Metagenomi(MGX) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This part provides other information, including legal proceedings, risk factors, equity sales, and controls Item 1. Financial Statements (Unaudited) Metagenomi, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, operations, equity, and cash flows, are presented Condensed Consolidated Balance Sheets | Assets (in thousands) | June 30, 2024 | December 31, 2023 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $61,181 | $140,603 | | Available-for-sale marketable securities | $238,740 | $130,579 | | Total current assets | $307,579 | $278,273 | | Total assets | $385,905 | $364,842 | | | | | | Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) | | Total current liabilities | $52,810 | $68,861 | | Total liabilities | $116,486 | $149,668 | | Total stockholders' equity (deficit) | $269,419 | $(135,584) | | Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) | $385,905 | $364,842 | Condensed Consolidated Statements of Operations and Comprehensive Loss | (in thousands, except share and per share data) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Collaboration revenue | $20,008 | $11,337 | $31,167 | $19,994 | | Research and development | $28,320 | $22,681 | $59,759 | $42,811 | | General and administrative | $8,551 | $6,619 | $17,303 | $13,084 | | Total operating expenses | $36,871 | $29,300 | $77,062 | $55,895 | | Loss from operations | $(16,863) | $(17,963) | $(45,895) | $(35,901) | | Total other income, net | $3,925 | $6,853 | $7,809 | $10,855 | | Net loss | $(10,739) | $(13,008) | $(35,887) | $(29,141) | | Net loss per share, basic and diluted | $(0.29) | $(3.82) | $(1.24) | $(8.56) | | Weighted average common shares outstanding | 36,625,291 | 3,404,585 | 28,901,399 | 3,404,585 | Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) | (in thousands, except share data) | Redeemable Convertible Preferred Stock Amount | Common Stock Amount | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders' Equity (Deficit) | | :-------------------------------- | :------------------------------------ | :------------------ | :------------------------- | :----------------------------------- | :------------------ | :----------------------------------- | | BALANCE—December 31, 2023 | $350,758 | $0 | $9,457 | $(97) | $(144,944) | $(135,584) | | BALANCE—June 30, 2024 | $0 | $4 | $450,511 | $(265) | $(180,831) | $269,419 | - Conversion of redeemable convertible preferred stock to common stock upon initial public offering resulted in a significant shift in equity structure, with $350,758 thousand converted[17] - Issuance of common stock in connection with IPO, net of issuance costs, provided $80,729 thousand in additional paid-in capital[17] Condensed Consolidated Statements of Cash Flows | (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(56,159) | $(47,087) | | Net cash used in investing activities | $(107,768) | $(90,787) | | Net cash provided by financing activities | $84,505 | $4,256 | | Net decrease in cash, cash equivalents and restricted cash | $(79,422) | $(133,618) | | Cash, cash equivalents and restricted cash at end of period | $66,429 | $56,896 | Notes to Unaudited Condensed Consolidated Financial Statements 1. Description of Business, Organization and Liquidity - Metagenomi, Inc. is a precision genetic medicines company developing curative therapeutics using a proprietary metagenomics-derived genome editing toolbox[19] - The company completed a Reorganization on January 24, 2024, merging Metagenomi LLC into Metagenomi, Inc., followed by a 1-for-1.74692 Reverse Stock Split on January 26, 2024[21][22] - Metagenomi completed its Initial Public Offering (IPO) on February 8, 2024, issuing 6,250,000 shares of common stock at $15.00 per share, generating approximately $80.7 million in net proceeds[24] - As of June 30, 2024, the company had an accumulated deficit of $180.8 million but believes existing cash, cash equivalents, and available-for-sale marketable securities ($299.9 million) are sufficient to fund operations for at least the next 12 months[26] 2. Summary of Significant Accounting Policies - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and include adjustments for the Reorganization and Reverse Stock Split[28][29] - Management evaluates estimates and assumptions on an ongoing basis, particularly for revenue recognition, stock-based compensation, and valuation of deferred tax assets[30] - The company is evaluating the impact of recently issued ASUs 2023-07 (Segment Reporting) and 2023-09 (Income Tax Disclosures) on its financial statements[31][32] 3. Fair Value Measurements - Financial instruments measured at fair value are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[33][34][36] | Assets (in thousands) | June 30, 2024 Total | Level 1 | Level 2 | Level 3 | | :-------------------- | :------------------ | :------ | :------ | :------ | | Money market funds | $59,780 | $59,780 | $— | $— | | Marketable securities | $238,740 | $— | $238,740| $— | | Long-term investments | $8,521 | $— | $— | $8,521 | | Total fair value of assets | $307,041 | $59,780 | $238,740| $8,521 | - Long-term investments in Affini-T Therapeutics, Inc. are classified as Level 3 financial assets and valued using an option-pricing model backsolve method[36][39] | Level 3 Financial Assets (in thousands) | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :----------------------------- | | Beginning balance | $8,521 | $8,521 | | Change in fair value | $— | $— | | Ending balance | $8,521 | $8,521 | 4. Available-For-Sale Marketable Securities | (in thousands) | June 30, 2024 Fair Value | December 31, 2023 Fair Value | | :------------- | :----------------------- | :--------------------------- | | Money market funds | $59,780 | $137,216 | | U.S. treasury bills | $16,957 | $9,831 | | U.S. government bonds | $98,792 | $2,989 | | Total available-for-sale marketable securities | $238,740 | $130,579 | - The company's available-for-sale marketable securities significantly increased from $130.6 million at December 31, 2023, to $238.7 million at June 30, 2024[41] - No impairment losses were recognized on available-for-sale securities during the three and six months ended June 30, 2024 and 2023[41] 5. Long-Term Investments - Investments in Affini-T Therapeutics, Inc. (preferred and common stock) were valued at $8.5 million as of June 30, 2024, with no change in fair value recognized during the three and six months ended June 30, 2024[43][44] - Investment in ViTToria Biotherapeutics, Inc. (preferred stock) had a carrying value of $2.2 million as of June 30, 2024, accounted for using the measurement alternative method[45] 6. Accrued Expenses and Other Current Liabilities | (in thousands) | June 30, 2024 | December 31, 2023 | | :------------- | :------------ | :---------------- | | Accrued personnel related expenses | $4,719 | $7,263 | | Accrued legal and professional services | $3,002 | $2,627 | | Accrued research and development expenses | $1,890 | $856 | | Total accrued expenses and other current liabilities | $10,984 | $11,472 | - Total accrued expenses and other current liabilities slightly decreased from $11.472 million at December 31, 2023, to $10.984 million at June 30, 2024, primarily due to a decrease in accrued personnel-related expenses[46] 7. Significant Agreements Moderna strategic collaboration and license agreement - The Strategic Collaboration and License Agreement with ModernaTX, Inc. was mutually terminated on April 26, 2024, resulting in Metagenomi regaining full development and commercialization rights to its base editing and RNA-mediated integration systems (RIGS)[47][48] - Prior to termination, the agreement involved collaboration on in vivo genome editing therapies across DT Field (knock-out/base editing/insertion) and RT Field (gene editing outside DNA donor templates)[49] - Due to the termination, the company recognized the remaining deferred revenue of $15.9 million as revenue during the three and six months ended June 30, 2024, and forfeited a $5.0 million payment for research costs[60] Affini-T development, option and license agreement - The Development, Option and License Agreement with Affini-T Therapeutics, Inc. involves identifying, developing, or optimizing reagents for Affini-T's gene-edited T-cell receptor (TCR)-based therapeutic products for cancer[62] - Metagenomi received upfront equity consideration of 719,920 shares of Affini-T common stock (estimated fair value $1.3 million) in June 2022 and is eligible for up to $18.8 million in development milestones, $40.6 million in regulatory milestones, and $250.0 million in sales-based milestones[65] - Collaboration revenue recognized from Affini-T was $1.0 million and $1.3 million for the three and six months ended June 30, 2024, respectively, a decrease from the prior year[69] Ionis collaboration and license agreement - The Collaboration and License Agreement with Ionis Pharmaceuticals, Inc. focuses on drug discovery and exploratory research for new gene editing medicines, with Metagenomi having an exclusive option to co-develop and co-commercialize certain products[71][75] - Metagenomi received an $80.0 million upfront payment in November 2022 and is eligible for up to $29.0 million in development milestones, $60.0 million in regulatory milestones, and $250.0 million in sales-based milestones per licensed product[78][79] - Collaboration revenue recognized from Ionis was $3.1 million and $11.1 million for the three and six months ended June 30, 2024, respectively. Deferred revenue related to Ionis was $50.2 million as of June 30, 2024[84] 8. Commitments and Contingencies - The company's material cash requirements include contractual obligations for leased office and laboratory space[85] - Management is not aware of any legal matters that could have a material adverse effect on the company's financial position, results of operations, or cash flows[86] - The company has not recorded material liabilities for guarantees and indemnifications as of June 30, 2024, and December 31, 2023[87] 9. Redeemable Convertible Preferred Stock - All outstanding redeemable convertible preferred units were converted into an equal number of shares of redeemable convertible preferred stock on January 24, 2024, in connection with the Reorganization[88] - Immediately prior to the IPO closing, all outstanding redeemable convertible preferred stock converted into 23,935,594 shares of common stock[88] 10. Stock-Based Compensation - The company modified profits interest terms on July 31, 2023, resulting in a $10.3 million modification expense[96] - In connection with the Reorganization, 282,660 profits interest units were canceled, leading to the recognition of $3.0 million in previously unrecognized compensation[96] | (in thousands) | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :----------------------------- | | Research and development expenses | $2,304 | $6,302 | | General and administrative expenses | $2,208 | $3,267 | | Total stock-based compensation expense | $4,512 | $9,569 | - As of June 30, 2024, there was $16.0 million of unrecognized compensation expense for restricted stock awards, $24.6 million for stock options, and $5.0 million for restricted stock units, to be recognized over weighted-average periods of 2.4, 3.5, and 3.7 years, respectively[105] 11. Net Loss Per Share | (in thousands, except share and per share amounts) | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :----------------------------- | | Net loss attributable to common stockholders | $(10,739) | $(35,887) | | Weighted-average common shares outstanding—basic and diluted | 36,625,291 | 28,901,399 | | Net loss per share attributable to common stockholders—basic and diluted | $(0.29) | $(1.24) | - Potentially dilutive securities, including redeemable convertible preferred stock, profits interests, restricted stock, options, and restricted stock units, were excluded from diluted net loss per share calculation as their effect would have been anti-dilutive[107] 12. Subsequent Events - On July 19, 2024, Metagenomi received 933,650 shares of Affini-T common stock, with an estimated fair value of $4.0 million, upon achieving a regulatory milestone related to the submission of drug master files to the FDA[108][109] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Metagenomi's financial condition, operational results, pipeline, and collaborations for the specified periods Overview - Metagenomi is a precision genetic medicines company focused on developing curative therapeutics using a proprietary metagenomics-derived genome editing toolbox[110] - The company's platform combines AI and proprietary algorithms to discover and develop novel editing tools, including programmable nucleases, base editors, RNA-mediated integration systems (RIGS), and CRISPR-associated transposases (CASTs)[110][111] - Metagenomi aims to address a broad array of diseases and target organs, including liver, central nervous system, muscle, kidney, and lung, with all elements of its toolbox wholly owned and protected by a broad patent estate[111][112] Lead Therapeutic Programs - The Hemophilia A program, with lead candidate MGX-001, aims to provide life-long protection from bleeding events by inserting a Factor VIII (FVIII) DNA cassette into a safe harbor location in the liver[113][115] - Preclinical data in non-human primates (NHP) showed therapeutically relevant levels of cyno-FVIII protein for 4.5 months, with 12-month durability data expected in September 2024[114][115] - All four Wave 1 therapeutic targets in the Ionis collaboration, focusing on cardiometabolic diseases like transthyretin amyloidosis (TTR) and refractory hypertension (AGT), have advanced into the lead optimization phase[116] - In TTR and AGT programs, the company achieved over 90% and 85% knockdown of human TTR and AGT proteins in mouse models, respectively, and initiated NHP studies[117][118] Technology Platform - The company has identified thousands of novel CRISPR nucleases, including ultra-small (SMART) systems, expanding targetability and enabling efficient delivery with AAV vectors[119][120] - Base editors have shown a 5-fold expansion in genome targetability compared to SpCas9 base editors, with multiplex base editing proof-of-concept achieved[121] - RNA-mediated Integration Systems (RIGS) demonstrated in vitro proof-of-concept for small gene correction and targeted integration of >900 bp in human cells using all-RNA delivery[122] - CRISPR-associated transposases (CASTs) are being developed for large, >10,000 base pair, targeted genomic integrations, with in vitro proof-of-concept achieved[123] Other Business Updates - The company revised its pipeline guidance through year-end 2025, including one to two development candidate (DC) nominations in 2025, and maintained guidance for an IND filing for hemophilia A in 2026[124] - Internal efforts are focused on in vivo gene editing, with technology out-licensing pursued for ex vivo cell therapy[124] - The company deprioritized the Primary Hyperoxaluria Type 1 (PH1) program and will seek a partner or licensee for its further development[127] - The amyotrophic lateral sclerosis (ALS) program was discontinued due to recent peer company clinical data indicating a lack of efficacy for Ataxin-2 as a therapeutic target[124] Affini-T Collaboration - On July 19, 2024, Metagenomi received 933,650 shares of Affini-T common stock, valued at $4.0 million, upon achieving a regulatory milestone related to the submission of drug master files to the FDA for Affini-T's T-cell receptor-based therapy[125] Termination of Moderna Agreement - The Strategic Collaboration and License Agreement with ModernaTx, Inc. was mutually terminated on April 26, 2024, resulting in Metagenomi regaining full development and commercialization rights to its wholly-owned base editing and RIGS technologies[126] - Metagenomi is no longer entitled to receive future payments from Moderna under the terminated agreement[126] Reorganization and Reverse Stock Split - On January 24, 2024, Metagenomi LLC merged into Metagenomi, Inc. (the Reorganization), with common and preferred unitholders receiving corresponding shares in Metagenomi, Inc[128] - A 1-for-1.74692 reverse stock split was effected on January 26, 2024, following the Reorganization[129] Initial Public Offering - Metagenomi completed its IPO on February 13, 2024, issuing 6,250,000 shares of common stock at $15.00 per share, generating approximately $80.7 million in net proceeds[130] Macroeconomic Trends - The company acknowledges potential negative impacts from macroeconomic events such as rising inflation, interest rate fluctuations, economic slowdowns, and geopolitical tensions, but has not experienced a material adverse impact to date[131] Collaboration and License Agreements - Metagenomi has collaborations with Affini-T and Ionis for developing gene-edited therapeutic products and investigational medicines, respectively[132] - The Moderna Agreement was mutually terminated in April 2024, with Metagenomi regaining full rights to its technologies[132] Components of Results of Operations - All revenue to date is from collaboration agreements (Moderna, Ionis, Affini-T), with no product sales expected in the foreseeable future[133][134] - Research and development expenses are the largest component of operating expenses, expected to increase substantially with platform development, manufacturing investments, and clinical trials[136][138] - General and administrative expenses are also expected to increase due to headcount growth and costs associated with operating as a public company[139][140] Results of Operations Comparison of the Three and Six Months Ended June 30, 2024 and 2023 | (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Change ($) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | Change ($) | | :------------- | :------------------------------- | :------------------------------- | :--------- | :----------------------------- | :----------------------------- | :--------- | | Collaboration revenue | $20,008 | $11,337 | $8,671 | $31,167 | $19,994 | $11,173 | | Total operating expenses | $36,871 | $29,300 | $7,571 | $77,062 | $55,895 | $21,167 | | Loss from operations | $(16,863) | $(17,963) | $1,100 | $(45,895) | $(35,901) | $(9,994) | | Total other income, net | $3,925 | $6,853 | $(2,928) | $7,809 | $10,855 | $(3,046) | | Net loss | $(10,739) | $(13,008) | $2,269 | $(35,887) | $(29,141) | $(6,746) | Collaboration Revenue (Detailed) | (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Change ($) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | Change ($) | | :------------- | :------------------------------- | :------------------------------- | :--------- | :----------------------------- | :----------------------------- | :--------- | | Ionis | $3,079 | $4,802 | $(1,723) | $11,144 | $8,465 | $2,679 | | Moderna | $15,947 | $4,548 | $11,399 | $18,742 | $8,890 | $9,852 | | Affini-T | $982 | $1,987 | $(1,005) | $1,281 | $2,639 | $(1,358) | | Total | $20,008 | $11,337 | $8,671 | $31,167 | $19,994 | $11,173 | - Collaboration revenue increased by $8.7 million for the three months and $11.2 million for the six months ended June 30, 2024, primarily due to the recognition of $15.9 million in remaining deferred revenue from the Moderna Agreement termination[142] Research and Development Expenses (Detailed) | (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Change ($) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | Change ($) | | :------------- | :------------------------------- | :------------------------------- | :--------- | :----------------------------- | :----------------------------- | :--------- | | Employee-related expenses | $12,982 | $9,234 | $3,748 | $27,864 | $16,956 | $10,908 | | Laboratory materials and supplies | $6,073 | $3,940 | $2,133 | $11,872 | $8,419 | $3,453 | | Facilities and overhead costs | $6,112 | $4,710 | $1,402 | $11,889 | $10,048 | $1,841 | | Other R&D and consulting costs | $3,153 | $4,797 | $(1,644) | $8,134 | $7,388 | $746 | | Total R&D expense | $28,320 | $22,681 | $5,639 | $59,759 | $42,811 | $16,948 | - Research and development expenses increased by $5.6 million for the three months and $16.9 million for the six months ended June 30, 2024, driven by higher employee-related expenses (including stock-based compensation) and increased laboratory materials and supplies due to expanded operations[144][145] General and Administrative Expenses (Detailed) - General and administrative expenses increased by $1.9 million for the three months and $4.2 million for the six months ended June 30, 2024, primarily due to increased employee-related expenses, including stock-based compensation, resulting from increased headcount[146] Total Other Income, Net (Detailed) - Total other income, net, decreased by $2.9 million for the three months and $3.0 million for the six months ended June 30, 2024, mainly due to the absence of a change in fair value of long-term investments in Affini-T, which was recognized in the prior year[147] Benefit (Provision) for Income Taxes (Detailed) - The company recorded a benefit for income taxes of $2.2 million for both the three and six months ended June 30, 2024, a decrease of $4.1 million and $6.3 million respectively from a provision in the prior year, due to the intention to carry back 2024 R&D credits[148] Liquidity and Capital Resources - Since inception, Metagenomi has funded operations through redeemable convertible preferred stock, convertible promissory notes, collaboration agreements, and $80.7 million net proceeds from its February 2024 IPO[149] - The company had $299.9 million in cash, cash equivalents, and available-for-sale marketable securities as of June 30, 2024, projected to fund operations into 2027[153] - Future funding requirements are substantial and depend on the timing and progress of R&D, preclinical and clinical development, regulatory approvals, manufacturing, and commercialization activities[152] Sources of Liquidity - The company has historically financed operations through equity issuances and collaboration agreements, including $120.0 million in upfront cash payments from collaborations through June 30, 2024[149] - Metagenomi expects to incur substantial losses and will require additional funding through equity offerings, debt financings, or collaborations until significant product revenue is generated[150] Future Funding Requirements - Expenses are expected to increase substantially as the company advances its portfolio towards candidate nomination and preclinical trials, and incurs costs as a public company[152] - Additional funding will be required to continue R&D, develop and protect intellectual property, further develop the platform, and hire additional personnel[153] - Failure to raise additional capital could lead to delays, reductions, or termination of product development and commercialization efforts, or relinquishing valuable rights to technologies[154] Cash Flows | (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(56,159) | $(47,087) | | Net cash used in investing activities | $(107,768) | $(90,787) | | Net cash provided by financing activities | $84,505 | $4,256 | | Net decrease in cash, cash equivalents and restricted cash | $(79,422) | $(133,618) | - Net cash used in operating activities increased to $56.2 million for the six months ended June 30, 2024, primarily due to net loss and changes in operating assets and liabilities, partially offset by non-cash charges[156] - Net cash provided by financing activities was $84.5 million for the six months ended June 30, 2024, driven by net proceeds from the IPO[159] Contractual Obligations and Commitments - Material cash requirements include contractual obligations for leased office and laboratory space, with no material changes during the six months ended June 30, 2024[160] Recently Issued Accounting Pronouncements - The company is evaluating the impact of recently issued accounting pronouncements on its financial position, results of operations, or cash flows[161] Critical Accounting Policies and Significant Judgments and Estimates - No material changes to critical accounting estimates or methodologies were made during the six months ended June 30, 2024[163] - Key estimates include revenue recognition under collaboration agreements, accrued R&D costs, fair value of common stock and stock-based compensation, and valuation of deferred tax assets[162] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Metagenomi, Inc. is exempt from providing quantitative and qualitative market risk disclosures - Metagenomi is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[164] Item 4. Controls and Procedures Disclosure controls and procedures are confirmed effective, with no material changes in internal control over financial reporting during the quarter Management's Evaluation of Disclosure Controls and Procedures - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2024[166] Changes in Internal Controls - There have been no material changes in internal control over financial reporting during the quarter ended June 30, 2024[167] PART II. OTHER INFORMATION This part provides other information, including legal proceedings, risk factors, equity sales, and controls Item 1. Legal Proceedings No legal matters or governmental proceedings are currently known to materially adversely affect the company's financial position or operations - Management believes there are no current claims or actions pending that would materially adversely affect the company's financial position, results of operations, or cash flows[168] Item 1A. Risk Factors Significant risks to Metagenomi's financial position, operations, technology, regulatory environment, and intellectual property are detailed SUMMARY OF MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS - The company has incurred significant losses since inception and expects to continue incurring losses, potentially never achieving profitability[170][172] - Substantial additional funding is required, and inability to raise capital on acceptable terms could force delays or termination of research and development programs[170][173] - The company is in early development stages with no product candidates in clinical development, facing challenges due to the novel nature of its genome editing technology and rapid industry evolution[170][190] Risks Related to Financial Position and Need for Capital - The company has an accumulated deficit of $180.8 million as of June 30, 2024, and expects increasing operating losses for the foreseeable future[172] - Future capital requirements are highly dependent on the timing and progress of R&D, preclinical and clinical development, regulatory approvals, and commercialization activities[181] - The company's ability to utilize net operating loss carryforwards and other tax attributes may be limited due to past ownership changes and potential future changes under tax laws[188] Risks Related to Business, Technology, and Industry - The company is in early development, with all programs in research or lead optimization, and has not initiated IND-enabling studies or clinical development, making commercialization many years away, if ever[190] - The novel nature of genome editing technology presents additional development challenges and risks, including regulatory uncertainty, potential for unintended editing events, and long follow-up observation periods for patients[196] - The genome editing field is rapidly evolving, and competing technologies or adverse public perception of genome editing could negatively impact demand or regulatory approval[204][233] Risks Related to Regulatory, Legal, and Clinical Trials - There is no assurance of obtaining FDA or foreign regulatory designations (e.g., Fast Track, Breakthrough Therapy, RMAT, Orphan Drug) or realizing their intended benefits, as standards for approval remain unchanged[255][256] - Clinical trials are lengthy, expensive, and uncertain, with a high failure rate, and novel genome editing technologies face evolving regulatory requirements and potential for unexpected side effects[198][199][206] - Difficulty enrolling patients, especially for rare diseases, or delays in accessing animal research models (e.g., NHPs) could significantly delay or prevent clinical development[216][280] - Healthcare reform legislation and drug pricing pressures in the U.S. and abroad could increase costs, reduce reimbursement, and adversely affect the commercialization of future products[263][268] Risks Related to Third Party Relationships - Conflicts with collaborators or strategic partners could limit the company's ability to implement strategies, as partners may act adversely or develop competing products[315][316] - Reliance on third parties for clinical trials, research, and manufacturing increases risks of delays, unsatisfactory performance, or insufficient supply, which could harm development and commercialization efforts[327][333] - Relationships with healthcare providers and payors are subject to anti-kickback, fraud and abuse, and anti-bribery laws, with potential for significant penalties for non-compliance[340][341] Risks Related to Personnel, Operations, and Growth - Future success depends on retaining key executives and attracting/motivating qualified scientific, clinical, manufacturing, and sales/marketing personnel in a competitive environment[346][347] - Expected expansion in R&D, regulatory affairs, and commercialization will require effective management of growth, which could lead to operational difficulties or disruptions[349][350] - Disruptions at the FDA and other government agencies due to funding shortages or health concerns could hinder product development and approval timelines[351] Risks Related to Our Intellectual Property - Commercial success relies on obtaining, maintaining, and enforcing broad intellectual property protection for genome editing systems, which is expensive, time-consuming, and uncertain[352][368] - Patent terms may be inadequate to protect competitive position, and changes in patent laws or interpretations (e.g., Myriad, Amgen rulings, UPC) could diminish patent value or narrow scope[375][379][381][383][384] - The company faces risks of lawsuits for infringing third-party IP rights, which could be costly, delay commercialization, or require obtaining licenses on unfavorable terms[394][395] - Inability to protect trade secrets or acquire/license additional necessary intellectual property from third parties could harm business and competitive position[366][411] Risks Related to our Common Stock, and Operating as a Public Company - The market price of common stock may be volatile due to various factors, including competitive developments, clinical trial results, regulatory changes, and macroeconomic conditions[421] - Operating as a public company incurs increased costs and requires substantial management time for compliance initiatives and corporate governance practices, including SOX Section 404[423][424] - Future sales of common stock by insiders or additional equity issuances could cause stock price dilution and decline[427][429] - Provisions in the company's bylaws and Delaware law may have anti-takeover effects, potentially discouraging acquisitions or limiting stockholders' ability to influence management[442] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No recent unregistered sales of equity securities are reported, and the use of proceeds from the company's IPO is detailed Recent Sales of Unregistered Securities - There have been no recent unregistered sales of equity securities[450] Use of Proceeds from our IPO - The company received aggregate net proceeds of $80.7 million from its IPO on February 13, 2024, after deducting underwriting discounts and commissions and other offering costs[451] - There has been no material change in the planned use of net proceeds from the IPO as described in the final prospectus[452] Item 3. Defaults Upon Senior Securities There are no defaults upon senior securities - There are no defaults upon senior securities[453] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[453] Item 5. Other Information No material changes to board nominee procedures or Rule 10b5-1 trading arrangements by directors or officers are reported - No material changes to procedures for security holders to recommend nominees to the board of directors[453] - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter ended June 30, 2024[453] Item 6. Exhibits Exhibits filed with the Form 10-Q, including certifications, XBRL documents, and organizational documents, are listed - Includes certifications from Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1)[453] - Contains Inline XBRL Instance Document, Taxonomy Extension Schema, and Cover Page Interactive Data File (Exhibits 101.INS, 101.SCH, 104)[453] - References Amended and Restated Certificate of Incorporation and Bylaws (Exhibits 3.1, 3.2) filed previously[454] Signatures The report is duly signed by Metagenomi, Inc.'s Chief Executive Officer and Chief Financial Officer on August 14, 2024 - Report signed by Brian C. Thomas, Ph.D., Chief Executive Officer, and Pamela Wapnick, MBA, Chief Financial Officer, on August 14, 2024[455]