The following discussion and analysis of our financial condition and results ofoperations should be read in conjunction with our condensed consolidatedfinancial statements and the related notes to those statements includedelsewhere in this Quarterly Report on Form 10-Q. In addition to historicalfinancial information, the following discussion and analysis containsforward-looking statements that involve risks, uncertainties and assumptions.Some of the numbers included herein have been rounded for the convenience ofpresentation. Our actual results may differ materially from those anticipated inthese forward-looking statements as a result of many factors, including thosediscussed in "Risk Factors" in Part II, Item 1A. and elsewhere in this QuarterlyReport on Form 10-Q.
Overview
We are a biotechnology company committed to creating a new class of precisiongenetic medicines based on our proprietary base editing technology, with avision of providing life-long cures to patients suffering from serious diseases.Our proprietary base editing technology potentially enables an entirely newclass of precision genetic medicines that targets a single base in the genomewithout making a double-stranded break in the DNA. This approach uses a chemicalreaction designed to create precise, predictable and efficient genetic outcomesat the targeted sequence. Our novel base editors have two principal components:(i) a CRISPR protein, bound to a guide RNA, that leverages the establishedDNA-targeting ability of CRISPR, but modified to not cause a double-strandedbreak, and (ii) a base editing enzyme, such as a deaminase, which carries outthe desired chemical modification of the target DNA base. We believe this designcontributes to a more precise and efficient edit compared to traditional geneediting methods. The precision of our editors has the potential to increase theimpact of gene editing for a broad range of therapeutic applications. Bybuilding on the significant recent advances in the field of genetic medicine, webelieve we will be able to rapidly advance our portfolio of novel base editingprograms.
Existing gene editing technologies operate by creating targeted double-strandedbreaks in the DNA, and then rely on cellular mechanisms to complete the editingprocess. Such approaches can be effective in the disruption of gene expression;however, they are inefficient for precise repair or alteration of genesequences, and can result in unwanted DNA modifications. We believe our baseediting platform offers meaningful advantages over existing approaches in geneediting and gene therapy, including:
We are currently advancing a broad, diversified portfolio of base editingprograms against distinct editing targets. To unlock the full potential of ourbase editing technology across a wide range of therapeutic applications, we arepursuing a comprehensive suite of clinically validated delivery modalities inparallel. For a given tissue type, we use the delivery modality with the mostcompelling biodistribution. Our programs are organized by delivery modality intothree distinct pipelines: electroporation for efficient delivery to blood cellsand immune cells ex vivo; lipid nanoparticles, or LNPs, for non-viral in vivodelivery to the liver and potentially other organs in the future; andadeno-associated viral vectors, or AAV, for viral delivery to the eye andcentral nervous system, or CNS.
Our base editing portfolio
The elegance and simplicity of the base editing approach provides for anefficient, precise, and highly versatile gene editing system, capable of genecorrection, gene silencing/gene activation, and multiplex editing of severalgenes simultaneously. We believe the flexibility and versatility of our baseeditors may lead to broad therapeutic applicability and transformationalpotential for the field of precision genetic medicines.
We have achieved proof-of-concept in vivo with long-term engraftment of ex vivobase edited human CD34 cells in mice for BEAM-101, our program that reproducessingle base changes seen in individuals with Hereditary Persistence of FetalHemoglobin, or HPFH, that protects them from the effects of mutations causingsickle cell disease or thalassemia. Additionally, in the second quarter of 2020,
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we published data on BEAM-102, our program to directly correct the causativemutation in sickle cell disease by recreating a naturally-occurring humanhemoglobin variant, Hb-G Makassar. The Makassar variant does not causehemoglobin to polymerize, or red cells to sickle and, therefore, edited cellsare cured through elimination of the disease-causing protein. With respect toour liver disease programs, also in the second quarter of 2020, we have shownthe ability to directly correct the mutation causing alpha-1 antitrypsindeficiency, providing both in vitro and in vivo proof of concept for baseediting to correct this disease. We have also successfully demonstratedfeasibility of base editing with each of our three delivery modalities inrelevant cell types for electroporation and AAV and in vivo in mice for LNP.
Beyond the in vivo proofs-of-concept already established, we expect to achieveadditional milestones in 2020, including the publication of additional in vivobase editing data and, provided the COVID-19 pandemic does not cause ourtimelines to slip materially, initiation of investigational new drug, or IND,enabling studies for at least one of our lead programs. We expect to submit aninitial wave of IND filings from this portfolio, and we remain on track to fileour first IND in 2021.
The modularity of our platform means that establishing preclinicalproof-of-concept of base editing using a particular delivery modality will alsopotentially reduce risk and accelerate the timeline for additional productcandidates that we may develop targeting the same tissue. In some cases, a newproduct candidate may only require changing the guide RNA. Subsequent programsusing the same delivery modality can also take advantage of shared capabilitiesand resources of earlier programs. In this way, we view each delivery modalityas its own unique pipeline, where the success of any one program may pave theway for a large number of additional programs to progress quickly to the clinic.
Ex vivo electroporation for hematologic diseases and oncology
Sickle Cell Disease and Beta-Thalassemia
Sickle cell disease, a severe inherited blood disease, is caused by a singlepoint mutation, E6V, in the beta globin gene at the sixth amino acid. Thismutation causes the mutated form of hemoglobin, or HbS, to aggregate into long,rigid molecules that bend red blood cells into a sickle shape under conditionsof low oxygen. Sickled cells obstruct blood vessels and die prematurely,ultimately resulting in anemia, severe pain (crises), infections, stroke, organfailure, and early death. Sickle cell disease is the most common inherited blooddisorder in the United States, affecting an estimated 100,000 individuals, ofwhich a significant proportion are of African-American descent (1:365 births).Beta-thalassemia is another inherited blood disorder characterized by severeanemia caused by reduced production of functional hemoglobin due to insufficientexpression of the beta globin protein. Transfusion-dependent beta-thalassemia,or TDBT, is the most severe form of this disease, often requiring multipletransfusions per year. Patients with TDBT suffer from failure to thrive,persistent infections, and life-threatening anemia. The incidence of symptomaticbeta-thalassemia is estimated to be 1:100,000 worldwide, including 1:10,000 inEurope. In the United States, based on affected birth incidence of 0.7 in100,000 births, and increasing survival rates, we expect the population ofindividuals affected by this disease to be more than 1,400 and rising. The onlypotentially curative therapy currently available for patients with sickle celldisease or beta-thalassemia is allogeneic Hematopoietic Stem Cell Transplant, orHSCT; however, this procedure holds a high level of risk, particularlyGraft-versus-Host Disease, or GvHD, resulting in a low number of patients optingfor this treatment.
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We are using base editing to pursue two complementary approaches to treatingsickle cell disease and one to treat beta-thalassemia:
BEAM-101: Recreating naturally-occurring protective mutations to activate fetalhemoglobin
The beneficial effects of the fetal form of hemoglobin, or HbF, to compensatefor mutations in adult hemoglobin were first identified in individuals with acondition known as HPFH. Individuals who carry mutations that would havetypically caused them to be beta-thalassemia or sickle cell disease patients,but who also have HPFH, are asymptomatic or experience a much milder form oftheir disease. HPFH is caused by single base changes in the regulatory region ofthe genes, HBG1 and HBG2, which prevents binding of one or more repressorproteins and increases the expression of gamma globin, which forms part of theHbF tetramer.
Using base editing, we reproduce these specific, naturally occurring basechanges in the regulatory elements of the gamma globin genes, preventing bindingof repressor proteins and leading to re-activation of gamma globin expression,and thus the increase in gamma globin levels. Our in vitro and in vivocharacterization of BEAM-101 using ex vivo delivery achieved precise andefficient editing of human CD34+ hematopoietic stem and progenitor cells, orHSPCs, resulting in long-term engraftment and therapeutically-relevant increasesin target gene expression in mice.
In vitro characterization of BEAM-101:
In vivo performance of BEAM-101:
BEAM-102: Direct correction of the sickle cell mutation
Our second base editing approach for sickle cell disease, BEAM-102, is a directcorrection of the causative sickle mutation at position 6 of the beta globingene. By making a single A-to-G edit, we have demonstrated in primary humanCD34+ cells isolated from sickle cell disease patients the ability to create thenaturally occurring Makassar variant of hemoglobin. This variant, which wasoriginally identified in humans in 1970, has the same function as the wild-typevariant and does not cause sickle cell disease. Distinct from other approaches,cells that are successfully edited in this way are fully corrected, no longercontaining the sickle protein.
BEAM-102 uses ex vivo delivery of our adenine base editor, or ABE, to edit CD34+HSPCs. In cells isolated from donors with sickle cell disease, we achievedgreater than 80% correction of the sickle point mutation to the HbG-Makassarvariant, following in vitro erythroid differentiation. As expected, we observedthe simultaneous reduction of HbS to less than 20% of control levels. More than70% of erythroid colonies derived from edited patient cells showed biallelicediting (yielding cells that no longer produce any sickle protein at all), 20%had monoallelic editing (with one sickle allele and one corrected allele, likelyconferring a level of protection similar to patients with "sickle cell trait"who do not show significant symptoms of disease), and 2% were unedited. Further,the correction of the HbS protein to the HbG-Makassar variant was shown tosignificantly reduce the propensity of in vitro differentiated erythroid cellsto sickle when subjected to hypoxia. These findings represent therapeutic levelsof correction and support advancement of this program to potentially address theunderlying genetic cause of sickle cell disease. Published modeling studiessuggest that as little as 20% correction of HbS may be sufficient to cure thedisease.
Ex vivo electroporation for multiplex editing of advanced cell therapies
CAR-T Cell Therapies in Immunology/Oncology
We believe base editing is an ideal tool to simultaneously multiplex edit manygenes without unintended on-target effects, such as genomic rearrangements oractivation of the p53 pathway, that can result from simultaneous editing withnucleases through the creation of double strand breaks. The ability to create alarge number of multiplex edits in T cells could endow CAR-T cells and other
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cell therapies with combinations of features that may dramatically enhance theirtherapeutic potential in treating hematological or solid tumors.
Proof-of-concept experiments have now demonstrated the ability of base editorsto efficiently modify up to 8 genomic loci simultaneously in primary human Tcells with efficiencies ranging from 85-95% as measured by flow cytometry oftarget protein knockdown. Importantly, these results are achieved without thegeneration of chromosomal rearrangements, as detected by a sensitive method(UDiTaSTM) and with no loss of cell viability from editing. The proof-of-conceptexperiments have also demonstrated robust T cell killing of target tumor cells.
Our initial focus will be on hematologic malignancies, and we are developingallogeneic CAR-T product candidates that have four edits each. This multiplexediting will enable a high degree of engineering and functionality, includingthe following simultaneous edits:
The initial indications that we plan to target with these product candidates arerelapsed, refractory, pediatric T-cell Acute Lymphoblastic Leukemia, or T-ALL,and pediatric Acute Myeloid Leukemia, or AML. We believe that our approach hasthe potential to produce higher response rates and deeper remissions thanexisting approaches.
Non-Viral delivery for liver diseases
Alpha-1 Antitrypsin Deficiency
Alpha-1 Antitrypsin Deficiency, or Alpha-1, is a severe inherited geneticdisorder that can cause progressive lung and liver disease. The most severe formof ALPHA-1 arises when a patient has a point mutation in both copies of theSERPINA1 gene at amino acid 342 position (E342K, also known as the PiZ mutationor the "Z" allele). This point mutation causes alpha-1 antitrypsin, or AAT, tomisfold, accumulating inside liver cells rather than being secreted, resultingin very low levels (10%-15%) of circulating AAT. As a consequence, the lung isleft unprotected from neutrophil elastase, resulting in progressive, destructivechanges in the lung, such as emphysema, which can result in the need for lungtransplants. The mutant AAT protein also accumulates in the liver, causing liverinflammation and cirrhosis, which can ultimately cause liver failure or cancerand require patients to undergo a liver transplant. It is estimated thatapproximately 60,000 individuals in the United States have two copies of the Zallele. There are currently no curative treatments for patients with ALPHA-1.
With the high efficiency and precision of our base editors, we aim to utilizeour ABEs to enable the programmable conversion of A-to-T and G-to-C base pairsand precisely correct the E342K point mutation back to the wild type sequence.
For a recent study, we engineered novel ABEs and guide RNAs capable ofcorrecting the PiZ mutation, and then applied a proprietary non-viral lipidnanoparticle formulation to deliver the optimized reagents to the livers of aPiZ transgenic mouse model. This direct editing approach resulted in an averageof 16.9% correction of beneficial alleles at 7 days and 28.8% at three months.This significant increase over the period suggests that corrected hepatocytesmay have a proliferative advantage relative to uncorrected cells. In addition,treated mice demonstrate decreased alpha-1 antitrypsin, or A1AT, globule burdenwithin the liver and a durable, significant increase in serum A1AT activeprotein at three months, roughly 4.9-fold higher than in controls, levels whichwe believe would be therapeutic if achieved in patients. These data indicate thepotential for base editing as a one-time therapy to treat both lung and livermanifestations of Alpha-1 antitrypsin deficiency.
Glycogen Storage Disease 1a
Glycogen Storage Disease Type 1A, also known as Von Gierke disease, is an inborndisorder of glucose metabolism caused by mutations in the G6PC gene, whichresults in low blood glucose levels that can be fatal if patients do not adhereto a strict regimen of slow-release forms of glucose, administered every one tofour hours (including overnight). There are no disease-modifying therapiesavailable for patients with GSD1a.
Our approach to treating patients with glycogen storage disease 1a, or GSD1a, isto apply base editing via LNP delivery to repair the two most prevalentmutations that cause the disease, R83C and Q347X. It is estimated that thesetwo-point mutations account for 900 and 500 patients, respectively, in theUnited States, representing approximately 59% of all GSD1a patients. Animalstudies have shown that as little as 11% of normal G6Pase activity in livercells is sufficient to restore fasting glucose; however, this level must bemaintained in order to preserve glucose control and alleviate other serious, andpotentially fatal, GSD1a sequelae
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We have identified product candidates that can correct up to 80% of the allelesin cells harboring the Q347X point mutation and approximately 60% of the allelesin cells harboring the R83C mutation as shown in the figures below. Correctionof at least 11% is expected to be clinically relevant and potentially diseasemodifying for GSD1a patients.
Viral delivery for ocular and CNS disorders
Stargardt Disease
Stargardt Disease is an inherited disorder of the central region of the retina,causing progressive vision loss typically beginning in adolescence andultimately leading to central and night vision blindness. The most prevalentmutation in the ABCA4 gene that leads to Stargardt disease is the G1961E pointmutation. Approximately 5,500 individuals in the United States are affected bythis mutation. Our base editing approach is to repair the G1961E point mutationin the ABCA4 gene. Disease modeling using tiny spot stimuli, or light stimulithrough holes that are equivalent in size to a single photoreceptor cell,suggests that only 12%-20% of these cells are sufficient to preserve vision. Weanticipate, therefore, that editing percentages in the range of 12%-20% of thesecells would be disease-modifying, since each edited cell will be fully correctedand protected from the biochemical defect.
Given that the base editor is larger than the packaging capacity of a singleAAV, we use a split AAV system that delivers the base editor via two AAVvectors. Once inside the cell, the two halves of the editor are recombined tocreate a functional base editor. In a human retinal pigment epithelial cell line(ARPE-19 cells) in which we have knocked in the ABCA4 G1961E point mutation, wehave demonstrated the precise correction of approximately 75% of the diseasealleles at 5 weeks after dual infection with the split AAV system.
Collaborations
We believe our base editing technology has potential across a broad array ofgenetic diseases. To fully realize this potential, we have established and willcontinue to seek out innovative collaborations, licenses, and strategicalliances with pioneering companies and with leading academic and researchinstitutions. Additionally, we have and will continue to pursue relationshipsthat potentially allow us to accelerate our preclinical research and developmentefforts. These relationships will allow us to uphold our vision of maximizingthe potential of base editing to provide life-long cures for patients sufferingfrom serious diseases.
Ex vivo electroporation for hematologic diseases and oncology
Boston Children's Hospital
In July 2020, we formed a strategic alliance with Boston Children's Hospital.Under the terms of the agreement, we will sponsor research programs at BostonChildren's to facilitate development of disease-specific therapies using ourproprietary base editing technology. Boston Children's will also serve as aclinical site to advance bench-to-bedside translation of our pipeline acrosscertain therapeutic areas of interest, including programs in sickle cell diseaseand pediatric leukemias and exploration of new programs targeting otherdiseases.
Magenta Therapeutics
In June 2020, we announced a non-exclusive research and clinical collaborationagreement with Magenta Therapeutics to evaluate the potential utility ofMGTA-117, Magenta's novel targeted ADC for conditioning of patients with sicklecell disease and beta-thalassemia receiving our base editing therapies.Conditioning is a critical component necessary to prepare a patient's body toreceive the edited cells, which carry the corrected gene and must engraft in thepatient's bone marrow in order to be effective. Today's conditioning regimensrely on nonspecific chemotherapy or radiation, which are associated withsignificant toxicities. MGTA-117 precisely targets only hematopoietic stem andprogenitor cells, sparing immune cells, and has shown high selectivity, potentefficacy, wide safety margins and broad tolerability in non-human primatemodels. MGTA-117 may be capable of clearing space in bone marrow to supportlong-term engraftment and rapid recovery in patients. Combining the precision ofour base editing technology with the more targeted conditioning regimen enabledby MGTA-117 could further improve therapeutic outcomes for patients sufferingfrom these severe diseases. We will be responsible for clinical trial costsrelated to development of our base editors when combined with MGTA-117, whileMagenta will continue to be responsible for all other development costs ofMGTA-117.
Non-Viral delivery for liver diseases
Verve Therapeutics
In April 2019, we entered into a collaboration and license agreement with Verve,a company focused on developing genetic medicines to safely edit the genome ofadults to permanently lower LDL cholesterol and triglyceride levels and therebytreat coronary heart disease. This collaboration allows us to fully realize thepotential of base editing in treating cardiovascular diseases, an area outsideof our core focus where the Verve team has significant, world-class expertise.Under the terms of the agreement, Verve received exclusive access to our baseediting technology, gene editing, and delivery technologies for humantherapeutic applications against certain cardiovascular targets. In exchange, wereceived 2,556,322 shares of Verve common stock. Additionally, we will receivemilestone payments for certain clinical and regulatory events and retains theoption, after the completion of Phase 1 studies, to participate in futuredevelopment and commercialization, and share 50 percent of U.S. profits andlosses, for any product directed
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against these targets. Verve granted to us a non-exclusive license underknow-how and patents controlled by Verve, and an interest in joint collaborationtechnology. Either party may owe the other party other milestone payments forcertain clinical and regulatory events related to the delivery technologyproducts. Royalty payments may become due by either party to the other based onthe net sales of any commercialized delivery technology products under theagreement.
In June 2020, Verve reported preclinical proof-of-concept data in non-humanprimates that demonstrated the successful use of adenine base editors to turnoff a gene in the liver. Utilizing ABE technology licensed from us and anoptimized guide RNA packaged in an engineered lipid nanoparticle, Verveevaluated in vivo liver base editing to turn off proprotein convertasesubtilisin/kexin type 9 (PCSK9), a gene whose protein product elevates blood LDLcholesterol or angiopoietin-like protein 3 (ANGPTL3), a gene whose proteinproduct elevates blood triglyceride-rich lipoproteins. We believe theseproof-of-concept data, which show we can safely edit the primate genome,represent the first successful application of the base editing technology innon-human primates
In two separate studies, seven animals were treated with the drug producttargeting the PCSK9 gene and seven additional animals with the drug producttargeting the ANGPTL3 gene. Whole liver editing, blood protein and lipid levelswere measured at two weeks and compared to baseline. The program targeting PCSK9showed an average of 67% whole liver PCSK9 editing, which translated into an 89%reduction in plasma PCSK9 protein and resulted in a 59% reduction in blood LDLcholesterol levels. The program targeting ANGPTL3 showed an average of 60% wholeliver ANGPTL3 editing, which translated into a 95% reduction in plasma ANGPTL3protein and resulted in a 64% reduction in blood triglyceride levels and 19%reduction in LDL cholesterol levels. In addition, in studies in primary humanhepatocytes, clear evidence of on-target editing was observed with no evidenceof off-target editing.
Per the terms of our agreement with Verve, we can exercise our right toparticipate in the future development and commercialization of any programs atthe completion of Phase I studies.
Viral delivery for ophthalmology and CNS diseases
IOB
In July 2020, we announced a research collaboration with the Institute ofMolecular and Clinical Ophthalmology Basel (IOB). Founded in 2018 by aconsortium that includes Novartis, the University Hospital of Basel and theUniversity of Basel, IOB is a leader in basic and translational research aimedat treating impaired vision and blindness. Clinical scientists at IOB have alsohelped to develop better ways to measure how vision is impacted by Stargardtdisease. Additionally, researchers at IOB have developed living models of theretina, known as organoids, which can be used to test novel therapies. Under theterms of the agreement, the companies will leverage IOB's unique expertise inthe field of ophthalmology along with our novel base editing technology toadvance programs directed to the treatment of certain ocular diseases, includingStargardt disease.
Manufacturing
To realize the full potential of base editors as a new class of medicines, weare building customized and integrated capabilities across discovery,manufacturing, and preclinical and clinical development. Due to the criticalimportance of high-quality manufacturing and control of production timing andknow-how, we have taken steps toward establishing our own manufacturingfacility, which will provide us the flexibility to manufacture numerousdifferent drug product modalities. We believe this investment will maximize thevalue of our portfolio and capabilities, the probability of technical success ofour programs, and the speed at which we can provide life-long cures to patients.
In August 2020, we entered into a lease agreement with Alexandria Real EstateEquities, Inc. to build a 100,000 square foot current Good ManufacturingPractice, or cGMP, compliant manufacturing facility in Research Triangle Park,North Carolina intended to support a broad range of clinical programs. We willinvest up to $83 million over a five-year period and anticipate that thefacility will be operational by the first quarter of 2023. The project will befacilitated, in part, by a JDIG approved by the North Carolina EconomicInvestment Committee, which authorizes potential reimbursements based on new taxrevenues generated through the project. The facility will be designed to supportmanufacturing for our ex vivo cell therapy programs in hematology and oncologyand in vivo non-viral delivery programs for liver diseases, with flexibility tosupport manufacturing of our viral delivery programs, and ultimately, scale-upto support potential commercial supply.
For our initial waves of clinical programs, we will use contract manufacturingorganizations, or CMOs, with relevant manufacturing experience in geneticmedicines.
COVID-19
With the ongoing concern related to the COVID-19 pandemic, we have maintainedand expanded the business continuity plans, implemented in the first six monthsof 2020, to address and mitigate the impact of the COVID-19 pandemic on ourbusiness. In March 2020, to protect the health of our employees, and theirfamilies and communities, we restricted access to our offices to personnel whoperformed critical activities that must be completed on-site, limited the numberof such personnel that can be present at our facilities at any one time, andrequested that most of our employees work remotely. In May 2020, as certainstates eased restrictions, we established new protocols to better allow our fulllaboratory staff access to our facilities. These protocols included severalshifts
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working over a seven days week protocol. We expect to continue incurringadditional costs to ensure we adhere to the guidelines instituted by the Centersfor Disease Control and to provide a safe working environment to our onsiteemployees.
The extent to which the COVID-19 pandemic impacts our business, our corporatedevelopment objectives, results of operations and financial condition, includingand the value of and market for our common stock, will depend on futuredevelopments that are highly uncertain and cannot be predicted with confidenceat this time, such as the ultimate duration of the pandemic, travelrestrictions, quarantines, social distancing and business closure requirements,and the effectiveness of actions taken globally to contain and treat thedisease. Disruptions to the global economy, disruption of global healthcaresystems, and other significant impacts of the COVID-19 pandemic could have amaterial adverse effect on our business, financial condition, results ofoperations and growth prospects.
While the COVID-19 pandemic did not significantly impact our business or resultsof operations during the six months ended June 30, 2020, the length and extentof the pandemic, its consequences, and containment efforts will determine thefuture impact on our operations and financial condition.
Critical accounting policies and significant judgements
Our critical accounting policies are those policies which require the mostsignificant judgments and estimates in the preparation of our condensedconsolidated financial statements. We have determined that our most criticalaccounting policies are those relating to stock-based compensation, variableinterest entities, fair value measurements, and leases. There have been nosignificant changes to our existing critical accounting policies discussed inour Annual Report on Form 10-K for the year ended December 31, 2019.
Financial operations overview
General
We were incorporated on January 25, 2017 and commenced operations shortlythereafter. Since our inception, we have devoted substantially all of ourresources to building our base editing platform and advancing development of ourportfolio of programs, establishing and protecting our intellectual property,conducting research and development activities, organizing and staffing ourcompany, business planning, raising capital and providing general andadministrative support for these operations. To date, we have financed ouroperations primarily through the sales of our redeemable convertible preferredstock and proceeds from our IPO.
We are a development stage company, and all of our programs are at a preclinicalstage of development. To date, we have not generated any revenue from productsales and do not expect to generate revenue from the sale of products for theforeseeable future. Since inception we have incurred significant operatinglosses. Our net losses for the six months ended June 30, 2020 and 2019 were$64.7 million and $31.5 million, respectively. As of June 30, 2020, we had anaccumulated deficit of $267.7 million. We expect to continue to incursignificant expenses and increasing operating losses in connection with ongoingdevelopment activities related to our portfolio of programs as we continue ourpreclinical development of product candidates; advance these product candidatestoward clinical development; further develop our base editing platform; researchactivities as we seek to discover and develop additional product candidates;maintenance, expansion enforcement, defense, and protection of our intellectualproperty portfolio; and hiring research and development, clinical and commercialpersonnel. In addition, we expect to continue to incur additional costsassociated with operating as a public company.
As a result of these anticipated expenditures, we will need additional financingto support our continuing operations and pursue our growth strategy. Until suchtime as we can generate significant revenue from product sales, if ever, weexpect to finance our operations through a combination of equity offerings, debtfinancings, collaborations, strategic alliances, and licensing arrangements. Wemay be unable to raise additional funds or enter into such other agreements whenneeded on favorable terms or at all. Our inability to raise capital as and whenneeded would have a negative impact on our financial condition and our abilityto pursue our business strategy. We can give no assurance that we will be ableto secure such additional sources of funds to support our operations, or, ifsuch funds are available to us, that such additional funding will be sufficientto meet our needs.
Research and development expenses
Research and development expenses consist of costs incurred in performingresearch and development activities, which include:
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We expense research and development costs as incurred. Advance payments that wemake for goods or services to be received in the future for use in research anddevelopment activities are recorded as prepaid expenses. The prepaid amounts areexpensed as the benefits are consumed.
In the early phases of development, our research and development costs are oftendevoted to product platform and proof-of-concept studies that are notnecessarily allocable to a specific target, therefore, we have not yet beguntracking our expenses on a program-by-program basis.
We expect that our research and development expenses will increase substantiallyin connection with our planned preclinical and future clinical developmentactivities.
General and administrative expenses
General and administrative expenses consist primarily of salaries and otherrelated costs, including stock-based compensation, for personnel in ourexecutive, intellectual property, business development, finance, andadministrative functions. General and administrative expenses also include legalfees relating to intellectual property and corporate matters, professional feesfor accounting, auditing, tax and consulting services, insurance costs, travel,and direct and allocated facility related expenses and other operating costs.
We anticipate that our general and administrative expenses will increase in thefuture to support increased research and development activities. We also expectto incur increased costs associated with being a public company, including costsof accounting, audit, legal, regulatory and tax-related services associated withmaintaining compliance with Nasdaq and SEC requirements, director and officerinsurance costs, and investor and public relations costs.
Results of operations
Comparison of the three months ended June 30, 2020 and 2019
The following table summarizes our results of operations, together with thechange in dollars (in thousands):
License revenue was $6 thousand for the three months ended June 30, 2020 and2019 representing Verve license revenue recorded under the Collaboration andLicense Agreement executed in April 2019.
Research and development expenses
Research and development expenses were $19.4 million and $12.7 million for thethree months ended June 30, 2020 and 2019, respectively. The increase of$6.7 million was primarily due to the following:
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Research and development expenses will continue to increase as we continue ourcurrent research programs, initiate new research programs, continue ourpreclinical development of product candidates, and conduct future clinicaltrials for any of our product candidates.
General and administrative expenses