VYGR US Equity☆

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under Item 1A. “Risk Factors” and under “Forward-Looking Statements” in this Annual Report on Form 10-K.

We are a clinical-stage gene therapy company focused on developing life-changing treatments for patients suffering from severe neurological diseases. We focus on neurological diseases where we believe an adeno-associated virus, or AAV, gene therapy approach that either increases or decreases the production of a specific protein can slow or reduce the symptoms experienced by patients, and therefore have a clinically meaningful impact. We have built a gene therapy platform that we believe positions us to be a leading company at the intersection of AAV gene therapy and severe neurological disease. Our gene therapy platform enables us to engineer, optimize, manufacture and deliver our AAV-based gene therapies that have the potential to provide durable efficacy following a single administration.

Additionally, we are working to identify novel AAV capsids, which are the outer viral protein shells that enclose the genetic material of the virus payload. Our team of experts in the fields of AAV gene therapy and neuroscience first identifies and selects severe neurological diseases that are well-suited for treatment using AAV gene therapy. We then engineer and optimize AAV vectors for delivery of the virus payload to the targeted tissue or cells. Our manufacturing process employs an established system that we believe will enable production of high quality AAV vectors at commercial-scale. In addition to our capsid optimization efforts, we leverage novel delivery paradigms, established routes of administration, and advances in dosing techniques to optimize delivery of our AAV gene therapies to target tissues, regions and cell types that are critical to the disease of interest. We believe we can achieve this directly, with targeted infusions to discrete regions of the brain, the spinal cord, or systemically, in conjunction with our novel capsids.

Our business strategy focuses on discovering, developing, manufacturing and commercializing our gene therapy programs. As part of this strategy, we have developed core competencies specific to AAV gene therapy development and manufacturing and are beginning to build our commercial infrastructure. This business strategy also includes business development activities that may include in-licensing activities or partnering certain programs in specific geographies with collaborators, as we have demonstrated through our ongoing collaboration withNeurocrine. Since our inception, our operations have focused on organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio, determining which neurological diseases to pursue, advancing our product candidates including delivery and manufacturing, and conducting preclinical studies and clinical trials. We do not have any product candidates approved for sale and have not generated any revenue from product sales. We have funded our operations primarily through private placements of redeemable convertible preferred stock, public offerings of our common stock, and our strategic collaborations, including our prior collaboration with Sanofi Genzyme, or the Sanofi Genzyme Collaboration, which commenced in February 2015 and was terminated in June 2019, our prior collaboration with AbbVie focusing on tau-related disease, or the AbbVie Tau Collaboration, which commenced in February 2018 and was terminated in August 2020, our prior collaboration with AbbVie focusing on pathological species of alpha-synuclein, or the AbbVie Alpha-Synuclein Collaboration which commenced in February 2019 and was terminated in August 2020, and our ongoing collaboration with Neurocrine, or the Neurocrine Collaboration, which commenced in March 2019. We refer to our collaboration agreement with Neurocrine as the Neurocrine Collaboration Agreement.

In February 2021, Neurocrine notified us that it had elected to terminate the Neurocrine Collaboration solely with regards to the VY-AADC Program, effective August 2, 2021, or the Neurocrine VY-AADC Program Termination

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Effective Date. The Neurocrine Collaboration Agreement remains in full force and effect for each other program thereunder. We intend to support Neurocrine, the clinical trial sponsor and IND holder, on ongoing matters related to the completion of imaging and clinical assessments requested by the DSMB and the provision of other information requested by the FDA for the RESTORE-1 Phase 2 clinical trial. As a result of the termination, subsequent to the Neurocrine VY-AADC Program Termination Effective Date, Neurocrine will no longer reimburse us for research and development activities related to the VY-AADC Program.

We have incurred significant operating losses in every year prior to 2020. We reported a net income of $36.7 million for the year ended December 31, 2020 primarily due to revenue recognition in connection with the terminations of our prior collaborations with AbbVie. As of December 31, 2020, we had an accumulated deficit of $275.9 million. We reported a net loss of $43.6 million and $88.3 million for the years ended December 31, 2019 and 2018, respectively. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:

● work to identify and optimize novel AAV capsids;

● expand our manufacturing capabilities;

● maintain, expand, protect and enforce our intellectual property portfolio;

● identify, acquire or in-license other product candidates and technologies;

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● continue to operate as a public company.

Financial Operations Overview

Revenue

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the foreseeable future. For the year ended December 31, 2020, we recognized $50.8 million of collaboration revenue from the AbbVie Tau Collaboration, inclusive of the recognition of $46.3 million related to its termination, $63.7 million of collaboration revenue from the AbbVie Alpha-Synuclein Collaboration, inclusive of the recognition of $58.9 million related to its termination, and $56.7 million of collaboration revenue from the Neurocrine Collaboration. For additional information about our revenue recognition policy related to the collaborations, see the section titled “—Critical Accounting Policies and Estimates—Revenue.”

For the foreseeable future, we expect substantially all of our revenue will be generated from our collaboration agreement with Neurocrine and any other strategic collaborations we may enter into in the future. If our development efforts are successful, we may also generate revenue from product sales.

Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our program discovery efforts, and the development of our programs and gene therapy platform, which include:

● consultant fees;

● facility costs including rent, depreciation and maintenance expenses; and

● fees for maintaining licenses under our third-party licensing agreements.

Research and development costs are expensed as incurred. Costs for certain activities, such as manufacturing, preclinical studies, and clinical trials, are generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and collaborators.

At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales of our product candidates. This is due to the numerous risks and uncertainties associated with developing such product candidates, including the uncertainty of:

● successful enrollment in and completion of clinical trials;

● establishing an appropriate safety profile;

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● receipt of marketing approvals from applicable regulatory authorities;

● continued acceptable safety profiles of the products following approval; and

● retention of key research and development personnel.

A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate.

Research and development activities are central to our business model. We expect research and development costs to increase for the foreseeable future as our development programs progress and as we seek to move our other product candidates, including VY-HTT01 as a treatment for Huntington’s disease, into clinical trials. We expect that Neurocrine’s partial termination of the Neurocrine Collaboration Agreement will decrease research and development costs related to the VY-AADC Program. However, we continue to evaluate the potential path forward for the VY-AADC Program and, if sponsorship of the RESTORE-1 Phase 2 clinical trial were transferred back to us, we would expect a significant increase in research and development costs above our current forecasts.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, accounting, business development, legal and human resource functions. Other significant costs include corporate facility costs not otherwise included in research and development expenses, legal fees related to patent and corporate matters and fees for accounting and consulting services.

We anticipate that our general and administrative expenses will increase in the future to support continued research and development activities, including the ongoing research and development activities and initiation of clinical trials for our product candidates. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants. We also anticipate increased expenses associated with being a public company, including costs for audit, legal, regulatory, and tax-related services, director and officer insurance premiums, business development activities, and investor relations costs.

Other Income (Expense)

Interest and other income (expense) consists primarily of interest income on our marketable debt securities and the gain or loss on the equity securities investment in ClearPoint Neuro, Inc. (formerly known as MRI Interventions, Inc.), or CLPT.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our consolidated financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results

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may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the financial statements prospectively from the date of change in estimates.

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies used in the preparation of our financial statements require the most significant judgments and estimates.

Revenue Recognition – ASC 606

In the year ended December 31, 2020, our revenue was generated from the AbbVie Tau Collaboration, the AbbVie Alpha-Synuclein Collaboration, and the Neurocrine Collaboration. We recognize revenue in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 606 Revenue from Contracts with Customers, or ASC 606. Effective January 1, 2018, we adopted the provisions of ASC 606 using the modified retrospective transition method. Under this method, we recorded the cumulative effect of initially applying the new standard to all contracts as of the date of adoption.

We enter into collaboration agreements which are within the scope of ASC 606, under which we license rights to certain of our product candidates and perform research and development services. The terms of these arrangements typically include payment of one or more of the following: non-refundable, upfront fees; reimbursement of research and development costs; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products.

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC 606, we perform the following five steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. We only apply the five-step model to contracts when it is probable that we will collect consideration we are entitled to in exchange for the goods or services we transfer to the customer.

The promised goods or services in our arrangement typically consist of license rights to our intellectual property or research and development services. We provide options to additional items in the contracts, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer. We evaluate the customer options for material rights, or options to acquire additional goods or services for free or at a discount. If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement. Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer and are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service is separately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct, we consider factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on their own or whether the required expertise is readily available and whether the goods or services are integral or dependent to other goods or services in the contract.

We estimate the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration may include fixed consideration or variable consideration. At the inception of each arrangement that includes variable consideration, we evaluate the amount of potential payment and the likelihood that the payments will be received. We utilize either the most likely amount method or expected amount method to estimate the amount expected to be received based on which method best predicts the amount expected to be received. The amount of variable consideration which is included in the transaction price may be constrained, and is

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included in the transaction price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

Our contracts often include development and regulatory milestone payments which are assessed under the most likely amount method and constrained if it is probable that a significant revenue reversal would occur. Milestone payments that are not within our control or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. At the end of each reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues in the period of adjustment. To date, we have not recognized any consideration related to the achievement of development, regulatory, or commercial milestone revenue resulting from any of our collaboration arrangements.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, we have not recognized any consideration related to sales-based royalty revenue resulting from any of our collaboration arrangements.

We allocate the transaction price based on the estimated stand-alone selling price of each of the performance obligations. We must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. We utilize key assumptions to determine the stand-alone selling price for service obligations, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs. Additionally, in determining the standalone selling price for material rights, we utilize comparable transactions, industry standards for product development and clinical trial success probabilities and estimates of option exercise likelihood. Variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated are consistent with the amounts we would expect to receive for the satisfaction of each performance obligation.

The consideration allocated to each performance obligation is recognized as revenue when control is transferred for the related goods or services. For performance obligations which consist of licenses and other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

Upfront payments and fees are recorded as contract liabilities within deferred revenue upon receipt or when due until we perform our obligations under these arrangements. Amounts are recorded as accounts receivable when our rights to consideration are unconditional. A significant portion of revenue recognized from the Neurocrine Collaboration is related to performance obligations pursuant to which revenue is recognized using a proportional performance model. Revenue is recognized using input-based measurements, which involves the measurement of progress toward each performance obligation based on the actual costs incurred compared to total projected costs. We estimate the expected remaining costs to complete the research and development services for eachperformance obligation. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure and related revenue recognition.

Accrued Research and Development Expenses

As part of the process of preparing our financial statements, we are required to estimate our accrued expenses as of each balance sheet date. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date based on facts and

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circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. The significant estimates in our accrued research and development expenses include the costs incurred for services performed by our vendors in connection with research and development activities for which we have not yet been invoiced.

We record our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and development expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid accordingly. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.

Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred.

Results of Operations

Comparison of the years ended December 31, 2020 and 2019:

The following table summarizes our results of operations for the years ended December 31, 2020 and 2019, respectively, together with the changes in those items in dollars:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year ended ​ ​ ​

​ ​ December 31, ​ ​ ​

​ ​ (in thousands) ​

Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Collaboration Revenue

Collaboration revenue was $171.1 million for the year ended December 31, 2020, and $104.4 million for the year ended December 31, 2019. The $66.7 million increase in collaboration revenue in 2020 was primarily a result of the termination of the AbbVie Tau Collaboration and the AbbVie Alpha-Synuclein Collaboration in August 2020. We recognized $50.8 million related to research services from the AbbVie Tau Collaboration in the year ended December 31, 2020. This amount included $4.5 million related to research services provided prior to the termination date and $46.3 million of deferred revenue remaining under the agreement at the termination date as all of our obligations were complete as of September 30, 2020. We also recognized $63.7 million related to research services from the AbbVie Alpha-Synuclein Collaboration in the year ended December 31. 2020. This amount included $4.8 million related to research services provided prior to the termination date and $58.9 million of deferred revenue remaining under the agreement at the termination date as all of our obligations were complete as of September 30, 2020. Additionally, we

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recognized $56.7 million of revenue related to the Neurocrine Collaboration for collaboration-related services provided and expenses reimbursed in the year ended December 31, 2020. We expect the termination of the collaboration related to VY-AADC Program will result in a decrease in revenue related to services provided and expenses reimbursed from the Neurocrine Collaboration.

Our collaboration revenues were not materially impacted by the COVID-19 pandemic during the year ended December 31, 2020. In subsequent periods, the COVID-19 pandemic could affect our collaboration revenues and our operations.

Research and Development Expense

Research and development expense decreased by $10.9 million from $119.7 million for the year ended December 31, 2019 to $108.8 million for the year ended December 31, 2020. The following table summarizes our research and development expenses for the years ended December 31, 2020 and 2019:

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year ended ​ ​ ​

​ ​ December 31, ​ ​ ​

​ ​ (in thousands) ​

External research and development expenses ​ $ 44,698 $ 64,212 ​ $ (19,514) ​

​

The decrease in research and development expense for the year ended December 31, 2020 was primarily attributable to the following:

​

The COVID-19 pandemic continues to evolve rapidly. Our corporate headquarters is in Massachusetts, a state particularly hard hit by the pandemic. We have and will continue to adhere to applicable guidelines and safety measures including stay-at-home policies and the reporting of only essential personnel for business continuity to ensure the safety of our employees, consultants, contractors, and staff. Certain of our clinical trial sites and collaboration partners have experienced facility closures or been subject to quarantines, travel restrictions and other governmental restrictions and have appropriately diverted attention and resources to respond to the impacts of COVID-19 on their own operations and personnel. Some have even become involved in research and development efforts related to COVID-19.

The current workplace safety measures that we have enacted in response to COVID-19 have required a reduction in on-site activity at our facilities in Massachusetts, including in our laboratories in which preclinical experiments are conducted. As a result, we have had to prioritize our preclinical experiments and terminate or delay some non-critical experiments in order to maintain critical experiments for our preclinical programs.

We will continue to monitor the issues raised by the global spread of COVID-19 and have put in place and will continue to put in place measures as appropriate and necessary for, or that we believe to be in the best interest of, our business, employees, collaborators, stockholders, and the community.

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General and Administrative Expense

General and administrative expense decreased by $1.3 million from $36.3 million for the year ended December 31, 2019 to $35.0 million for the year ended December 31, 2020. The change in general and administrative expense was primarily attributable to the following:

Other Income, Net

Interest and other income of approximately $9.4 million and $8.1 million was recognized in the years ended December 31, 2020 and 2019, primarily driven by $7.7 million and $1.6 million in the years ended December 31, 2020 and 2019, respectively, related to gains on our common stock investment in and warrants to purchase shares of common stock of CLPT, and interest income on marketable securities balances.

Comparison of year ended December 31, 2019 and 2018:

The following table summarizes our results of operations for the year ended December 31, 2019 and 2018, respectively, together with the changes in those items in dollars:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year ended ​ ​ ​ ​

​ ​ December 31, ​ ​ ​ ​

​ ​ (in thousands) ​

Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income tax benefit ​ ​ — ​ ​ 180 ​ ​ (180) ​

Collaboration Revenue

Collaboration revenue was $104.4 million for the year ended December 31, 2019, and $7.6 million for the year ended December 31, 2018. The $96.8 million increase in collaboration revenue in 2019 was primarily a result of the termination of the Sanofi Genzyme Collaboration in June 2019, as well as our entries into the Neurocrine Collaboration and AbbVie Alpha-Synuclein Collaboration in the beginning of 2019. As a result of the termination, we paid $10.0 million to Sanofi Genzyme and paid an additional $10.0 million in September 2020 after the filing of an IND application for a product candidate incorporating certain intellectual property rights developed under or substantially related to VY-HTT01 for Huntington’s disease, or a Post-Termination HD Product. We recognized $31.8 million of revenue related to the Sanofi Genzyme Collaboration in 2019. This amount includes $2.9 million related to research services provided prior to the termination date, $0.2 million of in-kind related services, and $48.7 million of deferred revenue remaining under the agreement at the termination date. These amounts were offset by the $10.0 million paid in June 2019 and the $10.0 million paid to Sanofi Genzyme related to the filing of an IND application in September 2020. Additionally, we

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recognized $11.3 million, $1.3 million, and $60.0 million of revenue related to the AbbVie Tau Collaboration, AbbVie Alpha-Synuclein Collaboration, and the Neurocrine Collaboration, respectively, for collaboration-related services provided and expenses reimbursed.

Research and Development Expense

Research and development expense increased by $54.8 million from $64.9 million for the year ended December 31, 2018 to $119.7 million for the year ended December 31, 2019. The following table summarizes our research and development expenses, for the year ended December 31, 2019 and 2018, respectively:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year ended ​ ​

​ ​ December 31, ​ ​

​ ​ (in thousands)

The change in research and development expense was primarily attributable to research and development, and included the following:

General and Administrative Expense

General and administrative expense increased by $2.5 million from $33.8 million for the year ended December 31, 2018 to $36.3 million for the year ended December 31, 2019. The change in general and administrative expense was primarily attributable to the following:

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Other Income, Net

Interest and other income of approximately $8.1 million and $2.6 million was recognized in the years ended December 31, 2019 and 2018, respectively, related to interest income on marketable securities balances, which increased by $235.0 million during 2019 as a result of our AbbVie Alpha-Synuclein and Neurocrine Collaborations, in addition to gains and losses on our common stock investment in and warrants to purchase shares of common stock of CLPT.

Income Tax

There was no income tax payable for the year ended December 31, 2019. We recorded an income tax benefit of $0.2 million in the year ended December 31, 2018 related to our alternative minimum tax, or AMT, liability.

​

Liquidity and Capital Resources

Sources of Liquidity

We have funded our operations primarily through private placements of redeemable convertible preferred stock, public offerings of our common stock, the Sanofi Genzyme Collaboration which commenced in February 2015 and was terminated in June 2019, the AbbVie Tau Collaboration which commenced in February 2018 and was terminated in August 2020, the AbbVie Alpha-Synuclein Collaboration which commenced in February 2019 and was terminated in August 2020, and the Neurocrine Collaboration, which commenced in March 2019.

In February 2021, Neurocrine notified us it had elected to terminate the Neurocrine Collaboration solely with regards to the VY-AADC Program, effective August 2, 2021. The Neurocrine Collaboration Agreement remains in full force and effect for each other program thereunder. We intend to support Neurocrine, the study sponsor and IND holder, on ongoing matters related to the completion of imaging and clinical assessments requested by the DSMB and the provision of other information requested by the FDA for the RESTORE-1 Phase 2 clinical trial. As a result of the termination, subsequent to the Neurocrine VY-AADC Program Termination Effective Date, Neurocrine will no longer reimburse us for research and development activities related to the VY-AADC Program.

As of December 31, 2020, we had cash, cash equivalents, and marketable debt securities of $174.8 million. Based upon our current operating plans, we expect that our existing cash, cash equivalents, and marketable debt securities as well as amounts expected to be received for reimbursement amounts expected from development costs related to our collaboration and license agreement with Neurocrine will enable us to meet our planned operating expenses and capital expenditure requirements into mid-2022.

Cash Flows

The following table provides information regarding our cash flows for the years ended December 31, 2020, 2019, and 2018.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year ended ​

​ ​ December 31, ​

​ (in thousands) ​

Net cash (used in) provided by: ​ ​ ​ ​ ​ ​ ​ ​ ​

Net increase in cash and cash equivalents ​ $ 19,442 ​ $ 39,183 ​ $ 15,329 ​

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Cash Flows from Operating Activities

Net cash used in operating activities was $96.7 million during the year ended December 31, 2020. The cash used in operating activities for the year ended December 31, 2020 was primarily driven by the one-time recognition of $105.2 million deferred revenue related to the termination of the AbbVie Tau Collaboration and the AbbVie Alpha-Synuclein Collaboration, offset by $36.7 million of net income, and changes in working capital.

Net cash provided by operating activities was $48.7 million during the year ended December 31, 2019 and was primarily due to an increase in cash received of $157.0 million from the upfront payments related to the AbbVie Alpha-Synuclein Collaboration and the Neurocrine Collaboration, offset by an increase of $57.4 million in operating expenses, net of stock-based compensation and depreciation, as we increased our research and development activities and infrastructure to support our program initiatives.

Net cash used in operating activities was $15.9 million during the year ended December 31, 2018 and was primarily due to an increase in deferred revenue of $69.0 million from the upfront payment related to the AbbVie Tau Collaboration in 2018, offset by a $16.7 million increase in operating expenses, net of stock-based compensation and depreciation, due to increased research and development activities, as well as higher general and administrative expenses. The decrease in cash used in operating activities was also offset by an increase in prepaid expenses and other current assets as well as a decrease in accrued expenses.

Cash Flows from Investing Activities

Net cash provided by investing activities was $113.0 million during the year ended December 31, 2020. The cash provided by investing activities for the year ended December 31, 2020 was primarily due to proceeds from maturities of marketable securities of $195.5 million, offset by purchases of marketable securities of $70.4 million and purchases of property and equipment of $12.3 million.

Net cash used in investing activities was $90.5 million during the year ended December 31, 2019. The cash used in investing activities for the year ended December 31, 2019 was primarily due to purchases of marketable securities of $494.2 million and purchases of property and equipment of $5.1 million, offset by proceeds from maturities of marketable securities of $411.3 million.

Net cash provided by investing activities was $26.5 million during the year ended December 31, 2018. The cash provided by investing activities for the year ended December 31, 2018 was primarily due to proceeds from maturities of marketable securities of $364.0 million offset by purchase of marketable securities of $333.2 million and purchases of property and equipment of $4.3 million.

Cash Flows from Financing Activities

Net cash provided by financing activities was $3.2 million during the year ended December 31, 2020 primarily due to the proceeds from the exercise of stock options, and purchases by our employees of our common stock under our employee stock purchase plan.

Net cash provided by financing activities was $81.0 million during the year ended December 31, 2019 primarily related to the issuance of 4,179,728 shares of our common stock to Neurocrine pursuant to a stock purchase agreement in connection with the Neurocrine Collaboration as well as proceeds from exercises of stock options.

Net cash provided by financing activities was $4.7 million during the year ended December 31, 2018 related to proceeds from exercises of stock options, and purchases by our employees of our common stock under our employee stock purchase plan.

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Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue or initiate clinical trials of, and seek marketing approval for, our product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant expenses related to program sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Furthermore, we expect to incur increasing costs associated with operating as a public company, meeting financial controls, satisfying regulatory and quality standards, fulfilling healthcare compliance requirements, and maintaining product, clinical trial and directors’ and officers’ liability insurance coverage. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital or enter into business development transactions when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

Based upon our current operating plan, we expect that our existing cash, cash equivalents, and marketable debt securities as well as amounts expected to be received for reimbursement amounts expected from development costs related to the Neurocrine Collaboration Agreement, will enable us to meet our planned operating expenses and capital expenditure requirements into mid-2022. Our future capital requirements will depend on many factors, including:

● the costs, timing and outcome of regulatory review of our product candidates;

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Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete. We may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our product revenues, if any, and any commercial milestone payments or royalty payments under our collaboration agreements, will be derived from sales of products that may not be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing and business development transactions to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.

Until such time, if ever, as we can generate product revenues sufficient to achieve consistent profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We do not have any committed external source of funds other than the amounts we are entitled to receive from Neurocrine for the reimbursement of certain research and development expenses, the achievement of specified regulatory and commercial milestones, and royalty payments related to ongoing programs under the Neurocrine Collaboration. To the extent that we raise additional capital through the sale of equity or equity-linked securities, including convertible debt, our stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our existing stockholders’ rights as holders of our common stock. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, obtaining additional capital, acquiring or divesting businesses, making capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations

We enter into agreements in the normal course of business with clinical research organizations, contract manufacturing organizations, and institutions to license intellectual property. These contracts are cancelable at any time by us, generally upon 30 to 90 days prior written notice.

Our agreements to license intellectual property include potential milestone payments that are dependent upon the development of products using the intellectual property licensed under the agreements and contingent upon the achievement of clinical trial or regulatory approval milestones. We may also be required to pay annual maintenance fees or minimum amounts payable ranging from low-four digits to low five-digits depending upon the terms of the applicable agreement.

We also have non-cancelable operating lease commitments arising from our leases of office and laboratory space at our facilities in Cambridge and Lexington, Massachusetts. We expect lease costs under these commitments to total $7.8 million in 2021 and increase annually; in 2025, we expect total lease costs of approximately $9.6 million.

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As described elsewhere in this Annual Report on Form 10-K including in “Part I, Item 1—Business,” we are also currently party to a collaboration agreement with Neurocrine.

Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable rules of the Securities and Exchange Commission, or the SEC.

Smaller Reporting Company Status

​

We previously qualified as a “smaller reporting company,” as defined in Rule 12b-2 under the Exchange Act, and have been permitted to rely, and have relied, on the reduced disclosure requirements available to smaller reporting companies, including reduced disclosure obligations regarding executive compensation. Our ability to rely on the reduced disclosure requirements available to smaller reporting companies will cease after the filing of this Annual Report on Form 10-K, including those portions of our definitive proxy statement relating to our 2021 Annual Meeting of Stockholders incorporated by reference into Part III of this Annual Report on Form 10-K.

​

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk related to changes in interest rates. We have policies requiring us to invest in high-quality issuers, limit our exposure to any individual issuer, and ensure adequate liquidity. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments, including cash equivalents, are in the form of money market fund and marketable securities and are invested in U.S. Treasury and U.S. government agency obligations. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, an immediate 100 basis point change in interest rates would not have had a material effect on the fair market value of our portfolio.

We are not currently exposed to market risk related to changes in foreign currency exchange rates; however, we may contract with vendors that are located in Asia and Europe in the future and may be subject to fluctuations in foreign currency rates at that time.

Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation had a material effect on our business, financial condition, or results of operations during the year ended December 31, 2020.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

​

The financial statements required to be filed pursuant to this Item 8 are appended to this report. An index of those financial statements is found in Item 15.

​

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

​

ITEM 9A.CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act to mean controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and other procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

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Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of December 31, 2020, our disclosure controls and procedures were effective at the reasonable assurance level.

We continue to review and document our disclosure controls and procedures and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive officer and principal financial officer, or persons performing similar functions, and effected by a company’s board of directors, management, and other personnel, 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 and includes those policies and procedures that:

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision of and with the participation of our principal executive officer and principal financial and accounting officer, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework). Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2020.

The effectiveness of our internal control over financial reporting as of December 31, 2020, has been audited by Ernst & Young LLP, an independent registered public accounting firm, who has issued an attestation report on such audit, which is included herein.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during our fiscal quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

​

​

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Report of Independent Registered Public Accounting Firm

​

To the Stockholders and the Board of Directors of Voyager Therapeutics, Inc.

​

Opinion on Internal Control over Financial Reporting

​

We have audited Voyager Therapeutics, Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Voyager Therapeutics, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

​

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and our report dated February 25, 2021 expressed an unqualified opinion thereon.

​

Basis for Opinion

​

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

​

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

​

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

​

Definition and Limitations of Internal Control Over Financial Reporting

​

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

​

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

​

/s/ Ernst & Young LLP

Boston, Massachusetts

February 25, 2021

​

ITEM 9B. OTHER INFORMATION

​

None.

​

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PART III

​

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

​

Incorporated by reference from the information in our Proxy Statement for our 2021 Annual Meeting of Stockholders, which we expect to file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.

​

ITEM 11. EXECUTIVE COMPENSATION

​

Incorporated by reference from the information in our Proxy Statement for our 2021 Annual Meeting of Stockholders, which we expect to file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.

​

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

​

Incorporated by reference from the information in our Proxy Statement for our 2021 Annual Meeting of Stockholders, which we expect to file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.

​

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Incorporated by reference from the information in our Proxy Statement for our 2021 Annual Meeting of Stockholders, which we expect to file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.

​

​

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

​

Incorporated by reference from the information in our Proxy Statement for our 2021 Annual Meeting of Stockholders, which we expect to file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.

​

PART IV

​

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

​

(a)(1) Financial Statements.

Pages

Report of independent registered public accounting firm F- 1

Consolidated Balance Sheets F-3

Consolidated Statements of Operations and Comprehensive Income (Loss) F-4

Consolidated Statements of Stockholders’ Equity F-5

Consolidated Statements of Cash Flows F-6

Notes to consolidated financial statements F-7

​

(a)(2) Financial Statement Schedules.

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All schedules have been omitted because they are not required or because the required information is given in the Consolidated Financial Statements or Notes thereto set forth under Item 8 above.

(a)(3) Exhibits.

See the Exhibit Index immediately preceding the signature page of this Annual Report on Form 10-K. The exhibits listed in the Exhibit Index below are filed or incorporated by reference as part of this Annual Report on Form 10-K.

​

ITEM 16. FORM 10-K SUMMARY

​

This Annual Report on Form 10-K does not include a summary.

​

​

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​

Report of Independent Registered Public Accounting Firm

​

To the Stockholders and the Board of Directors of Voyager Therapeutics, Inc.

Opinion on the Financial Statements

​

We have audited the accompanying consolidated balance sheets of Voyager Therapeutics, Inc. (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2021 expressed an unqualified opinion thereon.

Adoption of ASU No. 2016-02

​

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU No. 2016-02, Leases, and the related amendments.

Basis for Opinion

​

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

​

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

​

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​

​ ​

​ ​ Revenue recognition under the proportional performance model

​

/s/ Ernst & Young LLP

​

We have served as the Company’s auditor since 2015.

​

Boston, Massachusetts

February 25, 2021

​

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Voyager Therapeutics, Inc.

Consolidated Balance Sheets

(amounts in thousands, except share and per share data)

​ ​ ​ ​ ​ ​ ​ ​

​ ​ December 31,

Assets ​ ​ ​ ​ ​

Current assets: ​ ​ ​ ​ ​ ​ ​

Related party collaboration receivable ​ ​ 8,012 ​ ​ 18,496 ​

Prepaid expenses and other current assets ​ 8,619 ​ 4,630 ​

Deposits and other non-current assets ​ 2,316 ​ 1,723 ​

Marketable securities, non-current ​ — ​ 1,920 ​

Operating lease, right-of-use assets ​ ​ 36,064 ​ ​ 28,472 ​

Liabilities and stockholders’ equity ​ ​ ​ ​ ​ ​ ​

Current liabilities: ​ ​ ​ ​ ​ ​ ​

Accounts payable ​ $ 634 ​ $ 4,070 ​

Other current liabilities ​ ​ 4,198 ​ ​ 3,193 ​

Commitments and contingencies (see note 9) ​ ​ ​ ​ ​ ​ ​

Stockholders’ equity: ​ ​ ​ ​ ​ ​ ​

Accumulated other comprehensive loss ​ (134) ​ (104) ​

Total liabilities and stockholders’ equity ​ $ 261,584 ​ $ 354,760 ​

​ ​ ​ ​ ​ ​ ​ ​

​

​

The accompanying notes are an integral part of these consolidated financial statements.

​

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Voyager Therapeutics, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(amounts in thousands, except share and per share data)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year ended ​

​ ​ December 31,

Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other income (expense), net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income tax benefit ​ ​ — ​ ​ — ​ ​ 180 ​

Other comprehensive (loss) income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net unrealized (loss) gain on available-for-sale-securities ​ (30) ​ 29 ​ 34 ​

Total other comprehensive (loss) income ​ (30) ​ 29 ​ 34 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net income (loss) per share, basic ​ $ 0.99 ​ $ (1.21) ​ $ (2.75) ​

Net income (loss) per share, diluted ​ ​ 0.98 ​ ​ (1.21) ​ $ (2.75) ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

​

The accompanying notes are an integral part of these consolidated financial statements.

​

​

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​

Voyager Therapeutics, Inc.

Consolidated Statements of Stockholders’ Equity

(amounts in thousands, except share data)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​

​ ​ Common Stock ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’

​ Shares Amount Capital Loss Deficit Equity

Vesting of restricted stock ​ 319,891 ​ ​ — ​ ​ 9 ​ ​ — ​ ​ — ​ ​ 9 ​

Issuance of common stock under ESPP ​ 88,774 ​ ​ — ​ ​ 969 ​ ​ — ​ ​ — ​ ​ 969 ​

Stock-based compensation expense ​ — ​ ​ — ​ ​ 15,710 ​ ​ — ​ ​ — ​ ​ 15,710 ​

Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ (88,288) ​ ​ (88,288) ​

Issuance of common stock under ESPP ​ 70,217 ​ ​ — ​ ​ 663 ​ ​ — ​ ​ — ​ ​ 663 ​

Stock-based compensation expense ​ — ​ ​ — ​ ​ 15,640 ​ ​ — ​ ​ — ​ ​ 15,640 ​

Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ (43,597) ​ ​ (43,597) ​

Vesting of restricted stock units ​ 170,367 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​

Stock-based compensation expense ​ — ​ ​ — ​ ​ 14,499 ​ ​ — ​ ​ — ​ ​ 14,499 ​

Net income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 36,741 ​ ​ 36,741 ​

​

​

​

​

The accompanying notes are an integral part of these consolidated financial statements

​

​

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Voyager Therapeutics, Inc.

Consolidated Statements of Cash Flows

(amounts in thousands)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year ended ​

​ ​ December 31,

Cash flow from operating activities ​ ​ ​ ​ ​ ​ ​

In-kind research and development expenses ​ ​ — ​ ​ 616 ​ ​ 176 ​

Deferred rent ​ — ​ ​ — ​ ​ 52 ​

Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Related party collaboration receivable ​ ​ 10,484 ​ ​ (18,496) ​ ​ — ​

Prepaid expenses and other assets ​ (551) ​ ​ 1,675 ​ ​ (3,937) ​

Operating lease, right-of-use assets ​ ​ (7,592) ​ ​ 2,951 ​ ​ — ​

Other non-current assets ​ 275 ​ ​ (343) ​ ​ (180) ​

Operating lease liabilities ​ ​ 13,439 ​ ​ (2,506) ​ ​ — ​

Lease incentive benefit ​ — ​ — ​ 321 ​

Cash flow from investing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Purchases of property and equipment ​ (12,097) ​ (7,718) ​ (4,305) ​

Proceeds from sale of equipment ​ ​ — ​ ​ 172 ​ ​ — ​

Cash flow from financing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Proceeds from the exercise of stock options ​ 2,319 ​ 2,714 ​ 3,889 ​

Proceeds from the purchase of common stock under ESPP ​ ​ 844 ​ ​ 663 ​ ​ 860 ​

Net cash provided by financing activities ​ 3,163 ​ ​ 80,994 ​ ​ 4,749 ​

Supplemental disclosure of cash and non-cash activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Impact of adopting new accounting standards ​ $ — ​ $ — ​ $ 20,050 ​

Capital expenditures incurred but not yet paid ​ $ 831 ​ $ 434 ​ $ 300 ​

​

​

The accompanying notes are an integral part of these consolidated financial statements.

​

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VOYAGER THERAPEUTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

​

1. Nature of business

Voyager Therapeutics, Inc. (the “Company”) is a clinical-stage gene therapy company focused on developing life-changing treatments for patients suffering from severe neurological diseases. The Company is focused on neurological diseases where it believes an adeno-associated virus (“AAV”) gene therapy approach that either increases or decreases the production of a specific protein can slow or reduce the symptoms experienced by patients, and therefore have a clinically meaningful impact. The Company has built a gene therapy platform that it believes positions itself to be a leading company at the intersection of AAV gene therapy and severe neurological disease. The Company’s gene therapy platform enables it to engineer, optimize, manufacture and deliver its AAV-based gene therapies that have the potential to provide durable efficacy following a single administration.

Additionally, the Company is working to identify novel AAV capsids, which are the outer viral protein shells that enclose the genetic material of the virus payload. The Company’s team of experts in the fields of AAV gene therapy and neuroscience first identifies and selects severe neurological diseases that are well-suited for treatment using AAV gene therapy. The Company then engineers and optimizes AAV vectors for delivery of the virus payload to the targeted tissue or cells. The Company’s manufacturing process employs an established system that it believes will enable production of high quality AAV vectors at commercial-scale. In addition to the Company’s capsid optimization efforts, it leverages novel delivery paradigms, established routes of administration, and advances in dosing techniques to optimize delivery of its AAV gene therapies to target tissues, regions and cell types that are critical to the disease of interest. The Company believes it can achieve this directly, with targeted infusions to discrete regions of the brain, the spinal cord, or systemically, in conjunction with its novel capsids.

The Company’s business strategy focuses on discovering, developing, manufacturing and commercializing its gene therapy programs. As part of this strategy, the Company has developed core competencies specific to AAV gene therapy development and manufacturing. This business strategy also includes business development activities that may include in-licensing activities or partnering certain programs in certain geographies with collaborators, as the Company has demonstrated through its ongoing collaboration with Neurocrine Biosciences, Inc. (the “Neurocrine Collaboration Agreement”). The Company is devoting substantially all of its efforts to product research and development, market development, and raising capital. The Company is subject to risks common to companies in the biotechnology and gene therapy industries, including but not limited to, the need to obtain sufficient capital to continue to fund its operations, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for its product candidates, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary information and technology, protection against data breaches and other cybersecurity threats, compliance with government regulations, development by competitors of technological innovations, and ability to transition from pilot-scale manufacturing to large-scale production of products.

The Company has incurred annual net operating losses in every year prior to 2020. As of December 31, 2020, the Company had an accumulated deficit of $275.9 million. The Company has not generated any product revenue and has financed its operations primarily through public offerings and private placements of its equity securities and funding from its prior collaborations with Sanofi Genzyme Corporation (“Sanofi Genzyme”), AbbVie Biotechnology Ltd and AbbVie Ireland Unlimited Company (collectively, “AbbVie”), and its ongoing collaboration with Neurocrine Biosciences, Inc. (“Neurocrine”).

Based upon its current operating plan, the Company expects that its existing cash, cash equivalents, and marketable debt securities, as well as ongoing reimbursement amounts expected from development costs related to the Neurocrine Collaboration Agreement, will enable the Company to meet its planned operating expenses and capital expenditure requirements into mid-2022.

There can be no assurance that the Company will be able to obtain additional debt or equity financing or generate product revenue or revenue from collaborative partners on terms acceptable to the Company, on a timely basis

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or at all. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations, and financial condition.

2. Summary of significant accounting policies

The following is a summary of significant accounting policies followed in the preparation of these financial statements.

Basis of presentation

The accompanying consolidated financial statements include those of the Company and its subsidiary, Voyager Securities Corporation, after elimination of all intercompany accounts and transactions. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, the Company’s management evaluates its estimates, which include, but are not limited to, estimates related to revenue recognition, accrued expenses, stock-based compensation expense, and income taxes. The Company bases its estimates on historical experience and other market specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.

Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes between the following:

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The carrying amounts reflected in the balance sheets for cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values, due to their short-term nature.

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Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks and amounts held in money market funds.

Marketable Securities

The Company classifies marketable debt securities with a remaining maturity of greater than three months when purchased as available-for-sale. Marketable debt securities with a remaining maturity date greater than one year and marketable equity securities are classified as non-current where the Company has the intent and ability to hold these securities for at least the next 12 months. During 2016, the Company invested in a supplier and received common stock and warrants to purchase common stock in that entity. The common stock is considered an available-for-sale marketable equity security and is included in current marketable securities, and the warrants are included in current assets since they expire in September of 2021.

All available for sale debt securities are carried at fair value with the unrealized gains and losses included in other comprehensive income (loss) as a component of stockholders’ equity until realized. Any premium or discount arising at purchase is amortized and/or accreted to interest income and/or expense. Realized gains and losses are determined using the specific identification method and are included in other income (expense). If any adjustment to fair value reflects a decline in value of the investment, the Company uses a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. No other than temporary losses have been recognized.

Cash, cash equivalents, and marketable securities as of December 31, 2020 and 2019 consist of the following:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair

​ Cost Gains Losses Value

​ ​ (in thousands)

As of December 31, 2020 ​ ​ ​ ​ ​

Marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

As of December 31, 2019 ​ ​ ​ ​ ​

Marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

All of the Company’s marketable debt securities at December 31, 2020 and 2019 have a contractual maturity of one year or less.

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Restricted Cash

As of December 31, 2020 and 2019, the Company maintained restricted cash totaling approximately $1.8 million and $0.7 million, respectively, held in the form of money market accounts as collateral for the Company’s facility lease obligations. The balance is included within deposits in other non-current assets in the accompanying consolidated balance sheets. The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of cash flows:

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of December 31, ​

​ ​ (in thousands) ​

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Property and Equipment

Property and equipment consists of laboratory equipment, furniture and office equipment, and leasehold improvements and is stated at cost, less accumulated depreciation. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed to operations as incurred; while costs of major additions and betterments are capitalized. Depreciation is calculated over the estimated useful lives of the assets using the straight-line method.

Impairment of Long-Lived Assets

The Company evaluates long-lived assets for potential impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the assets exceed their fair value. The Company has not recognized any impairment losses from inception through December 31, 2020.

Revenue Recognition

As of December 31, 2020, all of the Company’s revenue has been generated from its collaboration agreements with Sanofi Genzyme, AbbVie, and Neurocrine.

The Company enters into collaboration agreements which are within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”), under which the Company licenses rights to certain of the Company’s product candidates and performs research and development services. The terms of these arrangements typically include payment of one or more of the following: non-refundable, upfront fees; reimbursement of research and development costs; development, regulatory, and commercial milestone payments; and royalties on net sales of licensed products.

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC 606, the Company performs the following five steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect consideration it is entitled to in exchange for the goods or services it transfers to the customer.

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The promised goods or services in the Company’s arrangements typically consist of license rights to the Company’s intellectual property and research and development services. The Company provides options to additional items in the contracts, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer. The Company evaluates the customer options for material rights, or options to acquire additional goods or services for free or at a discount. If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement. Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer and are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service is separately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on its own or whether the required expertise is readily available and whether the goods or services are integral or dependent to other goods or services in the contract.

The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration may include fixed consideration or variable consideration. At the inception of each arrangement that includes variable consideration, the Company evaluates the amount of potential payments and the likelihood that the payments will be received. The Company utilizes either the most likely amount method or expected amount method to estimate the amount expected to be received based on which method best predicts the amount expected to be received. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

The Company’s contracts often include development and regulatory milestone payments which are assessed under the most likely amount method and constrained if it is probable that a significant revenue reversal would occur. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues in the period of adjustment. To date, the Company has not recognized any consideration related to the achievement of development, regulatory, or commercial milestone revenue resulting from any of the Company’s collaboration arrangements.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any consideration related to sales-based royalty revenue resulting from any of the Company’s collaboration arrangements.

The Company allocates the transaction price based on the estimated stand-alone selling price of each of the performance obligations. The Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company utilizes key assumptions to determine the stand-alone selling price for service obligations, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs. Additionally, in determining the standalone selling price for material rights, the Company utilizes comparable transactions, clinical trial success probabilities, and estimates of option exercise likelihood. Variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated are consistent with the amounts the Company would expect to receive for the satisfaction of each performance obligation.

The consideration allocated to each performance obligation is recognized as revenue when control is transferred for the related goods or services. For performance obligations which consist of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of

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measuring progress. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Upfront payments and fees are recorded as contract liabilities within deferred revenue on the consolidated balance sheets until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.

Research and Development

Research and development costs are charged to expense as incurred in performing research and development activities. The costs include employee compensation costs, external research, consultant costs, sponsored research, license fees, process development and facilities costs. Facilities costs primarily include the allocation of rent, utilities and depreciation.

Leases

Under Accounting Standards Codification (ASC) 842 Leases, which was adopted on January 1, 2019, the Company determines if an arrangement is or contains a lease at inception. For leases with a term of 12 months or less, the Company does not recognize a right-of-use asset or lease liability. The Company's operating leases are recognized on its consolidated balance sheet as other long-term assets, other current liabilities, and other long-term liabilities. The Company does not have any finance leases.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases typically do not provide an implicit rate, the Company uses an estimate of its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Operating lease right-of-use assets also include the effect of any lease prepaid or deferred lease payments and are reduced by lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. Non-lease components as it pertains to the Company's leased premises generally refer to common area maintenance charges related to the premises.

Prior to January 1, 2019, rent expense and lease incentives from operating leases were recognized on a straight-line basis over the lease term. The difference between rent expenses recognized and rental payments was recorded as deferred rent in the accompanying consolidated balance sheets.

Research Contract Costs and Accruals

The Company has entered into various research and development contracts with research institutions and other companies. These agreements are generally cancelable. The Company records accruals for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs.

Patent Costs

The Company expenses patent application and related legal costs as incurred and classifies such costs as general and administrative expenses in the accompanying statements of operations.

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Stock-Based Compensation Expense

The Company accounts for its stock-based compensation awards in accordance with ASC Topic 718 Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees, directors, and other service providers, referred to as non-employees, including grants of restricted stock units and stock options, to be recognized as expense in the consolidated statements of operations based on their grant date fair values. The Company estimates the fair value of options granted using the Black-Scholes option pricing model. The Company uses the fair value of its common stock to determine the fair value of restricted stock awards and restricted stock units.

The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the calculation of expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to a lack of company-specific historical and implied volatility data, the Company bases the estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded, blended with the historical volatility of its common stock. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The computation of expected volatility is based on the historical volatility of a representative group of companies with similar characteristics to the Company, including stage of product development and life science industry focus. The Company uses the simplified method as prescribed by the SEC Staff Accounting Bulletin No. 107, Share-Based Payment, to calculate the expected term for stock options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. For stock options granted to non-employees, the Company utilizes the contractual term of the arrangement as the basis for the expected term assumption. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock.

The Company expenses the fair value of its stock-based compensation awards on a straight-line basis over the associated service period, which is generally the period in which the related services are received, adjusted for actual forfeitures of unvested awards as they occur.

The Company records the expense for stock-based compensation awards subject to performance conditions over the remaining service period when management determines that achievement of the performance condition is probable. Management evaluates when the achievement of a performance condition is probable based on the expected satisfaction of the performance conditions as of the reporting date.

Income Taxes

Income taxes are recorded in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and the tax reporting basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company provides a valuation allowance against net deferred tax assets unless, based upon the weight of available evidence, it is more likely than not that the deferred tax assets will be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of December 31, 2020, the Company does not have any significant uncertain tax positions.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income or loss. Other comprehensive income or loss consists of unrealized gains or losses on marketable securities.

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Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-converted methods.

For purposes of the diluted net income (loss) per share, unvested restricted common stock and outstanding stock options are considered to be potentially dilutive securities. Unvested restricted common stock and outstanding stock options were excluded from the calculation of diluted net loss per share in the years ended December 31, 2019 and 2018, because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for the years ended December 31, 2019 and 2018.

The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net income (loss) per share because to do so would be anti-dilutive:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ As of December 31, ​

Unvested restricted common stock units ​ ​ 527,625 ​ ​ 455,404 ​ ​ — ​

​

Basic net income (loss) and diluted weighted-average shares outstanding are as follows for the year ended December 31, 2020, 2019, and 2018.

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31,

​ ​ (in thousands, except share data)

Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​

Denominator for basic net income (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​

Denominator for diluted net income (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​

Common stock options and restricted stock units ​ ​ 216,068 ​ ​ — ​ ​ —

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

Concentrations of Credit Risk and Off-Balance Sheet Risk

The Company has no financial instruments with off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements. Financial instruments that potentially subject the Company to a concentration of credit risk are cash and cash equivalents. The Company’s cash is held in accounts at financial institutions that may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds.

Concentration of Suppliers

The Company is dependent on third-party manufacturers to supply certain products for research and development activities in its programs. In particular, the Company relies on a sole manufacturer to supply it with specific vectors related to the Company’s research and development programs.

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Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker in deciding how to allocate resources and assess performance. The Company and the Company’s chief operating decision maker, the Company’s Chief Executive Officer, views the Company’s operations and manages its business as a single operating segment, which is the business of developing and commercializing gene therapies.

Recently Adopted Accounting Pronouncements

In 2016, the Financial Accounting Standards Board, or FASB, issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The Company adopted the standard on January 1, 2020. Based on the composition of our investment portfolio, current market conditions, and historical credit loss activity, the adoption of this standard did not have a material impact on the consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This standard eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The Company adopted the standard on the required effective date of January 1, 2020. The adoption of this standard did not have a material impact on the consolidated financial statements and related disclosures.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This standard amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and amends the related earnings per share (“EPS”) guidance. The ASU will be effective for smaller reporting companies for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years. Early adoption is permitted in fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is assessing the impact of ASU 2020-06 on the consolidated financial statements and does not expect it to have a material impact.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends certain aspects of the existing guidance to improve consistent application. The new standard will be effective for public business entities for fiscal years beginning after December 15, 2020. The Company is assessing the potential impact ASU 2019-12 may have on its financial position and results of operations upon adoption.

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3. Fair value measurements

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019 are as follows:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ Quoted Prices ​ Significant ​ ​ ​

​ ​ ​ ​ ​ in Active ​ Other ​ Significant

​ ​ ​ ​ ​ Markets for ​ Observable ​ Unobservable

​ ​ ​ ​ ​ Identical Assets ​ Inputs ​ Inputs ​

Assets Total (Level 1) (Level 2) (Level 3)

​ ​ (in thousands)

December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

U.S. Treasury notes ​ ​ 70,342 ​ ​ 70,342 ​ ​ — ​ ​ — ​

Equity securities ​ ​ 6,356 ​ ​ 6,356 ​ ​ — ​ ​ — ​

Total marketable securities ​ $ 76,698 ​ $ 76,698 ​ $ — ​ $ — ​

Warrants to purchase equity securities ​ ​ 3,816 ​ ​ — ​ ​ 3,816 ​ ​ — ​

December 31, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Equity securities ​ ​ 1,920 ​ ​ 1,920 ​ ​ — ​ ​ — ​

Total marketable securities ​ $ 197,411 ​ $ 197,411 ​ $ — ​ $ — ​

Warrants to purchase equity securities ​ ​ 554 ​ ​ — ​ ​ 554 ​ ​ — ​

​

The Company measures the fair value of money market funds, U.S. Treasuries and equity securities based on quoted prices in active markets for identical securities. The Level 2 equity securities include warrants to purchase equity securities that are valued using the Black-Scholes model. The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the calculation of expected term of the awards, (iii) the risk-free interest rate, and (iv) expected dividends. The assumptions utilized to value the warrants to purchase equity securities as of December 31, 2020 and 2019 are as follows.

​

​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of December 31,