from the Company’s audited financial statements but does not include all disclosures required by GAAP to
10
constitute a complete set of financial statements. These condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s financial position at June 30, 2026 and its results of operations, changes in stockholders’ equity, and cash flows for the interim periods ended June 30, 2026 and 2025.
These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the operating results to be expected for the year ending December 31, 2026, for any other interim period, or for any other future year.
Significant Judgments and Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, estimates related to the recognition of research and development expenses, equity-based compensation, and derivative liabilities. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ materially from the Company’s estimates.
Summary of Significant Accounting Policies
There have been no changes to the significant accounting policies disclosed in the Company's most recent Annual Report on Form 10‑K.
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2024‑03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures
(Sub‑Topic 220‑40)
:
Disaggregation of Income Statement Expenses,” which requires additional disclosure of the nature of expenses included in the income statement. The standard requires disclosures about specific types of expenses included in the expense captions presented in the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The requirements should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.
In December 2025, the FASB issued ASU No. 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements”. This ASU clarifies and improves existing interim reporting guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations. The ASU does not introduce significant changes to recognition or measurement guidance. The amendments in this ASU are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on its consolidated financial statements and disclosures
.
2. FA212 Asset Acquisition
On
September 19, 2024
, the Company entered into an asset purchase agreement with FA212 LLC (
“FA212”) for the purchase of certain intellectual property, including patents and assigned licenses related to a preclinical drug candidate, which the Company now refers to as SGT-212, assigned manufacturing contracts as well as research and development materials such as manufactured materials and samples.
The Company paid FA212 an upfront payment of $
1.0
million in the third quarter of 2024. Additionally, the Company agreed to pay FA212 development milestone payments of up to $
34.0
million, cumulative sales milestone payments of up to $
21.0
million, and tiered royalties on net sales in the low-single-digits. The Company also assumed from FA212 contingent development milestone payments of up to $
4.2
million, regulatory milestone payments of up to $
13.0
million, cumulative sales milestone payments of up to $
27.5
million, and tiered royalties on worldwide net sales in the mid-single digits payable to the University of Pennsylvania.
11
Certain development milestone payments to FA212 are payable in either cash, equity, or a combination of both, at the Company's discretion. Such contingent payments were determined to be derivative liabilities and were initially recorded at their fair value of $
3.4
million.
The Company determined that the FA212 agreement represented an asset acquisition of in-process research and development assets with no alternative future use and recognized the aggregate acquisition cost of $
5.1
million as research and development expense in the third quarter of 2024, which included the upfront payment, initial recognition of the derivative liability, and $
0.7
million in transaction costs.
The Company submitted an investigational new drug application (“IND”) for SGT-212 for the treatment of FA to the U.S. Food and Drug Administration (“FDA”
), which was cleared in December 2024. Upon clearance of the IND, the first development milestone of $
5.0
million became payable to FA212. On February 28, 2025, the Company made the first development milestone payment in the form of
975,496
shares of its common stock.
Following the dosing of the first participant in the Phase 1b FALCON clinical trial of SGT-212 in January 2026
, a $
7.5
million development milestone became payable to FA212 LLC. On January 15, 2026, the Company
made the second milestone payment in the form of
1,316,899
shares of its common stock.
The derivative liability for the final contingent payment was recorded at a fair value of $
4.2
million as of June 30, 2026. The derivative liabilities for contingent payments as of December 31, 2025 were recorded at an aggregate fair value of $
9.2
million. See Note 4 -
Fair Value Measurements
.
3.
Out-License Agreements
From time to time, the Company enters into non-exclusive license and collaboration agreements for the out-licensing of POLARIS‑101
TM
, its proprietary, rationally designed capsid technology used in SGT-003, to both companies and academic institutions pursuing treatments for rare diseases. These arrangements may entitle the Company to receive non-refundable upfront payments, contingent obligations for potential developmental, regulatory, and commercial performance milestone payments, cost reimbursement arrangements, product supply and royalty payments as a percentage of worldwide license product sales. At June 30, 2026
, potential future milestone payments to which the Company may be entitled to under these agreements totaled an aggregate of $
97.1
million. None of these milestones were assessed to be probable as of June 30, 2026
.
4. Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:
June 30, 2026
Level 1
Level 2
Level 3
Total
Financial assets
Cash equivalents:
Money market funds
$
—
$
150,232
$
—
$
150,232
Total cash equivalents
—
150,232
—
150,232
Available-for-sale securities (Note 5):
Treasury bills
—
159,714
—
159,714
Government bonds
—
58,570
—
58,570
Total available-for-sale securities
—
218,284
—
218,284
Total financial assets
$
—
$
368,516
$
—
$
368,516
Financial liabilities
Derivative liabilities (Note 2):
$
—
$
—
$
4,200
$
4,200
Total financial liabilities
$
—
$
—
$
4,200
$
4,200
12
December 31, 2025
Level 1
Level 2
Level 3
Total
Financial assets
Cash equivalents:
Money market funds
$
—
$
51,333
$
—
$
51,333
Total cash equivalents
—
51,333
—
51,333
Available-for-sale securities (Note 5):
Treasury bills
—
72,932
—
72,932
Government bonds
—
55,018
—
55,018
Total available-for-sale securities
—
127,950
—
127,950
Total financial assets
$
—
$
179,283
$
—
$
179,283
Financial liabilities
Derivative liabilities (Note 2):
$
—
$
—
$
9,200
$
9,200
Total financial liabilities
$
—
$
—
$
9,200
$
9,200
As of June 30, 2026 and December 31, 2025, the fair values of the Company’s cash equivalents and available-for-sale securities were determined using Level 2 inputs.
The Company estimated the fair value of the derivative liabilities by using a Monte Carlo simulation forecasting the timing and likelihood of certain development milestone events being achieved and discounting the probability of adjusted payments using an appropriate discount rate based on market interest rates. The main assumptions when determining the fair value of the derivative liabilities are the timing and probability of achieving certain milestones, the estimated volatility of the Company’s common stock, and the discount rate. The estimated fair value presented is not necessarily indicative of an amount that could be realized in a current market exchange. The use of alternative inputs and estimation methodologies could have a material effect on these estimates of fair value.
The significant unobservable inputs used in valuing the developmental milestone derivative liabilities at each measurement date are as follows:
December 31, 2025
Unobservable Input
June 30, 2026
Range
Average
Probability of achieving certain development milestones
60.0
%
40.0
% -
100.0
%
70.0
%
Volatility
91.0
%
98.0
%
98.0
%
Discount rate
4.1
%
3.5
% -
3.7
%
3.6
%
Timing of achieving certain development milestones
2.3
years
0.1
-
2.8
years
1.4
years
The following table presents a roll forward of activity associated with the Company’s derivative liabilities measured using Level 3 inputs:
Developmental Milestone Derivative Liabilities
Fair value of derivative liabilities as of January 1, 2026
$
9,200
Change in fair value of derivative liabilities
2,500
Common stock issued as payment for developmental milestone consideration
(
7,500
)
Fair value of derivative liabilities as of June 30, 2026
$
4,200
The Company recognized losses of $
0.9
million for the change in fair value of derivative liabilities during the three months ended June 30, 2026 and 2025. During the six months ended June 30, 2026 and 2025, the Company recognized losses of $
2.5
million an
d $
2.6
million, respectively, for the change in fair value of derivative liabilities.
It is the Company’s policy to recognize transfers between levels of the fair value hierarchy, if any, at the end of the reporting period. During the six months ended June 30, 2026, and the year ended December 31, 2025
, there were
no
transfers
between
Level 1
,
Level 2
, and Level 3.
As of June 30, 2026, and December 31, 2025, the Company’
s accounts payable, accrued expenses, and other current liabilities approximated their estimated fair values due to the short-term nature of these financial instruments.
13
5. Available-for-Sale Securities
A summary of the Company's available-for-sale securities is presented below:
June 30, 2026
Description
Amortized
Cost
Gross
Unrealized
Gain
Gross Unrealized Loss
Fair
Value
Treasury bills maturing in one year or less
$
159,761
$
—
$
(
47
)
$
159,714
Government bonds maturing in one year or less
58,636
—
(
66
)
58,570
Total available-for-sale securities
$
218,397
$
—
$
(
113
)
$
218,284
December 31, 2025
Description
Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Fair
Value
Treasury bills maturing in one year or less
$
72,902
$
30
$
—
$
72,932
Government bonds maturing in one year or less
54,996
22
—
55,018
Total available-for-sale securities
$
127,898
$
52
$
—
$
127,950
The weighted average contractual maturity of the Company’s available-for-sale securities was approximately
0.5
years and
0.6
years as of
June 30, 2026, and December 31, 2025
, respectively.
6. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following:
June 30,
2026
December 31,
2025
Prepaid research and development expenses
$
13,862
$
13,969
Prepaid other and other current assets
2,930
2,415
Total
$
16,792
$
16,384
7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
June 30,
2026
December 31,
2025
Accrued research and development expenses
$
9,776
$
8,651
Accrued compensation
6,225
8,815
Accrued other and other current liabilities
1,789
1,479
Total
$
17,790
$
18,945
8. Stockholders
’ Equity
Authorized Shares
On June 10, 2026, at the Company’s 2026 Annual Meeting of Stockholders, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of common stock from
240,000,000
shares to
480,000,000
shares (the “Share Increase Amendment”). The Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware on June 10, 2026 to effect the Share Increase Amendment.
As a result of the Share Increase Amendment, as of June 30, 2026, the Company is authorized to issue
480,000,000
shares of common stock, $
0.001
par value per share. The Share Increase Amendment did not otherwise affect the par value, rights, preferences or privileges of the Company’s common stock.
14
Common Stock and Pre-funded Warrants
On February 19, 2025, the Company issued and sold
35,739,810
shares of its common stock at a price per share of $
4.03
and, to certain investors in lieu of shares of common stock, pre-funded warrants to purchase
13,888,340
shares of common stock at a price of $
4.029
per pre-funded warrant (the “February 2025 Offering”). The Company received approximately $
188.0
million of net proceeds from the February 2025 Offering after deducting underwriting discounts and commissions and offering costs.
On March 9, 2026, the Company issued and sold
14,973,257
shares of its common stock at a price of $
5.61
per share, and, to certain investors in lieu of shares of common stock, pre-funded warrants to purchase
27,807,482
shares of its common stock at a price of $
5.609
per pre-funded warrant (the “March 2026 Private Placement”). The Company received approximately $
226.3
million of aggregate net proceeds from the March 2026 Private Placement after deducting offering costs.
The Company determined the pre-funded warrants met the criteria for equity classification.
No
warrants were exercised during the
six months ended June 30, 2026
.
9. Equity-Based Compensation
Equity-Based Compensation Expense
The Company has classified equity-based compensation expense in its condensed consolidated statements of operations as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Research and development
$
2,097
$
1,116
$
3,997
$
2,218
General and administrative
3,519
2,029
6,771
4,268
Total
$
5,616
$
3,145
$
10,768
$
6,486
Equity Incentive Plans
As of June 30, 2026, the Company’s approved equity incentive plans include: the 2018 Omnibus Incentive Plan (the “2018 Plan”); Amended and Restated 2020 Equity Incentive Plan, as amended (the “2020 Plan”); the Amended and Restated 2021 Employee Stock Purchase Plan; and the 2024 Inducement Stock Incentive Plan (the “2024 Plan”). These plans are administered by the Board of Directors (the “Board”) and permit the granting of stock options, stock appreciation rights, restricted stock, restricted stock units (the “RSUs”
), performance awards, and other stock-based or cash-based awards. Upon the adoption of the 2020 Plan, the Company no longer grants new equity awards under its 2018 Plan. Service based awards to employees generally vest over a
four-year
period with
25
% of such awards vesting following
twelve months
of continued employment or service. The remaining awards vest in either monthly or yearly installments over the following
three years
. Stock options granted under the Company
’s equity incentive plans expire ten years from the date of grant.
Amended and Restated 2020 Equity Incentive Plan
On June 12, 2025 and June 11, 2024, the Company's stockholders approved amendments to the 2020 Plan to increase the number of shares of common stock reserved for issuance under the plan by
9,000,000
shares and
2,000,000
shares, respectively. As of
June 30, 2026
, there were
5,876,554
stock options outstanding,
4,754,784
RSUs outstanding,
1,689,025
performance stock units outstanding, and
8,338,130
shares remained available for future issuance under the 2020 Plan.
2024 Inducement Stock Incentive Plan
In March 2024, the Board approved the 2024 Plan, which provides for the reservation of
1,000,000
shares of common stock for equity granted as an inducement material to the individual’s entering into employment with the Company and in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4). As of
June 30, 2026
, there were
100,000
stock options outstanding,
748,925
RSUs outstanding, and
6,570
shares remained available for future issuance under the 2024 Plan.
15
Stock Options
The table below summarizes the activity with respect to stock options for the
six months ended June 30, 2026:
Number of
Options
Weighted
Average
Exercise
Price
Remaining Contractual Life (in years)
Aggregate Intrinsic Value
Outstanding at January 1, 2026
4,378,145
$
12.04
8.23
$
1,077
Granted
2,380,362
$
6.59
Exercised
(
14,011
)
$
5.55
Expired
(
4,303
)
$
31.44
Forfeitures
(
16,031
)
$
4.76
Outstanding at June 30, 2026
6,724,162
$
10.13
8.39
$
23,120
Vested and expected to vest at June 30, 2026
6,724,162
$
10.13
8.39
$
23,120
Exercisable at June 30, 2026
2,732,785
$
15.35
7.17
$
9,393
The assumptions used in the Black-Scholes option-pricing model for all stock options granted during each period presented are as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Common stock price
$
6.61
$
4.58
$
5.45
- $
6.61
$
4.10
- $
4.58
Expected volatility
94.5
%
114.2
%
94.5
% -
97.4
%
112.1
% -
114.2
%
Expected dividends
0.0
%
0.0
%
0.0
%
0.0
%
Expected term (in years)
5.5
5.5
5.3
-
6.1
5.3
-
5.5
Risk-free rate
4.3
%
4.0
%
3.8
% -
4.3
%
4.0
% -
4.4
%
T
he weighted average grant date fair values of stock options granted during the
three months ended June 30, 2026 and 2025
were $
5.04
and $
3.84
, respectively,
and the weighted average grant date fair values of stock options granted during the six months ended June 30, 2026 and 2025
were $
5.17
an
d $
3.83
, resp
ectively.
The Company recognize
d $
2.3
million and $
1.2
million of equity-based compensation expense in connection with stock options during the
three months ended June 30, 2026 and 2025, respectively. During the six months ended June 30, 2026 and 2025, the Company recognized equity-based compensation expense in connection with stock opt
ions of $
4.3
million an
d $
2.6
million, respectively. As of June 30, 2026
, there was $
18.8
million of total unrecognized equity-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted average period of
2.8
years.
Restricted Stock Units
The following table summarizes activity with respect to RSUs during the
six months ended June 30, 2026:
Units
Weighted-
Average
Grant Date
Fair Value
Nonvested RSUs at January 1, 2026
3,809,777
$
4.93
Granted
2,738,436
$
6.71
Vested
(
740,583
)
$
4.74
Forfeitures
(
217,117
)
$
5.83
Nonvested RSUs at June 30, 2026
5,590,513
$
5.79
The Company recognize
d $
2.3
million and $
1.1
mil
lion of equity-based compensation expense in connection with RSUs during the three months ended June 30, 2026 and 2025, respectively. During the six months ended June 30, 2026 and 2025
, the Company recognized equity-based compensation expense in connection with RSUs of $
4.3
million and $
2.1
million, respectively.
As of June 30, 2026
, there was $
27.8
million of total unrecognized equity-based compensation expense related to nonvested RSUs, which is expected to be recognized over a weighted average period of
3.0
years.
16
Performance Stock Units
In June 2024, the Board approved a grant of performance-based restricted stock unit awards (“PSUs” or “Performance Awards”) to the Company’s executive team.
Each PSU represents the contingent right to receive one share of the Company’s common stock
. These Performance Awards provide for the vesting of
25
% of the target number of underlying RSUs granted upon the achievement of each of four independent performance milestones predetermined by the Board (each, a "Performance Milestone" and together, the “Performance Milestones”), subject to the grantee’s continued service with the Company (the “Approval Conditions”).
The Performance Milestones are tied to the achievement of certain business objectives and are non-market and non-financial in nature.
In the first quarter of 2026, the Board determined that the first Performance Milestone was achieved and
25
% of the target number of shares vested for each executive officer upon such determination. In the first quarter of 2026, the Board also determined that a second Performance Milestone was achieved and that
25
% of the target number of shares for the executive officers will vest on the 2027 Evaluation Date, which will occur in the first quarter of 2027, subject to such executive officer’s continued service to the company on such date. The Board will determine whether the remaining two performance conditions have been satisfied and the remaining number of units that may vest on the 2027 Evaluation Date. The percentage of the RSUs allocable to any Performance Milestone that has not been achieved on or prior to the 2027 Evaluation Date shall be cancelled.
In January 2026, the Board approved a grant of PSUs to an additional member of the Company’s executive team which
provide for the vesting of
33
% of the target number of underlying RSUs, upon the achievement of each of the three then-remaining Performance Milestones.
The following table summarizes activity with respect to PSUs during the
six months ended June 30, 2026:
Units
Weighted
Average
Grant Date
Fair Value
Nonvested PSUs at January 1, 2026
2,074,188
$
7.51
Granted
133,383
$
7.74
Vested
(
518,546
)
$
7.51
Forfeitures
—
$
—
Nonvested PSUs at June 30, 2026
1,689,025
$
7.53
The Company recognized $
0.9
million and $
0.8
million of
equity-based compensation expense in connection with PSUs during the three months ended June 30, 2026 and 2025, respectively. During the six months ended June 30, 2026 and 2025
, the Company recognized equity-based compensation expense in connection with PSUs of $
1.9
million and $
1.8
million, respectively.
As of June 30, 2026
, there was $
2.3
million of unrecognized equity-based compensation expense related to nonvested PSUs based on the achievement of all Performance Milestones, which is expected to be recognized over a weighted average period of
0.6
years.
10. Commitments and Contingencies
Letter of Credit
The Company had an outstanding letter of credit in the amount of $
1.3
million and $
2.0
million at June 30, 2026 and December 31, 2025, respectively, which is required as a condition of the Company’s office and laboratory lease.
Indemnification Agreements
In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with its executive officers and members of its Board that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as executive officers or directors of the Company. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnification arrangements.
The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of June 30, 2026 and December 31, 2025.
17
Legal Proceedings
The Company may periodically become subject to legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which the Company is focused. The Company is not aware of any material legal proceedings or claims as of June 30, 2026
.
11. Net Loss Per Share
The following table sets forth the computation of the Company
’s basic and diluted net loss per share:
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Numerator:
Net loss
$
(
54,799
)
$
(
39,480
)
$
(
111,536
)
$
(
78,762
)
Denominator:
Shares used to compute net loss per share, basic and
diluted
Weighted average shares of common stock
outstanding
99,280,401
77,539,468
92,728,853
67,476,597
Weighted average shares of pre-funded warrants to
purchase common stock
44,408,300
16,600,818
34,114,812
12,840,991
Weighted average shares of common stock
outstanding used to compute basic and diluted
net loss per share
143,688,701
94,140,286
126,843,665
80,317,588
Net loss per share, basic and diluted
$
(
0.38
)
$
(
0.42
)
$
(
0.88
)
$
(
0.98
)
Included within the weighted average shares of common stock outstanding for the three and six months ended June 30, 2026 and 2025
are
44,408,300
and
16,600,818
shares of common stock issuable upon the exercise of pre-funded warrants, respectively. The pre‑funded warrants are exercisable at any time for nominal consideration, and as such, the shares are considered outstanding for the purpose of calculating basic and diluted net loss per share.
The following table presents the potentially dilutive securities outstanding as of the dates indicated that were excluded from the computation of diluted net loss per share because the effect of including them would have been anti-dilutive due to the Company’s net loss during the periods presented:
As of June 30,
2026
2025
Options to purchase common stock
6,724,162
3,324,305
Nonvested restricted stock units
5,590,513
3,102,124
Nonvested performance stock units
1,689,025
2,074,188
Shares subject to employee stock purchase plan
235,127
216,802
Warrants
2,000
2,563
Total
14,240,827
8,719,982
12. Segment Reporting
The Company has
one
reportable and
one
operating segment and conducts its business activities on a consolidated basis primarily in North America. The Company’s singular focus is developing treatments through gene therapy and other means for patients with neuromuscular and cardiac diseases. All of the Company’s tangible assets are held in the United States.
The accounting policies of the Company are the same as those described in the summary of significant accounting policies.
The Company’s chief operating decision maker (“
CODM”) is its
chief executive officer
.
The CODM assesses performance for the Company and decides how to allocate resources based on net loss as reported on the condensed consolidated statements of operations. The annual budgeting process is the primary mechanism used to make these decisions.
The financial information also helps the CODM in making performance assessments using budgeted versus actual results.
18
The following table presents segment expenses, other segment items, and segment net loss for the periods presented:
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Segment expenses:
SGT-003
$
24,516
$
12,219
$
47,458
$
21,385
SGT-501
903
2,223
2,310
6,689
SGT-212
2,364
1,145
5,680
1,970
External R&D other
1,983
3,116
4,840
5,886
Internal R&D expense
(1)
9,060
6,765
18,211
13,608
External G&A expense
6,327
5,279
11,795
10,156
Internal G&A expense
(1)
4,734
3,360
8,600
6,823
Other segment items
(2)
7,497
7,586
15,798
15,228
Other income, net
(
2,585
)
(
2,213
)
(
3,156
)
(
2,983
)
Condensed consolidated net loss
$
(
54,799
)
$
(
39,480
)
$
(
111,536
)
$
(
78,762
)
(1)
Internal expenses consisted primarily of payroll and related costs, temporary services, and travel and entertainment.
(2)
Other segment items primarily included other program costs, equity-based compensation expense, and depreciation and amortization expense.
The measure of segment assets is reported on the balance sheet as total condensed consolidated assets.
19
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this quarterly report on Form 10-Q and our audited financial statements and related notes for the year ended December 31, 2025 included in our annual report on Form 10-K filed on March 19, 2026.
Some of the statements contained in this discussion and analysis or set forth elsewhere in this quarterly report on Form 10-Q, including information with respect to our plans and strategy for our business, constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
“
Securities Act
”
), and Section 21E of the Securities Exchange Act of 1934, as amended (the
“
Exchange Act
”
). We have based these forward-looking statements on our current expectations and projections about future events. The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this quarterly report on Form 10-Q particularly including those risks identified in Part II, Item 1A “Risk Factors” and our other filings with the Securities and Exchange Commission (the
“
SEC
”
).
Our actual results and timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this quarterly report on Form 10-Q. Statements made herein are made as of the date of the filing of this Form 10-Q with the SEC and should not be relied upon as of any subsequent date. Even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward‑looking statements contained in this quarterly report on Form 10-Q, they may not be predictive of results or developments in future periods. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made.
Overview
We are a life sciences company focused on advancing a portfolio of current and future gene therapy candidates, which we refer to collectively as our Candidates, including SGT-003 for the treatment of Duchenne muscular dystrophy (“Duchenne”), SGT-212 for the treatment of Friedreich’s ataxia (“FA”), SGT-501 for the treatment of catecholaminergic polymorphic ventricular tachycardia (“CPVT”), SGT-601 for the treatment of TNNT2-mediated dilated cardiomyopathy (“TNNT2 DCM”), and additional assets for the treatment of genetic cardiac and neuromuscular diseases, at different stages of development, with varying levels of investment. The Company is also focused on developing innovative libraries of genetic regulators and other enabling technologies with promising potential to significantly impact gene therapy delivery cross-industry. We are advancing our diverse pipeline across rare neuromuscular and cardiac diseases, bringing together experts in science, technology, disease management and care. Patient-focused and founded by those directly impacted by Duchenne, our mission is to improve the daily lives of patients living with these devastating diseases.
Solid was purpose-built to advance the best science and accelerate the discovery and development of treatments that may benefit all patients with Duchenne. As we expand to bring meaningful treatments to patients living with other neuromuscular and cardiac diseases, the values and guiding principles that drive us continue. Our corporate vision is to build an innovation platform enabling the discovery and development of high-value genetic medicines for neuromuscular and cardiac diseases by integrating internal capabilities, including a vector core, use of validated animal models, optimized expression cassettes, novel platform technologies including capsids and regulatory expertise, and collaborations with leaders in related clinical and research fields. Our mission, which guides our operations, is to treat and change the course of neuromuscular and cardiac diseases at all stages. Underscoring this mission, our disease-focused business model is founded on the following fundamental principles:
•
identify and develop meaningful therapies for underserved patients with sometimes fatal neuromuscular and cardiac diseases;
•
build innovative libraries of delivery capsids and other enabling technologies with the potential to have broad impact on the gene therapy field at large;
•
bring together the leading experts in neuromuscular and cardiac diseases, science, technology, disease management and care; and
•
be guided by the needs of these patients.
20
We are continuing to advance our pipeline of Candidates. The U.S. Food and Drug Administration (the “FDA”) has granted Fast Track, Orphan Drug and Rare Pediatric Disease designations for SGT-003 for Duchenne, and SGT-003 has also been awarded Orphan Drug designation from the European Commission for the treatment of Duchenne, in addition to an Innovation Passport by the new UK Innovative Licensing and Access Pathway, which aims to accelerate time to market and facilitate patient access to new medicines in the United Kingdom. The FDA has granted Fast Track, Orphan Drug and Rare Pediatric Disease designations to SGT-212 for the treatment of FA and SGT-501 for the treatment of CPVT.
As we continue to pursue opportunities in both the U.S. and international markets, we remain attentive to evolving global economic conditions, including uncertainties related to international trade policies, tariffs, and supply chain dynamics. Although these factors have not had a material impact on our operations to date, future changes in trade regulations, tariff structures, or logistical constraints could influence the cost, availability, or timing of materials and components used in our manufacturing processes. We continue to monitor these developments closely.
SGT-003
Participant dosing in the Phase 1/2 INSPIRE DUCHENNE trial of SGT-003 began in the second quarter of 2024. The INSPIRE DUCHENNE trial is a Phase 1/2 first-in-human, open-label, single-dose, multicenter trial designed to evaluate the safety, tolerability and efficacy of SGT-003 in pediatric patients with Duchenne at a dose of 1E14vg/kg. SGT-003 is administered as a one-time intravenous infusion. Since initiation of the INSPIRE DUCHENNE clinical trial, we amended the clinical trial protocol to increase the anticipated participant enrollment size, expand the participant cohort age groups and extend the time points of certain secondary objective measurements.
On March 11, 2026, we announced positive new interim data from the Phase 1/2 INSPIRE DUCHENNE clinical trial as of a February 23, 2026 data cutoff date. For a full description of the initial results from the INSPIRE DUCHENNE trial, see Part I, Item I, “Business” in our Annual Report on Form 10-K filed on March 19, 2026.
SGT-003 has been generally well tolerated in the 53 participants dosed in the Phase 1/2 INSPIRE DUCHENNE clinical trial as of August 4, 2026. One study participant withdrew consent after the Day 60 follow-up visit. No treatment-related adverse events were seen in this participant. The safety and tolerability profile observed in the INSPIRE DUCHENNE trial continued to be promising; SGT-003 is administered using a low-burden, steroid-only prophylactic immunomodulation regimen. As of August 4, 2026, there were two previously disclosed treatment-related serious adverse events reported in the INSPIRE DUCHENNE trial.
The INSPIRE DUCHENNE trial is ongoing and being conducted at clinical sites across the United States, Canada, Italy and the United Kingdom. We believe we have aligned with the FDA on SGT-003's potency assay strategy and will continue commercial-readiness CMC activities, with our process performance qualification manufacturing batches to be completed in 2026.
In October 2025, we activated the first clinical trial site and began screening participants for IMPACT DUCHENNE, a Phase 3 randomized, double-blind, placebo-controlled trial evaluating SGT-003. In February 2026, we announced positive feedback from a Type C meeting with the FDA where we reached alignment on the IMPACT DUCHENNE trial design, including: the patient population of ambulant participants 7 to <12 years of age, the primary endpoint of change from baseline in Time to Rise (TTR) velocity from supine position evaluated at 18 months and other key secondary endpoints. Clinical trial sites for IMPACT DUCHENNE are currently active in Australia and Canada, with additional clinical site activations expected in the second half of 2026, subject to site initiation activities and regulatory clearances. Participant screening is underway and we dosed our first participant in the IMPACT DUCHENNE trial in April 2026.
We plan to meet with the FDA late in the fourth quarter of 2026 to discuss the INSPIRE DUCHENNE SGT-003 data package and to seek guidance on a potential accelerated approval pathway for SGT-003; we expect to provide an update as discussions progress.
The FDA has granted Fast Track, Orphan Drug and Rare Pediatric Disease designations for SGT-003 and the European Commission has granted Orphan drug designation for SGT-003 for the treatment of Duchenne. SGT-003 has been awarded an Innovation Passport by the new UK Innovative Licensing and Access Pathway, which aims to accelerate time to market and facilitate patient access to new medicines in the United Kingdom.
Additionally, Solid has received a positive opinion from the European Medicines Agency’s Paediatric Committee on its Pediatric Investigation Plan (PIP), establishing alignment on its pediatric development framework for SGT-003 in Europe.
SGT-212
In January 2025, we announced that the FDA cleared our IND for SGT-212 for the treatment of FA. In October 2025, we activated the first clinical trial site and began screening participants for FALCON, an open-label, multi-center Phase 1b clinical trial of SGT-212, and in January 2026, we dosed the first participant in the trial. Two participants have been dosed in the FALCON clinical trial and SGT-212 has been well tolerated with no treatment related serious adverse events observed as of August 4, 2026.
The trial is expected to enroll approximately 10 non-ambulatory and ambulatory adult participants (aged 18-40) living with FA in up
21
to three cohorts and is designed to evaluate the safety and tolerability of contemporaneous IDN and systemic IV infusion of SGT-212, with initial data anticipated in the first quarter of 2027, subject to participant enrollment. The FDA has granted Fast Track, Orphan Drug and Rare Pediatric Disease designations to SGT-212 for the treatment of FA.
SGT-501
In July 2025, we announced that the FDA cleared our IND and that Health Canada approved our clinical trial application for SGT-501 for the treatment of CPVT. In January 2026, we announced that clinical trial sites have been activated and participant screening is underway in the ARTEMIS clinical trial, an open-label, multi-center Phase 1b clinical trial evaluating SGT-501 in adult participants with CPVT. The ARTEMIS trial is designed to evaluate the safety and tolerability of a single IV infusion of SGT-501. We anticipate dosing our first participant in the second half of 2026 with initial safety data anticipated in the first half of 2027, subject to participant enrollment.
The FDA has granted Fast Track, Orphan Drug and Rare Pediatric Disease designations to SGT-501 for the treatment of CPVT.
Other Cardiac Programs
We are currently developing a preclinical product candidate, SGT-601, for the treatment of TNNT2 DCM. Efficacy studies in mice suggest that SGT-601 treatment resulted in a restoration of ejection fraction function and a stabilization in cardiac function over time.
Platform Technologies
The Company is also focused on developing innovative enabling technologies, including next-generation capsids. In March 2026, we began using the mark POLARIS-101
TM
to represent our AAV-SLB101 capsid (“POLARIS-101
TM
”). POLARIS‑101
TM
is our rationally designed, proprietary capsid, which is used in SGT-003 for Duchenne and has been generally well tolerated as of August 4, 2026 (N=53), in the INSPIRE DUCHENNE clinical trial, and was also well tolerated in nonclinical NHP and mouse models. We aim to license POLARIS-101
TM
broadly to corporations, institutions and academic labs pursuing neuromuscular and cardiac rare disease research, with more than 50 agreements, including licenses, executed.
We are building additional cardiac and neuromuscular next-generation capsid and promoter libraries with capsid selection from the first library anticipated in the second half of 2026.
Our Operations
Due to our significant research and development expenditure, licensing and patent investment, and general and administrative costs associated with our operations, we have generated substantial operating losses in each period since our inception. Our net losses were $54.8 million and $111.5 million for the three and six months ended June 30, 2026, respectively, and $39.5 million and $78.8 million for the three and six months ended June 30, 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $1.1 billion. We expect to incur significant expenses and operating losses for the foreseeable future.
As we seek to develop and commercialize our Candidates, we anticipate that our expenses will increase significantly and that we will need substantial additional funding to support our continuing operations. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity financing, debt financing or other sources, which may include licensing agreements or strategic collaborations. We may be unable to raise additional funds or enter into such agreements or arrangements when needed on favorable terms, if at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development or commercialization of our Candidates.
Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or determine when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As of June 30, 2026, we had cash, cash equivalents, and available-for-sale securities of $377.7 million, excluding restricted cash of $1.3 million. We believe that our cash, cash equivalents, and available-for-sale securities as of June 30, 2026 will enable us to fund our operating expenses and capital expenditure requirements into mid-2028. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently anticipate.
22
Financial Operations Overview
Revenue
We have not generated any commercial product revenue to date and do not expect to do so for the foreseeable future, if ever. If our development efforts for our Candidates are successful and result in marketing approval, we may generate commercial product revenue in the future.
Operating Expenses
We classify our operating expenses into two categories: research and development and general and administrative expenses. Personnel costs, including salaries, benefits, bonuses, and equity-based compensation expense comprise a significant component of both expense categories. We allocate expenses associated with personnel costs based on the nature of work associated with these resources.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and clinical and preclinical development activities for our Candidates and include:
•
expenses incurred under agreements with third parties, including contract research organizations (“CROs”) that conduct research, preclinical and clinical activities on our behalf, as well as contract development and manufacturing organizations (“CDMOs”) that manufacture SGT-003, SGT-212, SGT-501, and other Candidates for use in our preclinical studies and clinical trials;
•
salaries, benefits and other related costs, including equity-based compensation expense, for personnel engaged in research and development functions;
•
costs of outside consultants engaged to assist in our research and development activities, including their fees, equity-based compensation and related travel expenses;
•
costs of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;
•
costs incurred in seeking regulatory approval of our Candidates;
•
expenses incurred under our intellectual property licenses; and
•
facility-related research and development expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.
Research and development activities are central to our business model. We are still in the early stages of development for most of our Candidates. Candidates in later stages of clinical development generally have higher development costs than those in preclinical development or in earlier stages of clinical development, primarily due to the increased size and duration of later‑stage clinical trials. We expect that our research and development expenses will continue to increase for the foreseeable future if and as we continue to conduct our INSPIRE DUCHENNE, IMPACT DUCHENNE, FALCON and ARTEMIS trials and continue to develop our pipeline and complete ongoing and planned preclinical studies and clinical trials of our Candidates.
We typically use our employee and infrastructure resources across our Candidates. We track outsourced development costs and milestone payments made under our licensing arrangements by Candidate, but we do not allocate personnel costs, license payments made under our licensing arrangements or other internal costs to Candidates on a program-specific basis. These costs are included in unallocated research and development expenses in the table below.
23
The following table summarizes our research and development expenses by Candidate for the respective periods (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2026
2025
2026
2025
Allocated research and development expenses:
SGT-003
$
24,516
$
12,318
$
47,458
$
21,616
SGT-501
903
2,223
2,310
6,689
SGT-212
2,364
1,145
5,680
1,970
SGT-601
22
2,268
508
4,422
Other development programs
1,536
1,346
3,104
2,831
Total allocated research and development expenses
29,341
19,300
59,060
37,528
Unallocated research and development expenses:
Personnel related expenses
11,384
8,160
22,695
16,150
External expenses
3,540
4,955
8,650
9,651
Total unallocated research and development expenses
14,924
13,115
31,345
25,801
Total research and development expenses
$
44,265
$
32,415
$
90,405
$
63,329
We cannot determine with certainty the duration, costs, and timing of ongoing and planned clinical trials of SGT-003, SGT-212, SGT‑501 or our other Candidates, or if, when, or to what extent we will generate revenue from the commercialization and sale of any of our Candidates for which we obtain marketing approval or our other research and development expenses. We may never succeed in obtaining marketing approval for any of our Candidates. The duration, costs, and timing of clinical trials and development of our Candidates will depend on a variety of factors, including:
•
the scope, rate of progress, expense, and results of any clinical trials of our Candidates and other research and development activities that we may conduct;
•
the imposition of regulatory restrictions on clinical trials, including full and partial clinical holds and the time and activities required to lift any such holds;
•
uncertainties in clinical trial design and participant enrollment or drop out or discontinuation rates;
•
significant and changing government regulation and regulatory guidance;
•
potential additional studies or clinical trials requested by regulatory agencies;
•
the timing and receipt of any marketing approvals; and
•
the expense of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including equity-based compensation, for personnel in our executive, finance, business development and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel expenses, and facility-related expenses.
We expect that our general and administrative expenses will increase in the future as we support our research and development activities and activities related to our INSPIRE DUCHENNE trial, our IMPACT DUCHENNE trial, our FALCON trial, our ARTEMIS trial and any other planned or future clinical trials for and potential commercialization of our Candidates.
Other Income, Net
Other income, net consists primarily of interest income. Interest income consists of income earned on our cash and cash equivalents, available-for-sale securities, and restricted cash.
Critical Accounting Policies and Use of Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about
24
the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ materially from these estimates.
During the six months ended June 30, 2026, there were no material changes to our critical accounting policies. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2025 and the notes to the unaudited condensed consolidated financial statements included in Part I, Item 1, “Financial Statements (unaudited),” of this Quarterly Report on Form 10-Q. We believe that of our critical accounting policies, the following accounting policies involve the most judgment and complexity:
•
accrued research and development expenses;
•
equity-based compensation; and
•
derivative liabilities.
Accordingly, we believe the policies set forth above are critical to fully understanding and evaluating our financial condition and results of operations. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected.
Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations for the periods indicated (in thousands, except percentages):
Three Months Ended
June 30,
2026
2025
$ Change
% Change
Operating expenses:
Research and development
$
44,265
$
32,415
$
11,850
36.6
%
General and administrative
13,119
9,278
3,841
41.4
%
Total operating expenses
57,384
41,693
15,691
37.6
%
Loss from operations
(57,384
)
(41,693
)
(15,691
)
37.6
%
Other income, net:
Interest income
3,221
2,966
255
8.6
%
Interest expense
—
(60
)
60
(100.0
)%
Change in fair value of derivative liabilities
(850
)
(900
)
50
(5.6
)%
Other income, net
214
207
7
3.4
%
Total other income, net
2,585
2,213
372
16.8
%
Net loss
$
(54,799
)
$
(39,480
)
$
(15,319
)
38.8
%
25
Research and Development Expenses
The following table summarizes our research and development expenses by Candidate for the periods indicated (in thousands, except percentages):
Three Months Ended
June 30,
2026
2025
$ Change
% Change
Allocated research and development expenses:
SGT-003
$
24,516
$
12,318
$
12,198
99.0
%
SGT-501
903
2,223
(1,320
)
(59.4
)%
SGT-212
2,364
1,145
1,219
106.5
%
SGT-601
22
2,268
(2,246
)
(99.0
)%
Other development programs
1,536
1,346
190
14.1
%
Total allocated research and development expenses
29,341
19,300
10,041
52.0
%
Unallocated research and development expenses:
Personnel related expenses
11,384
8,160
3,224
39.5
%
External expenses
3,540
4,955
(1,415
)
(28.6
)%
Total unallocated research and development expenses
14,924
13,115
1,809
13.8
%
Total research and development expenses
$
44,265
$
32,415
$
11,850
36.6
%
Research and development expenses for the three months ended June 30, 2026 were $44.3 million, compared to $32.4 million for the three months ended June 30, 2025. The increase of $11.9 million in research and development expenses was primarily due to a $12.2 million increase in costs for SGT-003 primarily related to manufacturing and clinical costs, a $3.2 million increase in personnel related expenses, and a $1.2 million increase in costs for SGT-212 primarily related to clinical and research costs, partially offset by a $2.2 million decrease in costs for SGT-601 related to lower manufacturing and research costs, a $1.4 million decrease in external expenses primarily related to laboratory supplies, and a $1.3 million decrease in costs for SGT-501 primarily related to lower license payments and research costs.
General and Administrative Expenses
General and administrative expenses were $13.1 million for the three months ended June 30, 2026, compared to $9.3 million for the three months ended June 30, 2025. The increase of $3.8 million was primarily related to a $2.6 million increase in personnel related costs, a $0.5 million increase in business development costs, a $0.4 million increase in equipment costs, and a $0.3 million increase in consulting services.
Other Income, Net
Other income, net was $2.6 million for the three months ended June 30, 2026 compared to $2.2 million for the three months ended June 30, 2025. The increase of $0.4 million was primarily related to higher interest income from our available-for-sale securities.
26
Comparison of the Six Months Ended June 30, 2026 and 2025
The following table summarizes our results of operations for the periods indicated (in thousands, except percentages):
Six Months Ended
June 30,
2026
2025
$ Change
% Change
Operating expenses:
Research and development
$
90,405
$
63,329
$
27,076
42.8
%
General and administrative
24,287
18,416
5,871
31.9
%
Total operating expenses
114,692
81,745
32,947
40.3
%
Loss from operations
(114,692
)
(81,745
)
(32,947
)
40.3
%
Other income, net:
Interest income
5,285
5,266
19
0.4
%
Interest expense
—
(128
)
128
(100.0
)%
Change in fair value of derivative liabilities
(2,500
)
(2,550
)
50
(2.0
)%
Other income, net
371
395
(24
)
(6.1
)%
Total other income, net
3,156
2,983
173
5.8
%
Net loss
$
(111,536
)
$
(78,762
)
$
(32,774
)
41.6
%
Research and Development Expenses
The following table summarizes our research and development expenses by Candidate for the periods indicated (in thousands, except percentages):
Six Months Ended
June 30,
2026
2025
$ Change
% Change
Allocated research and development expenses:
SGT-003
$
47,458
$
21,616
$
25,842
119.6
%
SGT-501
2,310
6,689
(4,379
)
(65.5
)%
SGT-212
5,680
1,970
3,710
188.3
%
SGT-601
508
4,422
(3,914
)
(88.5
)%
Other development programs
3,104
2,831
273
9.6
%
Total allocated research and development expenses
59,060
37,528
21,532
57.4
%
Unallocated research and development expenses:
Personnel related expenses
22,695
16,150
6,545
40.5
%
External expenses
8,650
9,651
(1,001
)
(10.4
)%
Total unallocated research and development expenses
31,345
25,801
5,544
21.5
%
Total research and development expenses
$
90,405
$
63,329
$
27,076
42.8
%
Research and development expenses for the six months ended June 30, 2026 were $90.4 million, compared to $63.3 million for the six months ended June 30, 2025. The increase of $27.1 million in research and development expenses was primarily due to a $25.8 million increase in costs for SGT-003 primarily related to manufacturing and clinical costs, a $6.5 million increase in personnel related expenses, and a $3.7 million increase in costs for SGT-212 primarily related to clinical costs and license and milestone payments, partially offset by a $4.4 million decrease in costs for SGT-501 primarily related to lower license and milestone payments and manufacturing and research costs, a $3.9 million decrease in costs for SGT-601 related to lower manufacturing and research costs, and a $1.0 million decrease in external expenses primarily related to overhead costs.
General and Administrative Expenses
General and administrative expenses were $24.3 million for the six months ended June 30, 2026, compared to $18.4 million for the six months ended June 30, 2025. The increase of $5.9 million was primarily related to a $4.1 million increase in personnel related costs, a $0.8 million increase in informational technology equipment and related costs, a $0.8 million increase in consulting services, and a $0.4 million increase in other operating expenses, partially offset by a $0.6 million decrease in legal fees.
27
Other Income, Net
Other income, net was $3.2 million for the six months ended June 30, 2026 compared to $3.0 million for the six months ended June 30, 2025. The increase of $0.2 million is attributable to lower interest expense on finance leases which terminated during the fourth quarter of 2025.
Liquidity and Capital Resources
Sources of Liquidity
To date, we have financed our operations primarily through the sale of securities in private placements and follow-on offerings, the sale of common stock in our initial public offering, and sales of common stock under our “at-the-market offering” sales agreement with Jefferies LLC (“Jefferies”) (the “ATM Sales Agreement”). Through June 30, 2026, we raised an aggregate of $144.6 million of gross proceeds from our sales of preferred units prior to the completion of our initial public offering, and an aggregate of $1.2 billion of net proceeds from the sale of our common stock through public offerings, including our IPO and follow-on public offerings, private placements, the ATM Sales Agreement, and pursuant to the stock purchase agreements.
On March 13, 2019, we entered into the ATM Sales Agreement, which was amended and restated in March 2024, under which we may offer and sell, from time to time, shares of our common stock through Jefferies as sales agent. Any such sales being made by any method that is deemed an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act. We will pay Jefferies a commission of up to 3% of the gross proceeds of any sales of common stock pursuant to the ATM Sales Agreement. During the year ended December 31, 2025, we sold 891,414 shares pursuant to the ATM Sales Agreement resulting in net proceeds of $5.1 million. During the six months ended June 30, 2026, we sold 8,515,987 shares pursuant to the ATM Sales Agreement resulting in net proceeds of $60.8 million. In July 2026, the Company sold 2,012,500 shares of its common stock, pursuant to its ATM Sales Agreement for net proceeds of $15.7 million.
On February 19, 2025, we issued and sold in an underwritten offering (the “February 2025 Offering”), 35,739,810 shares of our common stock at a price of $4.03 per share and, to certain investors in lieu of shares of common stock, pre-funded warrants to purchase 13,888,340 shares of common stock at a price of $4.029 per pre-funded warrant. We received approximately $188.0 million of net proceeds from the February 2025 Offering, after deducting underwriting discounts and commissions and offering costs.
On March 9, 2026, we issued and sold 14,973,257 shares of our common stock at a price of $5.61 per share, and, to certain investors in lieu of shares of common stock, pre-funded warrants to purchase 27,807,482 shares of its common stock at a price of $5.609 per pre-funded warrant, (the “March 2026 Private Placement”). We received approximately $226.3 million of aggregate net proceeds from the March 2026 Private Placement, after deducting offering costs.
As of June 30, 2026, we had cash, cash equivalents, and available-for-sale securities of $377.7 million, excluding restricted cash of $1.3 million, and had no outstanding debt.
Summary of Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):
Six Months Ended
June 30,
2026
2025
Cash used in operating activities
$
(99,817
)
$
(69,262
)
Cash used in investing activities
(88,831
)
(60,195
)
Cash provided by financing activities
287,498
188,127
Net increase in cash, cash equivalents, and restricted cash
$
98,850
$
58,670
Operating Activities
During the six months ended June 30, 2026, operating activities used $99.8 million of cash, primarily resulting from our net loss of $111.5 million and changes in our operating assets and liabilities of $1.6 million, partially offset by non-cash charges of $13.4 million. Net cash used by changes in our operating assets and liabilities during the six months ended June 30, 2026 consisted of a decrease in accrued expenses and other liabilities of $1.4 million, a decrease in the operating lease liability of $1.0 million, and an increase in prepaid expenses and other assets of $0.3 million, offset by an increase in accounts payable of $1.1 million. Non-cash activities were driven by equity-based compensation of $10.8 million, a change in the fair value of derivative liabilities of $2.5 million, non-cash lease expense of $1.3 million, and depreciation and amortization expense of $0.8 million, partially offset by amortization of discount on available-for-sale securities of $2.0 million.
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During the six months ended June 30, 2025, operating activities used $69.3 million of cash, primarily resulting from our net loss of $78.8 million partially offset by changes in our operating assets and liabilities of $0.7 million and non-cash charges of $10.2 million. Net cash used by changes in our operating assets and liabilities during the six months ended June 30, 2025 consisted of an increase in prepaid expenses and other assets of $2.1 million, a decrease in the operating lease liability of $0.8 million, offset by an increase in accrued expenses and other liabilities of $1.7 million, and an increase in accounts payable of $0.5 million. Non-cash activities were driven by equity-based compensation of $6.5 million, a change in the fair value of derivative liabilities of $2.6 million, non-cash lease expense of $1.2 million, and depreciation and amortization expense of $0.8 million, partially offset by amortization of available-for-sale securities of $0.8 million.
Investing Activities
During the six months ended June 30, 2026, investing activities used $88.8 million of cash, resulting from purchases of available-for-sale securities of $235.4 million and the purchases of property plant and equipment of $0.3 million, partially offset by the maturities of available-for-sale securities of $146.9 million.
During the six months ended June 30, 2025, investing activities used $60.2 million of cash, resulting from the purchases of available-for-sale securities of $128.8 million and the purchases of property plant and equipment of $0.5 million, partially offset by the maturity of available-for-sale securities of $69.0 million.
Financing Activities
During the six months ended June 30, 2026, financing activities provided $287.5 million of cash, primarily resulting from the net proceeds from the issuance and sale of common stock and pre-funded warrants to purchase shares of common stock in the March 2026 Private Placement of $226.3 million, the sale of common stock in the ATM of $60.8 million, and proceeds from the issuance of $0.3 million of shares of common stock under the Company’s Amended and Restated 2021 Employee Stock Purchase Plan ("ESPP").
During the six months ended June 30, 2025, financing activities provided $188.1 million of cash, resulting from the net proceeds from the issuance and sale of common stock and pre-funded warrants to purchase shares of common stock of $188.2 million, and proceeds from the issuance of $0.2 million of shares of common stock under the Company's ESPP.
Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing development activities related to our Candidates. In addition, we have incurred and expect to continue to incur costs associated with operating as a public company. We expect that our expenses will increase substantially if and as we:
•
enroll participants in our INSPIRE DUCHENNE, IMPACT DUCHENNE, FALCON and ARTEMIS trials and advance clinical development of SGT-003, SGT-212 and SGT-501;
•
advance our other Candidates into clinical trials;
•
continue research and preclinical development of our Candidates and adjacent technologies such as assays;
•
seek to identify additional candidates;
•
engage in regulatory interactions with the FDA and other regulatory authorities;
•
submit regulatory filings relating to the development of our Candidates and seek marketing approvals for our Candidates that successfully complete clinical trials, if any;
•
establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;
•
scale up our manufacturing processes and arrange manufacturing for larger quantities of our Candidates for preclinical and clinical development and potential commercialization;
•
maintain, expand, protect and enforce our intellectual property portfolio;
•
hire and retain additional clinical, quality control and scientific personnel;
•
build out new facilities or expand existing facilities to support our activities;
•
acquire or in-license other drugs, drug candidates, technologies and intellectual property; and
•
add operational, financial and management information systems and personnel.
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As of June 30, 2026, we had cash, cash equivalents and available-for-sale securities of $377.7 million, excluding restricted cash of $1.3 million. Based on our current operating plan, we believe that our cash, cash equivalents and available-for-sale securities as of June 30, 2026 will be sufficient to fund our operating expenses and capital requirements into mid-2028. As a result, in order to continue to operate our business beyond that time, we will need to raise additional funds. However, there can be no assurance that we will be able to generate funds on terms acceptable to us, on a timely basis, or at all. In addition, we have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently anticipate.
Due to the numerous risks and uncertainties associated with the development of our Candidates and because the extent to which we may enter collaborations with third parties for development of our Candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our Candidates. Our future capital requirements will depend on many factors, including:
•
the progress, costs and results of the INSPIRE DUCHENNE, IMPACT DUCHENNE, FALCON and ARTEMIS trials and any future clinical trials of our Candidates;
•
the costs, timing and outcome of regulatory review of our Candidates;
•
the scope, progress, results and costs of discovery, laboratory testing, manufacturing, preclinical development and clinical trials for our Candidates;
•
the costs associated with manufacturing and use of third-party manufacturers;
•
the revenue, if any, received from commercial sale of our Candidates, should any of our Candidates receive marketing approval;
•
the costs of preparing, filing and prosecuting patent applications, maintaining, defending and enforcing our intellectual property rights and defending intellectual property-related claims;
•
the outcome of any lawsuits filed against us;
•
the terms of our current and any future license agreements and collaborations;
•
our ability to establish and maintain additional strategic collaborations, licensing or other arrangements and the financial terms of such arrangements;
•
the payment or receipt of milestones, royalties and other collaboration-based revenues, if any;
•
the extent to which we acquire or in-license other candidates, technologies and intellectual property; and
•
if and as we need to adapt our business in response to public health emergencies or pandemics and collateral consequences related thereto.
We are supplying, and expect to continue to supply, our ongoing and future preclinical and clinical development programs with drug product produced at a current GMP compliant facility located at one of our CDMOs. We intend to establish the capability and capacity to supply Candidates at commercial scale from multiple sources.
Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval for any Candidates or generate revenue from the sale of any products for which we may obtain marketing approval. In addition, our Candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.
Adequate additional funds may not be available to us on acceptable terms, or at all. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity securities, our existing stockholders’ ownership interest may be diluted. Any debt or preferred equity financing, if available, may involve agreements that include restrictive covenants that may limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute existing stockholders’ ownership interests.
If we raise additional funds through licensing agreements and strategic collaborations with third parties, we may have to relinquish valuable rights to our technology, future revenue streams, research programs, or Candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds, we may be required to delay, limit, reduce and/or terminate development of our Candidates or any future commercialization efforts or grant rights to develop and market Candidates that we would otherwise prefer to develop and market ourselves.
30
Contractual Obligations and Commitments
During the six months ended June 30, 2026, there were no material changes to our contractual obligations and commitments from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Recently Issued Accounting Pronouncements
A summary of significant recent accounting pronouncements that we expect to adopt is included in Note 1 – Nature of the Business and Basis of Presentation to our condensed consolidated financial statements (See Part I, Item 1 – Financial Statements, of this Quarterly Report on Form 10-Q).
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Item 3. Quantitative and Qualitati
ve Disclosures About Market Risk.
Interest Rate Risk
We are exposed to market risk related to changes in interest rates. As of June 30, 2026, our cash equivalents consisted of money market funds and treasury bills that have contractual maturities of less than 90 days from the date of acquisition. As of June 30, 2026, our investments consisted of treasury bills and government bonds that have contractual maturities of less than one year. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the short-term nature of our portfolio, an immediate 10% change in market interest rates would not have a material impact on the fair market value of our investment portfolio or on our financial position or results of operations.
Inflation Risk
Inflation generally affects us by increasing our cost of labor and research, manufacturing and development costs. We do not believe that inflation had a material effect on our business, financial condition or results of operations in the last two years. However, our operations may be adversely affected by inflation in the future.
Item 4. Controls
and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer (our principal executive officer and principal financial and accounting officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (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 is 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 such information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected. Based on the evaluation of our disclosure controls and procedures as of June 30, 2026, our President and Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were designed and operating effectively.
31
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have occurred during the three months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A.
Risk Factors.
You should carefully consider the following risk factors, in addition to the other information contained in this Quarterly Report on Form 10-Q, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. If any of the events described in the following risk factors and the risks described elsewhere in this Quarterly Report on Form 10-Q occurs, our business, operating results and financial condition could be seriously harmed and the trading price of our common stock could decline. This Quarterly Report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described below and elsewhere in this Quarterly Report on Form 10-Q. The risks and uncertainties described below are not the only ones we face. Additional risks not presently known to us or other factors not perceived by us to present significant risks to our business at this time also may impair our business operations.
RISK FACTOR SUMMARY
Our business is subject to a number of risks that if realized could materially affect our business, operating results and financial condition and the trading price of our common stock could decline. These risks are discussed more fully below. These risks include the following:
•
We have incurred significant net losses since inception and anticipate that we will continue to incur net losses for the foreseeable future and may never achieve or maintain profitability.
•
We will need additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations.
•
We have never generated revenue from product sales and do not expect to do so for the foreseeable future, if ever.
•
Our limited operating history may make it difficult for our stockholders to evaluate the success of our business to date and to assess our future viability.
•
Unfavorable global economic or geopolitical conditions could harm our business, financial condition or results of operations.
•
Our pipeline of gene transfer candidates, which we refer to collectively as our Candidates, utilize novel technology, which makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval. To our knowledge, only a limited number of gene transfer products have been approved for commercialization in the United States and the European Union.
•
One of our prior clinical trials had been placed on clinical hold by the FDA in the past, and we cannot guarantee that similar events will not happen in ongoing, planned and future clinical trials for our Candidates.
•
We have never completed a clinical trial and may be unable to do so for any Candidate, including SGT-003, SGT‑212, SGT-501 and other Candidates.
•
Our Candidates may cause one or more adverse events or other undesirable side effects or have properties that could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay, denial or withdrawal of regulatory approval by the FDA or other comparable foreign regulatory authorities, limit the Candidates commercial potential or result in significant negative consequences following any potential marketing approval.
•
Success in preclinical studies or early clinical trials may not be indicative of results obtained in later trials.
•
Preliminary or interim data that we announce or publish from time to time may change as more data becomes available and are subject to audit and verification procedures that could result in material changes in the final data.
•
We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.
•
We may find it difficult to enroll participants in our clinical trials, which could delay or prevent us from proceeding with clinical trials of SGT-003, SGT-212, SGT-501 or our other Candidates.
33
•
Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize our Candidates and the approval may be for a narrower indication than we seek.
•
We face significant competition and our competitors may achieve regulatory approval before us or develop therapies that are more advanced or effective than ours, which may adversely affect our ability to develop, successfully market or commercialize our Candidates. Changes within the competitive landscape could lead us to alter our regulatory and/or clinical trial strategy, baseline eligibility criteria or make other modifications to clinical trial designs.
•
We may not be successful in finding strategic collaborators for continuing development of our Candidates or platform technologies, or for successfully commercializing or competing in the market for certain indications.
•
We have limited gene therapy manufacturing experience and could experience production problems and delays in obtaining regulatory approval of our manufacturing processes, which could result in delays in the development or commercialization of SGT-003, SGT-212, SGT-501, or our other Candidates. In addition, changes to manufacturing sites or processes, or formulations for our Candidates may result in additional cost or delay.
•
We expect to utilize third parties to conduct our product manufacturing for the foreseeable future. Therefore, we are subject to the risk that these third parties may not perform satisfactorily or meet regulatory requirements.
•
Our gene transfer approach utilizes capsids derived from a virus, which may be perceived as unsafe or may result in unforeseen adverse events. Negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception of the safety of gene transfer Candidates and adversely affect our ability to conduct our business or obtain regulatory approvals for our Candidates.
•
We heavily rely on certain in-licensed patents and other intellectual property rights in connection with our development of our Candidates and may be required to acquire or license additional patents or other intellectual property rights to continue to develop and commercialize our Candidates.
•
If we are unable to obtain and maintain patent protection for our Candidates, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our Candidates may be adversely affected.
•
Our intellectual property licenses with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology or increase our financial or other obligations to our licensors.
•
The price of our common stock has been, and in the future is likely to be, volatile and fluctuate substantially, which could result in substantial losses for holders of our common stock.
Risks Related to our Financial Position and Need for Capital Requirements
We have incurred significant net losses since inception and anticipate that we will continue to incur net losses for the foreseeable future and may never achieve or maintain profitability.
Since inception, we have incurred significant net losses. Our net losses were $111.5 million and $78.8 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $1.1 billion. Prior to our acquisition of AavantiBio, Inc. in December 2022 (the “Acquisition”) we devoted substantially all of our efforts to research and development, including clinical development of SGT-001, which we are no longer developing, and preclinical development of SGT‑003, as well as to building out our management team and infrastructure. Following the Acquisition, we have devoted our efforts to the research and development of our other Candidates, including clinical development of SGT‑003, SGT‑212 and SGT-501, as well as building out our management team. We expect that it could be several years before we have a commercialized product, and we may never have a commercialized product. We expect to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if, and as, we:
•
enroll participants in our INSPIRE DUCHENNE, IMPACT DUCHENNE, FALCON and ARTEMIS trials and advance clinical development of SGT-003, SGT-212 and SGT-501;
•
advance our other Candidates into clinical trials;
•
continue research and preclinical development of our Candidates and adjacent technologies such as assays;
•
seek to identify additional Candidates;
•
engage in regulatory interactions with the FDA and other regulatory authorities;
34
•
submit regulatory filings relating to the development of our Candidates and seek marketing approvals for our Candidates that successfully complete clinical trials, if any;
•
establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;
•
scale up our manufacturing processes and arrange manufacturing for larger quantities of our Candidates for preclinical and clinical development and potential commercialization;
•
maintain, expand, protect and enforce our intellectual property portfolio;
•
hire and retain additional clinical, quality control and scientific personnel;
•
build out new facilities or expand existing facilities to support our activities;
•
acquire or in-license other drugs, drug candidates, technologies and intellectual property; and
•
add operational, financial and management information systems and personnel.
We may never achieve or maintain profitability. To become and remain profitable, we must develop and eventually commercialize one or more Candidates with significant market potential. This will require us to be successful in a range of challenging activities, and our expenses will increase substantially as we enroll participants in and conduct the INSPIRE DUCHENNE, IMPACT DUCHENNE, FALCON and ARTEMIS trials and continue to develop our pipeline and complete ongoing and planned preclinical studies and clinical trials of our Candidates, obtain marketing approval for our Candidates, develop adjacent technologies such as assays, develop and validate commercial-scale manufacturing processes, manufacture, market and sell any future Candidates for which we may obtain marketing approval and satisfy any post-marketing requirements. Moreover, the manufacturing process requires materials which may fluctuate in cost or be limited or unavailable to us, as well as relationships with contract development and manufacturing organizations (“CDMOs”) to facilitate the manufacturing process. We may never succeed in any of these activities and, even if we do, we may never generate revenue that is significant or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company also could cause stockholders to lose all or part of their investment.
We will need additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations.
We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, conduct clinical trials of, and seek marketing approval for our Candidates. In addition, if we obtain marketing approval for our Candidates, we expect to incur significant expenses related to product sales, marketing, manufacturing and distribution. We also expect to continue to incur additional costs associated with operating as a public company. While we believe that our cash, cash equivalents and available-for-sale securities as of June 30, 2026 will be sufficient to fund our operating expenses and capital requirements into mid-2028, we have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently anticipate. In order to continue to operate our business beyond that time, we will need to raise additional funds. However, there can be no assurance that we will be able to generate funds on terms acceptable to us, on a timely basis, or at all. In addition, we anticipate that we will need additional funding to complete the development of our Candidates.
Our future capital requirements will depend on many factors, including:
•
the progress, costs and results of the INSPIRE DUCHENNE, IMPACT DUCHENNE, FALCON and ARTEMIS trials and any future clinical trials of our Candidates;
•
the costs, timing and outcome of regulatory review of our Candidates;
•
the scope, progress, results and costs of discovery, laboratory testing, manufacturing, preclinical development and clinical trials for our Candidates;
•
the costs associated with manufacturing and use of third-party manufacturers;
•
the revenue, if any, received from commercial sale of our Candidates, should any of our future Candidates receive marketing approval;
•
the costs of preparing, filing and prosecuting patent applications, maintaining, defending and enforcing our intellectual property rights and defending intellectual property-related claims;
•
the outcome of any lawsuits filed against us;
35
•
the terms of our current and any future license agreements and collaborations;
•
our ability to establish and maintain additional strategic collaborations, licensing or other arrangements and the financial terms of such arrangements;
•
the payment or receipt of milestones, royalties and other collaboration-based revenues, if any;
•
the extent to which we acquire or in-license other candidates, technologies and intellectual property; and
•
if and as we need to adapt our business in response to public health emergencies or pandemics and collateral consequences related thereto.
Identifying potential candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to submit a Biologics License Application (“BLA”) or obtain marketing approval and achieve product sales. In addition, our Candidates, if approved, may not achieve commercial success. Our product revenue, if any, will be derived from or based on sales of our Candidates that may not be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all, and may be impacted by the economic climate and market conditions. Our ability to raise additional funds may be adversely impacted by general economic conditions, both inside and outside the U.S., including disruptions to, and instability and volatility in, the credit and financial markets in the U.S. and worldwide, heightened inflation, interest rate and currency rate fluctuations, global trade programs, tariffs and economic slowdown or recession as well as concerns related to public health emergencies or pandemics and geopolitical events, including civil or political unrest. In addition, market instability and volatility, high levels of inflation and interest rate fluctuations may increase our cost of financing or restrict our access to potential sources of future liquidity. Alternatively, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or Candidates.
We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership of our common stock will be diluted and the terms may include liquidation or other preferences that adversely affect the rights of our current stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and could involve restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or Candidates, or grant licenses on terms unfavorable to us.
We have never generated revenue from product sales and do not expect to do so for the foreseeable future, if ever.
Our ability to generate revenue from product sales and achieve profitability depends on our ability, alone or with collaborative partners, to successfully complete the development of, and obtain the regulatory approvals necessary to commercialize our Candidates. We do not anticipate generating revenue from product sales for the foreseeable future, if ever. Our ability to generate future revenue from product sales depends heavily on our success in:
•
completing research and development of our Candidates in a timely and successful manner;
•
seeking and obtaining regulatory and marketing approvals for any of our Candidates for which we complete clinical trials;
•
launching and commercializing Candidates for which we obtain regulatory and marketing approval by establishing a sales force and marketing and distribution infrastructure or, alternatively, collaborating with a commercialization partner;
•
maintaining and enhancing a commercially viable, sustainable, scalable, reproducible and transferable manufacturing process for our Candidates that is compliant with Current Good Manufacturing Practices (“cGMPs”);
•
establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate, in terms of cost, amount and quality, products and services to support clinical development and the commercial demand for our Candidates, if approved;
•
obtaining market acceptance, if and when approved, of our Candidates as a viable treatment option by patients, the medical community and third-party payors;
36
•
qualifying for coverage and adequate reimbursement by government and third-party payors for our Candidates both in the U.S. and internationally;
•
effectively addressing any competing technological and market developments;
•
negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter and performing our obligations under such arrangements;
•
maintaining, protecting, enforcing and expanding our portfolio of intellectual property rights, including patents, trademarks, trade secrets and know-how;
•
avoiding and defending against intellectual property infringement, misappropriation and other claims;
•
implementing additional internal systems and infrastructure, as needed; and
•
attracting, hiring and retaining qualified personnel.
Our limited operating history may make it difficult for our stockholders to evaluate the success of our business to date and to assess our future viability.
Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, acquiring rights to our technology, conducting research and development activities, establishing research and development collaborations, identifying and acquiring Candidates, establishing manufacturing arrangements, undertaking preclinical studies and clinical trials, and licensing of our POLARIS-101
TM
capsid. As a company, we have limited experience in clinical development. We have not yet demonstrated the ability to complete clinical trials of any Candidate, obtain marketing approvals, manufacture at commercial-scale or conduct sales and marketing activities necessary for successful commercialization. Consequently, any predictions our stockholders make about our prospects may not be as accurate as they could be if we had a longer operating history or prior experience integrating acquired businesses into our existing business.
Unfavorable global economic or geopolitical conditions could harm our business, financial condition or results of operations.
Our results of operations could be harmed by general conditions in the global economy and in the global financial markets or by geopolitical conditions. A severe or prolonged economic downturn, including the impact of increased interest rates and inflation, and global trade programs and tariffs, could result in a variety of risks to our business, including weakened demand for our Candidates and our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could strain our manufacturers, possibly resulting in manufacturing disruption, or cause delays in payments for our services by third-party payors or our future collaborators. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could harm our business.
We hold a portion of our cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts that could be adversely affected if the financial institutions holding such funds fail.
We hold a portion of our cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts at multiple financial institutions. The balance held in these accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) standard deposit insurance limit of $250,000. If a financial institution in which we hold such funds fails or is subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessing all or a portion of such uninsured funds. Any such loss or lack of access to these funds could adversely impact our short-term liquidity and ability to meet our operating expense obligations, including payroll obligations.
For example, on March 10, 2023, Silicon Valley Bank (“SVB”) and Signature Bank, were closed by state regulators and the FDIC was appointed receiver for each bank. The FDIC created successor bridge banks and all deposits of SVB and Signature Bank were transferred to the bridge banks under a systemic risk exception approved by the United States Department of the Treasury, the Federal Reserve and the FDIC. If financial institutions in which we hold funds for working capital and operating expenses were to fail, we cannot provide any assurances that such governmental agencies would take action to protect our uninsured deposits or investments in a similar manner.
We also maintain investment accounts with other financial institutions in which we hold our investments and marketable securities and, if access to the funds we use for working capital and operating expenses is impaired, we may not be able to sell investments or transfer funds from our investment accounts to other operating accounts on a timely basis sufficient to meet our operating expense obligations.
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Risks Related to the Development of our Candidates
Our pipeline of gene transfer Candidates utilize novel technology, which makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval. To our knowledge, only a limited number of gene transfer products have been approved for commercialization in the United States and the European Union.
Our future success depends on our successful development of our Candidates. Our risk of failure is high. We had experienced problems and delays in developing SGT-001, which we are no longer developing, and may in the future experience problems or delays in developing our Candidates. Any such problems or delays would cause unanticipated costs, and any development problems may not be solved. For example, we or another party may uncover a previously unknown risk associated with our Candidates, the AAV capsid, construct or other issues resulting in toxicity or lack of efficacy that may be more problematic than we currently believe and this may prolong the period of observation required for obtaining, or result in the failure to obtain, regulatory approval or may necessitate additional clinical testing.
In addition, our ability to conduct and complete our preclinical development testing and studies is contingent on our ability to source animals and other supplies required for the conduct of such testing and studies and the performance of animal models. If we are unable to obtain all necessary animals and other supplies required for the conduct of our preclinical testing and studies, or the animal models do not perform as expected, we may be unable to complete such preclinical development testing and studies in a timely manner or at all. For example, some of our IND-enabling toxicology and other studies require certain non-human primates ("NHPs") that may be imported from countries in which trade relation with the U.S. are or may become challenging or through vendors who may not be able to timely source certain NHPs or at all, which may impair our ability to complete preclinical development testing and studies to support IND or similar applications or delay submission of such applications. Additionally, we may fail to demonstrate adequate Candidate efficacy and/or safety as required by regulatory authorities. We may fail to access relevant, adequate, or necessary animal models, including genetic models of disease and NHPs in particular, for use in such studies as requested by regulatory authorities. We may also experience substantial delays as a result of our reliance on contract research organizations (“CROs”) to conduct all animal model experimentation necessary to assess the efficacy and safety of our Candidates. Any of these factors may result in delays to Candidate progression, inability to obtain regulatory approval, and/or substantial increases in Candidate development costs.
In addition, the product specifications and the clinical trial requirements of the FDA, the European Commission, the European Medicines Agency (the “EMA”) and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of such product candidate. The regulatory approval process for novel product candidates such as ours is unclear and can be more expensive and take longer than for other, better known or more extensively studied product candidates. To our knowledge, only a limited number of gene transfer products have been approved for commercialization in the United States and the European Union. As a result, it is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for our gene transfer Candidates in either the United States or the European Union, if at all. Approvals by the European Commission may not be indicative of what the FDA may require for approval and vice versa.
Our Candidates may cause undesirable side effects or have other properties that could delay or prevent their clinical development, regulatory approval, limit their commercial potential or result in significant negative consequences following any potential marketing approval.
During the conduct of clinical trials, participants may experience changes in their health, including illnesses, injuries, discomforts or a fatal outcome. Often, it is not possible to determine whether the Candidate being studied caused these conditions. For instance, we reported a serious adverse event in IGNITE DMD, which resulted in a clinical hold in November 2019, which has since been resolved. In April 2021, a participant treated with SGT-001 in IGNITE DMD experienced a systemic inflammatory response classified as a serious adverse event and considered by the investigator to be drug related. In addition, there have been two previously disclosed treatment-related serious adverse events in the INSPIRE DUCHENNE trial. Both events were reviewed by the data and safety monitoring board with the recommendation to continue dosing without interruption, and both events have resolved; however, we cannot guarantee that similar events will not happen in ongoing and future clinical trials of SGT-003.
In addition, it is possible that as we test Candidates in larger, longer and more extensive clinical programs, or as use of these Candidates becomes more widespread if they receive regulatory approval, illnesses, injuries, discomforts and other adverse events that were observed in earlier clinical trials, as well as conditions that did not occur or went undetected in previous clinical trials, will be reported by subjects. Many times, side effects are only detectable after investigational products are tested in large-scale, Phase 3 clinical trials or, in some cases, after they are made available to patients on a commercial scale after approval. If additional clinical experience indicates that a Candidate has side effects or causes serious or life-threatening side effects, the development of the Candidate may fail or be delayed, or, if the Candidate has received regulatory approval, such approval may be withdrawn.
There have been several significant adverse side effects in gene therapy treatments in the past, including reported cases of leukemia and death seen in other clinical trials. The FDA convened the Cellular, Tissue, and Gene Therapies Advisory Committee in September
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2021 to discuss toxicity risks of AAV based gene therapy products and discussed risks including oncogenicity risks due to capsid genome integration, hepatotoxicity, thrombotic microangiopathy, and neurotoxicity (especially related to dorsal root ganglion toxicity). While new recombinant capsids have been developed with the intent to reduce these side effects, gene therapy is still a relatively new approach to disease treatment and additional adverse side effects could develop. There have been reports of significant adverse side effects, including muscle weakness, myocarditis, and acute liver injury, in clinical trials of other gene therapy treatments for Duchenne that may be related to the type and location of the specific gene mutation causing the disease. In another gene therapy treatment, there have been reports of AAV mediated acute liver failure leading to death in non-ambulatory boys with Duchenne in the setting of commercially available product. There also is the potential risk of delayed adverse events following exposure to gene therapy products due to persistent biologic activity of the genetic material or other components of products used to carry the genetic material. Possible adverse side effects that may occur with treatment with gene therapy products include an immunologic reaction early after administration that could substantially limit the effectiveness of the treatment or represent safety risks for patients. Additionally, in previous clinical trials involving AAV capsids for gene therapy, some subjects experienced the development of a positive ELISPOT test associated with T‑cell responses, which is of unclear clinical translatability. If T-cells are activated, the cellular immune response system may trigger the removal of transduced cells. If our gene transfer Candidates demonstrate a similar effect or other undesirable side effects, we may decide or be required to halt or delay further clinical development of our Candidates involving AAV capsids for gene therapy.
Adverse side effects may be observed following administration of any AAV gene therapy, including SGT-003 or other Candidates. Not all contemplated AAV delivery systems have been validated in human clinical trials previously, such as POLARIS-101
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, which is a novel capsid. If a delivery system does not meet the safety criteria or cannot provide the desired efficacy results, then we may be forced to suspend or terminate our development of SGT-003 or other Candidates. If certain adverse side effects were to occur in the future and we are unable to demonstrate that they were not caused by the administration process or related procedures, the FDA, the European Commission, the EMA or other regulatory authorities could order us to cease further development of, or deny approval of, SGT-003 or other Candidates for any or all targeted indications. Even if we are able to demonstrate that any serious adverse events are not product-related, such occurrences could affect participant recruitment or the ability of enrolled participants to complete the clinical trial. Participants will also create antibodies to the AAV capsid and a second administration of gene transfer might not be safe or successful.
Additionally, if one or more of our Candidates receive marketing approval, the FDA could require us to adopt a Risk Evaluation and Mitigation Strategy (“REMS”) to ensure that the benefits outweigh the risks, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners. Furthermore, if we or others later identify undesirable side effects caused by our Candidates, several potentially significant negative consequences could result, including:
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regulatory authorities may suspend or withdraw approvals of such a Candidate;
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regulatory authorities may require additional warnings on the label;
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we may be required to change the way a Candidate is administered or conduct additional clinical trials;
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we could be sued and held liable for harm caused to patients; and
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our reputation may suffer.
One of our prior clinical trials had been placed on clinical hold by the FDA in the past, and we cannot guarantee that similar events will not happen in ongoing, planned and future clinical trials for our Candidates.
In November 2019, the FDA placed a clinical hold on our clinical trial of SGT-001 following a serious adverse event in IGNITE DMD. The third participant in the 2E14 vg/kg cohort of IGNITE DMD, dosed in late October 2019, experienced a serious adverse event deemed related to the study drug that was characterized by complement activation, thrombocytopenia, decrease in red blood cell count, acute kidney injury, and cardio-pulmonary insufficiency. In April 2021, an eighth participant was treated with SGT-001. The participant experienced a systemic inflammatory response which has since fully resolved. The event was classified as a serious adverse event and considered by the investigator to be drug related. While SGT-003 utilizes POLARIS-101
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, a different capsid than was utilized in SGT-001, and includes other changes to the construct and manufacturing process to help avoid or mitigate any such events, we cannot guarantee that similar serious adverse events or clinical holds will not happen in ongoing and future clinical trials of SGT-003. We also cannot guarantee that similar serious adverse events or clinical holds will not happen in planned and future clinical trials of any of our other Candidates.
Delays in the completion of, or our inability to conduct, any clinical trial of SGT-003 or any other Candidate, as a result of similar serious adverse events or clinical holds or otherwise, will increase our costs, slow down or cease our Candidate development and approval process and delay or potentially jeopardize our ability to commence product sales and generate revenue. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of SGT-003 or other Candidates.
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We have never completed a clinical trial and may be unable to do so for any Candidate, including SGT-003, SGT-212, SGT-501 and other Candidates.
We are early in our development efforts and we have never completed a clinical trial. We are conducting our INSPIRE DUCHENNE trial of SGT-003, our IMPACT DUCHENNE trial of SGT-003, our FALCON trial of SGT-212 and our ARTEMIS trial of SGT-501. Our other current Candidates are still in the preclinical and discovery stages of development. Preclinical studies involve a lengthy and expensive process with an uncertain outcome. There are many potential preclinical models to test for different disease states, and we could fail to choose the best or a predictive preclinical model to determine proof of concept and potential safety and efficacy of o