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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to                    

Commission File Number: 001-38722

 

ORCHARD THERAPEUTICS PLC

(Exact Name of Registrant as Specified in its Charter)

 

 

England and Wales

Not Applicable

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

108 Cannon Street

London, United Kingdom

EC4N 6EU

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: +44 (0) 203 808-8286

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

American Depositary Shares, each representing one ordinary share, nominal value £0.10 per share

 

ORTX

 

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes  ☒    No  

As of July 31, 2020, the registrant had 97,577,100 ordinary shares, nominal value £0.10 per share, outstanding.

 

 


Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

2

 

Condensed Consolidated Statements of Cash Flows

3

 

Condensed Consolidated Statements of Shareholders’ Equity

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34

Item 4.

Controls and Procedures

35

PART II.

OTHER INFORMATION

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

98

Item 3.

Defaults Upon Senior Securities

99

Item 4.

Mine Safety Disclosures

99

Item 5.

Other Information

99

Item 6.

Exhibits

100

Signatures

101

 

i


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express or implied forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. In some cases, forward-looking statements may be identified by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. The forward-looking statements and opinions contained in this Quarterly Report on Form 10-Q are based upon information available to our management as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

 

the timing, progress and results of clinical trials and preclinical studies for our programs and product candidates, including statements regarding the timing of initiation and completion of trials or studies and related preparatory work, the period during which the results of the trials will become available and our research and development programs;

 

the timing, scope or likelihood of regulatory submissions, filings, and approvals;

 

our ability to develop and advance product candidates into, and successfully complete, clinical trials;

 

our expectations regarding the market opportunity for and size of the patient populations for our product candidates, if approved for commercial use;

 

the implementation of our business model and our strategic plans for our business, commercial product, product candidates and technology, including the execution of recent revisions to our vision and growth strategy;

 

our commercialization, marketing and manufacturing capabilities and strategy;

 

the pricing and reimbursement of our commercial product and product candidates, if approved;

 

the adequacy, scalability and commercial viability of our manufacturing capacity, methods and processes, including those of our manufacturing partners, and plans for future development;

 

the rate and degree of market acceptance and clinical utility of our commercial product and product candidates, in particular, and gene therapy, in general;

 

our ability to establish or maintain collaborations or strategic relationships or obtain additional funding;

 

the impact of the COVID-19 global pandemic and related downturn of the U.S. and global economies, as well as on our business operations, including clinical trials, and the operations of our third-party manufacturers and suppliers;  

 

our competitive position;

 

the scope of protection we and/or our licensors are able to establish and maintain for intellectual property rights covering our commercial product and product candidates;

 

developments and projections relating to our competitors and our industry;

 

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; the impact of laws and regulations;

 

our ability to attract and retain qualified employees and key personnel;

 

our ability to raise capital, particularly in light of the impact of the COVID-19 global pandemic and the related impact on the US and global economies;

 

our ability to contract with third party suppliers and manufacturers and their ability to perform adequately;

 

the expected cost savings resulting from our recently announced changes to our strategic vision;

 

our projected financial performance and financial condition, including the sufficiency of our cash, cash equivalents and investments to fund operations in future periods and future liquidity, working capital and capital requirements;

 

our cash runway into 2022; and

 

our risks and uncertainties, including those listed under the caption “Item 1A. Risk Factors.”

 

 

You should refer to the section titled “Item 1A. Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot be assured that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, these statements should not be regarded as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q 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.

 

ii


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ORCHARD THERAPEUTICS PLC

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

41,174

 

 

$

19,053

 

Marketable securities

 

 

187,480

 

 

 

305,937

 

Trade receivables

 

 

723

 

 

 

1,442

 

Prepaid expenses and other current assets

 

 

12,760

 

 

 

8,530

 

Research and development tax credit receivable, current

 

 

12,995

 

 

 

14,934

 

Total current assets

 

 

255,132

 

 

 

349,896

 

Non-current assets:

 

 

 

 

 

 

 

 

Operating lease right-of-use-assets

 

 

18,642

 

 

 

19,415

 

Property and equipment, net

 

 

5,460

 

 

 

7,596

 

Research and development tax credit receivable

 

 

19,734

 

 

 

13,710

 

Restricted cash

 

 

4,266

 

 

 

4,264

 

Other assets

 

 

11,342

 

 

 

4,400

 

Total assets

 

$

314,576

 

 

$

399,281

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

15,590

 

 

$

11,984

 

Accrued expenses and other current liabilities

 

 

19,811

 

 

 

37,980

 

Operating lease liabilities

 

 

5,924

 

 

 

5,892

 

Notes payable, current

 

 

694

 

 

 

 

Total current liabilities

 

 

42,019

 

 

 

55,856

 

Notes payable, long-term

 

 

24,192

 

 

 

24,699

 

Operating lease liabilities, net of current portion

 

 

17,171

 

 

 

15,320

 

Other long-term liabilities

 

 

4,173

 

 

 

4,213

 

Total liabilities

 

 

87,555

 

 

 

100,088

 

Commitments and contingencies (see Note 11)

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Ordinary shares, £0.10 nominal value

 

 

12,405

 

 

 

12,331

 

Additional paid-in capital

 

 

757,296

 

 

 

738,481

 

Accumulated other comprehensive income

 

 

9,050

 

 

 

2,042

 

Accumulated deficit

 

 

(551,730

)

 

 

(453,661

)

Total shareholders’ equity

 

 

227,021

 

 

 

299,193

 

Total liabilities and shareholders’ equity

 

$

314,576

 

 

$

399,281

 

 

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

1


ORCHARD THERAPEUTICS PLC

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Product sales, net

 

$

597

 

 

$

 

 

$

597

 

 

$

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

 

 

191

 

 

 

 

 

 

191

 

 

 

 

Research and development

 

 

31,568

 

 

 

40,478

 

 

$

56,404

 

 

 

57,971

 

Selling, general and administrative

 

 

15,659

 

 

 

13,674

 

 

 

35,804

 

 

 

24,464

 

Total costs and operating expenses

 

 

47,418

 

 

 

54,152

 

 

 

92,399

 

 

 

82,435

 

Loss from operations

 

 

(46,821

)

 

 

(54,152

)

 

 

(91,802

)

 

 

(82,435

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

892

 

 

 

1,727

 

 

 

2,372

 

 

 

3,350

 

Interest expense

 

 

(568

)

 

 

(245

)

 

 

(1,181

)

 

 

(245

)

Other income (expense), net

 

 

(943

)

 

 

1,368

 

 

 

(7,733

)

 

 

(2,118

)

Total other income (expense), net

 

 

(619

)

 

 

2,850

 

 

 

(6,542

)

 

 

987

 

Net loss before income tax

 

 

(47,440

)

 

 

(51,302

)

 

 

(98,344

)

 

 

(81,448

)

Income tax (expense) benefit

 

 

(60

)

 

 

772

 

 

 

275

 

 

 

179

 

Net loss attributable to ordinary shareholders

 

 

(47,500

)

 

 

(50,530

)

 

 

(98,069

)

 

 

(81,269

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

610

 

 

 

(1,443

)

 

 

6,643

 

 

 

1,608

 

Unrealized gain (loss) on marketable securities

 

 

1,385

 

 

 

108

 

 

 

364

 

 

 

108

 

Total other comprehensive income (loss)

 

 

1,995

 

 

 

(1,335

)

 

 

7,007

 

 

 

1,716

 

Total comprehensive loss

 

$

(45,505

)

 

$

(51,865

)

 

$

(91,062

)

 

$

(79,553

)

Net loss per share attributable to ordinary shareholders, basic

   and diluted

 

$

(0.48

)

 

$

(0.56

)

 

$

(0.99

)

 

$

(0.92

)

Weighted average number of ordinary shares outstanding, basic

   and diluted

 

 

99,251,314

 

 

 

89,712,916

 

 

 

99,048,498

 

 

 

88,369,311

 

 

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

2


ORCHARD THERAPEUTICS PLC

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss attributable to ordinary shareholders

 

$

(98,069

)

 

$

(81,269

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

1,081

 

 

 

775

 

Non-cash share-based compensation

 

 

15,558

 

 

 

8,451

 

Impairment of long-lived assets

 

 

5,650

 

 

 

 

Non-cash interest expense

 

 

254

 

 

 

46

 

Non-cash consideration for licenses

 

 

791

 

 

 

 

Amortization of Strimvelis loss provision

 

 

(2,018

)

 

 

(2,589

)

Amortization of premium (discount) on marketable securities

 

 

169

 

 

 

(232

)

Other non-cash adjustments

 

 

6,984

 

 

 

2,860

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade receivables

 

 

642

 

 

 

370

 

Research and development tax credit receivable

 

 

(5,989

)

 

 

(9,913

)

Prepaid expenses, other current assets and other assets

 

 

(3,313

)

 

 

1,125

 

Operating leases, right-of-use assets

 

 

1,525

 

 

 

1,324

 

Accounts payable, accrued expenses and other current liabilities

 

 

(9,644

)

 

 

6,802

 

Other long-term liabilities

 

 

 

 

 

(897

)

Operating lease liabilities

 

 

(1,633

)

 

 

30

 

Net cash used in operating activities

 

 

(88,012

)

 

 

(73,117

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Proceeds from sales and maturities of marketable securities

 

 

168,140

 

 

 

 

Purchases of marketable securities

 

 

(49,494

)

 

 

(286,399

)

Payment of construction deposit

 

 

(10,000

)

 

 

 

Receipt of funds from construction deposit

 

 

1,876

 

 

 

 

Purchases of property and equipment

 

 

(2,484

)

 

 

(589

)

Net cash provided by (used in) investing activities

 

 

108,038

 

 

 

(286,988

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Issuance of debt from credit facility, net of debt issuance costs paid

 

 

 

 

 

24,695

 

Proceeds from share options and ESPP shares

 

 

2,582

 

 

 

1,270

 

Issuance of ADSs in follow-on offering, net of offering costs paid

 

 

 

 

 

130,163

 

Net cash provided by financing activities

 

 

2,582

 

 

 

156,128

 

Effect of exchange rate changes on cash, cash equivalents, and

   restricted cash

 

 

(485

)

 

 

922

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

22,123

 

 

 

(203,055

)

Cash, cash equivalents, and restricted cash, beginning of period

 

 

23,317

 

 

 

339,681

 

Cash, cash equivalents, and restricted cash, end of period

 

$

45,440

 

 

$

136,626

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

 

 

Deferred offering costs and debt issuance costs in accounts payable and accrued expenses

 

 

 

 

 

726

 

Property and equipment included in accounts payable and accrued expenses

 

 

125

 

 

 

262

 

Lease assets obtained in exchange for new operating lease liabilities

 

 

3,752

 

 

 

 

Shares issued as part of license agreement

 

 

791

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for taxes

 

 

1,321

 

 

 

 

Cash paid for interest

 

 

927

 

 

 

199

 

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

 

3


ORCHARD THERAPEUTICS PLC

Condensed Consolidated Statements Shareholders’ Equity

(In thousands, except share and per share amounts)

(unaudited)

 

 

 

Ordinary Shares

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Total

 

Balance at December 31, 2018

 

 

85,865,557

 

 

$

10,924

 

 

$

587,490

 

 

$

3,163

 

 

$

(290,239

)

 

$

311,338

 

Share-based compensation expense

 

 

 

 

 

 

 

 

3,821

 

 

 

 

 

 

 

 

 

3,821

 

Exercise of share options

 

 

1,471

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

3,051

 

 

 

 

 

 

3,051

 

Net loss attributable to ordinary shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,739

)

 

 

(30,739

)

Balance at March 31, 2019

 

 

85,867,028

 

 

$

10,924

 

 

$

591,315

 

 

$

6,214

 

 

$

(320,978

)

 

$

287,475

 

Share-based compensation expense

 

 

-

 

 

 

-

 

 

 

4,630

 

 

 

 

 

 

 

 

 

4,630

 

Exercise of share options

 

 

532,889

 

 

 

69

 

 

 

504

 

 

 

 

 

 

 

 

 

573

 

Issuance of ESPP shares

 

 

60,335

 

 

 

8

 

 

 

685

 

 

 

 

 

 

 

 

 

693

 

Issuance of ADSs in follow-on offering, net of issuance costs of $620

 

 

9,725,268

 

 

 

1,233

 

 

 

128,418

 

 

 

 

 

 

 

 

 

129,651

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

(1,335

)

 

 

 

 

 

(1,335

)

Net loss attributable to ordinary shareholders

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

(50,530

)

 

 

(50,530

)

Balance at June 30, 2019

 

 

96,185,520

 

 

$

12,234

 

 

$

725,552

 

 

$

4,879

 

 

$

(371,508

)

 

$

371,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

96,923,729

 

 

$

12,331

 

 

$

738,481

 

 

$

2,042

 

 

$

(453,661

)

 

$

299,193

 

Share-based compensation expense

 

 

 

 

 

 

 

 

9,479

 

 

 

 

 

 

 

 

 

9,479

 

Exercise of share options

 

 

230,836

 

 

 

30

 

 

 

1,408

 

 

 

 

 

 

 

 

 

1,438

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

5,013

 

 

 

 

 

 

5,013

 

Net loss attributable to ordinary shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50,569

)

 

 

(50,569

)

Balance at March 31, 2020

 

 

97,154,565

 

 

$

12,361

 

 

$

749,368

 

 

$

7,055

 

 

$

(504,230

)

 

$

264,554

 

Share-based compensation expense

 

 

 

 

 

 

 

 

6,079

 

 

 

 

 

 

 

 

 

6,079

 

Exercise of share options

 

 

214,299

 

 

 

27

 

 

 

643

 

 

 

 

 

 

 

 

 

670

 

Issuance of ESPP shares

 

 

53,462

 

 

 

7

 

 

 

425

 

 

 

 

 

 

 

 

 

432

 

Ordinary shares issued as part of license agreements

 

 

75,413

 

 

 

10

 

 

 

781

 

 

 

 

 

 

 

 

 

791

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

1,995

 

 

 

 

 

 

1,995

 

Net loss attributable to ordinary shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(47,500

)

 

 

(47,500

)

Balance at June 30, 2020

 

 

97,497,739

 

 

$

12,405

 

 

$

757,296

 

 

$

9,050

 

 

$

(551,730

)

 

$

227,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

4


 

ORCHARD THERAPEUTICS PLC

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1. Nature of the Business

Orchard Therapeutics plc (the “Company”) is a global gene therapy leader dedicated to transforming the lives of people affected by rare diseases through the development of innovative, potentially curative gene therapies. The Company’s ex vivo autologous gene therapy approach utilizes genetically modified blood stem cells and seeks to correct the underlying cause of disease in a single administration. The Company’s gene therapy product candidate pipelines span multiple therapeutic areas where the disease burden on children, families and caregivers is immense and current treatment options are limited or do not exist.

The Company is a public limited company incorporated pursuant to the laws of England and Wales. The Company has American Depositary Shares (ADSs) registered with the U.S. Securities and Exchange Commission (the “SEC”) and has been listed on the Nasdaq Global Select Market since October 31, 2018. The Company’s ADSs each represent one ordinary share of the Company.

The Company is subject to risks and uncertainties common to development-stage companies in the biotechnology industry. There can be no assurance that the Company’s research and development will be successfully initiated or completed, that adequate protection for the Company’s technology will be obtained, that any products developed will obtain necessary government regulatory approval or that any products, if approved, will be commercially viable. The Company operates in an environment of rapid scientific and technological innovation and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and service providers. Even if the Company’s product development efforts are successful in gaining regulatory approval, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

 

The Company is subject to risks associated with the COVID-19 pandemic. In an effort to halt the outbreak of COVID-19, a number of countries, including the United States, United Kingdom and Italy where the Company operates, have placed significant restrictions on travel. While some COVID-19 restrictions have been relaxed, limitations on travel and other social distancing measures have had an effect on the Company’s preclinical and clinical activities and regulatory timelines. Commercial activity associated with the Company’s EMA-approved gene therapy for ADA-SCID, Strimvelis®, had been postponed by the treatment site but resumed in June 2020. Any prolonged material disruptions to the Company’s employees, suppliers, contract manufacturers, vendors, patients, government sponsored funding programs or the Company’s marketable securities could impact operating results and could lead to impairments. To date the Company has recorded impairments on long-lived assets that are due to a combination of a corporate restructuring and COVID-19 market impacts (see Note 8). The capital markets have experienced significant volatility as a result of the pandemic and the Company’s ability to access the capital markets in the future could be impacted if disruptions in the capital markets continue.

Through June 30, 2020, the Company funded its operations primarily with proceeds from the sale of convertible preferred shares and ADSs in the Company’s initial public offering (“IPO”) and a subsequent follow-on offering, as well as with certain grant and reimbursement payments and a drawdown on its credit facility, described in note 6 below. The Company has incurred recurring losses since its inception. As of June 30, 2020, the Company had an accumulated deficit of $551.7 million. The Company expects to continue to generate operating losses for the foreseeable future. The Company expects that its cash, cash equivalents, and marketable securities on hand as of June 30, 2020 of $228.7 million, will be sufficient to fund its operations and capital expen