10-Q
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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

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

 

For the quarterly period ended September 30, 2023 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: 001-36829

Rocket Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

04-3475813

(State or other jurisdiction of incorporation or organization)

 

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

 

 

 

9 Cedarbrook Drive, Cranbury, NJ

 

08512

(Address of principal executive office)

 

(Zip Code)

 

(609) 659-8001

(Registrant’s telephone number, including area code)

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.01 par value per share

 

RCKT

 

Nasdaq Global 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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting 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

As of November 3, 2023, there were 90,158,895 shares of common stock, $0.01 par value per share, outstanding.

 

 

 


Table of Contents

 

 

 

PART I – FINANCIAL INFORMATION

Page

Item 1.

Financial Statements

 

5

 

Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022

 

5

 

Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (unaudited)

 

6

 

Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022 (unaudited)

 

7

 

Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022 (unaudited)

 

8

 

Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited)

 

10

 

Notes to Consolidated Financial Statements (unaudited)

 

11

Item 2.

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

 

27

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

44

Item 4.

Controls and Procedures

 

45

 

PART II – OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

46

Item 1A.

Risk Factors

 

46

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

 

46

Item 3.

Defaults Upon Senior Securities

 

46

Item 4.

Mine Safety Disclosures

 

46

Item 5.

Other Information

 

46

Item 6.

Exhibits

 

47

Signatures

 

 

48

 

 


Table of Contents

 

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “aim,” “anticipate,” “believe,” “can,” “contemplate,” “continue,” “could,” “design,” “estimate,” “expect,” “future,” “intend,” “likely,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

federal, state, and non-U.S. regulatory requirements, including regulation of our current or any other future product candidates by the U.S. Food and Drug Administration (“FDA”);
the timing of and our ability to submit regulatory filings with the FDA and to obtain and maintain FDA or other regulatory authority approval of, or other action with respect to, our product candidates;
our competitors’ activities, including decisions as to the timing of competing product launches, pricing, and discounting;
whether safety and efficacy results of our clinical trials and other required tests for approval of our product candidates provide data to warrant progression of clinical trials, potential regulatory approval, or further development of any of our product candidates;
our ability to develop, acquire and advance product candidates into, enroll a sufficient number of patients into, and successfully complete, clinical studies, and our ability to apply for and obtain regulatory approval for such product candidates, within currently anticipated timeframes, or at all;
our ability to establish key collaborations and vendor relationships for our product candidates and any other future product candidates;
our ability to develop our sales and marketing capabilities or enter into agreements with third parties to sell and market any of our product candidates;
our ability to obtain additional funding to conduct our planned research and development efforts;
our ability to acquire additional businesses, form strategic alliances or create joint ventures and our ability to realize the benefit of such acquisitions, alliances, or joint ventures;
our ability to successfully develop and commercialize any technology that we may in-license or products we may acquire;
the development of our direct manufacturing capabilities for our AAV programs;
our ability to successfully operate in non-U.S. jurisdictions in which we currently or in the future do business, including compliance with applicable regulatory requirements and laws;
our ability to obtain and enforce patents to protect our product candidates, and our ability to successfully defend ourselves against unforeseen third-party infringement claims;
anticipated trends and challenges in our business and the markets in which we operate;
our estimates regarding our capital requirements; and
our ability to obtain additional financing and raise capital as necessary to fund operations or pursue business opportunities.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and 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 these forward-looking statements. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section incorporated by reference from our Annual Report for the year ended December 31, 2022, on Form 10-K, that could cause actual results or events to differ materially from the forward-looking statements that we make. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results, performance, or achievements may be materially different from what we expect. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

3


Table of Contents

 

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events, or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. This Quarterly Report contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Unless stated otherwise, references in this Quarterly Report to “us,” “we,” “our,” or our “Company” and similar terms refer to Rocket Pharmaceuticals, Inc.

4


Table of Contents

 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Rocket Pharmaceuticals, Inc.

Consolidated Balance Sheets

($ in thousands, except shares and per share amounts)

 

 

September 30, 2023

 

December 31, 2022

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

225,657

 

$

140,517

 

Investments

 

211,514

 

 

215,877

 

Prepaid expenses and other current assets

 

9,694

 

 

7,666

 

Total current assets

 

446,865

 

 

364,060

 

Property and equipment, net

 

36,534

 

 

29,009

 

Goodwill

 

39,154

 

 

39,154

 

Intangible assets

 

25,150

 

 

25,724

 

Restricted cash

 

1,372

 

 

1,340

 

Deposits

 

542

 

 

608

 

Investments

 

-

 

 

43,276

 

Operating lease right-of-use assets

 

4,089

 

 

1,972

 

Finance lease right-of-use asset

 

45,056

 

 

46,664

 

Total assets

$

598,762

 

$

551,807

 

Liabilities and stockholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued expenses

$

30,624

 

$

36,660

 

Operating lease liabilities, current

 

1,079

 

 

773

 

Finance lease liability, current

 

1,773

 

 

1,736

 

Total current liabilities

 

33,476

 

 

39,169

 

Operating lease liabilities, non-current

 

2,990

 

 

1,088

 

Finance lease liability, non-current

 

19,341

 

 

19,269

 

Other liabilities

 

1,869

 

 

2,595

 

Total liabilities

 

57,676

 

 

62,121

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

Preferred stock, $0.01 par value, authorized 5,000,000 shares:

 

 

 

 

Series A convertible preferred stock; 300,000 shares designated as Series A; 0 
   shares issued and outstanding

 

-

 

 

-

 

Series B convertible preferred stock; 300,000 shares designated as Series B; 0
   shares issued and outstanding

 

-

 

 

-

 

Common stock, $0.01 par value, 120,000,000 shares authorized; 90,146,602 and
   
79,123,312 shares issued and 90,146,602 and 79,120,741 shares outstanding
   at September 30, 2023 and December 31, 2022, respectively

 

901

 

 

791

 

Treasury stock, at cost, 0 common shares at September 30, 2023 and 2,571
   common shares at December 31, 2022

 

-

 

 

(47

)

Additional paid-in capital

 

1,440,403

 

 

1,203,074

 

Accumulated other comprehensive loss

 

(508

)

 

(357

)

Accumulated deficit

 

(899,710

)

 

(713,775

)

Total stockholders' equity

 

541,086

 

 

489,686

 

Total liabilities and stockholders' equity

$

598,762

 

$

551,807

 

 

 

 

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

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Table of Contents

 

Rocket Pharmaceuticals, Inc.

Consolidated Statements of Operations

($ in thousands, except shares and per share amounts)

(unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

2022

 

2023

 

2022

 

Revenue

$

-

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

46,844

 

 

43,383

 

 

144,598

 

 

115,533

 

General and administrative

 

18,585

 

 

15,105

 

 

51,782

 

 

39,728

 

Total operating expenses

 

65,429

 

 

58,488

 

 

196,380

 

 

155,261

 

Loss from operations

 

(65,429

)

 

(58,488

)

 

(196,380

)

 

(155,261

)

Interest expense

 

(469

)

 

(465

)

 

(1,405

)

 

(1,395

)

Interest and other income, net

 

1,720

 

 

1,353

 

 

4,474

 

 

2,644

 

Accretion of discount and amortization of premium on investments, net

 

2,279

 

 

(156

)

 

7,376

 

 

(1,128

)

Net loss

$

(61,899

)

$

(57,756

)

$

(185,935

)

$

(155,140

)

Net loss per share - basic and diluted

$

(0.75

)

$

(0.87

)

$

(2.30

)

$

(2.37

)

Weighted-average common shares outstanding - basic and diluted

 

82,636,120

 

 

66,215,535

 

 

80,865,658

 

 

65,406,844

 

 

 

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

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Table of Contents

 

Rocket Pharmaceuticals, Inc.

Consolidated Statements of Comprehensive Loss

($ in thousands)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

$

(61,899

)

 

$

(57,756

)

 

$

(185,935

)

 

$

(155,140

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) on investments

 

 

216

 

 

 

169

 

 

 

(151

)

 

 

(435

)

Total comprehensive loss

 

$

(61,683

)

 

$

(57,587

)

 

$

(186,086

)

 

$

(155,575

)

 

 

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

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Table of Contents

 

Rocket Pharmaceuticals, Inc.

Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2023 and 2022

($ in thousands except share amounts)

(unaudited)

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

Other

 

 

 

Total

 

 

Common Stock

 

Treasury

 

Paid-In

 

Comprehensive

 

Accumulated

 

Stockholders'

 

 

Shares

 

Amount

 

Stock

 

Capital

 

Income/(Loss)

 

Deficit

 

Equity

 

Balance at December 31, 2022

 

79,123,312

 

$

791

 

$

(47

)

$

1,203,074

 

$

(357

)

$

(713,775

)

$

489,686

 

Issuance of common stock pursuant to
   exercise of stock options

 

88,429

 

 

1

 

 

-

 

 

1,113

 

 

-

 

 

-

 

 

1,114

 

Issuance of common stock pursuant to
   vesting of restricted stock units

 

126,060

 

 

1

 

 

-

 

 

(1

)

 

-

 

 

-

 

 

-

 

Issuance of common stock pursuant to
   exercise of warrants

 

126,093

 

 

1

 

 

-

 

 

6

 

 

-

 

 

-

 

 

7

 

Issuance of common stock pursuant to
   the at-the-market offering program,
   net of issuance costs

 

948,300

 

 

10

 

 

-

 

 

17,212

 

 

-

 

 

-

 

 

17,222

 

Unrealized comprehensive gain on
   investments

 

-

 

 

-

 

 

-

 

 

-

 

 

267

 

 

-

 

 

267

 

Stock-based compensation

 

-

 

 

-

 

 

-

 

 

8,915

 

 

-

 

 

-

 

 

8,915

 

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(58,335

)

 

(58,335

)

Balance at March 31, 2023

 

80,412,194

 

 

804

 

 

(47

)

 

1,230,319

 

 

(90

)

 

(772,110

)

 

458,876

 

Issuance of common stock pursuant to
   exercise of stock options

 

48,088

 

 

-

 

 

-

 

 

182

 

 

-

 

 

-

 

 

182

 

Issuance of common stock pursuant to
   vesting of restricted stock units

 

61,133

 

 

1

 

 

-

 

 

(1

)

 

-

 

 

-

 

 

-

 

Unrealized comprehensive loss on
   investments

 

-

 

 

-

 

 

-

 

 

-

 

 

(632

)

 

-

 

 

(632

)

Stock-based compensation

 

-

 

 

-

 

 

-

 

 

10,245

 

 

-

 

 

-

 

 

10,245

 

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(65,701

)

 

(65,701

)

Balance at June 30, 2023

 

80,521,415

 

 

805

 

 

(47

)

 

1,240,745

 

 

(722

)

 

(837,811

)

 

402,970

 

Issuance of common stock, net of
   issuance costs

 

9,453,418

 

 

94

 

 

-

 

 

188,790

 

 

-

 

 

-

 

 

188,884

 

Issuance of common stock pursuant to
   exercise of stock options

 

56,811

 

 

1

 

 

-

 

 

544

 

 

-

 

 

-

 

 

545

 

Issuance of common stock pursuant to
   vesting of restricted stock units

 

114,958

 

 

1

 

 

-

 

 

(1

)

 

-

 

 

-

 

 

-

 

Unrealized comprehensive gain on
   investments

 

-

 

 

-

 

 

-

 

 

-

 

 

214

 

 

-

 

 

214

 

Sale of treasury stock

 

-

 

 

-

 

 

47

 

 

9

 

 

-

 

 

-

 

 

56

 

Stock-based compensation

 

-

 

 

-

 

 

-

 

 

10,316

 

 

-

 

 

-

 

 

10,316

 

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(61,899

)

 

(61,899

)

Balance at September 30, 2023

 

90,146,602

 

$

901

 

$

-

 

$

1,440,403

 

$

(508

)

$

(899,710

)

$

541,086

 

 

 

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

 

8


Table of Contents

 

Rocket Pharmaceuticals, Inc.

Consolidated Statements of Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2023 and 2022

($ in thousands except share amounts)

(unaudited)

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

Other

 

 

 

Total

 

 

Common Stock

 

Treasury

 

Paid-In

 

Comprehensive

 

Accumulated

 

Stockholders'

 

 

Shares

 

Amount

 

Stock

 

Capital

 

Income/(Loss)

 

Deficit

 

Equity

 

Balance at December 31, 2021

 

64,505,889

 

$

645

 

$

-

 

$

946,152

 

$

(161

)

$

(491,912

)

$

454,724

 

Issuance of common stock pursuant to
   exercise of stock options

 

6,000

 

 

-

 

 

-

 

 

76

 

 

-

 

 

-

 

 

76

 

Issuance of common stock pursuant to
   vesting of restricted stock units

 

10,168

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Unrealized comprehensive loss on
   investments

 

-

 

 

-

 

 

-

 

 

-

 

 

(468

)

 

-

 

 

(468

)

Stock-based compensation

 

-

 

 

-

 

 

-

 

 

6,270

 

 

-

 

 

-

 

 

6,270

 

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(42,982

)

 

(42,982

)

Balance at March 31, 2022

 

64,522,057

 

 

645

 

 

-

 

 

952,498

 

 

(629

)

 

(534,894

)

 

417,620

 

Issuance of common stock pursuant to
   exercise of stock options

 

2,387

 

 

-

 

 

-

 

 

3

 

 

-

 

 

-

 

 

3

 

Issuance of common stock pursuant to
   the at-the-market offering program,
   net of issuance costs

 

1,313,450

 

 

13

 

 

-

 

 

17,229

 

 

-

 

 

-

 

 

17,242

 

Unrealized comprehensive loss on
   investments

 

-

 

 

-

 

 

-

 

 

-

 

 

(136

)

 

-

 

 

(136

)

Stock-based compensation

 

-

 

 

-

 

 

-

 

 

7,369

 

 

-

 

 

-

 

 

7,369

 

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(54,402

)

 

(54,402

)

Balance at June 30, 2022

 

65,837,894

 

 

658

 

 

-

 

 

977,099

 

 

(765

)

 

(589,296

)

 

387,696

 

Issuance of common stock pursuant to
   exercise of stock options

 

22,437

 

 

-

 

 

-

 

 

229

 

 

-

 

 

-

 

 

229

 

Issuance of common stock pursuant to
   the at-the-market offering program,
   net of issuance costs

 

1,978,472

 

 

20

 

 

-

 

 

29,278

 

 

-

 

 

-

 

 

29,298

 

Unrealized comprehensive gain on
   investments

 

-

 

 

-

 

 

-

 

 

-

 

 

169

 

 

-

 

 

169

 

Stock-based compensation

 

-

 

 

-

 

 

-

 

 

7,677

 

 

-

 

 

-

 

 

7,677

 

Net loss

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(57,756

)

 

(57,756

)

Balance at September 30, 2022

 

67,838,803

 

$

678

 

$

-

 

$

1,014,283

 

$

(596

)

$

(647,052

)

$

367,313

 

 

 

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

9


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Rocket Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

($ in thousands)

(unaudited)

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(185,935

)

 

$

(155,140

)

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

 

 

 

 

 

 

Depreciation and amortization of property and equipment

 

 

3,548

 

 

 

2,883

 

Amortization of finance lease right of use asset

 

 

1,615

 

 

 

1,605

 

Impairment of acquired intangible asset

 

 

574

 

 

 

-

 

Write down of property and equipment, net

 

 

291

 

 

 

177

 

Stock-based compensation

 

 

29,476

 

 

 

21,316

 

Amortization of premium and accretion of discount on investments, net

 

 

(7,076

)

 

 

1,132

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(1,962

)

 

 

(1,278

)

Accounts payable and accrued expenses

 

 

(5,611

)

 

 

7,189

 

Operating lease liabilities

 

 

120

 

 

 

(96

)

Finance lease liability

 

 

109

 

 

 

134

 

Other liabilities

 

 

(726

)

 

 

(43

)

Net cash used in operating activities

 

 

(165,577

)

 

 

(122,121

)

Investing activities:

 

 

 

 

 

Purchases of investments

 

 

(182,418

)

 

 

(177,460

)

Proceeds from maturities of investments

 

 

236,982

 

 

 

222,074

 

Payments made to acquire right of use asset

 

 

(36

)

 

 

-

 

Purchases of property and equipment

 

 

(11,789

)

 

 

(5,355

)

Net cash provided by investing activities

 

 

42,739

 

 

 

39,259

 

Financing activities:

 

 

 

 

 

Issuance of common stock, net of issuance costs

 

 

188,884

 

 

 

-

 

Issuance of common stock, pursuant to exercise of stock options

 

 

1,841

 

 

 

308

 

Issuance of common stock, pursuant to sale of treasury stock

 

 

56