Nature of the Business and Basis of Presentation

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of the Business and Basis of Presentation

1. Nature of the Business and Basis of Presentation

Translate Bio, Inc. (the “Company”) is a clinical-stage messenger RNA (“mRNA”) therapeutics company developing a new class of potentially transformative medicines to treat diseases caused by protein or gene dysfunction, or to prevent infectious diseases by generating protective immunity. Using its proprietary mRNA therapeutic platform (“MRT platform”), the Company creates mRNA that encodes functional proteins. The Company’s mRNA is designed to be delivered to the target cell where the cell’s own machinery recognizes it and translates it, restoring or augmenting protein function to treat or prevent disease. The Company is primarily focused on applying its MRT platform to treat pulmonary diseases caused by insufficient protein production or where production of proteins can modify disease. In addition, the Company is pursuing discovery efforts in diseases that affect the liver. The Company is also pursuing the applicability of its MRT platform for the development of mRNA vaccines for infectious diseases under a collaboration with Sanofi Pasteur Inc. (“Sanofi”), the vaccines global business unit of Sanofi, a French société anonyme (“Sanofi S.A.”)

The Company is developing mRNA therapeutics for the treatment of cystic fibrosis (“CF”) with two programs, MRT5005, a clinical-stage program, and a preclinical next-generation CF program. The Company is conducting a Phase 1/2 clinical trial to evaluate the safety and tolerability of single- and multiple-ascending doses of MRT5005. The clinical trial is investigating several groups receiving five once-weekly doses, as well as a group receiving five daily doses. Percent predicted forced expiratory volume in one second (“ppFEV1”) which is a well-defined and accepted endpoint measuring lung function, is also being measured at pre-defined timepoints throughout the trial as a safety measure. In 2019, the Company reported interim data from the single-ascending dose portion of the Phase 1/2 clinical trial through one-month follow up post dosing. In March 2021, the Company reported the second interim data analysis. In evaluating safety and tolerability, the primary outcome measure, data to date from the ongoing Phase 1/2 clinical trial suggested that repeat dosing of MRT5005 was generally safe and well tolerated. For patients receiving MRT5005, ppFEV1 was not negatively impacted; there was no pattern of treatment-associated increases in ppFEV1. The clinical trial is ongoing with evaluation of the remaining dose groups, which include a 20 mg multiple-ascending dose group and the daily dosing cohort, and the Company anticipates reporting the interim findings from the clinical trial at the North American Cystic Fibrosis Conference, being held September 30, 2021 through October 2, 2021. The Company’s preclinical next-generation CF program incorporates mRNA codon optimization and advances in lipid nanoparticle chemistry. Positive preclinical data generated from the program support the planned initiation of investigational new drug (“IND”)-enabling studies in the second half of 2021. The Company is conducting translational studies with MRT5005 and a next-generation CF candidate to support and optimize future clinical development.

The Company is leveraging its lung delivery platform and focusing its preclinical research efforts on identifying lead product candidates in additional pulmonary diseases with unmet medical needs, including primary ciliary dyskinesia (“PCD”), pulmonary arterial hypertension and respiratory infectious diseases. Positive preclinical data from our PCD program support the anticipated initiation of IND-enabling studies in the second half of 2021.

The Company has a collaboration with Sanofi to develop infectious disease vaccines using the Company’s mRNA technology. Under the collaboration, the Company and Sanofi are jointly conducting research and development activities to advance mRNA vaccines targeting up to seven infectious disease pathogens (see Note 3). Two of the target pathogens under development are SARS-CoV-2, which causes COVID-19, and influenza. MRT5500 has been selected as the lead candidate for a vaccine against SARS-CoV-2. A Phase 1/2 clinical trial to evaluate MRT5500 began in the first quarter of 2021 with interim data anticipated in the third quarter of 2021. A Phase 1 clinical trial evaluating MRT5400 and MRT5401, the Company’s investigational mRNA vaccine candidates against seasonal influenza, was initiated in June 2021 with interim data expected by the end of 2021.

Since early 2020, the outbreak of the novel strain of coronavirus named SARS-CoV-2 has spread across the globe and the COVID-19 pandemic has had wide-reaching impacts on the global economy and business operations. The COVID-19 pandemic has had, and the Company expects it will continue to have, an impact on its operations, the operations of its collaborators, the operations of third-party contractors and other entities with which the Company interacts, as well as on the patients who may enroll in the Company’s clinical trials. The Company continues to actively monitor COVID-19 trends and government guidance. The ultimate impacts of the COVID-19 pandemic are still unknown and uncertain.

The Company is subject to risks common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently

under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

The preparation of the accompanying condensed consolidated financial statements requires the Company to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis the Company evaluates its estimates, judgments and methodologies. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenues and expenses. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including revenue, expenses, reserves and allowances, manufacturing, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken in an effort to contain or to potentially treat or vaccinate against COVID-19, it as well as the economic impact on local, regional, national and international customers and markets. The Company has made estimates of the impact of COVID-19 within its financial statements and have determined them to be immaterial. There may be changes to those estimates in future periods. Actual results may differ from these estimates.

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its two wholly owned subsidiaries, Translate Bio MA, Inc. and Translate Bio Securities Corporation, from their date of incorporation. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated balance sheet as of June 30, 2021, the unaudited condensed consolidated statements of operations and of comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020, the unaudited condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2021 and 2020 and the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. The accompanying balance sheet as of December 31, 2020 has been derived from the Company’s audited financial statements for the year ended December 31, 2020. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 1, 2021.

The accompanying unaudited interim condensed consolidated financial presentation has been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflects all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2021, the results of its operations for the three and six months ended June 30, 2021 and 2020, and its cash flows for the six months ended June 30, 2021 and 2020. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2021 and 2020 are also unaudited. The results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period.

Sales of Common Stock

The Company is a party to an Open Market Sale AgreementSM (the “Sales Agreement”) with Jefferies LLC under which the Company may issue and sell shares of common stock, from time to time, having an aggregate offering price of up to $100.0 million. During the year ended December 31, 2020, the Company issued and sold 2,863,163 shares of its common stock pursuant to the Sales Agreement, resulting in gross proceeds of $37.9 million, before deducting commissions of $1.1 million and other offering expenses of $0.2 million. There were no shares issued or sold pursuant to the Sales Agreement during the six months ended June 30, 2021. In the future, $62.1 million of shares of common stock remain available to be sold pursuant to the Sales Agreement, which sales, if any, would be made under the Company’s universal shelf registration statement on Form S-3.