Recent Business Highlights

The company has faced significant challenges in recent years, including the termination of several major collaboration agreements and the need to reprioritize its core programs. However, the company has also made progress in advancing its pipeline of preclinical neurology programs and securing new partnerships for its novel AAV capsid delivery technology.

Corporate Updates

In 2023, the company’s collaboration agreements with Biogen and Novartis were terminated, resulting in a significant decrease in revenues. The company’s collaboration with Kite Pharma also expired in 2024, and in December 2024, Pfizer notified the company of its termination of their collaboration agreement effective April 2025.

The company has been actively seeking additional capital through strategic collaborations, public or private equity/debt financing, and other sources. However, the company’s ability to raise substantial additional capital has been impaired by the perception of its ability to continue as a going concern.

Financial Position – Going Concern

Based on the company’s current operating plan, it expects to meet its liquidity requirements only into the middle of the second quarter of 2025. The company’s history of significant losses, negative cash flows, limited liquidity, and dependence on additional financing have resulted in substantial doubt about its ability to continue as a going concern for at least the next 12 months.

The company needs substantial additional capital to continue operations and fund its research and development activities. It has been actively seeking additional capital, but there is no guarantee it will be able to secure the necessary funding. If adequate funds are not available, the company may be required to take additional cost reduction measures, delay or discontinue programs, or even cease operations entirely.

Table: Cash and Cash Equivalents

Year	Cash and Cash Equivalents (in thousands)
2024	$41,900
2023	$81,000

The company’s cash and cash equivalents decreased from $81 million at the end of 2023 to $41.9 million at the end of 2024, primarily due to operating losses and the termination of collaboration agreements.

Core Preclinical Neurology Programs and Technology

The company is focused on advancing its core preclinical neurology programs, including:

Chronic Neuropathic Pain – ST-503

• The company’s IND for ST-503, an investigational epigenetic regulator for intractable pain due to idiopathic small fiber neuropathy, has been cleared by the FDA.
• The company is preparing to initiate a Phase ¹⁄₂ clinical study to assess the safety, tolerability, and preliminary efficacy of ST-503, with patient enrollment and dosing expected to begin in mid-2025, subject to securing adequate funding.
• Preliminary proof-of-efficacy data from the Phase ¹⁄₂ study is expected in Q4 2026.

Prion Disease

• The company continues to advance CTA-enabling activities for its epigenetic regulation product candidate to treat prion disease, leveraging its novel STAC-BBB AAV capsid variant.
• Nonclinical proof-of-concept data has been published, demonstrating significant reduction in prion expression and improved survival in animal models.
• The company expects to submit a CTA for the prion program in Q1 2026, subject to securing adequate funding, and begin clinical trial enrollment and dosing in mid-2026, with preliminary data anticipated in Q4 2026.

Novel AAV Capsid Delivery Technology

• In December 2024, the company entered into a license agreement with Astellas, granting them a worldwide exclusive license to utilize the STAC-BBB capsid for one target, with the option to add up to four additional targets.
• The company is also in advanced contract negotiations with a potential third collaborator for a STAC-BBB license agreement.

Clinical Programs

Fabry Disease

• The company announced updated positive preliminary data from its Phase ¹⁄₂ STAAR study of isaralgagene civaparvovec (ST-920) in Fabry patients.
• The FDA has provided a clear regulatory pathway to Accelerated Approval for ST-920 using data from the ongoing Phase ¹⁄₂ study, avoiding the need for an additional registrational study.
• The 52-week eGFR slope data from the Phase ¹⁄₂ study will be available in H1 2025, and a potential BLA submission is anticipated in H2 2025.
• The company is executing BLA readiness activities while continuing to seek a commercialization partner for the Fabry program.

Hemophilia A

• Pfizer presented positive Phase 3 data for giroctocogene fitelparvovec, the investigational gene therapy the company has been developing with Pfizer.
• However, Pfizer has decided to terminate the collaboration agreement, effective April 2025. The company will regain worldwide rights to the program and is exploring options to maximize its value, including seeking a new collaboration partner.

Certain Components of Results of Operations

The company’s revenues have primarily consisted of collaboration agreements, which have declined significantly due to the termination of several major partnerships. The company expects revenues to continue to fluctuate and is dependent on its ability to secure new collaborations.

The company has historically incurred net losses and expects to continue doing so as it advances its research and development activities. Research and development expenses are expected to increase in the near-term due to Fabry disease program BLA readiness activities, and the company expects R&D expenses to increase further if it is able to secure additional capital and advance its programs.

General and administrative expenses are expected to remain consistent in the near-term but may increase as the company’s business grows.

Critical Accounting Policies and Estimates

The company’s critical accounting policies and estimates relate to revenue recognition and the valuation of long-lived assets. The company’s revenues are primarily derived from collaboration agreements, which involve complex accounting for upfront fees, milestone payments, and other variable consideration. The company also evaluates the carrying value of its long-lived assets, such as property and equipment and leasehold improvements, for potential impairment.

Recent Accounting Pronouncements

The company has adopted the relevant recent accounting pronouncements, which have not had a material impact on its consolidated financial statements.

Results of Operations

Revenues decreased by $118.4 million in 2024 compared to 2023, primarily due to the termination of the Biogen and Novartis collaborations, as well as the expiration of the Kite agreement and a decrease in revenues from the company’s license agreements.

Table: Revenues

Year	Revenues (in thousands)
2024	$57,800
2023	$176,232

Research and development expenses decreased by $122.5 million in 2024 compared to 2023, primarily due to lower preclinical, clinical, and manufacturing expenses, as well as lower compensation and overhead costs resulting from restructuring activities.

Table: Research and Development Expenses

Program	2024 (in thousands)	2023 (in thousands)
Fabry clinical program	$27,725	$46,938
Preclinical and early research	$68,255	$115,577
Other programs	$15,541	$71,542
Total	$111,521	$234,057

General and administrative expenses decreased by $16.4 million in 2024 compared to 2023, primarily due to lower compensation, facilities, and professional services costs.

The company recognized impairment charges of $5.5 million in 2024 related to certain long-lived assets, including right-of-use assets and leasehold improvements.

Interest and other income, net, decreased by $5.2 million in 2024 compared to 2023, primarily due to lower interest income and research tax credits.

The company’s income tax benefit decreased from $5.1 million in 2023 to $0.2 million in 2024, primarily due to the reversal of a long-term payable in the UK subsidiary.

Liquidity and Capital Resources

The company’s cash and cash equivalents decreased from $81 million at the end of 2023 to $41.9 million at the end of 2024, primarily due to operating losses and the termination of collaboration agreements.

The company has been actively seeking additional capital through various means, including strategic collaborations, public or private equity/debt financing, and other sources. However, the company’s ability to raise substantial additional capital has been impaired by the perception of its ability to continue as a going concern.

Based on the company’s current operating plan, it expects to meet its liquidity requirements only into the middle of the second quarter of 2025. The company’s history of significant losses, negative cash flows, limited liquidity, and dependence on additional financing have resulted in substantial doubt about its ability to continue as a going concern for at least the next 12 months.

The company needs substantial additional capital to continue operations and fund its research and development activities. If adequate funds are not available, the company may be required to take additional cost reduction measures, delay or discontinue programs, or even cease operations entirely.

Contractual Obligations

The company’s contractual obligations as of December 31, 2024 primarily relate to operating leases, purchase obligations, and license obligations.

Strengths and Weaknesses

Strengths:

• Promising preclinical neurology programs, including ST-503 for chronic neuropathic pain and the prion disease program
• Novel STAC-BBB AAV capsid delivery technology, which has generated licensing revenue and interest from potential partners
• Positive preliminary data and regulatory pathway for the Fabry disease program

Weaknesses:

• Significant financial challenges, including substantial doubt about the company’s ability to continue as a going concern
• Dependence on securing substantial additional capital to fund operations and advance programs
• Termination of several major collaboration agreements, resulting in a significant decline in revenues
• Lack of partners to progress the company’s more advanced clinical programs, such as Fabry disease and hemophilia A

Outlook

The company’s future outlook is highly uncertain and dependent on its ability to secure substantial additional capital. If the company is unable to raise the necessary funds, it may be required to take drastic measures, including further cost reductions, delaying or discontinuing programs, or even ceasing operations entirely.

The company’s core preclinical neurology programs, such as ST-503 and the prion disease program, hold promise, but the company will need to successfully navigate the clinical development and regulatory approval process, which requires significant resources.

The Fabry disease program represents a potential near-term opportunity, with the company aiming to submit a BLA in the second half of 2025. However, the company’s ability to advance this program is heavily dependent on securing a commercialization partner in the near term.

Overall, the company faces significant challenges and uncertainty, and its ability to continue as a going concern and successfully execute on its strategic priorities is heavily contingent on its success in raising substantial additional capital.