☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
04-3475813
|
||
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Accelerated filer ☒
|
|
Non-accelerated filer ☐
|
Smaller reporting company ☒
|
Emerging growth company ☒
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
Common Stock, $0.01 par value
|
RCKT
|
Nasdaq Global Market
|
Page
|
||
Item 1.
|
4
|
|
4
|
||
5
|
||
6
|
||
7
|
||
8
|
||
9
|
||
Item 2.
|
18
|
|
Item 3.
|
29
|
|
Item 4.
|
29
|
|
PART II - OTHER INFORMATION
|
||
Item 1.
|
29
|
|
Item 1A.
|
29
|
|
Item 2.
|
54
|
|
Item 3.
|
54
|
|
Item 4.
|
54
|
|
Item 5.
|
54
|
|
Item 6.
|
55
|
|
56
|
•
|
federal, state, and non-U.S. regulatory requirements, including regulation of our current or any other future product candidates by the U.S. Food and Drug Administration (“FDA”);
|
|
•
|
the timing of and our ability to submit regulatory filings to the FDA and to obtain and maintain FDA or other regulatory authority approval of our product candidates;
|
|
•
|
our competitors’ activities, including decisions as to the timing of competing product launches, generic entrants, pricing and discounting;
|
|
•
|
whether safety and efficacy results of our clinical trials and other required tests for approval of our product candidates provide data to warrant progression of clinical trials, potential regulatory approval or
further development of any of our product candidates;
|
|
•
|
our ability to develop, acquire and advance product candidates into, and successfully complete, clinical studies, and our ability to apply for and obtain regulatory approval for such product candidates, within
currently anticipated timeframes, or at all;
|
|
•
|
our ability to establish key collaborations and vendor relationships for our product candidates and any other future product candidates;
|
|
•
|
our ability to successfully develop and commercialize any technology that we may in-license or products we may acquire;
|
|
•
|
unanticipated delays due to manufacturing difficulties, supply constraints or changes in the regulatory environment;
|
|
•
|
our ability to successfully operate in non-U.S. jurisdictions in which we currently or in the future may do business, including compliance with applicable regulatory requirements and laws;
|
|
•
|
uncertainties associated with obtaining and enforcing patents to protect our product candidates, and our ability to successfully defend ourselves against unforeseen third-party infringement claims;
|
|
•
|
anticipated trends and challenges in our business and the markets in which we operate;
|
|
•
|
our estimates regarding our capital requirements; and
|
|
•
|
our ability to obtain additional financing and raise capital as necessary to fund operations or pursue business opportunities.
|
September 30,
2019
|
December 31,
2018
|
|||||||
Assets
|
(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
89,195
|
$
|
111,355
|
||||
Investments
|
151,366
|
94,375
|
||||||
Prepaid expenses and other assets
|
5,030
|
3,358
|
||||||
Total current assets
|
245,591
|
209,088
|
||||||
Property and equipment, net
|
19,270
|
2,027
|
||||||
Goodwill
|
30,815
|
30,815
|
||||||
Restricted cash
|
1,525
|
1,436
|
||||||
Deposits
|
455
|
545
|
||||||
Operating lease right-of-use assets
|
2,254
|
-
|
||||||
Investments
|
-
|
7,402
|
||||||
Total assets
|
$
|
299,910
|
$
|
251,313
|
||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
21,246
|
$
|
15,372
|
||||
Operating lease liabilities, current
|
935
|
-
|
||||||
Total current liabilities
|
22,181
|
15,372
|
||||||
Convertible notes, net of unamortized discount
|
44,097
|
41,447
|
||||||
Operating lease liabilities, non-current
|
1,691
|
-
|
||||||
Other liabilities
|
23
|
457
|
||||||
Total liabilities
|
67,992
|
57,276
|
||||||
Commitments and contingencies (Note 11)
|
||||||||
Stockholders’ equity:
|
||||||||
Preferred stock, $0.01 par value, authorized 5,000,000 shares:
|
||||||||
Series A convertible preferred stock; 300,000 shares designated as Series A; 0 shares issued and outstanding
|
-
|
-
|
||||||
Series B convertible preferred stock; 300,000 shares designated as Series B; 0 shares issued and outstanding
|
-
|
-
|
||||||
Common stock, $0.01 par value, 120,000,000 shares authorized; 50,376,030 and 45,194,736 shares issued at September 30, 2019 and December 31, 2018, respectively
|
503
|
452
|
||||||
Treasury stock, at cost, 22,308 and 50,000 common shares at September 30, 2019 and December 31, 2018, respectively
|
(344
|
)
|
(668
|
)
|
||||
Additional paid-in capital
|
394,930
|
300,253
|
||||||
Accumulated other comprehensive income (loss)
|
117
|
(127
|
)
|
|||||
Accumulated deficit
|
(163,288
|
)
|
(105,873
|
)
|
||||
Total stockholders’ equity
|
231,918
|
194,037
|
||||||
Total liabilities and stockholders’ equity
|
$
|
299,910
|
$
|
251,313
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Revenue
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
14,829
|
13,065
|
43,955
|
29,590
|
||||||||||||
General and administrative
|
4,336
|
2,268
|
12,547
|
15,021
|
||||||||||||
Total operating expenses
|
19,165
|
15,333
|
56,502
|
44,611
|
||||||||||||
Loss from operations
|
(19,165
|
)
|
(15,333
|
)
|
(56,502
|
)
|
(44,611
|
)
|
||||||||
Research and development incentives
|
-
|
-
|
250
|
186
|
||||||||||||
Interest expense
|
(1,466
|
)
|
(1,176
|
)
|
(4,615
|
)
|
(4,010
|
)
|
||||||||
Interest and other income, net
|
979
|
420
|
2,522
|
1,236
|
||||||||||||
Accretion of discount on investments
|
368
|
-
|
930
|
-
|
||||||||||||
Net loss
|
$
|
(19,284
|
)
|
$
|
(16,089
|
)
|
$
|
(57,415
|
)
|
$
|
(47,199
|
)
|
||||
Net loss per share attributable to common stockholders - basic and diluted
|
$
|
(0.38
|
)
|
$
|
(0.40
|
)
|
$
|
(1.19
|
)
|
$
|
(1.22
|
)
|
||||
Weighted-average common shares outstanding - basic and diluted
|
50,364,649
|
39,900,551
|
48,270,771
|
38,598,304
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Net loss
|
$
|
(19,284
|
)
|
$
|
(16,089
|
)
|
$
|
(57,415
|
)
|
$
|
(47,199
|
)
|
||||
Other comprehensive loss
|
||||||||||||||||
Net unrealized gain (loss) on investments
|
(27
|
)
|
(128
|
)
|
244
|
(207
|
)
|
|||||||||
Total comprehensive loss
|
$
|
(19,311
|
)
|
$
|
(16,217
|
)
|
$
|
(57,171
|
)
|
$
|
(47,406
|
)
|
Additional
|
Accumulated Other
|
Total
|
||||||||||||||||||||||||||
Common Stock
|
Treasury
|
Paid-In
|
Comprehensive
|
Accumulated
|
Stockholders'
|
|||||||||||||||||||||||
Shares
|
Amount
|
Stock
|
Capital
|
Income (Loss)
|
Deficit
|
Equity
|
||||||||||||||||||||||
Balance at December 31, 2018
|
45,194,736
|
$
|
452
|
$
|
(668
|
)
|
$
|
300,253
|
$
|
(127
|
)
|
$
|
(105,873
|
)
|
$
|
194,037
|
||||||||||||
Issuance of common stock pursuant to exercise of stock options
|
19,701
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Stock repurchase
|
-
|
-
|
(725
|
)
|
(2
|
)
|
-
|
-
|
(727
|
)
|
||||||||||||||||||
Retirement of treasury stock
|
(100,000
|
)
|
(1
|
)
|
1,393
|
(1,392
|
)
|
-
|
-
|
-
|
||||||||||||||||||
Unrealized comprehensive gain on marketable securities
|
-
|
-
|
-
|
-
|
38
|
-
|
38
|
|||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
3,180
|
-
|
-
|
3,180
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(19,451
|
)
|
(19,451
|
)
|
|||||||||||||||||||
Balance at March 31, 2019
|
45,114,437
|
451
|
-
|
302,039
|
(89
|
)
|
(125,324
|
)
|
177,077
|
|||||||||||||||||||
Issuance of common stock, net of issuance costs
|
5,175,000
|
52
|
-
|
86,028
|
-
|
-
|
86,080
|
|||||||||||||||||||||
Issuance of common stock pursuant to exercise of stock options
|
42,998
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Net exercise of options
|
-
|
-
|
(344
|
)
|
-
|
-
|
-
|
(344
|
)
|
|||||||||||||||||||
Unrealized comprehensive gain on marketable securities
|
-
|
-
|
-
|
-
|
233
|
-
|
233
|
|||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
4,138
|
-
|
-
|
4,138
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(18,680
|
)
|
(18,680
|
)
|
|||||||||||||||||||
Balance at June 30, 2019
|
50,332,435
|
503
|
(344
|
)
|
392,205
|
144
|
(144,004
|
)
|
248,504
|
|||||||||||||||||||
Issuance of common stock pursuant to exercise of stock options
|
43,595
|
-
|
-
|
31
|
-
|
-
|
31
|
|||||||||||||||||||||
Unrealized comprehensive loss on marketable securities
|
-
|
-
|
-
|
-
|
(27
|
)
|
-
|
(27
|
)
|
|||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
2,694
|
-
|
-
|
2,694
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(19,284
|
)
|
(19,284
|
)
|
|||||||||||||||||||
Balance at September 30, 2019
|
50,376,030
|
$
|
503
|
$
|
(344
|
)
|
$
|
394,930
|
$
|
117
|
$
|
(163,288
|
)
|
$
|
231,918
|
Series A Convertible
Preferred Shares |
Series B Convertible
Preferred Shares
|
Common Stock
|
Treasury
|
Paid-In
|
Comprehensive
|
Accumulated
|
Stockholders'
|
|||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Stock
|
Capital
|
Income(Loss)
|
Deficit
|
Equity
|
||||||||||||||||||||||||||||||||||
Balance at December 31, 2017
|
128,738
|
$
|
16,060
|
126,909
|
$
|
25,406
|
6,795,627
|
$
|
68
|
$
|
-
|
$
|
5,340
|
$
|
-
|
$
|
(31,355
|
)
|
$
|
15,519
|
||||||||||||||||||||||||
Conversion of convertible preferred stock into common stock
|
(128,738
|
)
|
(16,060
|
)
|
(126,909
|
)
|
(25,406
|
)
|
19,475,788
|
194
|
-
|
41,272
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||
Exchange of common stock in connection with the Merger
|
- |
- | - | - |
6,805,608
|
68
|
-
|
85,992
|
-
|
-
|
86,060
|
|||||||||||||||||||||||||||||||||
Issuance of common stock, net of issuance costs of $5.3 million
|
- | - | - | - |
6,325,000
|
63
|
-
|
78,455
|
-
|
-
|
78,518
|
|||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to settlement of restricted stock units
|
- | - | - | - |
1,875
|
1
|
-
|
(1
|
)
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Unrealized comprehensive gain on marketable securities
|
- | - | - | - |
-
|
-
|
-
|
-
|
10
|
-
|
10
|
|||||||||||||||||||||||||||||||||
Stock-based compensation
|
- | - | - | - |
-
|
-
|
-
|
5,382
|
-
|
-
|
5,382
|
|||||||||||||||||||||||||||||||||
Net loss
|
- | - | - | - |
-
|
-
|
-
|
-
|
-
|
(15,343
|
)
|
(15,343
|
)
|
|||||||||||||||||||||||||||||||
Balance at March 31, 2018
|
-
|
-
|
-
|
-
|
39,403,898
|
394
|
-
|
216,440
|
10
|
(46,698
|
)
|
170,146
|
||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to settlement of restricted stock units
|
-
|
-
|
-
|
-
|
41,093
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to settlement of stock option exercises
|
-
|
-
|
-
|
-
|
61,536
|
1
|
-
|
(1
|
)
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Unrealized comprehensive loss on marketable securities
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(89
|
)
|
-
|
(89
|
)
|
|||||||||||||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2,786
|
-
|
-
|
2,786
|
|||||||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(15,767
|
)
|
(15,767
|
)
|
|||||||||||||||||||||||||||||||
Balance at June 30, 2018
|
-
|
-
|
-
|
-
|
39,506,527
|
395
|
-
|
219,225
|
(79
|
)
|
(62,465
|
)
|
157,076
|
|||||||||||||||||||||||||||||||
Issuance of common stock pursuant to settlement of restricted stock units
|
-
|
-
|
-
|
-
|
75,625
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||||||
Issuance of common stock pursuant to settlement of stock option exercises
|
-
|
-
|
-
|
-
|
253,348
|
3
|
-
|
146
|
-
|
-
|
149
|
|||||||||||||||||||||||||||||||||
Unrealized comprehensive loss on marketable securities
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(128
|
)
|
-
|
(128
|
)
|
|||||||||||||||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2,612
|
-
|
-
|
2,612
|
|||||||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(16,089
|
)
|
(16,089
|
)
|
|||||||||||||||||||||||||||||||
Balance at September 30, 2018
|
-
|
$
|
-
|
-
|
$
|
-
|
39,835,500
|
$
|
398
|
$
|
-
|
$
|
221,983
|
$
|
(207
|
)
|
$
|
(78,554
|
)
|
$
|
143,620
|
Nine Months Ended September 30,
|
||||||||
2019
|
2018
|
|||||||
Operating Activities:
|
||||||||
Net loss
|
$
|
(57,415
|
)
|
$
|
(47,199
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Accretion of discount on convertible notes
|
2,650
|
2,241
|
||||||
Increase in lease liability
|
-
|
(180
|
)
|
|||||
Depreciation expense
|
325
|
233
|
||||||
Stock-based compensation expense
|
10,012
|
10,780
|
||||||
Loss on disposal of property and equipment
|
-
|
312
|
||||||
Accretion of discount on investments
|
(835
|
)
|
(484
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Prepaid expenses and other assets
|
(1,583
|
)
|
511
|
|||||
Accounts payable and accrued expenses
|
1,978
|
812
|
||||||
Operating lease liabilities
|
(62
|
)
|
-
|
|||||
Net cash used in operating activities
|
(44,930
|
)
|
(32,974
|
)
|
||||
Investing activities:
|
||||||||
Cash acquired in connection with the Reverse Merger
|
-
|
76,348
|
||||||
Purchases of investments
|
(150,246
|
)
|
(141,087
|
)
|
||||
Proceeds from maturities of investments
|
101,736
|
41,255
|
||||||
Proceeds from sale of property and equipment
|
-
|
20
|
||||||
Purchases of property and equipment
|
(14,015
|
)
|
(570
|
)
|
||||
Payment of security deposit
|
-
|
(287
|
)
|
|||||
Net cash used in investing activities
|
(62,525
|
)
|
(24,321
|
)
|
||||
Financing activities:
|
||||||||
Proceeds from issuance of common stock, net of issuance costs
|
86,080
|
78,518
|
||||||
Proceeds from exercise of options
|
31
|
149
|
||||||
Common stock repurchase
|
(727
|
)
|
-
|
|||||
Net cash provided by financing activities
|
85,384
|
78,667
|
||||||
Net change in cash, cash equivalents and restricted cash
|
(22,071
|
)
|
21,372
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
112,791
|
18,349
|
||||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
90,720
|
$
|
39,721
|
||||
Supplemental disclosure of non-cash financing and investing activities:
|
||||||||
Accrued purchases of property and equipment
|
$
|
3,535
|
$
|
-
|
||||
Retirement of treasury stock
|
$
|
1,393
|
$
|
-
|
||||
Net exercise of options
|
$
|
344
|
$
|
-
|
||||
Unrealized gain (loss) on investments
|
$
|
244
|
$
|
(207
|
)
|
|||
Conversion of convertible preferred stock into common stock
|
$
|
-
|
$
|
41,466
|
||||
Supplemental cash flow information:
|
||||||||
Cash paid for interest
|
$
|
2,990
|
$
|
2,990
|
||||
Cash paid for income taxes
|
$
|
-
|
$
|
2
|
1. |
Nature of Business
|
2. |
Risks and Liquidity
|
3. |
Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Policies
|
September 30,
2019
|
December 31,
2018
|
|||||||
Cash and cash equivalents
|
$
|
89,195
|
$
|
111,355
|
||||
Restricted cash
|
1,525
|
1,436
|
||||||
$
|
90,720
|
$
|
112,791
|
4. |
Fair Value of Financial Instruments
|
Fair Value Measurements as of
September 30, 2019 Using:
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Money market mutual funds (included in cash and cash equivalents)
|
$
|
45,496
|
$
|
-
|
$
|
-
|
$
|
45,496
|
||||||||
United States Treasury securities (included in cash and cash equivalents)
|
9,985
|
-
|
-
|
9,985
|
||||||||||||
|
55,481
|
-
|
-
|
55,481
|
||||||||||||
|
||||||||||||||||
United States Treasury securities
|
102,133
|
-
|
-
|
102,133
|
||||||||||||
Government Bonds
|
-
|
13,991
|
-
|
13,991
|
||||||||||||
Corporate Bonds
|
-
|
26,242
|
-
|
26,242
|
||||||||||||
Municipal Bonds
|
-
|
9,000
|
-
|
9,000
|
||||||||||||
Investments
|
102,133
|
49,233
|
-
|
151,366
|
||||||||||||
$
|
157,614
|
$
|
49,233
|
$
|
-
|
$
|
206,847
|
Fair Value Measurements as of
December 31, 2018 Using:
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Money market mutual funds (included in cash and cash equivalents)
|
$
|
30,552
|
$
|
-
|
$
|
-
|
$
|
30,552
|
||||||||
United States Treasury securities
|
101,777
|
-
|
-
|
101,777
|
||||||||||||
Investments
|
101,777
|
-
|
-
|
101,777
|
||||||||||||
$
|
132,329
|
$
|
-
|
$
|
-
|
$
|
132,329
|
5. |
Property and Equipment
|
|
September 30,
2019
|
December 31,
2018
|
||||||
Laboratory equipment
|
$
|
1,850
|
$
|
1,556
|
||||
Leasehold improvements
|
29
|
29
|
||||||
Furniture and fixtures
|
274
|
273
|
||||||
Computer equipment
|
179
|
179
|
||||||
Construction costs in progress
|
17,742
|
469
|
||||||
20,074
|
2,506
|
|||||||
Less: accumulated depreciation
|
(804
|
)
|
(479
|
)
|
||||
|
$
|
19,270
|
$
|
2,027
|
6. |
Accounts Payable and Accrued Expenses
|
September 30,
2019 |
December 31,
2018 |
|||||||
Research and development
|
$
|
13,730
|
$
|
10,414
|
||||
Construction in progress
|
3,552
|
-
|
||||||
Government grant payable
|
555
|
534
|
||||||
Professional fees
|
730
|
690
|
||||||
Accrued interest
|
493
|
1,241
|
||||||
Bonus
|
1,543
|
1,774
|
||||||
Accrued vacation
|
280
|
130
|
||||||
Other
|
363
|
589
|
||||||
$
|
21,246
|
$
|
15,372
|
$
|
52,000
|
|||
Discount
|
(7,903
|
)
|
||
Carrying value as of September 30, 2019
|
$
|
44,097
|
Nine Months Ended September 30,
|
||||||||
2019
|
2018
|
|||||||
Risk-free interest rate
|
2.40
|
%
|
2.61
|
%
|
||||
Expected term (in years)
|
5.79
|
5.78
|
||||||
Expected volatility
|
75.13
|
%
|
88.30
|
%
|
||||
Expected dividend yield
|
0.00
|
%
|
0.00
|
%
|
||||
Exercise price
|
$
|
14.42
|
$
|
17.76
|
||||
Fair value of common stock
|
$
|
14.42
|
$
|
17.76
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Contractual
Term (Years)
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Outstanding as of December 31, 2018
|
8,615,997
|
$
|
4.48
|
7.51
|
$
|
94,474
|
||||||||||
Granted
|
1,397,616
|
14.42
|
9.58
|
|||||||||||||
Exercised
|
(106,294
|
)
|
1.72
|
1,110
|
||||||||||||
Cancelled
|
(298,782
|
)
|
7.49
|
|||||||||||||
Outstanding as of September 30, 2019
|
9,608,537
|
$
|
5.85
|
7.30
|
$
|
88,855
|
||||||||||
Options vested and exercisable as of September 30, 2019
|
7,143,825
|
$
|
2.87
|
6.72
|
$
|
84,535
|
||||||||||
Options unvested as of September 30, 2019
|
2,464,712
|
$
|
14.48
|
9.06
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Research and development
|
$
|
893
|
$
|
2,223
|
$
|
4,711
|
$
|
5,075
|
||||||||
General and administrative
|
1,801
|
389
|
5,301
|
5,705
|
||||||||||||
Total stock based compensation expense
|
$
|
2,694
|
$
|
2,612
|
$
|
10,012
|
$
|
10,780
|
9. |
Stockholders’ Equity
|
10. |
Net Loss Per Share
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net loss
|
$
|
(19,284
|
)
|
$
|
(16,089
|
)
|
$
|
(57,415
|
)
|
$
|
(47,199
|
)
|
||||
Denominator:
|
||||||||||||||||
Weighted-average common shares outstanding - basic and diluted
|
50,364,649
|
39,900,551
|
48,270,771
|
38,598,304
|
||||||||||||
Net loss per share- basic and diluted
|
$
|
(0.38
|
)
|
$
|
(0.40
|
)
|
$
|
(1.19
|
)
|
$
|
(1.22
|
)
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Shares issuable upon conversion of the 2021 Convertible Notes
|
1,620,948
|
1,620,948
|
1,620,948
|
1,620,948
|
||||||||||||
Warrants exercisable for common shares
|
14,102
|
14,102
|
14,102
|
14,102
|
||||||||||||
Options to purchase common shares
|
9,608,537
|
8,475,802
|
9,608,537
|
8,475,802
|
||||||||||||
11,243,587
|
10,110,852
|
11,243,587
|
10,110,852
|
Maturity of lease liabilities
|
September 30, 2019
|
|||
2019 (remaining three months)
|
$
|
344
|
||
2020
|
1,150
|
|||
2021
|
894
|
|||
2022
|
572
|
|||
2023
|
74
|
|||
Total lease payments
|
$
|
3,033
|
||
Less: interest
|
(290
|
)
|
||
Total operating lease liabilities
|
$
|
2,743
|
2019 (remaining three months)
|
$
|
788
|
||
2020
|
2,405
|
|||
2021
|
2,162
|
|||
2022
|
1,876
|
|||
2023
|
1,738
|
|||
Thereafter
|
22,143
|
|||
Total
|
$
|
31,113
|
Leases
|
September 30, 2019
|
|||
Operating right-of-use assets
|
$
|
2,254
|
||
Operating current lease liabilities
|
1,052
|
|||
Operating noncurrent lease liabilities
|
1,691
|
|||
Total operating lease liabilities
|
$
|
2,743
|
Other information
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||
Operating cash flows from operating leases
|
$
|
838
|
||
Weighted-average remaining lease term - operating leases
|
2.7 years
|
|||
Weighted-average discount rate - operating leases
|
7.77
|
%
|
12. |
Agreements Related to Intellectual Property
|
14. |
CIRM Grant
|
15. |
Related Party Transactions
|
16. |
401(k) Savings Plan
|
• |
expenses incurred under agreements with research institutions that conduct research and development activities including, process development, preclinical, and clinical activities on Rocket’s behalf;
|
• |
costs related to process development, production of preclinical and clinical materials, including fees paid to contract manufacturers and manufacturing input costs for use in internal manufacturing
processes;
|
• |
consultants supporting process development and regulatory activities; and
|
• |
costs related to in-licensing of rights to develop and commercialize our product candidate portfolio.
|
• |
salaries and personnel-related costs, including benefits, travel and stock-based compensation, for our scientific personnel performing research and development activities;
|
• |
facilities and other expenses, which include expenses for rent and maintenance of facilities, and depreciation expense and;
|
• |
laboratory supplies and equipment used for internal research and development activities.
|
• |
the scope, rate of progress, and expense of ongoing as well as any future clinical studies and other research and development activities that we undertake;
|
• |
future clinical study results;
|
• |
uncertainties in clinical study enrollment rates;
|
• |
changing standards for regulatory approval; and
|
• |
the timing and receipt of any regulatory approvals.
|
• |
the scope, progress, outcome and costs of our clinical trials and other research and development activities;
|
• |
the efficacy and potential advantages of our product candidates compared to alternative treatments, including any standard of care;
|
• |
the market acceptance of our product candidates;
|
• |
obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;
|
• |
significant and changing government regulation; and
|
• |
the timing, receipt and terms of any marketing approvals.
|
|
Three Months Ended September 30,
|
|||||||||||
|
2019
|
2018
|
Change
|
|||||||||
Operating expenses:
|
||||||||||||
Research and development
|
$
|
14,829
|
$
|
13,065
|
$
|
1,764
|
||||||
General and administrative
|
4,336
|
2,268
|
2,068
|
|||||||||
Total operating expenses
|
19,165
|
15,333
|
3,832
|
|||||||||
Loss from operations
|
(19,165
|
)
|
(15,333
|
)
|
(3,832
|
)
|
||||||
Research and development incentives
|
-
|
-
|
-
|
|||||||||
Interest expense
|
(1,466
|
)
|
(1,176
|
)
|
(290
|
)
|
||||||
Interest and other income net
|
979
|
420
|
559
|
|||||||||
Accretion of discount on investments
|
368
|
-
|
368
|
|||||||||
Total other expense net
|
(119
|
)
|
(756
|
)
|
637
|
|||||||
Net loss
|
$
|
(19,284
|
)
|
$
|
(16,089
|
)
|
$
|
(3,195
|
)
|
Nine Months Ended September 30,
|
||||||||||||
2019
|
2018
|
Change
|
||||||||||
Operating expenses:
|
||||||||||||
Research and development
|
$
|
43,955
|
$
|
29,590
|
$
|
14,365
|
||||||
General and administrative
|
12,547
|
15,021
|
(2,474
|
)
|
||||||||
Total operating expenses
|
56,502
|
44,611
|
11,891
|
|||||||||
Loss from operations
|
(56,502
|
)
|
(44,611
|
)
|
(11,891
|
)
|
||||||
Research and development incentives
|
250
|
186
|
64
|
|||||||||
Interest expense
|
(4,615
|
)
|
(4,010
|
)
|
(605
|
)
|
||||||
Interest and other income net
|
2,522
|
1,236
|
1,286
|
|||||||||
Accretion of discount on investments
|
930
|
-
|
930
|
|||||||||
Total other expense net
|
(913
|
)
|
(2,588
|
)
|
1,675
|
|||||||
Net loss
|
$
|
(57,415
|
)
|
$
|
(47,199
|
)
|
$
|
(10,216
|
)
|
Nine Months Ended September 30,
|
||||||||
2019
|
2018
|
|||||||
Cash used in operating activities
|
$
|
(44,930
|
)
|
$
|
(32,974
|
)
|
||
Cash used in investing activities
|
(62,525
|
)
|
(24,321
|
)
|
||||
Cash provided by financing activities
|
85,384
|
78,667
|
||||||
Net change in cash, cash equivalents and restricted cash
|
$
|
(22,071
|
)
|
$
|
21,372
|
• |
leverage our programs to advance other product candidates into preclinical and clinical development;
|
• |
seek regulatory agreements to initiate clinical trials in the EU, US and ROW;
|
• |
establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which Rocket may obtain marketing approval and intend to commercialize on its own or
jointly;
|
• |
hire additional preclinical, clinical, regulatory, quality and scientific personnel;
|
• |
expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a
public company;
|
• |
maintain, expand and protect our intellectual property portfolio; and
|
• |
acquire or in-license other product candidates and technologies.
|
• |
the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical studies and clinical trials;
|
• |
the costs, timing and outcome of regulatory review of our product candidates;
|
• |
the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;
|
• |
the costs of manufacturing commercial-grade product to support commercial launch;
|
• |
the ability to receive additional non-dilutive funding, including grants from organizations and foundations;
|
• |
the revenue, if any, received from commercial sale of its products, should any of its product candidates receive marketing approval;
|
• |
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
|
• |
our ability to establish and maintain collaborations on favorable terms, if at all;
|
• |
the extent to which we acquire or in-license other product candidates and technologies; and
|
• |
the timing, receipt and amount of sales of, or milestone payments related to our royalties on, current or future product candidates, if any.
|
• |
the timing of enrollment, commencement, completion and results of our clinical trials;
|
• |
the production of LVV and AAV gene therapy products to support preclinical and clinical needs;
|
• |
the results of our preclinical studies for our current product candidates and any subsequent clinical trials;
|
• |
the scope, progress, results and costs of drug discovery, laboratory testing, preclinical development and clinical trials, if any, for our internal product candidates; the costs associated with building out
additional laboratory and research capacity;
|
• |
the costs, timing and outcome of regulatory review of our product candidates;
|
• |
the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;
|
• |
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;
|
• |
our current licensing agreements or collaborations remaining in effect;
|
• |
our ability to establish and maintain additional licensing agreements or collaborations on favorable terms, if at all;
|
• |
the extent to which we acquire or in-license other product candidates and technologies; and
|
• |
the costs associated with being a public company.
|
• |
completing research and preclinical and clinical development of our product candidates;
|
• |
seeking and obtaining regulatory and marketing approvals for product candidates for which we complete clinical studies;
|
• |
developing a sustainable, commercial-scale, reproducible, and transferable manufacturing process for our vectors and product candidates;
|
• |
establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate (in amount and quality) products and services to support clinical development and the market
demand for our product candidates, if approved;
|
• |
launching and commercializing product candidates for which we obtain regulatory and marketing approval, either by collaborating with a partner or, if launched independently, by establishing a sales force,
marketing and distribution infrastructure;
|
• |
obtaining sufficient pricing and reimbursement for our product candidates from private and governmental payors
|
• |
obtaining market acceptance of our product candidates and gene therapy as a viable treatment option;
|
• |
addressing any competing technological and market developments;
|
• |
identifying and validating new gene therapy product candidates;
|
• |
negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; and
|
• |
maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how.
|
• |
failure of patients to enroll in the studies at the rate we expect;
|
• |
ineffectiveness of our product candidates;
|
• |
patients experiencing unexpected side effects or other safety concerns being raised during treatment;
|
• |
changes in governmental regulations or administrative actions;
|
• |
failure to conduct studies in accordance with required clinical practices;
|
• |
inspection of clinical study operations or study sites by the FDA, the EMA or other regulatory authorities, resulting in a clinical hold;
|
• |
insufficient financial resources;
|
• |
insufficient supplies of drug product to treat the patients in the studies;
|
• |
political unrest at foreign clinical sites;
|
• |
a shutdown of the U.S. government, including the FDA; or
|
• |
natural disasters at any of our clinical sites.
|
• |
difficulty in establishing or managing relationships with CROs, and physicians;
|
• |
different standards for the conduct of clinical trials;
|
• |
absence in some countries of established groups with sufficient regulatory expertise for review of LVV and AAV gene therapy protocols;
|
• |
our inability to locate qualified local partners or collaborators for such clinical trials; and
|
• |
the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatment.
|
• |
severity of the disease under investigation;
|
• |
design of the study protocol;
|
• |
size of the patient population;
|
• |
eligibility criteria for the study in question;
|
• |
perceived risks and benefits of the product candidate under study, including as a result of adverse effects observed in similar or competing therapies;
|
• |
proximity and availability of clinical study sites for prospective patients;
|
• |
availability of competing therapies and clinical studies;
|
• |
efforts to facilitate timely enrollment in clinical studies;
|
• |
patient referral practices of physicians; and
|
• |
ability to monitor patients adequately during and after treatment.
|
• |
issue a warning letter asserting that we are in violation of the law;
|
• |
seek an injunction or impose civil or criminal penalties or monetary fines;
|
• |
suspend any ongoing clinical studies;
|
• |
refuse to approve a pending marketing application, such as a BLA or supplements to a BLA submitted by us;
|
• |
seize products; or
|
• |
refuse to allow us to enter into supply contracts, including government contracts.
|
• |
regulatory authorities may suspend or withdraw approvals of such product candidate;
|
• |
regulatory authorities may require additional warnings on the label;
|
• |
we may be required to change the way a product candidate is administered or conduct additional clinical trials; and
|
• |
our reputation may suffer.
|
• |
some or all of our product candidates may be found to be unsafe or ineffective or otherwise fail to meet applicable regulatory standards or receive necessary regulatory clearances;
|
• |
our product candidates, if safe and effective, may nonetheless not be able to be developed into commercially viable products;
|
• |
it may be difficult to manufacture or market our product candidates on a scale that is necessary to ultimately deliver our products to end-users;
|
• |
proprietary rights of third parties may preclude us from marketing our product candidates;
|
• |
the nature of our indications as rare diseases means that the potential market size may be limited; and
|
• |
third parties may market superior or equivalent drugs which could adversely affect the commercial viability and success of our product candidates.
|
• |
the inability to negotiate manufacturing agreements with third parties under commercially reasonable terms;
|
• |
reduced control as a result of using third-party manufacturers for all aspects of manufacturing activities;
|
• |
the risk that these activities are not conducted in accordance with our study plans and protocols;
|
• |
termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; and
|
• |
disruptions to the operations of our third-party manufacturers or suppliers caused by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier.
|
• |
the efficacy and safety of such product candidates as demonstrated in preclinical studies and clinical trials;
|
• |
the potential and perceived advantages of product candidates over alternative treatments;
|
• |
the cost of our treatment relative to alternative treatments;
|
• |
the clinical indications for which the product candidate is approved by the FDA or the EMA;
|
• |
patient awareness of, and willingness to seek, gene therapy;
|
• |
the willingness of physicians to prescribe new therapies;
|
• |
the willingness of physicians to undergo specialized training with respect to administration of our product candidates;
|
• |
the willingness of the target patient population to try new therapies;
|
• |
the prevalence and severity of any side effects;
|
• |
product labeling or product insert requirements of the FDA, the EMA or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling;
|
• |
relative convenience and ease of administration;
|
• |
the strength of marketing and distribution support;
|
• |
the timing of market introduction of competitive products;
|
• |
publicity concerning our products or competing products and treatments; and
|
• |
sufficient third-party payor coverage and reimbursement.
|
• |
different regulatory requirements for approval of drugs and biologics in foreign countries;
|
• |
reduced protection for intellectual property rights;
|
• |
unexpected changes in tariffs, trade barriers and regulatory requirements;
|
• |
economic weakness, including inflation, or political instability in particular foreign economies and markets;
|
• |
compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
|
• |
foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;
|
• |
workforce uncertainty in countries where labor unrest is more common than in the United States;
|
• |
shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;
|
• |
business interruptions resulting from geopolitical actions, including war and terrorism or natural disasters including earthquakes, typhoons, floods and fires, or from economic or political instability;
|
• |
compliance with foreign laws, regulations, standards and regulatory guidance governing the collection, use, disclosure, retention, security and transfer of personal data, including the European Union General
Data Privacy Regulation (“GDPR”); and
|
• |
greater difficulty with enforcing our contracts in jurisdictions outside of the United States.
|
• |
The Medicaid Drug Rebate Program requires pharmaceutical manufacturers to enter into and have in effect a national rebate agreement with the Secretary of the U.S. Department of Health and Human Services in
exchange for state Medicaid coverage of most of the manufacturer’s drugs. The ACA made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’ rebate liability by raising the minimum
basic Medicaid rebate on most branded prescription drugs and biologic agents to 23.1% of average manufacturer price (“AMP”) and adding a new rebate calculation for “line extensions” (i.e., new formulations, such as extended release
formulations) of solid oral dosage forms of branded products, as well as potentially impacting their rebate liability by modifying the statutory definition of AMP.
|
• |
The ACA expanded the types of entities eligible to receive discounted 340B pricing, although, with the exception of children’s hospitals, these newly eligible entities will not be eligible to receive
discounted 340B pricing on orphan drugs used in orphan indications. In addition, because 340B pricing is determined based on AMP and Medicaid drug rebate data, the revisions to the Medicaid rebate formula and AMP definition described
above could cause the required 340B discounts to increase. The ACA imposed a requirement on manufacturers of branded drugs and biologic agents to provide a 50% discount off the negotiated price of branded drugs dispensed to Medicare
Part D beneficiaries in the coverage gap (i.e., “donut hole”).
|
• |
The ACA imposed an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market
share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications.
|
• |
The ACA included the Federal Physician Payments Sunshine Act, which requires certain pharmaceutical manufacturers of drugs, devices, biologics and medical supplies for which payment is available under
Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exception, to track certain financial arrangements with physicians and teaching hospitals, including any “transfer of value” provided, as well as any
ownership or investment interests held by physicians and their immediate family members. Covered manufacturers were required to begin collecting data on August 1, 2013 and submit reports on aggregate payment data to CMS for the first
reporting period (August 1, 2013—December 31, 2013) by March 31, 2014, and were required to report detailed payment data for the first reporting period and submit legal attestation to the completeness and accuracy of such data by June
30, 2014. Thereafter, covered manufacturers must submit reports by the 90th day of each subsequent calendar year. The information reported was made publicly available on a searchable website in September 2014.
|
• |
The ACA established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. The
research conducted by the Patient-Centered Outcomes Research Institute may affect the market for certain pharmaceutical products.
|
• |
The ACA created the Independent Payment Advisory Board which has the authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments
for prescription drugs. Under certain circumstances, these recommendations will become law unless Congress enacts legislation that will achieve the same or greater Medicare cost savings.
|
• |
The ACA established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to improve quality of care and lower program costs of Medicare, Medicaid
and the Children’s Health Insurance Program, potentially including prescription drug spending. Funding has been allocated to support the mission of the Center for Medicare and Medicaid Innovation through 2019.
|
• |
the scope of rights granted under the license agreement;
|
• |
whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;
|
• |
our right to sublicense patent and other intellectual property rights to third parties under collaborative development relationships;
|
• |
our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence
obligations;
|
• |
the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and
|
• |
whether and the extent to which inventors are able to contest to the assignment of their rights to our licensors.
|
• |
the scope of rights granted under the license agreement and other interpretation-related issues;
|
• |
the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;
|
• |
the sublicensing of patent and other rights under our collaborative development relationships;
|
• |
our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
|
• |
the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and
|
• |
the priority of invention of patented technology.
|
• |
results of clinical trials of our product candidates or those of our competitors;
|
• |
the success of competitive products or technologies;
|
• |
commencement or termination of collaborations;
|
• |
regulatory or legal developments in the United States and other countries;
|
• |
developments or disputes concerning patent applications, issued patents or other proprietary rights;
|
• |
the recruitment or departure of key personnel;
|
• |
the level of expenses related to any of our product candidates or clinical development programs;
|
• |
the results of our efforts to discover, develop, acquire or in-license additional product candidates;
|
• |
actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
|
• |
negative publicity around gene therapy in general, or our product candidates;
|
• |
variations in our financial results or those of companies that are perceived to be similar to us;
|
• |
changes in the structure of healthcare payment systems;
|
• |
market conditions in the pharmaceutical and biotechnology sectors; and
|
• |
general economic, industry and market conditions.
|
Exhibit
Number
|
Description of Exhibit
|
|
Agreement and Plan of Merger and Reorganization, dated as of September 12, 2017, by and among Inotek Pharmaceuticals Corporation, Rocket Pharmaceuticals, Ltd. and Rome Merger Sub (incorporated by reference to
Exhibit 2.1 to the Company’s Current Report on Form 8-K (001-36829), filed with the SEC on September 13, 2017)
|
||
3.1 |
Seventh Amended and Restated Certificate of Incorporation of Rocket Pharmaceuticals, Inc., effective as of February 23, 2015 (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K
(001-36829), filed with the SEC on March 31, 2015)
|
|
3.2 |
Certificate of Amendment (Reverse Stock Split) to the Seventh Amended and Restated Certificate of Incorporation of the Registrant, effective as of January 4, 2018 (incorporated by reference to Exhibit 3.1 to the
Company’s Current Report on Form 8-K (001-36829), filed with the SEC on January 5, 2018)
|
|
3.3 |
Certificate of Amendment (Name Change) to the Seventh Amended and Restated Certificate of Incorporation of the Registrant, effective January 4, 2018 (incorporated by reference to Exhibit 3.2 to the Company’s
Current Report on Form 8-K (001-36829), filed with the SEC on January 5, 2018)
|
|
3.4 |
Certificate of Amendment to the Seventh Amended and Restated Certificate of Incorporation of the Registrant, effective as of June 25, 2018 (incorporated by reference to Exhibit 3.1 to the Company’s Current
Report on Form 8-K (001-36829), filed with the SEC on June 25, 2018)
|
|
3.5 |
Amended and Restated By-Laws of Rocket Pharmaceuticals, Inc., effective as of March 29, 2018 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, (001-36829), filed with the SEC
on April 4, 2018)
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
101.INS
|
XBRL Instance Document.
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Document.
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Link Document.
|
* |
Filed herewith.
|
ROCKET PHARMACEUTICALS, INC.
|
||
November 8, 2019
|
By:
|
/s/ Gaurav Shah, MD
|
Gaurav Shah, MD
|
||
President, Chief Executive Officer and Director
|
||
(Principal Executive Officer)
|
||
November 8., 2019
|
By:
|
/s/ Kamran Alam
|
Kamran Alam
|
||
SVP, Finance
|
||
(Principal Financial Officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2019 of Rocket Pharmaceuticals, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial
reporting.
|
Date: November 8, 2019
|
/s/ Gaurav Shah, MD
|
Gaurav Shah, MD
|
|
President, Chief Executive Officer and Director
|
|
(Principal Executive Officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2019 of Rocket Pharmaceuticals, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial
reporting.
|
Date: November 8, 2019
|
/s/ Kamran Alam
|
Kamran Alam
|
|
SVP, Finance
|
|
(Principal Financial Officer)
|
1) |
the Report which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended;
and
|
2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: November 8, 2019
|
/s/ Gaurav Shah, MD
|
Gaurav Shah, MD
|
|
President, Chief Executive Officer and Director
|
|
(Principal Executive Officer)
|
|
Date: November 8, 2019
|
/s/ Kamran Alam
|
Kamran Alam
|
|
SVP, Finance
|
|
(Principal Financial Officer)
|
Accounts Payable and Accrued Expenses |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses |
At September 30, 2019 and December 31, 2018, the Company’s accounts payable and accrued expenses consisted of the following:
|
Risks and Liquidity |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2019 | |||
Risks and Liquidity [Abstract] | |||
Risks and Liquidity |
The Company has not generated any revenue and has incurred losses since inception. The Company’s operations are subject to certain risks and uncertainties, including, among others, uncertainty of drug candidate development, technological uncertainty, uncertainty regarding patents and proprietary rights, lack of commercial manufacturing experience, a lack of marketing or sales capability or experience, dependency on key personnel, compliance with government regulations and the need to obtain additional financing. Drug candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance-reporting capabilities. The Company’s product candidates are in the development and clinical stages. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies. The Company’s consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. The Company has experienced negative cash flows from operations and had an accumulated deficit of $163.3 million as of September 30, 2019. As of September 30, 2019, the Company had $240.6 million of cash, cash equivalents and investments. During the nine months ended September 30, 2019, the Company received net proceeds of $86.1 million from the completion on April 18, 2019 of a public offering of 5,175,000 shares of common stock. Rocket expects such resources will be sufficient to fund its operating expenses and capital expenditure requirements into the first half of 2021. In the longer term, the future viability of the Company is dependent on its ability to generate cash from operating activities or to raise additional capital to finance its operations. The Company’s failure to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies. |
Net Loss Per Share |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share |
Basic and diluted net loss per share attributable to common stockholders was calculated as follows:
The Company excluded the following potential shares of common stock, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:
|
Commitments and Contingencies (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Lease Cost | Variable lease components represent amounts that are not fixed in nature and are not tied to an index or rate, and are recognized as incurred.
|
|||||||||||||||||||||||||||||||||||||||||||||
Maturities of Lease Liabilities | The following table summarizes the maturity of the Company’s lease liabilities on an undiscounted cash flow basis and a reconciliation to the operating lease liabilities recognized on our balance sheet as of September 30, 2019:
|
|||||||||||||||||||||||||||||||||||||||||||||
Future Annual Minimum Lease Payment Commitments | The following disclosure is provided for periods prior to adoption of ASU 2016-02. Future annual minimum lease payment commitments, including the NJ Lease Agreement, as of September 30, 2019 were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Information Related to Operating Lease |
|
|||||||||||||||||||||||||||||||||||||||||||||
Lease Related to Cash Flow Information, Lease Term and Discount Rate |
|
Property and Equipment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Property and Equipment [Abstract] | |||||
Property and equipment, Gross | $ 20,074 | $ 20,074 | $ 2,506 | ||
Less: accumulated depreciation | (804) | (804) | (479) | ||
Property and equipment, net | 19,270 | 19,270 | 2,027 | ||
Depreciation expense | 100 | $ 100 | 325 | $ 233 | |
Laboratory Equipment [Member] | |||||
Property and Equipment [Abstract] | |||||
Property and equipment, Gross | 1,850 | 1,850 | 1,556 | ||
Leasehold Improvements [Member] | |||||
Property and Equipment [Abstract] | |||||
Property and equipment, Gross | 29 | 29 | 29 | ||
Furniture and Fixtures [Member] | |||||
Property and Equipment [Abstract] | |||||
Property and equipment, Gross | 274 | 274 | 273 | ||
Computer Equipment [Member] | |||||
Property and Equipment [Abstract] | |||||
Property and equipment, Gross | 179 | 179 | 179 | ||
Construction Costs in Progress [Member] | |||||
Property and Equipment [Abstract] | |||||
Property and equipment, Gross | $ 17,742 | $ 17,742 | $ 469 |
Nature of Business |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2019 | |||
Nature of Business [Abstract] | |||
Nature of Business |
Rocket Pharmaceuticals, Inc., together with its subsidiaries (collectively, “Rocket” or the “Company”), is a clinical-stage, multi-platform biotechnology company focused on the development of first or best-in-class gene therapies, with direct on-target mechanism of action and clear clinical endpoints, for rare and devastating pediatric diseases. The Company has clinical-stage lentiviral vector (“LVV”) programs currently undergoing clinical testing for Fanconi Anemia (“FA”), a genetic defect in the bone marrow that reduces production of blood cells or promotes the production of faulty blood cells, Leukocyte Adhesion Deficiency-I (“LAD-I” ), a genetic disorder that causes the immune system to malfunction and Pyruvate Kinase Deficiency (“PKD”), a rare red blood cell autosomal recessive disorder that results in chronic non-spherocytic hemolytic anemia. FA has been in clinical stage testing in the European Union (“EU”) since 2016, and in the United States (“U.S.”) since the first quarter of 2019. Rocket received investigational new drug (“IND”) clearance for both FA and LAD-I in late 2018 and PKD in the third quarter of 2019. Rocket also has a pre-clinical stage LVV program for Infantile Malignant Osteopetrosis (“IMO”), a genetic disorder characterized by increased bone density and bone mass secondary to impaired bone resorption. In addition, the Company has a clinical stage adeno-associated virus (“AAV”) program for Danon disease, a multi-organ lysosomal-associated disorder leading to early death due to heart failure. The Company has global commercialization and development rights to all of its product candidates under royalty-bearing license agreements, with the exception of the CRISPR/Cas9 development program for which the Company currently only has development rights. |
Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Policies (Tables) |
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Restricted Cash | Restricted cash consists of deposits collateralizing letters of credit issued by a bank in connection with the Company’s operating leases (see Note 11 “Commitments and Contingencies” for additional disclosures) and a deposit collateralizing a letter of credit issued by a bank supporting the Company’s Corporate Credit Card. Cash, cash equivalents and restricted cash consist of the following:
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Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Consolidated Statements of Comprehensive Loss (Unaudited) [Abstract] | ||||
Net loss | $ (19,284) | $ (16,089) | $ (57,415) | $ (47,199) |
Other comprehensive loss | ||||
Net unrealized gain (loss) on investments | (27) | (128) | 244 | (207) |
Total comprehensive loss | $ (19,311) | $ (16,217) | $ (57,171) | $ (47,406) |
Document and Entity Information - shares |
9 Months Ended | |
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Sep. 30, 2019 |
Nov. 04, 2019 |
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Cover [Abstract] | ||
Entity Registrant Name | ROCKET PHARMACEUTICALS, INC. | |
Entity Central Index Key | 0001281895 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Common Stock, Shares Outstanding | 50,376,030 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Address, State or Province | NY |
CIRM Grant |
9 Months Ended | ||
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Sep. 30, 2019 | |||
CIRM Grant [Abstract] | |||
CIRM Grant |
On April 30, 2019, the Company announced that CIRM awarded Rocket up to a $6.5 million CLIN2 grant award to support the clinical development of gene therapy for LAD-I. Proceeds from the grant will help fund clinical trial costs as well as manufactured drug product for Phase I/II patients enrolled at the U.S. clinical site, University of California, Los Angeles (“UCLA”) Mattel Children’s Hospital, led by principal investigator Donald Kohn, M.D., UCLA Professor of Microbiology, Immunology and Molecular Genetics, Pediatrics (Hematology/Oncology), Molecular and Medical Pharmacology and member of the Eli and Edythe Broad Center of Regenerative Medicine and Stem Cell Research at UCLA. The CIRM grant receipts were treated as an offset against R&D expenses as reimbursable expenses are incurred. As of September 30, 2019, the Company recorded a receivable and reduction of R&D expenses of $0.4 million for the reimbursable expenses incurred for the three months ended September 30, 2019. |
Related Party Transactions (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Member of the Board of Directors - One [Member] | ||||
Related Party Transaction [Abstract] | ||||
Related party expenses | $ 0 | $ 68,000 | $ 3,600 | $ 200,000 |
Member of the Board of Directors - Two [Member] | ||||
Related Party Transaction [Abstract] | ||||
Related party expenses | $ 27,500 | $ 27,500 | 82,500 | $ 82,500 |
Business development consulting services expense (per quarter) | $ 27,500 | |||
Termination notice period for business development consulting services agreement | 14 days |
Fair Value of Financial Instruments (Tables) |
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Fair Value of Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments Measured on Recurring Basis | Items measured at fair value on a recurring basis are the Company’s investments. The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy:
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Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Consolidated Statements of Operations (Unaudited) [Abstract] | ||||
Revenue | $ 0 | $ 0 | $ 0 | $ 0 |
Operating expenses: | ||||
Research and development | 14,829 | 13,065 | 43,955 | 29,590 |
General and administrative | 4,336 | 2,268 | 12,547 | 15,021 |
Total operating expenses | 19,165 | 15,333 | 56,502 | 44,611 |
Loss from operations | (19,165) | (15,333) | (56,502) | (44,611) |
Research and development incentives | 0 | 0 | 250 | 186 |
Interest expense | (1,466) | (1,176) | (4,615) | (4,010) |
Interest and other income, net | 979 | 420 | 2,522 | 1,236 |
Accretion of discount on investments | 368 | 0 | 930 | 0 |
Net loss | $ (19,284) | $ (16,089) | $ (57,415) | $ (47,199) |
Net loss per share attributable to common stockholders - basic and diluted (in dollars per share) | $ (0.38) | $ (0.40) | $ (1.19) | $ (1.22) |
Weighted-average common shares outstanding - basic and diluted (in shares) | 50,364,649 | 39,900,551 | 48,270,771 | 38,598,304 |
Related Party Transactions |
9 Months Ended | ||
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Sep. 30, 2019 | |||
Related Party Transactions [Abstract] | |||
Related Party Transactions |
During March 2018, the Company entered into a consulting agreement with a member of the Board of Directors for strategic and corporate consulting services to be provided to the Company. The Company incurred expenses of $3,600 and $0.2 million during the nine months ended September 30, 2019 and 2018, respectively and expenses of $0 and $68,000 during the three months ended September 30, 2019 and 2018, respectively relating to services provided under this consulting agreement. During April 2018, the Company entered into a consulting agreement with a member of the Board of Directors for business development consulting services. Payments for the services under the agreement are $27,500 per quarter, and the Company may terminate the agreement with 14 days’ notice. The Company incurred expenses of $82,500 for the nine months ended September 30, 2019 and 2018, respectively and $27,500 for the three months ended September 30, 2019 and 2018, respectively, relating to services provided under this consulting agreement. |
CIRM Grant (Details) - USD ($) $ in Millions |
Sep. 30, 2019 |
Jun. 30, 2019 |
Apr. 30, 2019 |
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Additional Information of CIRM Grant [Abstract] | |||
Grant award for clinical development support | $ 6.5 | ||
Receivable of offset grants against expenses | $ 0.4 | $ 1.1 |
Commitments and Contingencies |
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Commitments and Contingencies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies |
Operating Leases On August 14, 2018, Rocket entered into a lease for office space, process development, research activities and manufacturing to support the Company’s pipeline in Cranbury, NJ (the “NJ Lease Agreement”). The NJ Lease Agreement was subsequently amended on June 26, 2019. The amendment to the NJ Lease Agreement increased the space rented by the Company by 11,720 square feet to 103,720 square feet and adjusted the lease payment date of rent for the full building (“Lease Payment Date”) to September 1, 2019. The NJ Lease Agreement has a term of 15 years from the Lease Payment Date, with an option to renew for two consecutive five-year renewal terms. The NJ Lease Agreement commencement had not yet occurred at September 30, 2019, since the construction of all landlord owned improvements had not been completed, therefore the right of use asset and lease liability have not been recorded as of September 30, 2019 for this lease. Estimated rent payments are $1.2 million per annum, payable in monthly installments, depending upon the nature of the leased space, and subject to annual base rent increases of 3%. The total commitment under the lease is estimated to be approximately $29.3 million over the 15-year term of the lease. The Company delivered a cash security deposit of $0.3 million to the landlord in connection with the NJ Lease Agreement which has been reflected in deposits in the consolidated balance sheets. The Company entered into the lease prior to the building being available for use as the building construction was not complete. The total restricted cash balance for the Company’s operating leases at September 30, 2019 and December 31, 2018 was $1.0 million and $1.4 million, respectively. The Company determines if an arrangement is a lease at inception. Operating leases are included in our balance sheet as right-of-use assets from operating leases, current operating lease liabilities and long-term operating lease liabilities. Certain of the Company’s lease agreements contain renewal options; however, the Company does not recognize right-of-use assets or lease liabilities for renewal periods unless it is determined that the Company is reasonably certain of renewing the lease at inception or when a triggering event occurs. As the Company’s leases do not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments. The Company has utilized its incremental borrowing rate based on the long -term borrowing costs of comparable companies in the biotechnology industry. Since the Company elected to account for each lease component and its associated non-lease components as a single combined lease component, all contract consideration was allocated to the combined lease component. Some of the Company’s lease agreements contain rent escalation clauses (including index-based escalations). The Company recognizes the minimum rental expense on a straight-line basis based on the fixed components of a lease arrangement. The Company will amortize this expense over the term of the lease beginning with the lease commencement date. Variable lease components represent amounts that are not fixed in nature and are not tied to an index or rate, and are recognized as incurred.
The following table summarizes the maturity of the Company’s lease liabilities on an undiscounted cash flow basis and a reconciliation to the operating lease liabilities recognized on our balance sheet as of September 30, 2019:
The following disclosure is provided for periods prior to adoption of ASU 2016-02. Future annual minimum lease payment commitments, including the NJ Lease Agreement, as of September 30, 2019 were as follows:
Rent expense was $0.6 million and $0.6 million for the nine months ended September 30, 2019 and 2018, respectively. Rent expense was $0.1 million and $0.1 million for the three months ended September 30, 2019 and 2018, respectively. Litigation From time to time, the Company may be subject to other various legal proceedings and claims that arise in the ordinary course of its business activities. Although the results of litigation and claims cannot be predicted with certainty, the Company does not believe it is party to any other claim or litigation the outcome of which, if determined adversely to the Company, would individually or in the aggregate be reasonably expected to have a material adverse effect on its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. Indemnification Arrangements Pursuant to its bylaws and as permitted under Delaware law, the Company has indemnification obligations to directors, officers, employees or agents of the Company or anyone serving in these capacities. The maximum potential amount of future payments the Company could be required to pay is unlimited. The Company has insurance that reduces its monetary exposure and would enable it to recover a portion of any future amounts paid. As a result, the Company believes that the estimated fair value of these indemnification commitments is minimal. Throughout the normal course of business, the Company has agreements with vendors that provide goods and services required by the Company to run its business. In some instances, vendor agreements include language that requires the Company to indemnify the vendor from certain damages caused by the Company’s use of the vendor’s goods and/or services. The Company has insurance that would allow it to recover a portion of any future amounts that could arise from these indemnifications. As a result, the Company believes that the estimated fair value of these indemnification commitments is minimal. |
Debt |
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Debt [Abstract] | ||||||||||||||||||
Debt |
On January 4, 2018, in connection with its reverse merger, the Company assumed the obligations of Inotek Pharmaceuticals Corporation (“Inotek”) under its outstanding convertible notes, with an aggregate principal value of $52.0 million, (the “2021 Convertible Notes”). The 2021 Convertible Notes were issued in 2016 and mature on August 1, 2021 (the “Maturity Date”). The 2021 Convertible Notes are unsecured, and accrue interest at a rate of 5.75% per annum and interest is payable semi-annually on February 1 and August 1 of each year. Each holder of the 2021 Convertible Notes (“Holder”) has the option until the close of business on the second business day immediately preceding the Maturity Date to convert all, or any portion, of the 2021 Convertible Notes held by it at a conversion rate of 31.1876 shares of the Company’s common stock per $1.00 principal amount of 2021 Convertible Notes (the “Conversion Rate”) which is $32.08 per share. The Conversion Rate is subject to adjustment from time to time upon the occurrence of certain events, including the issuance of stock dividends and payment of cash dividends. The Company, at its option, may redeem for cash all or any portion of the 2021 Convertible Notes if the last reported sale price of a share of the Company’s common stock is equal to or greater than 200% of the conversion price for the 2021 Convertible Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending within the five trading days immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the 2021 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The 2021 Convertible Notes are considered a hybrid financial instrument consisting of a fixed interest rate “host” and various embedded features that required evaluation as potential embedded derivatives under FASB ASC 815, Derivatives and Hedging (“ASC 815”). Based on the nature of the host instrument and the embedded features, management concluded that none of the conversion, put and redemption features required bifurcation and separate accounting from the host instrument. The Company determined that the Additional Interest was an embedded derivative that contains non-credit related events of default. As a result, the Additional Interest feature required bifurcation and separate accounting under ASC 815. Based on the amount of Additional Interest that would be owed and the likelihood of occurrence, Rocket estimated the fair value of the Additional Interest feature to be insignificant upon issuance and as of September 30, 2019 and December 31, 2018. As of September 30, 2019, the stated interest rate was 5.75%, and the effective interest rate was 15.3%. The table below summarizes the carrying value of the 2021 Convertible Notes as of September 30, 2019:
Accretion of the 2021 Convertible Notes discount was $0.9 million and $2.6 million for the three and nine months ended September 30, 2019, respectively. Accretion of the 2021 Convertible Notes discount was $0.8 million and $2.2 million for the three and nine months ended September 30, 2018, respectively. |
Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Policies |
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Policies |
Basis of Presentation The accompanying unaudited interim consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2018 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 8, 2019 (“2018 Form 10-K”). The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2019 and the results of its operations and its cash flows for the three and nine months ended September 30, 2019 and 2018. The financial data and other information disclosed in these consolidated notes related to the three and nine months ended September 30, 2019 and 2018 are unaudited. The results for the three and nine months ended September 30, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019 and any other interim periods or any future year or period. Principles of Consolidation The consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiaries in conformity with accounting principles generally accepted in the United States (“US GAAP”). All intercompany accounts have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include but are not limited to goodwill impairment, the accrual of research and development (“R&D”) expenses, the valuation of equity transactions and stock-based awards. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Actual results could differ from those estimates. Significant Accounting Policies The significant accounting policies used in the preparation of these consolidated financial statements for the three and nine months ended September 30, 2019 are consistent with those disclosed in Note 3 to the consolidated financial statements in the 2018 Form 10-K, except as noted below. Cash, Cash Equivalents and Restricted Cash Cash, cash equivalents and restricted cash consists of bank deposits, certificates of deposit and money market accounts with financial institutions. Cash equivalents are carried at cost which approximates fair value due to their short-term nature and which the Company believes do not have a material exposure to credit risk. The Company considers all highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. The Company’s cash and cash equivalent accounts, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. Restricted cash consists of deposits collateralizing letters of credit issued by a bank in connection with the Company’s operating leases (see Note 11 “Commitments and Contingencies” for additional disclosures) and a deposit collateralizing a letter of credit issued by a bank supporting the Company’s Corporate Credit Card. Cash, cash equivalents and restricted cash consist of the following:
Leases The Company adopted ASU 2016-02, Leases (“ASU 2016-02”), as amended, on January 1, 2019, which supersedes the prior leasing guidance and upon adoption, requires lessees to recognize right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Upon the adoption of the guidance, operating leases were capitalized on the balance sheet at the present value of lease payments. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 was calculated using the applicable incremental borrowing rate at the date of adoption. In adopting ASU 2016-02, the Company elected the available package of practical expedients which allows the Company to not reassess previous accounting conclusions around whether arrangements are or contain leases, the classification of leases, and the treatment of initial direct costs. The Company also made an accounting policy election to utilize the short-term lease exemption, whereby leases with a term of 12 months or less will not follow the recognition and measurement requirements of the new standard. Upon adoption, the Company recognized total right-of-use assets of $2.6 million, with corresponding liabilities of $3.1 million on the consolidated balance sheets, including the reclassification of $0.5 million from deferred rent to right-of-use assets. See Note 11 “Commitments and Contingencies” for additional disclosures in accordance with the new lease standard. Government Grants Research and development expense is presented net of reimbursements from the California Institute for Regenerative Medicine (“CIRM”), which are recognized over the period necessary to match the reimbursement with the related costs when it is probable that the Company has complied with the CIRM conditions and will receive the reimbursement. During the nine months ended September 30, 2019, we offset $1.1 million of grant funds against research and development expenses (See Note 14 “CIRM Grant” for additional disclosure). |
Net Loss Per Share (Tables) |
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Net Loss Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Net Loss Per Share | Basic and diluted net loss per share attributable to common stockholders was calculated as follows:
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Antidilutive Securities Excluded from Computation of Diluted Net Loss Per Share | The Company excluded the following potential shares of common stock, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:
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Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2019 | |
Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2018 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 8, 2019 (“2018 Form 10-K”). The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2019 and the results of its operations and its cash flows for the three and nine months ended September 30, 2019 and 2018. The financial data and other information disclosed in these consolidated notes related to the three and nine months ended September 30, 2019 and 2018 are unaudited. The results for the three and nine months ended September 30, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019 and any other interim periods or any future year or period. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements represent the consolidation of the accounts of the Company and its subsidiaries in conformity with accounting principles generally accepted in the United States (“US GAAP”). All intercompany accounts have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include but are not limited to goodwill impairment, the accrual of research and development (“R&D”) expenses, the valuation of equity transactions and stock-based awards. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Actual results could differ from those estimates. |
Significant Accounting Policies | Significant Accounting Policies The significant accounting policies used in the preparation of these consolidated financial statements for the three and nine months ended September 30, 2019 are consistent with those disclosed in Note 3 to the consolidated financial statements in the 2018 Form 10-K, except as noted below. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash Cash, cash equivalents and restricted cash consists of bank deposits, certificates of deposit and money market accounts with financial institutions. Cash equivalents are carried at cost which approximates fair value due to their short-term nature and which the Company believes do not have a material exposure to credit risk. The Company considers all highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. The Company’s cash and cash equivalent accounts, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. |
Leases | Leases The Company adopted ASU 2016-02, Leases (“ASU 2016-02”), as amended, on January 1, 2019, which supersedes the prior leasing guidance and upon adoption, requires lessees to recognize right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Upon the adoption of the guidance, operating leases were capitalized on the balance sheet at the present value of lease payments. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 was calculated using the applicable incremental borrowing rate at the date of adoption. In adopting ASU 2016-02, the Company elected the available package of practical expedients which allows the Company to not reassess previous accounting conclusions around whether arrangements are or contain leases, the classification of leases, and the treatment of initial direct costs. The Company also made an accounting policy election to utilize the short-term lease exemption, whereby leases with a term of 12 months or less will not follow the recognition and measurement requirements of the new standard. Upon adoption, the Company recognized total right-of-use assets of $2.6 million, with corresponding liabilities of $3.1 million on the consolidated balance sheets, including the reclassification of $0.5 million from deferred rent to right-of-use assets. See Note 11 “Commitments and Contingencies” for additional disclosures in accordance with the new lease standard. |
Government Grants | Government Grants Research and development expense is presented net of reimbursements from the California Institute for Regenerative Medicine (“CIRM”), which are recognized over the period necessary to match the reimbursement with the related costs when it is probable that the Company has complied with the CIRM conditions and will receive the reimbursement. During the nine months ended September 30, 2019, we offset $1.1 million of grant funds against research and development expenses (See Note 14 “CIRM Grant” for additional disclosure). |
Strategic Research Collaboration |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2019 | |||
Strategic Research Collaboration [Abstract] | |||
Strategic Research Collaboration |
On May 16, 2018, Rocket and the Stanford University School of Medicine (“Stanford University”) entered into a strategic collaboration agreement to support the advancement of FA and PKD gene therapy research. Under the terms of the collaboration agreement, Stanford University is the lead clinical trial research center in the U.S. for the FA registrational trial and is the lead U.S. site for PKD clinical trials. The project will also separately evaluate the potential for non-myeloablative, non-genotoxic antibody-based conditioning regimens as a future development possibility that may be applied across bone marrow-derived disorders. In addition, Rocket agreed to support expansion of Stanford University’s Laboratory for Cell and Gene Therapy (“LCGM”) in order to further enhance the development of Rocket’s internal pipeline. Rocket agreed to contribute up to $3.5 million for the LCGM expansion of which 40% or $1.4 million was due upon execution of the collaboration agreement and the remaining $2.1 million balance is due upon the achievement of certain milestones. In January 2019, the Company and Stanford University signed a Clinical Trial Agreement for the treatment of FA. Upon the signing of the Clinical Trial Agreement, the second milestone of $1.4 million for the LGCM became due and was accrued and expensed in January 2019, when the milestone was met, and paid in April 2019. During the nine months ended September 30, 2019, none of the remaining milestones were met with regard to the LCGM. |
Accounts Payable and Accrued Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses | At September 30, 2019 and December 31, 2018, the Company’s accounts payable and accrued expenses consisted of the following:
|
401(k) Savings Plan (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
401(k) Savings Plan [Abstract] | ||||
Percentage of matching employee contributions | 4.00% | |||
Matching employee contributions | $ 46,178 | $ 23,037 | $ 171,382 | $ 88,700 |
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