# Solid Biosciences Inc. (SLDB) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Solid Biosciences Inc.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1707502/000095017025034644/sldb-20241231.htm
Accession: 0000950170-25-034644
Filing date: 2025-03-06
Report date: 2024-12-31
Extracted from a substantive MD&A body after the formal Item 7 span was a TOC or reference stub.
Confidence: high

Company profile: /company/SLDB/
All MD&A years: /company/SLDB/mda/
Previous year: /company/SLDB/mda/fy2023/ (FY 2023)
Next year: /company/SLDB/mda/fy2025/ (FY 2025)

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, or Duchenne, SGT-212 for the treatment of Friedreich's ataxia, or FA, SGT-501 for the treatment of Catecholaminergic polymorphic ventricular tachycardia, or CPVT, SGT-601 for the treatment of TNNT2-mediated dilated cardiomyopathy, or TNNT2 DCM, and additional assets for the treatment of genetic cardiac and other diseases, at different stages of development, with varying levels of investment. 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 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:

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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:

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bring together the leading experts in neuromuscular and cardiac diseases, science, technology, disease management and care; and

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be guided by the needs of these patients.

We are continuing to advance our pipeline of Candidates. The U.S. Food and Drug Administration, or the FDA, has granted orphan drug designation, Rare Pediatric Disease designation and Fast Track designation for SGT-003 for Duchenne. The FDA has granted Fast Track Designation for SGT-212 for the treatment of FA. The FDA and the European Medicines Agency, or EMA, have granted orphan drug designation to SGT-501 for the treatment of CPVT and the FDA has granted Rare Pediatric Disease Designation for SGT-501.

SGT-003

Patient 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. In September 2024, we amended the INSPIRE DUCHENNE clinical trial protocol to increase the anticipated participant enrollment size, expand the participant cohort age groups, and extend the timepoints of certain secondary objective measurements. In connection with the expanded clinical trial, we have initiated work for additional GMP batches of SGT-003.

On February 18, 2025, we announced positive initial data from the Phase 1/2 INSPIRE DUCHENNE trial as of the data cutoff date of February 11, 2025. Interim biopsy data reported in the first three participants showed an average microdystrophin expression of 110%, as measured by western blot, and improvements in multiple biomarkers that are indicators of muscle integrity, health and resilience.

SGT-003 was well-tolerated in the first six participants dosed as of February 11, 2025. For a full description of the initial results from the INSPIRE DUCHENNE trial, see Part I, Item I, “Business” appearing in this Annual Report on Form 10-K.

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Enrollment in the INSPIRE DUCHENNE trial is ongoing, with at least 10 total participants in the trial anticipated to be dosed by early in the second quarter of 2025 and approximately 20 total participants anticipated to be dosed by the fourth quarter of 2025.

INSPIRE DUCHENNE currently has a total of six active clinical sites in the United States and Canada and approved clinical trial applications in the United Kingdom and Italy. We expect to activate additional trial sites by the end of 2025. In mid-2025, we plan to request a meeting with the U.S. Food and Drug Administration, or the FDA, to discuss the potential for accelerated approval regulatory pathways for SGT-003.

SGT-212

In January 2025, we announced that the FDA cleared our investigational new drug, or IND, for SGT-212 for the treatment of FA. We anticipate initiating an open-label, multi-center Phase 1b clinical trial of SGT-212 in non-ambulatory and ambulatory adult patients living with FA in the second half of 2025. The FDA has granted Fast Track designation to SGT-212 for the treatment of FA.

SGT-501

We have conducted preclinical studies of SGT-501, including three-and six-month good laboratory practices, or GLP, toxicology studies. IND-enabling GLP toxicology studies of SGT-501 in non-human primates, including the in-life portion of the six-month toxicology, were completed in the first quarter of 2025. We expect to submit an IND to the FDA for SGT-501 for the treatment of patients with RYR2-mediated CPVT in the first half of 2025.

Other Cardiac Programs

We are currently developing a preclinical stage 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. We anticipate submitting an IND to the FDA for SGT-601 for the treatment of TNNT2 DCM in the second half of 2026.

Capsid

Solid's proprietary capsid used in SGT-003, AAV-SLB101, was well tolerated in the first patients dosed in the INSPIRE DUCHENNE trial as well as in NHP and mouse studies.

We are focused on developing transformative treatments to improve the lives of patients with rare neuromuscular and cardiac diseases. The majority of our current programs are designed to treat these diseases with gene transfer products. Gene transfer, a type of gene therapy, is designed to address diseases caused by mutated genes through the delivery of functional versions of those genes, called transgenes. The transgenes are then utilized by the body to produce proteins that act therapeutically to treat the condition. In addition to a transgene, our gene transfer Candidates include a viral capsid or vector (a protein shell utilized as a vehicle to deliver a transgene to cells in the body) and a promoter (a specialized DNA sequence that directs cells to produce the protein in specific tissues). The capsid is modified to no longer self-replicate yet still retain its ability to introduce new genetic material directly into patients’ cells. Adeno-associated virus, or AAV, capsids have been approved for use to deliver transgenes to patients, including via systemic delivery as well as stereotactic neurosurgical administration to the brain. The use of AAV capsids to deliver gene therapies has also been extensively studied by third parties in human clinical trials for multiple disease indications, and in certain of these trials AAV was delivered systemically to the patient.

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 $124.7 million and $96.0 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $783.5 million. 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 such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity financings, debt financings 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

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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 December 31, 2024, we had cash, cash equivalents, and available-for-sale securities of $148.9 million, excluding restricted cash of $2.0 million. In February 2025, we issued and sold in an underwritten offering, or the February 2025 Offering, 35,739,810 shares of our 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 our common stock at a price per warrant of $4.029. We received net proceeds of approximately $187.5 million, after deducting underwriting discounts and commissions and estimated offering costs. We believe that our cash, cash equivalents, and available-for-sale securities as of December 31, 2024, together with the net proceeds from the February 2025 Offering, will enable us to fund our operating expenses and capital expenditure requirements into the first half of 2027. 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.

Financial Operations Overview

Revenue

We have not generated any commercial product revenue to date and do not expect to generate any product revenue from the sale of our products 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 from product sales.

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, or CROs, that conduct research, preclinical and clinical activities on our behalf, as well as contract manufacturing organizations, or CMOs, that manufacture SGT-003, 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;

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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 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

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future if and as we conduct clinical trials for SGT-003, initiate clinical trials for our other Candidates, including our planned Phase 1b clinical trial of SGT-212, and continue to identify and develop additional 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.

The following table summarizes our research and development expenses by Candidate for the respective periods (in thousands):

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2024","","","2023"],["Allocated research and development expenses:"],["SGT-001","","$","923","","","$","3,432"],["SGT-003","","","15,197","","","","20,856"],["SGT-501","","","17,223","","","","3,200"],["SGT-212","","","5,435","","","","794"],["Other development programs","","","13,344","","","","6,645"],["Total allocated research and development expenses","","","52,122","","","","34,927"],["Unallocated research and development expenses:"],["Personnel related expenses","","","25,100","","","","24,968"],["External expenses","","","19,209","","","","16,668"],["Total unallocated research and development expenses","","","44,309","","","","41,636"],["Total research and development expenses","","$","96,431","","","$","76,563"]]
[[/GREPCENT_TABLE]]

We cannot determine with certainty the duration, costs, and timing of clinical trials of ongoing and planned 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 patient 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

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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 planned Phase 1b clinical trial of SGT-212, and any other planned or future clinical trials for and potential commercialization of our Candidates.

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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.

Income Taxes

We account for income taxes using an asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements but have not been reflected in taxable income. A valuation allowance is established to reduce deferred tax assets to their estimated realizable value.

We account for uncertainty in income taxes recognized in the financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our 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 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 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.

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing at the end of this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements and that involve a significant level of estimation uncertainty.

Accrued Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advanced payments. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees paid to:

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CROs in connection with performing research activities, clinical trials and preclinical studies on our behalf;

•
vendors in connection with preclinical development and clinical activities;

•
vendors related to product manufacturing and development and distribution of clinical and preclinical supplies; and

•
third parties under our intellectual property licenses.

We base our expenses related to preclinical studies and clinical trials on our estimates of the services rendered and efforts expended pursuant to quotes and contracts with multiple CROs that conduct and manage preclinical studies and clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of

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services provided and result in a prepayment of the expense. In accruing fees, we estimate the time period over which services will be performed, and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or amount of prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in us reporting amounts that are too high or too low in any particular period.

Equity-Based Compensation

We have equity plans under which we make equity awards to employees, directors and non-employees. We measure all stock options and other stock-based awards granted to employees, directors and non-employees based on the fair value on the date of the grant and recognize compensation expense of those awards, over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are accounted for as they occur. We apply the straight-line method of expense recognition to all awards with only service-based vesting conditions. For performance-based restricted stock unit awards, which are subject to the achievement of performance milestones, the fair value is recognized as expense over the requisite service periods when the achievement of such performance milestones is determined to be probable. If a performance milestone is not determined to be probable or is not met, no equity-based compensation expense is recognized, and any previously recognized expense is reversed. For stock-based awards granted to non-employees, compensation expense is recognized over the period during which services are rendered by such non-employees until completed.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. In the first quarter of 2024, we determined that we have adequate historical stock price data to utilize solely our stock for historical volatility purposes. The expected term of stock options with service-based vesting conditions and options granted to non-employees has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. We use a 0% expected dividend yield in our determination of fair value based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future, if ever.

Derivative Liabilities

In connection with the asset purchase agreement with FA212 LLC, or FA212, certain development milestone payments to FA212 are payable in either cash, equity, or a combination of both, at our discretion. Such contingent payments were determined to be derivative liabilities.

Derivative liabilities are recorded at fair value based on the probability weighted present value of the estimated cash flows pursuant to the contractual terms of each agreement. The derivative liabilities are remeasured quarterly with changes in fair value recorded in change in fair value of derivative liabilities in the consolidated statements of operations.

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Results of Operations

Comparison of the Years Ended December 31, 2024 and 2023

The following table summarizes our results of operations for the years ended December 31, 2024 and 2023 (in thousands, except percentages):

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2024","","","2023","","","Change","","","Change"],["Operating expenses:"],["Research and development","","$","96,431","","","$","76,563","","","$","19,868","","","","25.9","%"],["General and administrative","","","33,297","","","","27,752","","","","5,545","","","","20.0","%"],["Restructuring expense","","","\u2014","","","","(63",")","","","63","","","","100.0","%"],["Total operating expenses","","","129,728","","","","104,252","","","","25,476","","","","24.4","%"],["Loss from operations","","","(129,728",")","","","(104,252",")","","","(25,476",")","","","24.4","%"],["Other income, net:"],["Interest income","","","9,469","","","","7,582","","","","1,887","","","","24.9","%"],["Interest expense","","","(340",")","","","(440",")","","","100","","","","(22.7",")%"],["Change in fair value of derivative liabilities","","","(4,750",")","","","\u2014","","","","(4,750",")","","","(100.0",")%"],["Other income, net","","","652","","","","1,095","","","","(443",")","","","(40.5",")%"],["Total other income, net","","","5,031","","","","8,237","","","","(3,206",")","","","(38.9",")%"],["Net loss","","$","(124,697",")","","$","(96,015",")","","$","(28,682",")","","","29.9","%"]]
[[/GREPCENT_TABLE]]

Research and Development Expenses

The following table summarizes our research and development expenses by Candidate for the respective periods (in thousands, except percentages):

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2024","","","2023","","","Change","","","Change"],["Allocated research and development expenses:"],["SGT-001","","$","923","","","$","3,432","","","$","(2,509",")","","","(73.1",")%"],["SGT-003","","","15,197","","","","20,856","","","","(5,659",")","","","(27.1",")%"],["SGT-501","","","17,223","","","","3,200","","","","14,023","","","","438.2","%"],["SGT-212","","","5,435","","","","794","","","","4,641","","","","584.5","%"],["Other development programs","","","13,344","","","","6,645","","","","6,699","","","","100.8","%"],["Total allocated research and development expenses","","","52,122","","","","34,927","","","","17,195","","","","49.2","%"],["Unallocated research and development expenses:"],["Personnel related expenses","","","25,100","","","","24,968","","","","132","","","","0.5","%"],["External expenses","","","19,209","","","","16,668","","","","2,541","","","","15.2","%"],["Total unallocated research and development expenses","","","44,309","","","","41,636","","","","2,673","","","","6.4","%"],["Total research and development expenses","","$","96,431","","","$","76,563","","","$","19,868","","","","25.9","%"]]
[[/GREPCENT_TABLE]]

Research and development expenses for the year ended December 31, 2024 were $96.4 million, compared to $76.6 million for the year ended December 31, 2023. The increase of $19.9 million in research and development expenses was primarily related to a $14.0 million increase in costs for SGT-501 from increased manufacturing and study related costs, a $4.6 million increase in costs for SGT-212 related to the entry into the asset purchase agreement with FA212, and a $6.7 million increase in license fees and research and consulting costs for other development programs, partially offset by a $5.7 million decrease in costs for SGT-003 related to manufacturing and study related costs.

General and Administrative Expenses

General and administrative expenses were $33.3 million for the year ended December 31, 2024, compared to $27.8 million for the year ended December 31, 2023. The increase of $5.5 million was primarily related to a $4.1 million increase in personnel costs and a $1.4 million increase in legal fees.

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Restructuring Expense

There was no restructuring expense during the year ended December 31, 2024, compared to $(0.1) million of restructuring expense for the year ended December 31, 2023. The restructuring expense was related to severance and other employee-related costs we recorded in the year ended December 31, 2022, in connection with a restructuring that occurred in December 2022. We paid $0.3 million and $3.7 million in severance and other employee-related costs during the years ended December 31, 2024 and 2023, respectively. See Note 16 to our consolidated financial statements appearing at the end of this Annual Report on Form 10-K.

Other Income, Net

Other income, net was $5.0 million and $8.2 million for the years ended December 31, 2024 and 2023, respectively. The decrease of $3.2 million was primarily related to a $4.8 million expense for a change in fair value of derivative liabilities, partially offset by a $1.9 million increase in interest income primarily related to available-for-sale securities included within our portfolio.

Liquidity and Capital Resources

Sources of Liquidity

To date, we have financed our operations primarily through the sale of redeemable preferred units and member units, 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, or Jefferies, or the ATM Sales Agreement. Through December 31, 2024, 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 $668.9 million of net proceeds from the sale of our common stock through public offerings, including our IPO and follow-on public offering, 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 years ended December 31, 2024 and 2023, we sold 2,212,937 and 602,030 shares of common stock, respectively, pursuant to the ATM Sales Agreement resulting in net proceeds of $18.4 million and $3.0 million, respectively. During the three months ended December 31, 2024, we sold 1,004,650 shares pursuant to the ATM Sales Agreement resulting in net proceeds of $6.9 million.

On January 11, 2024, we issued and sold 16,973,103 shares of our common stock at a price per share of $5.53 and, to one investor in lieu of shares of common stock, pre-funded warrants to purchase 2,712,478 shares of common stock at a price of $5.529 per pre-funded warrant, in a private placement, which we refer to as the January 2024 Private Placement. We received $103.7 million of net proceeds from the January 2024 Private Placement after deducting offering costs.

As of December 31, 2024, we had cash, cash equivalents and available-for-sale securities of $148.9 million, excluding restricted cash of $2.0 million, and had no debt outstanding.

On February 19, 2025, we issued and sold in 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 our common stock at a price of $4.029 per pre-funded warrant. We received approximately $187.5 million of net proceeds from the February 2025 Offering, after deducting underwriting discounts and commissions and estimated offering costs.

Summary of Cash Flows

The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["","","2024","","","2023"],["Net cash used in operating activities","","$","(100,012",")","","$","(94,180",")"],["Net cash (used in) provided by investing activities","","","(16,086",")","","","9,689"],["Net cash provided by financing activities","","","122,437","","","","3,122"],["Net increase (decrease) in cash, cash equivalents and restricted cash","","$","6,339","","","$","(81,369",")"]]
[[/GREPCENT_TABLE]]

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Operating Activities

During the year ended December 31, 2024, operating activities used $100.0 million of cash, primarily resulting from our net loss of $124.7 million offset by non-cash charges of $21.8 million due primarily to equity-based compensation of $10.5 million, an increase in the fair value of the derivative liabilities of $4.8 million, non-cash acquired in-process research and development of $3.4 million, depreciation expense of $2.5 million, non-cash lease expense of $2.4 million, and a non-cash up-front equity payment for a collaboration and license agreement of $2.0 million, partially offset by amortization of discount on available-for sale-securities of $3.6 million. Net cash provided by changes in our operating assets and liabilities was $2.9 million which included an increase of $4.8 million in accrued expenses and other current and non-current liabilities, and an increase in accounts payable of $2.2 million, partially offset by an increase in prepaid expenses and other current and non-current assets of $2.4 million and a decrease in operating lease liability of $1.7 million.

During the year ended December 31, 2023, operating activities used $94.2 million of cash, primarily resulting from our net loss of $96.0 million offset by non-cash charges of $10.7 million due primarily to equity-based compensation of $7.6 million and depreciation and impairment expense of $2.6 million, non-cash lease expense of $2.5 million, partially offset by amortization of discount on available-for sale-securities of $2.4 million. Net cash used by changes in our operating assets and liabilities was $8.9 million which included a decrease of $6.9 million in accrued expenses and other current and non-current liabilities, a decrease in operating lease liability of $1.7 million, and a decrease in accounts payable of $0.8 million, partially offset by a decrease in prepaid expenses and other current and non-current assets of $0.6 million.

Investing Activities

During the year ended December 31, 2024, investing activities used $16.1 million of cash, resulting from the purchases of available-for sale securities of $204.3 million and the purchases of property and equipment of $0.7 million, partially offset by the maturity of available-for sale securities of $188.9 million.

During the year ended December 31, 2023, investing activities provided cash of $9.7 million, consisting primarily of the sale of available-for-sale securities of $128.6 million, partially offset by net purchases of available-for-sale securities of $117.4 million and the purchase of property and equipment of $1.5 million primarily related to the corporate headquarters lease.

Financing Activities

During the year ended December 31, 2024, financing activities provided $122.4 million of cash, primarily resulting from the net proceeds from the sale of common stock and pre-funded warrants to purchase shares of common stock in the January 2024 Private Placement of $103.7 million and net proceeds from the sale of common stock under the ATM Sales Agreement of $18.4 million, proceeds from the exercise of common stock options of $0.5 million, and proceeds from the issuance of shares under the Company's Amended and Restated 2021 Employee Stock Purchase Plan, or ESPP, of $0.3 million, partially offset by payments of the principal portion of finance lease obligations of $0.5 million.

During the year ended December 31, 2023, financing activities provided $3.1 million of cash as a result of proceeds from the issuance of common stock of $3.0 million under the ATM Sales Agreement and from the issuance of shares of common stock of $0.1 million under the 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:

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continue to enroll patients in our INSPIRE DUCHENNE trial and advance clinical development of SGT-003;

•
advance our other Candidates into clinical trials, including our planned Phase 1b clinical trial of SGT-212;

•
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;

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•
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 product 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.

As of December 31, 2024, we had cash, cash equivalents and available-for-sale securities of $148.9 million, excluding restricted cash of $2.0 million. Based on our current operating plan, we believe that our cash, cash equivalents and available-for-sale securities as of December 31, 2024, together with the net proceeds from our February 2025 Offering, will be sufficient to fund our operating expenses and capital requirements into the first half of 2027. 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:

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the progress, costs and results of the INSPIRE DUCHENNE trial, our planned clinical trial of SGT-212, and any future clinical trials of our Candidates;

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the costs, timing and outcome of regulatory review of our Candidates;

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the scope, progress, results and costs of discovery, laboratory testing, manufacturing, preclinical development and clinical trials for our Candidates;

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the costs associated with manufacturing and use of third-party manufacturers;

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the revenue, if any, received from commercial sale of our Candidates, should any of our Candidates receive marketing approval;

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the costs of preparing, filing and prosecuting patent applications, maintaining, defending and enforcing our intellectual property rights and defending intellectual property-related claims;

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the outcome of any lawsuits filed against us;

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the terms of our current and any future license agreements and collaborations;

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our ability to establish and maintain additional strategic collaborations, licensing or other arrangements and the financial terms of such arrangements;

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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

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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 pre-clinical and clinical development programs with drug produced at a cGMP compliant facility located at one of our CMOs. 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

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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.

Contractual Obligations and Commitments

We lease certain office space, lab space and lab equipment in Massachusetts and North Carolina. These leases are used for our continuing operations. For a description of our lease obligations, refer to Note 10 to our consolidated financial statements appearing in this Annual Report on Form 10-K.

Under various agreements with third-party licensors, we have agreed to make milestone payments and pay royalties to third parties based on specified milestones. For a description of our license agreements, see Part I, Item 1, “Business—Strategic Partnerships and Collaborations/Licenses” and see Note 12 of our consolidated financial statements appearing in this Annual Report on Form 10-K.

We enter into contracts in the normal course of business with CROs and CMOs for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. These contracts are cancelable by us upon prior notice of 30 days.

Recently Issued Accounting Pronouncements

We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 to our consolidated financial statements appearing at the end of this Annual Report on Form 10-K, such standards will not have a material impact on our consolidated financial statements or do not otherwise apply to our operations.