# Scholar Rock Holding Corp (SRRK) FY 2024 MD&A Verbatim Item 7 Management's Discussion and Analysis from Scholar Rock Holding Corp's 10-K for fiscal year 2024. SEC filing source: https://www.sec.gov/Archives/edgar/data/1727196/000155837025001682/srrk-20241231x10k.htm Accession: 0001558370-25-001682 Filing date: 2025-02-27 Report date: 2024-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/SRRK/ All MD&A years: /company/SRRK/mda/ Previous year: /company/SRRK/mda/fy2023/ (FY 2023) Next year: /company/SRRK/mda/fy2025/ (FY 2025) Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The information contained in this section has been derived from our consolidated financial statements and should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, the “Exchange Act” and are subject to the “safe harbor” created by those sections. In particular, statements contained in this Annual Report on Form 10-K that are not historical facts, including, but not limited to statements regarding our future expectations, plans and prospects, including without limitation, our expectations regarding the potential of the TGFβ program, the potential of apitegromab as a therapy in SMA and the timeline for and progress in developing apitegromab, the potential of SRK-181 as a cancer immunotherapy and the timeline for and progress in developing SRK-181, the potential for our anti-myostatin program as a therapy in cardiometabolic disorders, and liquidity, constitute forward-looking statements and are made under these safe harbor provisions. Some of the forward-looking statements can be identified by the use of forward-looking terms such as "believes," "expects," "may," "will," "should," "could," "seek," "intends," "plans," "estimates," "anticipates," or other comparable terms. Forward-looking statements involve inherent risks and uncertainties, which could cause actual results to differ materially from those in the forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. We urge you to consider the risks and uncertainties discussed in greater detail under the heading "Risk Factors" elsewhere in this Annual Report on Form 10-K in evaluating our forward-looking statements. We have no plans to update our forward-looking statements to reflect events or circumstances after the date of this report. As a result of many factors, including those factors set forth under the heading "Risk Factors" elsewhere in this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Overview We are a late-stage biopharmaceutical company focused on the discovery, development and delivery of innovative medicines for the treatment of serious diseases in which signaling by protein growth factors plays a fundamental role. As a global leader in transforming growth factor beta (“TGFβ”) superfamily biology, our novel understanding of the molecular mechanisms of growth factor activation enabled us to develop a proprietary platform for the discovery and development of monoclonal antibodies that locally and selectively target the precursor, or latent, forms of growth factors. By targeting the signaling proteins at the cellular level and acting in the disease microenvironment, we believe we may avoid the historical dose-limiting safety challenges associated with inhibiting growth factors for therapeutic effect. We believe our focus on biologically validated growth factors may facilitate a more efficient development path. Based on this proprietary and scalable technology platform, we are building a growing portfolio of novel product candidates with the aim of transforming the lives of patients suffering from a wide range of serious diseases, including neuromuscular disorders, cardiometabolic disorders, cancer, fibrosis and iron-restricted anemia. We have discovered and progressed the development of: [[GREPCENT_TABLE]] [["","\u25cf","Apitegromab, an investigational, fully human monoclonal antibody that inhibits myostatin activation by selectively binding the pro- and latent forms of myostatin in skeletal muscle and is being developed for the treatment of SMA. We also believe apitegromab could have potential in the treatment of other neuromuscular disorders where the inhibition of myostatin may be beneficial."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","SRK-439, a novel, preclinical, investigational myostatin inhibitor that has high in vitro affinity for pro- and latent myostatin and maintains myostatin specificity and is being developed for the treatment of cardiometabolic disorders."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","SRK-181, an investigational inhibitor of the activation of latent TGF\u03b21, that is being developed for the treatment of cancers that are resistant to anti-PD-(L)1 antibody therapies."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","SRK-373, a novel, preclinical, investigational TGF\u03b2 inhibitor that selectively inhibits the activation of latent TGF\u03b21 isoform in the context of fibrotic extracellular matrix and that avoids perturbing TGF\u03b21 presented by cells of the immune system and is being developed for the treatment of fibrotic diseases."]] [[/GREPCENT_TABLE]] 110 Table of Contents [[GREPCENT_TABLE]] [["","\u25cf","SRK-256, a novel, preclinical, investigational inhibitor that selectively inhibits RGMc or hemojuvelin, the co-receptor of bone morphogenic protein 6 (\u201cBMP6\u201d) and hence inhibits BMP6 signaling. BMP6 signaling is critical for iron homeostasis and SRK-256 has wide potential applicability in states of iron-restricted anemias."]] [[/GREPCENT_TABLE]] ​ [[GREPCENT_TABLE]] [["","\u25cf","Additional discovery and early preclinical programs related to the selective modulation of growth factor signaling."]] [[/GREPCENT_TABLE]] ​ Our first product candidate, apitegromab, is a highly selective, fully human, monoclonal antibody, with a unique mechanism of action that results in inhibition of the activation of the growth factor, myostatin, in skeletal muscle. Apitegromab is being developed as a potential first muscle-targeted therapy for the treatment of SMA. We completed SAPPHIRE, a pivotal Phase 3 clinical trial to evaluate the efficacy and safety of apitegromab in patients with nonambulatory Type 2 and Type 3 SMA (which is estimated to represent the majority of the current prevalent SMA patient population in the U.S. and Europe) and announced positive top-line results in October 2024. The study achieved its primary endpoint. We submitted a U.S. Biologics License Application to the FDA in January 2025 and are planning to submit a European Union marketing authorization application to the European Medicines Agency (“EMA”) in the first quarter of 2025. If apitegromab is approved, we expect to initiate a commercial product launch in the fourth quarter of 2025 in the United States, with a commercial launch of apitegromab in Europe to follow.  Apitegromab was evaluated in our Phase 2 TOPAZ proof-of-concept clinical trial for the treatment of patients with Type 2 and Type 3 SMA. Positive 12-month top-line results were initially announced in April 2021. We have subsequently presented data from the TOPAZ trial over 24-months (2022), 36-months (2023) and 48-months (2024). At 48-months over 90% of TOPAZ patients with nonambulatory Type 2 and 3 SMA receiving a survival motor neuron (“SMN”) therapy remained on apitegromab treatment and showed sustained clinical benefit, a continued favorable safety profile with no new safety findings. Additionally, we are conducting a long-term extension study, ONYX, for patients from both the TOPAZ and SAPPHIRE studies, who were receiving apitegromab in conjunction with an approved SMN therapy. The FDA granted Fast Track designation, Rare Pediatric Disease designation and Orphan Drug designation to apitegromab for the treatment of SMA in May 2021, August 2020 and March 2018, respectively. The EMA granted Priority Medicines (“PRIME”) designation in March 2021 and the EC granted orphan medicinal product designation in December 2018 to apitegromab for the treatment of SMA. In October 2023, we announced an expansion of our therapeutic focus into cardiometabolic disorders by advancing our anti-myostatin program with SRK-439, a novel, fully human anti-myostatin monoclonal antibody, for evaluation in cardiometabolic disorders, including obesity. We are developing SRK-439 towards a potential IND submission in the third quarter of 2025. In 2024, we presented preclinical data at scientific conferences which support the potential of SRK-439 to increase lean mass and contribute to a favorable body composition in conjunction with a GLP-1 receptor agonist (“GLP-1 RA”) treatment. To inform the development of SRK-439, in May 2024 we initiated the Phase 2 EMBRAZE proof-of-concept trial, designed to assess the safety and efficacy of apitegromab to preserve muscle mass in individuals living with obesity and on background therapy of a GLP-1 RA. In September 2024, we announced that we completed enrollment in the Phase 2 EMRAZE proof-of-concept trial. Top-line results from this trial are expected in the second quarter of 2025. ​ We believe that apitegromab has the potential to be the first muscle-targeted therapy that is aimed at improving motor function in patients with SMA who are receiving an SMN therapy. We also have identified multiple other diseases for which the selective inhibition of the activation of myostatin may offer therapeutic benefit, including additional patient populations in SMA (such as patients with SMA under 2 years of age) and indications for other neuromuscular disorders beyond SMA. Our second product candidate, SRK-181, a highly selective inhibitor of the activation of latent TGFβ, is being developed for the treatment of cancers that are resistant to CPI therapies, such as anti-PD-1 or anti-PD-L1 antibody therapies (referred to together as anti-PD-(L)1 antibody therapies). SRK-181 is being evaluated in our Phase 1 DRAGON proof-of-concept clinical trial in patients with locally advanced or metastatic solid tumors that exhibit resistance to anti-PD-(L)1 antibody therapies. We completed enrollment of the DRAGON trial in December 2023 and continue to treat patients who remain on study. This two-part clinical trial consists of a dose escalation portion (Part A) and a dose expansion portion evaluating SRK-181 in combination with an approved anti-PD-(L)1 antibody therapy (Part B). Part B 111 Table of Contents commenced in 2021 and includes the following active cohorts: urothelial carcinoma, cutaneous melanoma, non-small cell lung cancer, ccRCC, and HNSCC. Safety, efficacy and biomarker data were presented in June 2024 at the ASCO annual meeting and in November 2024 at the SITC 39th Annual Meeting. The data showed encouraging responses in heavily pretreated and anti-PD-(L)1 resistant patients across multiple tumor types. We believe that the DRAGON trial achieved its study objectives by showing objective, durable clinical responses in patients with ccRCC resistant to PD-1 therapy above what is expected from continuing PD-1 alone. We anticipate that emerging data from the DRAGON trial will be presented at medical meetings in the future. ​ Using our innovative approach and proprietary platform, we are creating a pipeline of novel product candidates that selectively modulate the activation of growth factors implicated in a variety of serious diseases, including neuromuscular disorders, cardiometabolic disorders, cancer, fibrosis, and iron-restricted anemia. Our proprietary platform is designed to generate highly selective antibodies that target the growth factor’s latent precursor form prior to its activation within the disease microenvironment, or tissue where it is localized. Our structural insights and unique antibody discovery capabilities can also be applied to other protein classes beyond growth factors, with an aim of generating differentiated candidates targeting cell surface receptors such as immune cell receptors or G-protein coupled receptors, where selectivity remains challenging. ​ We have incurred significant operating losses since inception. Our net losses were $246.3 million for the year ended December 31, 2024. As of December 31, 2024, we had an accumulated deficit of $922.7 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future in performing our ongoing activities, as we: [[GREPCENT_TABLE]] [["","\u25cf","develop our commercialization capabilities to support product sales, marketing and distribution activities;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","continue development activities for apitegromab, including the completion of our Phase 3 SAPPHIRE pivotal clinical trial in SMA, the conduct of ONYX, our long-term extension study for patients from both the TOPAZ and SAPPHIRE studies and the associated drug supply;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","continue research and development activities for SRK-181, including the conduct of our Phase 1 DRAGON proof-of-concept clinical trial;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","continue research and development activities for our cardiometabolic program, including our Phase 2 EMBRAZE proof-of-concept trial with apitegromab and advancing SRK-439 towards a potential IND submission in the third quarter of 2025;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","continue to discover, validate and develop additional product candidates through the use of our proprietary platform;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","maintain, expand and protect our intellectual property portfolio;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","hire additional research, development, commercial and other business personnel; and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","continue to build the infrastructure to support our operations as a public company."]] [[/GREPCENT_TABLE]] ​ To date, we have not generated any revenue from product sales. If we successfully complete clinical development and obtain regulatory approval for apitegromab, SRK-181, SRK-439 or any of our future product candidates, we may generate revenue in the future from product sales. In addition, if we obtain regulatory approval for apitegromab, SRK-181, SRK-439 or any of our future product candidates, we expect to incur significant expenses related to developing our commercialization capabilities to support product sales, marketing and distribution activities. 112 Table of Contents Financial Operations Overview Operating Expenses Research and Development Research and development expenses consist primarily of costs incurred for our research and development activities, including our product candidate discovery efforts, preclinical studies, manufacturing, and clinical trials under our research programs, which include: [[GREPCENT_TABLE]] [["","\u25cf","employee-related expenses, including salaries, benefits and equity-based compensation expense for our research and development personnel;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","expenses incurred under agreements with third parties that conduct research and development and preclinical activities on our behalf;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","expenses incurred under agreements related to our clinical trials, including the costs for investigative sites and contract research organizations (\u201cCROs\u201d), that conduct our clinical trials;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","manufacturing process-development, manufacturing of clinical supplies and technology-transfer expenses;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","consulting and professional fees related to research and development activities;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","costs of purchasing laboratory supplies and non-capital equipment used in our internal research and development activities;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","costs related to compliance with clinical regulatory requirements; and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","facility costs and other allocated expenses, which include expenses for rent and maintenance of facilities, insurance, depreciation and other supplies."]] [[/GREPCENT_TABLE]] ​ Research and development costs are expensed as incurred. Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks. Nonrefundable advance payments for research and development goods and services to be received in the future from third parties are deferred and capitalized. The capitalized amounts are expensed as the related services are performed. A significant portion of our research and development costs have been external costs, which we track on a program-by-program basis after a clinical product candidate has been identified. However, we do not allocate our internal research and development expenses, consisting primarily of employee-related costs, depreciation and other indirect costs, on a program-by-program basis as they are deployed across multiple projects. Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials, as well as the associated clinical trial material requirements. We expect research and development costs for our product candidates to continue to be substantial for the foreseeable future as the development programs progress. However, we do not believe that it is possible at this time to accurately project total program-specific expenses through commercialization. There are numerous factors associated with the successful commercialization of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development programs and plans. The successful development of apitegromab, SRK-181, SRK-439, SRK-373, SRK-256 and any future product candidates is uncertain. Accordingly, at this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the remainder of the development of apitegromab, SRK-181, SRK-439, SRK-373, SRK-256 and any future product candidates. We are also unable to predict when, if ever, 113 Table of Contents material net cash inflows will commence from the sale of our product candidates, if approved. This is due to the numerous risks and uncertainties associated with developing product candidates, including the uncertainty of: [[GREPCENT_TABLE]] [["","\u25cf","the scope, progress, outcome and costs of our preclinical development activities, clinical trials and other research and development activities;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","establishing an appropriate safety profile;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","successful enrollment in and completion of clinical trials;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","whether our product candidates show safety and efficacy in our clinical trials;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","receipt of marketing approvals from applicable regulatory authorities, if any;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","significant and changing government regulation;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","commercializing the product candidates, if and when approved, whether alone or in collaboration with others; and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","continued acceptable safety profile of the products following any regulatory approval."]] [[/GREPCENT_TABLE]] A change in the outcome of any of these variables with respect to the development of apitegromab, SRK-181, SRK-439, SRK-373, SRK-256 or any of our future product candidates could significantly change the costs and timing associated with the development of that product candidate. General and Administrative General and administrative expenses consist primarily of employee-related expenses, including salaries, benefits and equity-based compensation expenses for personnel in executive, finance, business development, investor relations, legal, information technology, human resources and commercial functions. Other significant general and administrative expenses include facility costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters and fees for accounting, consulting services, professional fees and corporate expenses. We expect general and administrative expense to increase as we continue to invest in building the infrastructure to support the commercialization of apitegromab. Other Income (Expense), Net Other income (expense), net consists primarily of interest income earned on our cash, cash equivalents and marketable securities, partially offset by interest expense incurred on our debt facility, including amortization of debt discount and debt issuance costs. 114 Table of Contents 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]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,","\u200b","Change"],["\u200b","","2024","","2023","","$","","%"],["Operating expenses:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Research and development","\u200b","$","184,550","\u200b","$","121,900","\u200b","$","62,650","\u200b","51.4","%"],["General and administrative","\u200b","","67,504","\u200b","","49,395","\u200b","","18,109","\u200b","36.7","%"],["Total operating expenses","\u200b","","252,054","\u200b","","171,295","\u200b","","80,759","\u200b","47.1","%"],["Loss from operations","\u200b","","(252,054)","\u200b","","(171,295)","\u200b","","(80,759)","\u200b","47.1","%"],["Other income (expense), net","\u200b","","5,760","\u200b","","5,506","\u200b","","254","\u200b","4.6","%"],["Net loss","\u200b","$","(246,294)","\u200b","$","(165,789)","\u200b","$","(80,505)","\u200b","48.6","%"]] [[/GREPCENT_TABLE]] ​ ​ Operating Expenses Research and Development Research and development expense was $184.6 million for the year ended December 31, 2024 compared to $121.9 million for the year ended December 31, 2023, an increase of $62.7 million, or 51.4%. The following table summarizes our research and development expense for the years ended December 31, 2024 and 2023 (in thousands, except percentages): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,","\u200b","Change"],["\u200b","","2024","","2023","","$","","%"],["External costs by program:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Apitegromab","\u200b","$","78,290","\u200b","$","40,701","\u200b","$","37,589","\u200b","92.4","%"],["SRK-181","\u200b","\u200b","9,957","\u200b","\u200b","14,200","\u200b","\u200b","(4,243)","\u200b","(29.9)","%"],["SRK-439","\u200b","\u200b","11,638","\u200b","\u200b","631","\u200b","\u200b","11,007","\u200b","1,744.4","%"],["Other early programs and unallocated costs","\u200b","","3,047","\u200b","","5,187","\u200b","","(2,140)","\u200b","(41.3)","%"],["Total external costs","\u200b","","102,932","\u200b","","60,719","\u200b","","42,213","\u200b","69.5","%"],["Internal costs:","\u200b","","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","","\u200b"],["Employee compensation and benefits","\u200b","","64,354","\u200b","\u200b","44,594","\u200b","","19,760","\u200b","44.3","%"],["Facility and other","\u200b","","17,264","\u200b","\u200b","16,587","\u200b","","677","\u200b","4.1","%"],["Total internal costs","\u200b","","81,618","\u200b","","61,181","\u200b","","20,437","\u200b","33.4","%"],["Total research and development expense","\u200b","$","184,550","\u200b","$","121,900","\u200b","$","62,650","\u200b","51.4","%"]] [[/GREPCENT_TABLE]] ​ The increase in research and development expense was primarily attributable to the following: [[GREPCENT_TABLE]] [["","\u25cf","An increase in our external research and development costs of $42.2 million, which primarily consisted of:"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","o","$37.6 million increase in costs associated with apitegromab primarily due to clinical trial costs, particularly the conduct of ONYX, our long-term extension study for patients from both the TOPAZ and SAPPHIRE studies and our Phase 2 EMBRAZE proof-of-concept study (including purchases of"]] [[/GREPCENT_TABLE]] 115 Table of Contents [[GREPCENT_TABLE]] [["","","GLP-1 RA drug), as well as an increase in drug supply manufacturing, including to support lifecycle management initiatives;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","o","$4.2 million decrease in costs associated with SRK-181 mostly due to purchases of pembrolizumab in 2023 which were used in the Phase 1 DRAGON clinical trial;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","o","$11.0 million increase in preclinical costs and manufacturing development for SRK-439; and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","o","$2.1 million decrease in costs in other early development candidates and unallocated costs;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","$20.4 million increase in internal research and development costs, which was primarily driven by an increase in employee related costs, including salaries, benefits and non-cash equity-based compensation expense related to increased headcount, as well as an increase in temporary support expense."]] [[/GREPCENT_TABLE]] Total research and development expenses are expected to continue to be substantial, driven by employee compensation costs and development costs associated with our clinical stage programs as we continue development activities for apitegromab in SMA, including the completion of our Phase 3 SAPPHIRE pivotal clinical trial in SMA, the conduct of ONYX, our long-term extension study for patients from both the TOPAZ and SAPPHIRE studies and the associated drug supply, as well as costs associated with supporting our cardiometabolic program, including our Phase 2 EMBRAZE proof-of-concept trial of apitegromab and our preclinical program, SRK-439. Additionally, we will continue to invest in our pipeline. We expect costs of our SRK-181 program to decrease, as we completed enrollment of the Phase 1 DRAGON clinical trial in December 2023. General and Administrative General and administrative expense was $67.5 million for the year ended December 31, 2024 compared to $49.4 million for the year ended December 31, 2023, an increase of $18.1 million or 36.7%. The increase was primarily associated with employee-related costs including salaries, benefits and non-cash equity-based compensation expense related to increased headcount, in addition to an increase in professional service fees. We expect general and administrative expense to increase as we continue to invest in building the infrastructure to support the commercialization of apitegromab. Other Income (Expense), Net The change in other income (expense), net was primarily attributable to an increase in interest income earned due to higher interest rates and higher average balances in our cash, cash equivalents and marketable securities, partially offset by an increase in interest expense related to the Loan and Security Agreement, also due to higher interest rates. Liquidity and Capital Resources Sources of Liquidity Since our inception, we have not generated any product revenue and have incurred significant operating losses and negative cash flows from our operations. We have funded our operations to date primarily with proceeds from the sale of our convertible preferred stock and units in private placements before our IPO, and issuance of our common stock through our IPO in 2018, to Gilead in an exempt private placement, through multiple secondary public offerings, including our recent follow-on offering in October 2024 (see Note 9) and through at-the-market (“ATM”) sales, as well as payments from our research collaborations and the Loan and Security Agreement entered into in October 2020 and subsequently amended (see Note 13). 116 Table of Contents The following table provides information regarding our total cash, cash equivalents and marketable securities at December 31, 2024 and December 31, 2023 (in thousands): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","December 31,","","December 31,"],["\u200b","\u200b","2024","\u200b","2023"],["Cash and cash equivalents","\u200b","$","177,878","\u200b","$","101,855"],["Marketable securities","\u200b","","259,400","\u200b","","178,083"],["Total cash, cash equivalents and marketable securities","\u200b","$","437,278","\u200b","$","279,938"]] [[/GREPCENT_TABLE]] ​ During the year ended December 31, 2024, our cash, cash equivalents and marketable securities balance increased by $157.3 million. The change was primarily the result of proceeds from our equity offering completed in October 2024 and exercises of stock options and warrants, partially offset by cash used to operate our business, including payments related to, among other things, research and development and general and administrative expenses as we continued to invest in our product candidates and supported our internal research and development efforts and made interest payments on our debt. Our current ATM program, established in November 2022, allows for the sale of shares of our common stock having an aggregate offering price of up to $100 million. As of December 31, 2024, we sold 619,290 shares of our common stock, generating net proceeds of $5.2 million, under the ATM program. No sales were made under the ATM program during the year ended December 31, 2024. In October 2021, we sold 500,000 shares of our common stock through a sale in our prior ATM program (in place between March 2021 and June 2022) and received $13.1 million in net proceeds, after deducting commissions and fees. ​ We have had multiple equity offerings during the period 2019-2024. The most recent few are listed below: ​ In October 2024, we entered into an underwriting agreement with J.P. Morgan Securities LLC, Jefferies LLC and Piper Sandler & Co., as representatives of the several underwriters named therein, relating to the issuance and sale of an aggregate of 11,858,408 shares of our common stock and pre-funded warrants to purchase 353,983 shares of our common stock, which includes the exercise in full by the underwriters of their option to purchase an additional 1,592,920 shares. The offering price per share was $28.25 and the offering price per pre-funded warrant was $28.2499, which equals the per share public offering price for the common shares less the $0.0001 exercise price for each such pre-funded warrant. The offering resulted in estimated proceeds of approximately $324.4 million, net of underwriting discounts and estimated offering expenses (see Note 9). ​ In October 2023, we entered into an underwriting agreement with J.P. Morgan Securities LLC and Piper Sandler & Co., as representatives of the several underwriters named therein, relating to the issuance and sale of an aggregate of 14,270,074 shares of our common stock, which includes the exercise in full by the underwriters of their options to purchase an additional 1,861,314 shares. The offering price per share was $6.85. The offering resulted in proceeds of approximately $92.4 million, net of underwriting discounts and offering expenses. ​ On February 10, 2025, we entered into the Amended and Restated Loan and Security Agreement with Oxford for up to $200 million of which $25.0 million from Tranche 1 was received in October 2020 and $25.0 million from Tranche 2 was received in December 2021 (see Note 13). The Amended and Restated Loan and Security Agreement consolidates the existing outstanding loan tranches solely with Oxford. ​ 117 Table of Contents In December 2018, we entered into the Gilead Collaboration Agreement pursuant to which we conducted research and preclinical development activities relating to the diagnosis, treatment, cure, mitigation or prevention of diseases, disorders or conditions, other than in the field of oncology in accordance with a pre-determined research plan. Pursuant to the Gilead Collaboration Agreement, Gilead made non-refundable payments of $80.0 million, including an upfront payment and an equity investment. In December 2019, we achieved a $25.0 million preclinical milestone for the successful demonstration of efficacy in preclinical in vivo proof-of-concept studies, and subsequently received the associated payment in January 2020. Revenue was recognized during the period January 2019 through December 2021, as research and development services were provided. All revenue related to the Gilead Collaboration Agreement had been fully recognized by January 31, 2022, upon the termination of Gilead’s option exercise period. During the year ended December 31, 2024, 2,526,833 of the Company’s pre-funded warrants were exercised. As of December 31, 2024, the Company had 17,362,147 pre-funded warrants outstanding. During the year ended December 31, 2024, 1,309,492 of the Company’s common warrants were exercised. As of December 31, 2024, the Company had 8,678,664 common warrants outstanding. Cash Flows The following table provides information regarding our cash flows for the years ended December 31, 2024 and 2023 (in thousands): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,"],["\u200b","","2024","","2023"],["Net cash used in operating activities","\u200b","$","(200,949)","\u200b","$","(145,226)"],["Net cash (used in) provided by investing activities","\u200b","","(76,056)","\u200b","","41,141"],["Net cash provided by financing activities","\u200b","","353,028","\u200b","","102,574"],["Net increase (decrease) in cash, cash equivalents and restricted cash","\u200b","$","76,023","\u200b","$","(1,511)"]] [[/GREPCENT_TABLE]] ​ Net Cash Used in Operating Activities Net cash used in operating activities was $200.9 million for the year ended December 31, 2024, and consisted of our net loss of $246.3 million, changes in our assets and liabilities of $6.6 million, partially offset by non-cash adjustments of $38.8 million. The non-cash adjustments are primarily from equity-based compensation. Net cash used in operating activities was $145.2 million for the year ended December 31, 2023, and consisted of our net loss of $165.8 million, changes in our assets and liabilities of $10.6 million, partially offset by non-cash adjustments of $31.2 million. The non-cash adjustments are primarily from equity-based compensation. Net Cash (Used in) Provided by Investing Activities Net cash used in investing activities was $76.1 million for the year ended December 31, 2024, compared to net cash provided by investing activities of $41.1 million for the year ended December 31, 2023. Net cash used in and provided by investing activities for both periods was primarily associated with transactions involved in the routine management of our marketable securities. Net Cash Provided by Financing Activities Net cash provided by financing activities was $353.0 million for the year ended December 31, 2024, compared to $102.6 million for the year ended December 31, 2023. Net cash provided by financing activities for the year ended December 31, 2024 was primarily attributable to net proceeds from an equity offering completed in October 2024, in addition to stock option and warrant exercises. Net cash provided by financing activities for the year ended December 31, 2023 was primarily attributable to net proceeds from an equity offering completed in October 2023. 118 Table of Contents Funding Requirements We expect our expenses to be substantial as we continue the research and development of apitegromab in SMA. In addition, we will seek marketing approval for apitegromab, and if we seek marketing approval for any of our future product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. We expect to continue to incur costs related to SRK-181 as we continue to treat patients who remain on the Phase 1 DRAGON clinical trial. We expect to incur costs to support our cardiometabolic program, including our Phase 2 EMBRAZE proof-of-concept trial of apitegromab and our preclinical program, SRK-439. Additionally, we will support the development of our pipeline and any other preclinical programs. Furthermore, we expect to continue to incur costs associated with operating as a public company. We expect that our existing cash, cash equivalents, marketable securities and cash available to us will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2026. However, we will require additional capital in order to complete clinical development and commercialization for each of our current programs. We have based this estimate on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Our future capital requirements will depend on many factors, including: [[GREPCENT_TABLE]] [["","\u25cf","the costs and timing of developing our product candidates and future product candidates, including costs associated with apitegromab in our Phase 3 SAPPHIRE clinical trial in SMA and ONYX, our long-term extension study in SMA for patients from both the TOPAZ and SAPPHIRE studies, our Phase 2 EMBRAZE proof-of-concept trial for apitegromab in our cardiometabolic program, our Phase 1 DRAGON clinical trial for SRK-181, and the costs and timing of conducting future preclinical studies and clinical trials for SRK-439 or any other product candidates;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the costs of future manufacturing of apitegromab, SRK-181, SRK-439, SRK-373, SRK-256 and any other future product candidates;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the scope, progress, results and costs of discovery, preclinical development, laboratory testing and clinical trials for other potential product candidates we may develop, if any;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the costs of identifying and developing, or in-licensing or acquiring, additional product candidates and technologies;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the costs, timing and outcome of regulatory review of our product candidates;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","our ability to establish and maintain collaborations on favorable terms, if at all;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements, license agreements, or other agreements we might have at such time;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the costs of seeking marketing approvals for our product candidates that successfully complete clinical trials, including apitegromab in SMA;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the costs and timing of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","our headcount growth and associated costs as we expand our business operations and research and development activities;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the costs of supporting our infrastructure and facilities, including equipment and physical infrastructure to support our research and development;"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the costs of operating as a public company; and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the impact of adverse global economic conditions on our business, which may exacerbate the magnitude of the factors discussed above."]] [[/GREPCENT_TABLE]] ​ 119 Table of Contents Identifying potential product candidates and 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 and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. 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. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, common stockholder ownership interests may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights of a common stockholder. Additional debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. Market volatility or other factors could also adversely impact our ability to access capital as and when needed. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Critical Accounting Estimates This management’s discussion and analysis is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues 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 to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of change in estimates. Our actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing elsewhere in this report, we believe that the following accounting estimates are those most critical to the judgments used in the preparation of our consolidated financial statements. They involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our finance condition or result of operations. Research and Development Expenses and related Accruals/Prepaids As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued expenses as of each balance sheet date. This process involves reviewing open contracts and purchase orders, communicating with our personnel and/or reviewing other third-party sources to identify the progress of services that has been performed on our behalf, as well as invoices received and contracted costs. This contributes to estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers 120 Table of Contents and make adjustments if necessary. The significant estimates in our accrued research and development expenses include the costs incurred for services performed by our vendors in connection with research and development activities for which we have not yet been invoiced. In certain instances, we prepay for services to be provided in the future. These amounts are expensed as the services are performed. We base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development 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 services provided and result in a prepayment of the research and development expense. In accruing service 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 prepaid balance accordingly. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Although we do not expect our estimates to be materially different from amounts incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts incurred. The accrued research and development expenses at the end of each year are generally paid during the following year and therefore the same estimates and assumptions do not continue to exist each year, although, as described above, the method and procedures to develop those estimates and assumptions are generally consistent. Recent Accounting Pronouncements We have reviewed all recently issued standards and have determined that, other than Recently Issued Accounting Pronouncements as disclosed in Note 2 to our audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, such standards will not have a material impact on our financial statements or do not otherwise apply to our operations.