Table of Contents
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) | |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| ☒ | Smaller reporting company | |||||
| Emerging growth company | ||||||
Table of Contents
TABLE OF CONTENTS
2
Table of Contents
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or the Quarterly Report, contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, timing and likelihood of success, the plans and objectives of management for future operations and future results of anticipated products, the impact of the COVID-19 pandemic on our business and operations and our future financial results, and the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”, or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the factors described under the sections in this Quarterly Report titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as the following:
| • | our ability to execute our strategic initiative plans and manage operating expenses; |
| • | our status as a development-stage company and our expectation to incur losses in the future; |
| • | our future capital needs and our need to raise additional funds; |
| • | our ability to maximize the value of our pipeline of product candidates; |
| • | our unproven approach to therapeutic intervention; |
| • | our ability to enroll patients in clinical trials, timely and successfully complete those trials and receive necessary regulatory approvals; |
| • | our ability to access manufacturing facilities and to receive or manufacture sufficient quantities of our product candidates; |
| • | our ability to maintain our existing or future collaborations or licenses and to seek new collaborations, licenses or partnerships; |
| • | the continuing impact of the COVID-19 pandemic on our operations, the continuity of our business, including our preclinical studies and clinical trials, and general economic conditions; |
| • | our ability to protect and enforce our intellectual property rights; |
| • | federal, state, and foreign regulatory requirements, including U.S. Food and Drug Administration, or FDA, regulation of our product candidates; |
| • | our ability to obtain and retain key executives and attract and retain qualified personnel; and |
| • | developments relating to our competitors and our industry, including the impact of government regulation. |
Moreover, we operate in an evolving environment. New risks and uncertainties may emerge from time to time, and it is not possible for management to predict all risk and uncertainties.
You should read this Quarterly Report and the documents that we reference in this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
3
Table of Contents
June 30, |
December 31, |
|||||||
2023 |
2022 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Marketable securities |
||||||||
Accounts receivable |
||||||||
Unbilled receivables |
||||||||
Prepaid expenses and other current assets |
||||||||
Total current assets |
||||||||
Non-current assets: |
||||||||
Property and equipment, net |
||||||||
Right-of-use |
||||||||
Long-term restricted cash |
||||||||
Investments |
||||||||
Other assets |
||||||||
Total assets |
$ | $ | ||||||
Liabilities and stockholders’ equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued expenses |
||||||||
Loan payable |
||||||||
Lease liability |
||||||||
Deferred revenue |
||||||||
Total current liabilities |
||||||||
Non-current liabilities: |
||||||||
Loan payable, net of current portion |
||||||||
Lease liability |
||||||||
Deferred revenue |
||||||||
Warrant liabilities |
||||||||
Total liabilities |
||||||||
Commitments and contingencies (Note 17) |
||||||||
Stockholders’ equity: |
||||||||
Preferred stock, $ |
||||||||
Common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ | $ | ||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
Collaboration and license revenue |
$ | $ | $ | $ | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
||||||||||||||||
General and administrative |
||||||||||||||||
Total operating expenses |
||||||||||||||||
Operating (loss) income |
( |
) | ( |
) | ||||||||||||
Investment income |
||||||||||||||||
Foreign currency transaction, net |
( |
) | ( |
) | ||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Change in fair value of warrant liabilities |
( |
) | ||||||||||||||
Other income, net |
||||||||||||||||
Net (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Other comprehensive income (loss): |
||||||||||||||||
Foreign currency translation adjustment |
( |
) | ( |
) | ||||||||||||
Unrealized gain on marketable securities |
||||||||||||||||
Total comprehensive income (loss) |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Net (loss) income per share: |
||||||||||||||||
Basic |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Diluted |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
||||||||||||||||
Diluted |
||||||||||||||||
Accumulated |
||||||||||||||||||||||||
Additional |
other |
|||||||||||||||||||||||
Common stock |
paid-in |
Accumulated |
comprehensive |
Stockholders’ |
||||||||||||||||||||
Shares |
Amount |
capital |
deficit |
loss |
equity |
|||||||||||||||||||
Balance at December 31, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Issuance of common stock under Employee Stock Purchase Plan |
— | — | — | |||||||||||||||||||||
Issuance of vested restricted stock units |
— | — | — | — | ||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | ||||||||||||||||||||
Currency translation adjustment |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Unrealized gain on marketable securities |
— | — | — | — | ||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Balance at March 31, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Issuance of vested restricted stock units |
— | — | — | — | ||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | ||||||||||||||||||||
Currency translation adjustment |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Net loss |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Balance at June 30, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Accumulated |
||||||||||||||||||||||||
Additional |
other |
|||||||||||||||||||||||
Common stock |
paid-in |
Accumulated |
comprehensive |
Stockholders’ |
||||||||||||||||||||
Shares |
Amount |
capital |
deficit |
loss |
equity |
|||||||||||||||||||
Balance at December 31, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Issuance of common stock under Employee Stock Purchase Plan |
— | — | — | |||||||||||||||||||||
Issuance of common stock upon exercise of options |
— | — | — | |||||||||||||||||||||
Issuance of vested restricted stock units |
— | — | — | — | ||||||||||||||||||||
Issuance of common stock through at-the-market |
— | — | — | |||||||||||||||||||||
Other financing fees |
— | — | ( |
) | — | — | ( |
) | ||||||||||||||||
Stock-based compensation expense |
— | — | — | — | ||||||||||||||||||||
Currency translation adjustment |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Net income |
— | — | — | — | ||||||||||||||||||||
Balance at March 31, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Issuance of vested restricted stock units |
— | — | — | — | — | |||||||||||||||||||
Issuance of common stock and common warrants |
— | — | ||||||||||||||||||||||
Issuance of common stock, license agreement |
— | — | — | |||||||||||||||||||||
Other financing fees |
— | — | — | — | ||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | ||||||||||||||||||||
Currency translation adjustment |
— | — | — | — | ||||||||||||||||||||
Net income |
— | — | — | — | ||||||||||||||||||||
Balance at June 30, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Six Months Ended June 30, |
||||||||
2023 |
2022 |
|||||||
Cash flows from operating activities |
||||||||
Net (loss) income |
$ | ( |
) | $ | ||||
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
||||||||
Depreciation and amortization |
||||||||
Amortization of premiums and discounts on marketable securities |
( |
) | ||||||
Non-cash lease expense |
||||||||
Gain on disposal of property and equipment |
( |
) | ||||||
Stock-based compensation expense |
||||||||
Non-cash interest expense |
||||||||
Warrant liabilities revaluation |
( |
) | ( |
) | ||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
( |
) | ||||||
Unbilled receivable |
||||||||
Prepaid expenses, deposits and other assets |
( |
) | ||||||
Accounts payable |
( |
) | ||||||
Income taxes payable |
( |
) | ||||||
Deferred revenue |
( |
) | ||||||
Accrued expenses and other liabilities |
( |
) | ||||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
Cash flows from investing activities |
||||||||
Proceeds from maturities of marketable securities |
||||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||
Net cash provided by investing activities |
||||||||
Cash flows from financing activities |
||||||||
Repayments of principal on outstanding debt |
( |
) | ||||||
Debt amendment fee included in debt discount |
( |
) | ||||||
Net proceeds from issuance of common stock- at-the-market |
||||||||
Net proceeds from issuance of common stock and common warrants |
||||||||
Proceeds from exercise of stock options |
||||||||
Proceeds from issuance of common stock under Employee Stock Purchase Plan |
||||||||
Net cash (used in) provided by financing activities |
( |
) | ||||||
Effect of exchange rate changes on cash |
( |
) | ||||||
Net change in cash, cash equivalents, and restricted cash |
||||||||
Cash, cash equivalents, and restricted cash at beginning of period |
||||||||
Cash, cash equivalents, and restricted cash at end of period |
$ | $ | ||||||
Supplemental cash flow information |
||||||||
Cash paid for interest |
$ | $ | ||||||
Noncash investing and financing activities |
||||||||
Issuance of common stock, license agreement in stock-based compensation expense |
$ | $ | ||||||
Stock-based compensation expense in accrued liabilities |
$ | $ | ||||||
Purchase of property and equipment not yet paid |
$ | $ | ||||||
Equity offering costs in accrued liabilities |
$ | $ | ||||||
Amortized cost |
Unrealized losses |
Fair value |
||||||||||
December 31, 2022 |
||||||||||||
U.S. government agency securities and treasuries |
$ | $ | ( |
) | $ | |||||||
Corporate bonds |
$ | $ | ( |
) | $ | |||||||
Commercial paper |
||||||||||||
Total |
$ | $ | ( |
) | $ | |||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
Numerator: |
||||||||||||||||
Net (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Less: Change in fair value of liability warrants |
( |
) | ||||||||||||||
Adjusted net (loss) income |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Denominator: |
||||||||||||||||
Weighted-average common shares outstanding - basic |
||||||||||||||||
Dilutive effect of employee equity incentive plans and outstanding warrants |
||||||||||||||||
Weighted-average common shares used in per share calculations - diluted |
||||||||||||||||
Net (loss) income per share: |
||||||||||||||||
Basic |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Diluted |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
Options, RSUs and ESPP shares |
||||||||||||||||
Warrants to purchase common stock |
||||||||||||||||
Total |
||||||||||||||||
June 30, 2023 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets: |
||||||||||||||||
Money market funds (included in cash equivalents) |
$ | $ | $ | $ | ||||||||||||
Total assets |
$ | $ | $ | $ | ||||||||||||
Liabilities: |
||||||||||||||||
Warrant liabilities |
$ | $ | $ | $ | ||||||||||||
Total liabilities |
$ | $ | $ | $ | ||||||||||||
December 31, 2022 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets: |
||||||||||||||||
Money market funds (included in cash equivalents) |
$ | $ | $ | $ | ||||||||||||
Marketable securities: |
||||||||||||||||
U.S. government agency securities and treasuries |
||||||||||||||||
Corporate bonds |
||||||||||||||||
Commercial paper |
||||||||||||||||
Total assets |
$ | $ | $ | $ | ||||||||||||
Liabilities: |
||||||||||||||||
Warrant liabilities |
$ | $ | $ | $ | ||||||||||||
Total liabilities |
$ | $ | $ | $ | ||||||||||||
June 30, |
||||||||
2023 |
2022 |
|||||||
Cash and cash equivalents |
$ | $ | ||||||
Short-term restricted cash |
||||||||
Long-term restricted cash |
||||||||
Total cash, cash equivalents, and restricted cash |
$ | $ | ||||||
June 30, |
December 31, |
|||||||
2023 |
2022 |
|||||||
Risk-free interest rate |
% | % | ||||||
Dividend yield |
||||||||
Expected life (in years) |
||||||||
Expected volatility |
% | % | ||||||
June 30, |
December 31, |
|||||||
2023 |
2022 |
|||||||
Risk-free interest rate |
% | % | ||||||
Dividend yield |
||||||||
Expected life (in years) |
||||||||
Expected volatility |
% | % | ||||||
Warrant liabilities |
||||
Fair value as of December 31, 2022 |
$ | |||
Change in fair value |
( |
) | ||
Fair value as of June 30, 2023 |
$ | |||
June 30, |
December 31, |
|||||||
2023 |
2022 |
|||||||
Laboratory equipment |
$ | $ | ||||||
Computer equipment and software |
||||||||
Leasehold improvements |
||||||||
Furniture and fixtures |
||||||||
Office equipment |
||||||||
Construction in process |
||||||||
Total property and equipment |
||||||||
Less: Accumulated depreciation |
( |
) | ( |
) | ||||
Property and equipment, net |
$ | $ | ||||||
June 30, |
December 31, |
|||||||
2023 |
2022 |
|||||||
Payroll and employee related expenses |
$ | $ | ||||||
Collaboration and licensing |
||||||||
Accrued patent fees |
||||||||
Accrued external research and development costs |
||||||||
Accrued professional and consulting services |
||||||||
Accrued interest |
||||||||
Other |
||||||||
Accrued expenses |
$ | $ | ||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
Operating lease cost |
$ | $ | $ | $ | ||||||||||||
Variable lease cost |
||||||||||||||||
Short-term lease cost |
||||||||||||||||
Less: Sublease income |
( |
) | ( |
) | ||||||||||||
Total lease cost |
$ | $ | $ | $ | ||||||||||||
June 30, |
||||
2023 |
||||
2023 (remainder) |
$ | |||
2024 |
||||
2025 |
||||
2026 |
||||
2027 |
||||
Thereafter |
||||
Total future minimum lease payments |
||||
Less: Imputed interest |
||||
Total operating lease liabilities |
$ | |||
Six Months Ended June 30, |
||||||||
2023 |
2022 |
|||||||
Cash paid for amounts included in the measurement of lease liabilities: |
$ | $ | ||||||
June 30, |
||||||||
2023 |
2022 |
|||||||
Weighted-average remaining lease term |
||||||||
Weighted-average discount rate |
% | % | ||||||
Outstanding principal |
$ | |||
Venture debt termination fee |
||||
Less: Debt discount |
( |
) | ||
Less: Current portion of loan payable |
( |
) | ||
Loan payable, net of current portion |
$ | |||
Year ended: |
||||
2023 (remainder) |
$ | |||
2024 |
||||
2025 |
||||
Total minimum principal payments |
$ | |||
Number of Warrants |
||||||||||||||||
Equity classified |
Liability classified |
Total |
Weighted average exercise price |
|||||||||||||
Outstanding at June 30, 2023 |
$ | |||||||||||||||
Exercise of warrants |
||||
Shares available for future stock incentive awards |
||||
RSUs reserved for issuance |
||||
Unvested restricted stock units |
||||
Outstanding common stock options |
||||
Accrued Ginkgo Bioworks Holdings, Inc. milestone award |
||||
Total |
||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
Research and development |
$ | $ | $ | $ | ||||||||||||
General and administrative |
||||||||||||||||
Total stock-based compensation expense |
$ | $ | $ | $ | ||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
Risk-free interest rate |
% | % | % | % | ||||||||||||
Dividend yield |
||||||||||||||||
Expected term |
||||||||||||||||
Expected volatility |
% | % | % | % | ||||||||||||
Weighted-average fair value of common stock |
$ | $ | $ | $ | ||||||||||||
Number of options |
Weighted-average exercise price ($) |
Weighted-average remaining contractual term (in years) |
Aggregate intrinsic value (in thousands) |
|||||||||||||
Employees |
||||||||||||||||
Outstanding at December 31, 2022 |
$ | $ | ||||||||||||||
Granted |
$ | |||||||||||||||
Forfeited |
( |
) | $ | |||||||||||||
Outstanding at June 30, 2023 |
$ | $ | ||||||||||||||
Vested at June 30, 2023 |
$ | $ | ||||||||||||||
Vested and expected to vest at June 30, 2023 |
$ | $ | ||||||||||||||
Non-employee consultants |
||||||||||||||||
Outstanding at December 31, 2022 |
$ | $ | ||||||||||||||
Outstanding at June 30, 2023 |
$ | $ | ||||||||||||||
Vested at June 30, 2023 |
$ | $ | ||||||||||||||
Vested and expected to vest at June 30, 2023 |
$ | $ | ||||||||||||||
Number of shares |
Weighted average grant date fair value ($) |
|||||||
Unvested at December 31, 2022 |
$ | |||||||
Granted |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
Unvested at June 30, 2023 |
$ | |||||||
Balance at |
Balance at |
|||||||||||||||
beginning of period |
Additions |
Deductions |
end of period |
|||||||||||||
Six Months Ended June 30, 2023 |
||||||||||||||||
Contract liabilities: |
||||||||||||||||
Deferred revenue |
$ | $ | $ | ( |
) | $ | ||||||||||
Total contract liabilities |
$ | $ | $ | ( |
) | $ | ||||||||||
Name |
Shares of common stock purchased |
2022 Warrants purchased |
Total aggregate purchase price |
|||||||||
TAS Partners, LLC (affiliate of Timothy A. Springer, Ph.D.) |
$ | |||||||||||
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, which we filed with the SEC on March 2, 2023. In addition, you should read the “Risk Factors” and “Information Regarding Forward-Looking Statements” sections of this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage biotechnology company leveraging our ImmTOR® platform to develop tolerogenic therapies designed to selectively mitigate unwanted immune responses. With a proven ability to induce tolerance to highly immunogenic proteins, ImmTOR has the potential to amplify the efficacy of biologic therapies, including redosing of life-saving gene therapies, as well as restore the body’s natural self-tolerance in autoimmune diseases. We have several proprietary and partnered programs in our pipeline focused on enzyme therapies, gene therapies, and autoimmune diseases.
In April 2023, in light of current market conditions, our Board of Directors, or the Board, took steps to extend cash runway by pausing further development of SEL-302 for the treatment of methylmalonic acidemia, or MMA, and conducting a targeted headcount reduction of approximately 25%. On August 17, 2023, we announced additional steps to extend cash runway and maximize value for stockholders by continuing to prioritize development of SEL-212 and support of our collaboration with Astellas Gene Therapies, or Astellas, for Xork, and pausing further development of all of our other clinical and preclinical product candidates that we are no longer actively advancing. We intend to seek collaboration partners for the assets in the development programs that we are no longer actively advancing.
Our Product Candidates
Our ImmTOR platform has a broad range of potential applications. Our product development strategy has historically been built on the following three distinct pillars.
Biologic therapies. Biologic therapies are a class of biologic drugs frequently used to treat rare diseases. Through our analysis of biologic drugs, including in our preclinical studies, we have observed that enzymes foreign to the human body, such as enzymes derived from microbes or replacement enzymes in the case of patients that are deficient in the specific enzyme, are especially prone to causing undesired immune responses. Our partnered product candidate, SEL-212, which announced positive topline results from the Phase 3 DISSOLVE I and DISSOLVE II clinical trials in March 2023, consists of ImmTOR co-administered with pegadricase, a pegylated uricase enzyme of fungal origin. This is an example of an immunogenic enzyme that we are combining with ImmTOR with the intention of improving the enzyme’s efficacy and safety. We believe that ImmTOR has the potential to enable and expand the use of enzymes derived from microbial sources, such as bacterial immunoglobulin A, or IgA, protease for the treatment of IgA nephropathy and bacterial immunoglobulin G, or IgG, protease, called Xork, for the treatment of IgG-mediated autoimmune disease flares.
Gene therapies. We believe gene therapies have the potential to address key unmet medical needs for many rare genetic diseases, but undesired immune responses to the viral vectors used for gene replacement, augmentation and editing may be restricting their broader use. AAV immunogenicity and AAV toxicity represent two major challenges for the gene therapy field; in many cases these two issues are inextricably linked. Immunogenicity of AAV vectors is thought to cause or exacerbate many of the adverse events associated with AAV gene therapy. Induction of acute inflammation and capsid-specific CD8 T cells by
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AAV gene therapy is thought to contribute to observations of hepatotoxicity, which has been associated with loss of transgene expression. The formation of neutralizing antibodies against AAV after initial treatment with AAV mediated gene therapies effectively prevents the possibility of re-dosing in patients who may benefit from additional doses due to either the failure to achieve therapeutic benefit or loss of transgene expression over time. Additionally, a significant number of patients who would benefit from treatment by gene therapies are ineligible due to pre-existing immunity to the AAV vectors from a natural infection. This preexisting immunity could potentially be addressed through an IgG protease pre-treatment to open a dosing window for AAV gene therapies. We believe that the combination of ImmTOR and Xork could simultaneously address the two key issues facing the AAV gene therapy modality and make them more accessible while also making them safer and more durable.
Tolerogenic Therapies for Autoimmune Disease: Autoimmune diseases are caused by a breakdown in natural tolerance to our own self-antigens. With over 24 million Americans afflicted with autoimmune diseases, there is a large unmet medical need. As the ImmTOR platform is designed to induce or expand antigen specific T regulatory cells, we believe the ImmTOR platform has the potential to treat autoimmune diseases by restoring self-tolerance to auto-antigens.
In our preclinical studies, we observed that ImmTOR combined with a Treg-selective IL-2 molecule exhibited substantial synergistic activity in increasing the percentage and durability of total Treg expansion in the spleen. We believe that this combination has the potential to be a best-in-class therapy in diseases where expansion of total Treg may prove beneficial. This antigen specificity differentiates ImmTOR-IL from other IL-2 molecule approaches which do not show an antigen specific T-cell expansion. Thus, we believe that not only is ImmTOR-IL a potentially best in class IL-2 where generalized T cell expansion can be beneficial, but also a “first in class” antigen specific IL-2 therapy.
Biologic Therapies – Chronic Refractory Gout
SEL-212 consists of ImmTOR co-administered with pegadricase. Our pegadricase consists of a yeast-derived uricase modified with polyethylene glycol moieties. Uricase is an enzyme endogenous to all mammals, except for humans and certain primates, which converts serum urate to the more soluble metabolite, allantoin. There is a natural limit to the amount of serum urate that can be excreted by the kidneys, which decreases with age and can be reduced by some medications. By converting serum urate to allantoin, uricase provides an additional way for the body to reduce serum urate.
On March 21, 2023, we announced top-line data from the Phase 3 DISSOLVE I and II trials. Top-line results include:
| • | During month six, 56% and 48% of DISSOLVE I patients randomized to receive SEL-212 at the high dose of 0.15 mg/kg of ImmTOR (p<0.0001) and the low dose of 0.1 mg/kg of ImmTOR (p<0.0001), respectively, reached the primary endpoint of serum urate (SU) levels < 6 mg/dL for 80% of the time in month six, compared to 4% of patients randomized to receive placebo. During month six, 47% and 41% of DISSOLVE II patients randomized to receive SEL-212 at the high dose (p=0.0002) and the low dose (p=0.0015) of ImmTOR, respectively, reached the primary endpoint, compared to 12% of patients randomized to receive placebo. |
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| • | 65% and 47% of DISSOLVE I patients 50 years and older randomized to receive SEL-212 at the high dose (p<0.0001) and the low dose (p<0.0001) of ImmTOR, respectively, reached the primary endpoint, compared to 5% of patients randomized to receive placebo; 48% and 45% of DISSOLVE II patients 50 years and older randomized to receive SEL-212 the high dose (p=0.0017) and the low dose (p=0.0044) of ImmTOR, respectively, reached the primary endpoint, compared to 14% of patients randomized to receive placebo. |
| • | In DISSOLVE I, a significant and clinically meaningful overall reduction of 69% in mean SU levels at month six was observed in patients randomized to receive SEL-212 at the high dose, as compared with placebo. |
| • | Adverse events (AEs) identified in the trials were expected, including mild to moderate stomatitis which was observed in 3.4% of the low dose group and 9.2% of the high dose group compared to 0% in placebo across both trials, and a greater number of infusion reactions were observed at 24 hours and 1 hour after drug administration in both treatment groups compared to placebo. Treatment-related serious AEs were observed in six patients, including two cases of anaphylaxis and one gout flare in both the high and low dose treatment groups. Only 4.5% of patients receiving the low dose of SEL-212 and 3.4% at the high dose of SEL-212 had infusion reactions, across both trials, evaluated one hour post-dose. All infusion reactions occurred within the first three infusions, and each occurred during infusions and completely resolved with infusion halt and symptomatic treatment. There was one death in the six-month extension phase of the DISSOLVE I trial, which was caused by a motor vehicle accident unrelated to the study drug. There was no difference in gout flares when both treatment groups were compared to placebo. |
| • | In the six-month extension period for the DISSOLVE I trial, 75% of patients who completed six months of SEL-212 treatment as responders were observed to continue to be successfully treated through 12 months with no infusion reactions or safety signals. |
On July 10, 2023, as required under the Sobi License, we transferred control and ownership of the investigational new drug applications, or INDs, associated with SEL-212 to Sobi.
We estimate that peak sales of SEL-212, if approved, could reach over $700 million.
Gene Therapies – Methylmalonic Acidemia
Our lead therapeutic gene therapy program, SEL-302, is intended to use ImmTOR to enhance the treatment of methylmalonic acidemia, or MMA, an inherited disorder in which the body is unable to process certain proteins and fats (lipids) properly. This program was previously being conducted under our collaboration with Asklepios Biopharmaceutical, Inc., or AskBio. In October and November 2020, we received rare pediatric disease designation and orphan drug designation, respectively, from the Food and Drug Administration, or the FDA, for SEL-302, for the treatment of MMA due to methylmalonyl-CoA mutase, or MMUT gene mutations. See “—Licenses and Collaborations — Asklepios Biopharmaceutical, Inc.” for more information. In April 2021, we were notified by AskBio that it intended to opt-out of development of the MMA indication. The feasibility study and license agreement with AskBio, or AskBio Collaboration Agreement, otherwise remains in effect. We filed an IND to conduct a Phase 1/2 clinical trial of our SEL-302 product candidate in pediatric patients with methylmalonic acidemia in the third quarter of 2021. ImmTOR manufacturing, controlled by us, continues to proceed in accordance with our expectations and we have not observed any impact to any of our ImmTOR programs. In December 2022, we initiated ReiMMAgine, the Phase 1/2 clinical trial of SEL-302, however, we have since paused further development of SEL-302 for the treatment of MMA.
Gene Therapies – IgG Protease (Xork)
We have exclusively licensed Xork, an IgG-specific protease from Genovis AB (publ.), or Genovis, an enzyme technology company. We plan to develop Xork, either alone or in combination with our ImmTOR platform, with the goal of enabling the dosing of transformative gene therapies in patients with pre-existing AAV immunity due to natural exposures to AAV viruses. Currently, significant proportions of the potential patient populations for many gene therapy trials are ineligible for treatment by AAV mediated gene therapies due to pre-existing antibodies which limits transduction efficiency of the therapy and could trigger potentially dangerous immune responses. IgG proteases are derived from bacteria. Xork exhibits low cross-reactivity to antibodies in normal human serum and is differentiated from IgG proteases derived from Streptococcus pyogenes, a common human pathogen.
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In January 2023, we entered into an exclusive licensing and development agreement for Xork to be developed for use with AT845, Astellas’ investigational AAV-based treatment for Pompe disease in adults. We are responsible for the early development activities and manufacturing of Xork and will maintain the rights for the development of additional indications beyond Pompe disease. We intend to work to satisfy our remaining contractual obligations in connection with our partnership with Astellas.
Tolerogenic Therapies for Autoimmune Disease – ImmTOR & ImmTOR-IL
We believe our ImmTOR platform shows potential to treat autoimmune diseases. In preclinical studies, we have observed ImmTOR’s ability to induce antigen-specific T regulatory cells. We believe that ImmTOR, in combination with an autoantigen of interest, could create self-tolerance to auto-antigens and thus be a novel approach to the treatment of autoimmune diseases.
Additionally, in preclinical studies we have observed ImmTOR, in combination with IL-2 molecules, expanding T-regulatory cells beyond IL-2 alone and we intend to pursue a combination of ImmTOR and IL-2, which we refer to as ImmTOR-IL, in diseases for which general T cell expansion has shown a therapeutic benefit. Additionally, we have observed in preclinical studies that the combination of ImmTOR, a Treg-selective IL-2 molecule and an antigen, exhibited substantial synergistic activity in inducing and expanding antigen specific regulatory T cells when ImmTOR and IL-2 is combined with an antigen of interest. We have paused further development of ImmTOR-IL product candidates.
Cyrus Biotechnology, Inc., or Cyrus, is engineering a proprietary IL-2 protein to combine with the ImmTOR platform to potentially mitigate unwanted immune responses by reducing the inherent immunogenicity of the protein while also promoting immune tolerance. The IL-2 pathway influences critical aspects of both immune stimulation and immune regulation, through the development and expansion of Treg cells. These Treg cells are a specialized subpopulation of T cells involved in suppressing certain immune responses and maintaining the body’s self-tolerance. In preclinical studies investigating the effects of ImmTOR in combination with a Treg-selective IL-2 molecule we have observed a substantial synergistic activity in increasing the percentage and durability of Treg expansion in the spleen.
Licenses and Collaborations
In-licenses
Ginkgo Bioworks Holdings, Inc.
In October 2021, we entered into a Collaboration and License Agreement, or the First Ginkgo Agreement, with Ginkgo Bioworks Holdings, Inc., or Ginkgo. Under the First Ginkgo Agreement, Ginkgo will design next generation IgA proteases with potentially transformative therapeutic potential. In return, Ginkgo is eligible to earn both upfront research and development fees and milestone payments, including certain milestone payments in the form of our common stock, clinical and commercial milestone payments of up to $85 million in cash, as well as downstream value in the form of royalties on sales.
In January 2022, we entered into a Collaboration and License Agreement, or the Second Ginkgo Agreement, with Ginkgo. Under the Second Ginkgo Agreement, we and Ginkgo collaborate to design novel AAV capsids with potentially improved transduction, enhanced tissue tropism and reduced immunogenicity. In return, Ginkgo is eligible to earn both upfront research and development fees and milestone payments, including certain milestone payments in the form of our common stock, clinical and commercial milestone payments of up to $207 million in cash for each of a specified number of products which have the potential to total, in the aggregate, up to $1.1 billion. Ginkgo is also entitled to potential further downstream value in the form of royalties on sales.
In June 2022, we were notified of the achievement of the midpoint of the technical development plan under the First Ginkgo Agreement by Ginkgo. In July 2023, we mutually agreed with Ginkgo that the completion of the technical development plan’s midpoint task under the Second Ginkgo Agreement had been achieved as of June 2023.
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Genovis AB (publ.)
In October 2021, we entered into a strategic licensing agreement with Genovis, or the Genovis Agreement. Under the Genovis Agreement, we paid to Genovis an upfront payment in exchange for an exclusive license to Genovis’ Xork enzyme technology for all therapeutic uses in humans, excluding research, preclinical, diagnostic, and other potential non-therapeutic applications of the enzyme. Genovis is eligible to earn development and sales-based milestones and sub-licensing fees, as well as tiered royalties on worldwide sales in the low double digits. Outside of the remaining contractual obligations under our partnership with Astellas, we have paused further development of Xork product candidates.
Cyrus Biotechnology, Inc.
In September 2021, we entered into a Collaboration and License Agreement with Cyrus, or the Cyrus Agreement, pursuant to which Cyrus agreed to grant us an exclusive, worldwide license to certain intellectual property in order to form a protein engineering collaboration combining the ImmTOR platform with Cyrus’ engineered protein therapeutics. We expect that novel engineered protein therapeutic candidates from the partnership will be used to expand our proprietary pipeline and further bolster the ImmTOR platform. In return for the licensed intellectual property, we made an upfront payment and will pay certain discovery, development, and sales-based milestones which could potentially total up to approximately $1.5 billion across multiple programs.
In June 2022, we mutually agreed with Cyrus that the preclinical key in-vitro success milestone had been achieved. We intend to pause further development of product candidates involving Cyrus’ engineered protein therapeutics.
Out-licenses
Astellas Gene Therapies
In January 2023, we entered into a License and Development Agreement with Astellas. Under this agreement, Astellas obtained the sole and exclusive right to commercialize Xork for use in Pompe disease in combination with an Astellas gene therapy investigational or authorized product, with a current focus on AT845. In connection with entry into this agreement, we received a $10 million upfront payment and are eligible to receive $340.0 million for certain additional development and commercial milestones plus royalties on any potential commercial sales where Xork is used as a pre-treatment for AT845. As a result of the sublicense of Xork to Astellas, we made a $4.0 million payment to Genovis in February 2023.
Takeda Pharmaceuticals USA, Inc.
In October 2021, we entered into a strategic licensing agreement, or the Takeda Agreement, with Takeda Pharmaceuticals USA, Inc., or Takeda. Under the Takeda Agreement, we granted Takeda an exclusive license to our ImmTOR technology initially for two specified disease indications within the field of lysosomal storage disorders. Under the terms of the Takeda Agreement, we received an upfront payment and are entitled to receive up to $1.124 billion in future additional payments over the course of the partnership that are contingent on the achievement of development or commercial milestones or Takeda’s election to continue its activities at specified development stages. We are also eligible for tiered royalties on future commercial sales of any licensed products. In June 2023, we received a payment of $0.5 million for the achievement of a certain non-clinical milestone. In April 2023, we were notified by Takeda of its intention to terminate the Takeda Agreement effective July 25, 2023.
Swedish Orphan Biovitrum AB (publ.)
In June 2020, we announced that we had entered into a License and Development Agreement, or the Sobi License, with Sobi pursuant to which we agreed to grant Sobi an exclusive, worldwide (except as to Greater China) license to develop, manufacture and commercialize SEL-212, which is currently in development for the treatment of chronic refractory gout. In September 2020, pursuant to the Sobi License, Sobi paid us a one-time, upfront payment of $75 million. Sobi has also agreed to make milestone payments totaling up to $630 million to us upon the achievement of various development and regulatory milestones and sales thresholds for annual net sales of SEL-212, and tiered royalty payments ranging from the low double digits on the lowest sales tier to the high teens on the highest sales tier. In July 2022, we received $10.0 million for the completion of the enrollment of the DISSOLVE II trial.
Additionally, in 2020, Sobi purchased an aggregate of 5,416,390 shares of our common stock at a purchase price of $4.6156 per share for aggregate gross proceeds of $25 million, which we refer to as the Sobi Private Placement.
Under the Sobi License, we have operational oversight of the Phase 3 DISSOLVE clinical program of SEL-212 (DISSOLVE I and DISSOLVE II) that commenced in September 2020, at Sobi’s expense. In March 2023, we announced positive topline results from the Phase 3 DISSOLVE I and DISSOLVE II clinical trials.
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Sarepta Therapeutics, Inc.
In June 2020, we entered into a research license and option agreement, or the Sarepta Agreement, with Sarepta Therapeutics, Inc., or Sarepta. Pursuant to the Sarepta Agreement, we granted Sarepta a license to research and evaluate ImmTOR in combination with Sarepta’s AAV gene therapy or gene editing technology, using viral or non-viral delivery, or the Sarepta Product, to treat Duchenne Muscular Dystrophy and certain Limb-Girdle Muscular Dystrophy subtypes, or the Sarepta Indications. Sarepta had an option term of 24 months during which it was permitted to opt-in to obtain an exclusive license to further develop and commercialize the Sarepta Product to treat at least one Sarepta Indication, with a potential to extend the option term if Sarepta paid an additional fee to us. Sarepta made an upfront payment to us upon signing of the Sarepta Agreement, and we were eligible to receive additional payments under the option term. If Sarepta opted-in to an exclusive license agreement, we could have received option exercise payments per indication and we would have been entitled to significant development and commercial milestone payments and tiered royalties ranging from the mid-to-high single digits based on net sales.
In June 2021, we received a payment of $3.0 million for the achievement of certain preclinical milestones. In August 2022, we received a payment of $2.0 million in exchange for a nine-month extension to Sarepta’s options to both Sarepta Indications and a payment of $4.0 million for the achievement of certain non-clinical milestones. In March 2023, we were notified by Sarepta that Sarepta would not be exercising its exclusive option under the Sarepta Agreement.
Asklepios Biopharmaceutical, Inc.
Feasibility Study and License Agreement
In August 2019, we entered into the AskBio Collaboration Agreement. The initial product candidate being developed under this collaboration is gene therapy for MMA, which is a disease that can cause severe developmental defects and premature death as a result of an accumulation of toxic metabolites. We previously conducted preclinical studies for this product candidate and will leverage that previous work within the collaboration. In April 2021, we were notified by AskBio that it intended to opt-out of development of the MMA indication. The AskBio Collaboration Agreement otherwise remains in effect, although we have paused further development of SEL-302 for the treatment of MMA.
Impact of Global Events
COVID-19
We continue to closely monitor how the COVID-19 pandemic is affecting our employees, business, preclinical studies and clinical trials. Disruptions caused by the COVID-19 pandemic may result in difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical trials, and the incurrence of unforeseen costs as a result of supply chain, preclinical study or clinical trial delays.
While the COVID-19 pandemic has not had a material impact on our clinical programs as of the date of this Quarterly Report, it could have an impact on our ability to commence and conduct preclinical studies and clinical trials of our IgA nephropathy, gene therapy, and autoimmune disease programs, and our ability to obtain supply of both active drug substances and finished drug product as well as efficient execution of the overall supply chain for SEL-212 and our other programs.
At this time, any impact of COVID-19 on our business, revenues, results of operations and financial condition will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, the emergence of new virus variants, travel restrictions and social distancing in the United States and other countries, business closures, disruptions, mandated stay at home orders or lockdowns, supply chain disruptions, the ultimate impact on financial markets and the global economy, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.
Financial Operations
To date, we have financed our operations primarily through public offerings and private placements of our securities, funding received from research grants, collaboration and license arrangements and our credit facility. We do not have any products approved for sale and have not generated any product sales.
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Except for the year ended December 31, 2022, we have incurred significant operating losses since our inception. We incurred a net loss of $33.1 million and had net income of $37.4 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, we had an accumulated deficit of $428.0 million.
In April 2023, in light of current market conditions, our Board took steps to extend cash runway by pausing further development of SEL-302 for the treatment of MMA and conducting a targeted headcount reduction of approximately 25%. On August 17, 2023, we announced additional steps to extend cash runway and maximize value for stockholders by continuing to prioritize development of SEL-212 and support of our collaboration with Astellas for Xork, and pausing further development of all of our other clinical and preclinical product candidates that we are no longer actively advancing. We intend to seek collaboration partners for the assets in the development programs that we are no longer actively advancing. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we:
| • | continue to support the development of SEL-212 and satisfy our contractual obligations under our collaboration with Astellas for Xork; |
| • | assess ways to maximize value and support further development of our product candidates, other than SEL-212 and Xork, through potential partnerships; |
| • | seek regulatory approvals for any product candidates that successfully complete clinical trials; and |
| • | maintain, expand and protect our intellectual property portfolio, including through licensing arrangements. |
We believe that following the capital efficiencies expected to be realized through our strategic reprioritization, our existing cash, cash equivalents, and restricted cash as of June 30, 2023, combined with the next anticipated milestone payment related to SEL-212 development activities, will enable us to fund our operating expenses and capital expenditure requirements into 2027. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
The consolidated financial information presented below includes the accounts of Selecta Biosciences, Inc. and our wholly owned subsidiaries, Selecta (RUS) LLC, a Russian limited liability company, or Selecta (RUS), and Selecta Biosciences Security Corporation, a Massachusetts securities corporation. All intercompany accounts and transactions have been eliminated.
Collaboration and license revenue
To date, we have not generated any revenue from product sales. Our revenue consists primarily of collaboration and license revenue, which includes amounts recognized related to upfront and milestone payments for research and development funding under collaboration and license agreements. We expect that any revenue we generate will fluctuate from quarter to quarter because of the timing and amounts of fees, research and development reimbursements and other payments from collaborators. We do not expect to generate revenue from product sales for at least the next several years. If we or our collaborators fail to complete the development of our product candidates in a timely manner or fail to obtain regulatory approval as needed, our ability to generate future revenue will be harmed, and will affect the results of our operations and financial position. For further description of the agreements underlying our collaboration and license revenue, see Note 12 to our consolidated financial statements included elsewhere in this Quarterly Report.
Research and development expenses
Our research and development expenses consist of external research and development costs, which we track on a program-by-program basis and primarily include contract manufacturing organization related costs and fees paid to contract research organizations, and internal research and development costs, which are primarily compensation expenses for our research and development employees, lab supplies, analytical testing, allocated overhead costs and other related expenses. Our internal research and development costs are often devoted to expanding our programs and are not necessarily allocable to a specific target.
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We expense research and development costs as incurred. Conducting a significant amount of research and development is central to our business model. Product candidates in clinical development generally have higher development costs than those in earlier stages of development, primarily due to the size, duration and cost of clinical trials. The successful development of our clinical and preclinical product candidates is highly uncertain. Clinical development timelines, the probability of success and development costs can differ materially from our expectations. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those which we currently expect will be required for the completion of clinical development of a product candidate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time to complete any clinical development.
In June 2020, we and Sobi entered into the Sobi License. Pursuant to the Sobi License, clinical trial costs incurred to complete development of SEL-212, including but not limited to costs incurred while conducting and completing the Phase 3 DISSOLVE trials, will be reimbursed by Sobi. These costs, when reimbursed, will be recognized as revenue consistent with the revenue recognition methodology disclosed in Note 12 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report. The reimbursable costs exclude any costs of additional development activities required that are related to ImmTOR and that are unrelated to SEL-212.
In January 2023, we and Astellas entered into the Astellas Agreement. Pursuant to the Astellas Agreement, Astellas will reimburse us for 25% of all budgeted costs incurred to complete the development of Xork for use in Pompe disease with an Astellas gene therapy investigational or authorized product. These costs, when reimbursed, will be recognized as revenue consistent with the revenue recognition methodology disclosed in Note 12 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
General and administrative expenses
General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation, related to our executive, finance, business development and support functions. Other general and administrative expenses include facility-related costs not otherwise allocated to research and development expenses, travel expenses for our general and administrative personnel and professional fees for auditing, tax and corporate legal services, including intellectual property-related legal services.
Investment income
Investment income consists primarily of interest income earned on our cash, cash equivalents and marketable securities.
Interest expense
Interest expense consists of interest expense on amounts borrowed under our credit facilities.
Other income, net
Other income, net consists primarily of sublease income during the three and six months ended June 30, 2023 and was de minimis during the three and six months ended June 30, 2022.
Change in fair value of warrant liabilities
Common warrants classified as liabilities are remeasured at fair value, utilizing a Black-Scholes valuation methodology, quarterly with the change in fair value recognized as a component of earnings.
Foreign currency transaction gain (loss)
The functional currency of our Russian subsidiary is the Russian ruble. In addition to holding cash denominated in Russian rubles, our Russian bank accounts also hold cash balances denominated in U.S. dollars to facilitate payments to be settled in U.S. dollars or other currencies. As of each of June 30, 2023 and December 31, 2022, we maintained cash of $0.2 million in Russian banks accounts in denominations of both Russian rubles and U.S. dollars. The amounts denominated in U.S. dollars and used in transacting the day-to-day operations of our Russian subsidiary are subject to transaction gains and losses, which are reported as incurred.
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Results of Operations
Comparison of the Three Months Ended June 30, 2023 and 2022
Collaboration and license revenue
The following is a comparison of collaboration and license revenue for the three months ended June 30, 2023 and 2022 (in thousands, except percentages):
| Three Months Ended June 30, |
Increase | |||||||||||||||
| 2023 | 2022 | (decrease) | ||||||||||||||
| Collaboration and license revenue |
$ | 5,249 | $ | 39,273 | $ | (34,024 | ) | (87 | )% | |||||||
During the three months ended June 30, 2023, collaboration and license revenue was $5.2 million, compared to $39.3 million in 2022. During the three months ended June 30, 2023 and 2022, we recognized $4.3 million and $29.2 million, respectively, under the license agreement with Sobi resulting from the shipment of clinical supply and the reimbursement of costs incurred for the Phase 3 DISSOLVE clinical program. Additionally, during the three months ended June 30, 2023, $0.8 million was recognized under the Astellas Agreement and $0.1 million was recognized under the Takeda Agreement. During the three months ended June 30, 2022, $10.1 million was recognized under the Sarepta Agreement.
Research and development expenses
The following is a comparison of research and development expenses for the three months ended June 30, 2023 and 2022 (in thousands, except percentages):
| Three Months Ended June 30, |
Increase | |||||||||||||||
| 2023 | 2022 | (decrease) | ||||||||||||||
| Research and development |
$ | 17,782 | $ | 19,182 | $ | (1,400 | ) | (7 | %) | |||||||
During the three months ended June 30, 2023, our research and development expenses decreased by $1.4 million, or 7%, as compared to the three months ended June 30, 2022. The decrease in cost was primarily the result of the strategic reprioritization in April 2023, partially offset by a one-time cash charge to salaries and benefits as a result of our headcount reduction in April 2023 and increased contract license and milestone payments.
General and administrative expenses
The following is a comparison of general and administrative expenses for the three months ended June 30, 2023 and 2022 (in thousands, except percentages):
| Three Months Ended June 30, |
Increase | |||||||||||||||
| 2023 | 2022 | (decrease) | ||||||||||||||
| General and administrative |
$ | 6,105 | $ | 6,231 | $ | (126 | ) | (2 | %) | |||||||
During the three months ended June 30, 2023, our general and administrative expenses decreased by $0.1 million, or 2%, as compared to the three months ended June 30, 2022. The decrease in costs was primarily the result of a reduction in expenses incurred for stock compensation, partially offset by a one-time cash charge to salaries and benefits as a result of our headcount reduction in April 2023.
Investment income
Investment income was $1.4 million and $0.2 million for the three months ended June 30, 2023 and 2022, respectively. The increase in investment income was due to increased investment and higher interest rates.
Foreign currency transaction gain (loss)
We recognized de minimis foreign currency fluctuations during each of the three months ended June 30, 2023 and 2022.
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Interest expense
Interest expense was $0.8 million and $0.7 million for the three months ended June 30, 2023 and 2022, respectively, representing interest expense and amortization of the carrying costs of our credit facilities.
Change in fair value of warrant liabilities
For the three months ended June 30, 2023, we recognized $6.3 million of income from the decrease in the fair value of warrant liabilities utilizing the Black-Scholes valuation methodology. The decrease in value was primarily driven by a decrease in the price of our common stock. For the three months ended June 30, 2022, we recognized a $4.6 million charge from the increase in the fair value of warrant liabilities primarily driven by an increase in the price of our common stock.
Other income, net
Other income, net consists primarily of sublease income for the three months ended June 30, 2023 and was de minimis for the three months ended June 30, 2022.
Net (loss) income
Net loss for the three months ended June 30, 2023 was $11.4 million compared to net income of $8.6 million for the three months ended June 30, 2022.
Comparison of the Six Months Ended June 30, 2023 and 2022
Collaboration and license revenue
The following is a comparison of collaboration and license revenue for the six months ended June 30, 2023 and 2022 (in thousands, except percentages):
| Six Months Ended June 30, |
Increase | |||||||||||||||
| 2023 | 2022 | (decrease) | ||||||||||||||
| Collaboration and license revenue |
$ | 11,187 | $ | 73,272 | $ | (62,085 | ) | (85 | )% | |||||||
During the six months ended June 30, 2023 and 2022, we recognized $8.7 million and $52.9 million under the Sobi License resulting from the shipment of clinical supply and the reimbursement of costs incurred for the Phase 3 DISSOLVE clinical program. Additionally, during the six months ended June 30, 2023, $1.4 million was recognized under the Astellas Agreement and $0.6 million was recognized under the Takeda Agreement, and $0.5 million was recognized under the Sarepta Agreement. During the six months ended June 30, 2022, $10.2 million was recognized under the Sarepta Agreement, $9.2 million was recognized upon the mutual termination of the Spark License Agreement, and $1.0 million was recognized under the Takeda Agreement.
Research and development expenses
The following is a comparison of research and development expenses for the six months ended June 30, 2023 and 2022 (in thousands, except percentages):
| Six Months Ended June 30, |
Increase | |||||||||||||||
| 2023 | 2022 | (decrease) | ||||||||||||||
| Research and development |
$ | 36,406 | $ | 36,871 | $ | (465 | ) | (1 | )% | |||||||
During the six months ended June 30, 2023, our research and development expenses decreased by $0.5 million, or 1%, as compared to the six months ended June 30, 2022. The decrease in cost was primarily the result of the strategic reprioritization in April 2023, partially offset by increased contract license and milestone payments and a one-time cash charge to salaries and benefits as a result of our headcount reduction in April 2023.
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General and administrative expenses
The following is a comparison of general and administrative expenses for the six months ended June 30, 2023 and 2022 (in thousands, except percentages):
| Six Months Ended June 30, |
Increase | |||||||||||||||
| 2023 | 2022 | (decrease) | ||||||||||||||
| General and administrative |
$ | 11,800 | $ | 11,768 | $ | 32 | — | % | ||||||||
During the six months ended June 30, 2023, our general and administrative expenses increased by less than $0.1 million as compared to the six months ended June 30, 2022. The increase in costs was primarily driven by a one-time cash charge to salaries and benefits as a result of our headcount reduction in April 2023 partially offset by a reduction in expenses incurred for stock compensation.
Investment income
Investment income was $2.7 million and $0.2 million, for the six months ended June 30, 2023 and 2022, respectively. The increase in investment income was due to increased investments and higher interest rates.
Foreign currency transaction gain (loss)
We recognized de minimis foreign currency fluctuations during the six months ended June 30, 2023 and 2022, respectively.
Interest expense
Interest expense was $1.6 million and $1.4 million for the six months ended June 30, 2023 and 2022, respectively, representing interest expense and amortization of the carrying costs of our credit facilities.
Change in fair value of warrant liabilities
For the six months ended June 30, 2023, we recognized $2.3 million of income for the decrease in the fair value of warrant liabilities utilizing a Black-Scholes valuation methodology. The decrease in value was primarily driven by a decrease in the remaining expected life of the warrants. For the six months ended June 30, 2022, we recognized $13.9 million of income for the decrease in the fair value of warrant liabilities primarily driven by a decrease in the price of our common stock.
Other income (expense)
Other income was $0.5 million and $0.2 million for the six months ended June 30, 2023 and 2022, respectively. The increase was primarily driven by sublease income.
Net income (loss)
Net loss for the six months ended June 30, 2023 was $33.1 million compared to net income of $37.4 million for the six months ended June 30, 2022.
Liquidity and Capital Resources
Except for the year ended December 31, 2022, in which we had net income of $35.4 million, we have incurred recurring net losses since our inception. We expect that we will continue to incur losses and that such cumulative losses will increase for the foreseeable future.
Since inception, we have financed our operations with a combination of issuance of preferred and common stock, government grant funding, borrowings under credit facilities and proceeds from our collaboration and license agreements.
As of June 30, 2023, our cash, cash equivalents, and restricted cash were $115.0 million, of which $3.0 million was restricted cash related to lease commitments and $0.2 million was held by our Russian subsidiary designated solely for use in its operations.
In addition to our existing cash equivalents, we have from time to time, and may, in the future receive research and development funding pursuant to our collaboration and license agreements. Currently, funding from payments under our collaboration agreements represent our only source of committed external funds.
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Indebtedness
On August 31, 2020, we entered into a term loan of up to $35.0 million, or the 2020 Term Loan, consisting of term loans in an aggregate amount of $25.0 million, or the Term A Loan, and term loans in an aggregate amount of $10.0 million, or the Term B Loan, governed by a loan and security agreement among us and Oxford Finance LLC, or Oxford, as collateral agent and a lender, and Silicon Valley Bank, as a lender. The Term A Loan was funded in full on August 31, 2020, or the Funding Date, and will mature on August 1, 2025. The second draw period expired on September 30, 2021 and the Term B Loan is no longer available to be drawn by the Company.
On March 21, 2022, we entered into a Second Amendment to Loan and Security Agreement, or the Second Amendment. The Second Amendment extends the date on which amortization payments in respect of the 2020 Term Loan will commence to April 1, 2023. Thereafter, amortization payments will be paid monthly in equal installments of principal and interest to fully amortize the outstanding principal over the remaining term of the 2020 Term Loan, subject to recalculation upon a change in the prime rate. The Second Amendment was determined to be a loan modification, and the $0.1 million fee was recorded as an addition to the debt discount on the effective date.
On September 20, 2022, we entered into a Third Amendment to the Loan and Security Agreement or the Third Amendment. The Third Amendment was entered into in connection with the expansion of our corporate headquarters to provide for an increase of $0.2 million in the letter of credit for a total of $1.6 million which renews automatically each year.
On March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation, or the FDIC, was appointed as receiver. On March 13, 2023, the FDIC announced that all of Silicon Valley Bank’s deposits and substantially all of its assets had been transferred to a newly created, full-service FDIC-operated bridge bank, Silicon Valley Bridge Bank, N.A., or SVBB. SVBB assumed all loans that were previously held by Silicon Valley Bank. On March 27, 2023, First-Citizens Bank & Trust Company assumed all of SVBB’s customer deposits and certain other liabilities and acquired substantially all of SVBB’s loans and certain other assets from the FDIC.
On March 31, 2023, we entered into a Fourth Amendment to Loan and Security Agreement or the Fourth Amendment, with Oxford as collateral agent and a lender and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as Receiver for Silicon Valley Bridge Bank, N.A. (as successor to Silicon Valley Bank)), or SVB. The Fourth Amendment relieved us of the requirement to maintain all Collateral Accounts (as such term is defined in the Loan and Security Agreement) with SVB and instead requires us to hold an amount equal to the lesser of (i) 100% of our consolidated cash and (ii) 150% of the then-outstanding Obligations (as such term is defined in the Loan and Security Agreement) in Collateral Accounts with SVB that are subject to a Control Agreement (as such term is defined in the Loan and Security Agreement) in favor of SVB.
The 2020 Term Loan is secured by a lien on substantially all of our assets, other than intellectual property, provided that such lien on substantially all assets includes any rights to payments and proceeds from the sale, licensing or disposition of intellectual property. We also granted Oxford a negative pledge with respect to our intellectual property.
The 2020 Term Loan contains customary covenants and representations, including but not limited to financial reporting obligations and limitations on dividends, indebtedness, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, deposit accounts, and subsidiaries. The 2020 Term Loan also contains other customary provisions, such as expense reimbursement, non-disclosure obligations as well as indemnification rights.
The events of default under the 2020 Term Loan include, but are not limited to, our failure to make any payments of principal or interest under the 2020 Term Loan or other transaction documents, our breach or default in the performance of any covenant under the 2020 Term Loan or other transaction documents, the occurrence of a material adverse event, making a false or misleading representation or warranty in any material respect under the 2020 Term Loan, our insolvency or bankruptcy, any attachment or judgment on our assets of at least approximately $0.5 million, or the occurrence of any default under any of our agreements or obligations involving indebtedness in excess of approximately $0.5 million. If an event of default occurs, Oxford is entitled to take enforcement action, including acceleration of amounts due under the 2020 Term Loan. If we raise any additional debt financing, the terms of such additional debt could further restrict our operating and financial flexibility.
Future funding requirements
As of the date of this Quarterly Report, we have not generated any revenue from product sales. We do not know when, or if, we will generate revenue from product sales. We will not generate significant revenue from product sales unless and until we obtain regulatory approval and commercialize one of our current or future product candidates. We expect that we will continue to generate losses for the foreseeable future.
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As of June 30, 2023, we had an accumulated deficit of $428.0 million. In April 2023, in light of current market conditions, our Board took steps to extend cash runway by pausing further development of SEL-302 for the treatment of MMA and conducting a targeted headcount reduction of approximately 25%. On August 17, 2023, we announced additional steps to extend cash runway and maximize value for stockholders by continuing to prioritize development of SEL-212 and support of our collaboration with Astellas for Xork, and pausing further development of all of our other clinical and preclinical product candidates that we are no longer actively advancing. We intend to seek collaboration partners for the assets in the development programs that we are no longer actively advancing. We intend to continue evaluating our development programs and operating expenses on an ongoing basis. We anticipate operating losses to continue for the foreseeable future due to, among other things, costs related to research, development of our product candidates, conducting preclinical studies and clinical trials, and our administrative organization. We will require substantial additional financing to fund our operations and to continue to execute our strategy, and we will pursue a range of options to secure additional capital.
We are continually evaluating various potential sources of additional funding such as strategic collaborations, license agreements, debt issuance, potential royalty and/or milestone monetization transactions and the issuance of equity instruments to fund our operations. If we raise additional funds through strategic collaborations and alliances, which may include existing collaboration partners, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us. To the extent that we raise additional capital through the sale of equity instruments, the ownership interest of our existing stockholders will be diluted, and other preferences may be necessary that adversely affect the rights of existing stockholders.
We believe that following the capital efficiencies expected to be realized through our strategic reprioritization, our existing cash, cash equivalents, and restricted cash as of June 30, 2023, combined with the next anticipated milestone payment related to SEL-212 development activities, will enable us to fund our current planned operations into 2027, though we may realize additional cash resources upon the achievement of certain contingent collaboration milestones and we may pursue additional cash resources through public or private equity or debt financings, by establishing collaborations with other companies or through the monetization of potential royalty and/or milestone payments pursuant to our existing collaboration and license arrangements. Management’s expectations with respect to our ability to fund current and long-term planned operations are based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, we may need to seek additional strategic or financing opportunities sooner than would otherwise be expected. However, there is no guarantee that any collaboration milestones will be achieved or that any of these strategic or financing opportunities will be executed on favorable terms, and some could be dilutive to existing stockholders. If we are unable to obtain additional funding on a timely basis, we may be forced to further curtail, delay, or discontinue one or more of our planned research or development programs or be unable to expand our operations, meet long-term obligations or otherwise capitalize on our commercialization of our product candidates. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
Our future capital requirements will depend on many factors, including:
| • | our collaboration agreements remaining in effect, our entering into additional collaboration agreements and our ability to achieve milestones under these agreements; |
| • | the cost of manufacturing clinical supplies of our product candidates; |
| • | the size of our headcount and associated costs; |
| • | the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our other product candidates; |
| • | the costs, timing and outcome of regulatory review of our product candidates; |
| • | the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; |
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| • | the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; |
| • | the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and |
| • | the effect of competing technological and market developments.. |
Summary of Cash Flows
| Six Months Ended June 30, |
||||||||
| (In thousands) | 2023 | 2022 | ||||||
| Cash (used in) and provided by: |
||||||||
| Operating activities |
$ | (18,660 | ) | $ | (24,135 | ) | ||
| Investing activities |
28,112 | 9,446 | ||||||
| Financing activities |
(2,437 | ) | 38,603 | |||||
| Effect of exchange rate changes on cash |
(49 | ) | 86 | |||||
|
|
|
|
|
|||||
| Net change in cash, cash equivalents, and restricted cash |
$ | 6,966 | $ | 24,000 | ||||
|
|
|
|
|
|||||
Operating activities
Net cash used in operating activities of $18.7 million for the six months ended June 30, 2023 included approximately $27.6 million of net loss, adjusted for non-cash items, and approximately $8.9 million cash provided by changes in operating assets and liabilities.
Net cash used in operating activities of $24.1 million for the six months ended June 30, 2022 included approximately $31.6 million of net income, adjusted for non-cash items, and uses of cash of approximately $55.7 million for changes in operating assets and liabilities.
Investing activities
Net cash provided by investing activities for the six months ended June 30, 2023 was $28.1 million compared to net cash provided by investing activities of $9.4 million in the same period in 2022. The net cash provided by investing activities for each of the six months ended June 30, 2023 and 2022 was primarily proceeds from the maturities of marketable securities offset by purchases of property and equipment.
Financing activities
Net cash used in financing activities for the six months ended June 30, 2023 was $2.4 million compared to net cash provided by financing activities of $38.6 million in the same period in 2022. The net cash used in financing activities in the six months ended June 30, 2023 was primarily the result of repayments of principal on outstanding debt offset by proceeds from issuance of common stock under the Employee Stock Purchase Plan and in the six months ended June 30, 2022 was primarily the result of net proceeds from underwritten and “at-the-market” offerings.
Recent Accounting Pronouncements
For a discussion of recently adopted or issued accounting pronouncements please see Note 2 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
Off-Balance Sheet Arrangements
As of June 30, 2023, we did not have any off-balance sheet arrangements as defined in the rules and regulations of the Securities and Exchange Commission.
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Critical Accounting Policies and Use of Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in our consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions. During the three and six months ended June 30, 2023, there were no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K for the year ended December 31, 2022.
Smaller Reporting Company
We qualify as a “smaller reporting company” under the rules of the Securities Act and the Exchange Act. As a result, we may choose to take advantage of certain scaled disclosure requirements available specifically to smaller reporting companies. We will remain a smaller reporting company until the last day of the fiscal year in which the aggregate market value of our common stock held by non-affiliated persons and entities, or our public float, is more than $700 million as of the last business day of our most recently completed second fiscal quarter, or until the fiscal year following the year in which we have at least $100 million in revenue and at least $250 million in public float as of the last business day of our most recently completed second fiscal quarter.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates. As of June 30, 2023 and December 31, 2022, we had cash, cash equivalents, restricted cash and marketable securities of $115.0 million and $136.2 million, respectively, consisting of non-interest and interest-bearing money market accounts. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Due to the short-term and the low risk profile of our money market accounts and marketable securities, and our current policy to hold marketable securities to maturity, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash equivalents or short-term marketable securities.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2023.
Inherent Limitations on Effectiveness of Controls
There are inherent limitations to the effectiveness of any system of internal control over financial reporting. Accordingly, even an effective system of internal control over financial reporting can only provide reasonable assurance with respect to financial statement preparation and presentation in accordance with U.S. GAAP. Our internal controls over financial reporting are subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may be inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
See the risk factors previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes from the risk factors previously disclosed in such filings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
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Item 6. Exhibits
EXHIBIT INDEX
| Incorporated by Reference | ||||||||||
| Exhibit Number |
Exhibit Description |
Form |
File No. |
Exhibit |
Filing Date | |||||
| 3.1(a) | Restated Certificate of Incorporation of Selecta Biosciences, Inc. | 8-K | 001-37798 | 3.1 | 6/29/2016 | |||||
| 3.1(b) | Certificate of Amendment to the Restated Certificate of Incorporation of Selecta Biosciences, Inc., dated June 21, 2022 | 8-K | 001-37798 | 3.1 | 6/21/2022 | |||||
| 3.2 | Amended and Restated By-laws of Selecta Biosciences, Inc. | 8-K | 001-37798 | 3.2 | 8/22/2022 | |||||
| 31.1 | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | — | — | — | Filed herewith | |||||
| 31.2 | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | — | — | — | Filed herewith | |||||
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | — | — | — | Furnished herewith | |||||
| 101.INS | Inline XBRL Instance Document (the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document) | — | — | — | Filed herewith | |||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | — | — | — | Filed herewith | |||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | — | — | — | Filed herewith | |||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | — | — | — | Filed herewith | |||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | — | — | — | Filed herewith | |||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | — | — | — | Filed herewith | |||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | — | — | — | Filed herewith | |||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant in the capacities and on the dates indicated.
| SELECTA BIOSCIENCES, INC. | ||||||
| Date: August 17, 2023 | By: | /s/ Carsten Brunn, Ph.D. | ||||
| Carsten Brunn, Ph.D. | ||||||
| President and Chief Executive Officer, and Director | ||||||
| (Principal Executive Officer) | ||||||
| Date: August 17, 2023 | By: | /s/ Blaine Davis | ||||
| Blaine Davis | ||||||
| Chief Financial Officer | ||||||
| (Principal Financial Officer) | ||||||
45
Exhibit 31.1
CERTIFICATIONS
I, Carsten Brunn, Ph.D., certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Selecta Biosciences, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| August 17, 2023 | /s/ Carsten Brunn, Ph.D. | |||||
| Carsten Brunn, Ph.D. | ||||||
| President and Chief Executive Officer, and Director | ||||||
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS
I, Blaine Davis, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Selecta Biosciences, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| August 17, 2023 | /s/ Blaine Davis | |||||
| Blaine Davis | ||||||
| Chief Financial Officer | ||||||
| (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Selecta Biosciences, Inc. (the “Company”) for the period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, that to his knowledge:
| 1. | The Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| August 17, 2023 | /s/ Carsten Brunn, Ph.D. | |||||
| Carsten Brunn, Ph.D. | ||||||
| President and Chief Executive Officer, and Director | ||||||
| (Principal Executive Officer) | ||||||
| August 17, 2023 | /s/ Blaine Davis | |||||
| Blaine Davis | ||||||
| Chief Financial Officer | ||||||
| (Principal Financial Officer) | ||||||