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MeiraGTx(MGTX) - 2025 Q1 - Quarterly Report
MeiraGTxMeiraGTx(US:MGTX)2025-05-13 12:09

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents MeiraGTx's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with explanatory notes Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific dates | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Current Assets | $79,889 | $123,518 | | Total Assets | $224,014 | $269,751 | | Total Current Liabilities | $52,372 | $60,783 | | Total Liabilities | $190,915 | $201,924 | | Total Shareholders' Equity | $33,099 | $67,827 | - The company's total assets decreased from $269.8 million at December 31, 2024, to $224.0 million at March 31, 2025, primarily driven by a decrease in cash and cash equivalents20 - Shareholders' equity significantly decreased from $67.8 million at December 31, 2024, to $33.1 million at March 31, 2025, largely due to the net loss incurred during the period20 Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's financial performance, including revenue, operating expenses, and net loss, for the reported periods | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Service revenue - related party | $1,926 | $697 | | Total operating expenses | $43,522 | $47,469 | | Loss from operations | $(41,596) | $(46,772) | | Net loss | $(39,981) | $(20,442) | | Basic and diluted net loss per ordinary share | $(0.51) | $(0.32) | - The net loss for the three months ended March 31, 2025, significantly increased to $39.98 million from $20.44 million in the same period of 2024, primarily due to the absence of a large gain on sale of nonfinancial assets recognized in 202423197 - Service revenue from related parties increased from $0.7 million in Q1 2024 to $1.9 million in Q1 2025, driven by increased progress in PPQ services23186 Condensed Consolidated Statement of Shareholders' Equity This section outlines the changes in the company's shareholders' equity, reflecting net loss, share-based compensation, and share issuance | Metric (in thousands) | Balance at Dec 31, 2024 | Share-based Compensation | Issuance of Shares | Other Comprehensive Loss | Net Loss (Q1 2025) | Balance at Mar 31, 2025 | | :-------------------- | :---------------------- | :----------------------- | :----------------- | :----------------------- | :----------------- | :---------------------- | | Total Shareholders' Equity | $67,827 | $2,130 | $4,470 | $(1,347) | $(39,981) | $33,099 | - Shareholders' equity decreased by $34.7 million during Q1 2025, primarily due to the net loss of $39.98 million, partially offset by share-based compensation activity and issuance of ordinary shares25 Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the reported periods | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(36,828) | $(36,741) | | Net cash (used in) provided by investing activities | $(1,710) | $27,340 | | Net cash provided by (used in) financing activities | $1,713 | $(1,270) | | Net decrease in cash, cash equivalents and restricted cash | $(36,825) | $(10,671) | - Net cash used in operating activities remained consistent at approximately $36.8 million for both periods, reflecting ongoing research and development expenses28203204 - Investing activities shifted from providing $27.3 million in Q1 2024 (due to proceeds from sale of nonfinancial assets) to using $1.7 million in Q1 2025 for property and equipment purchases28205 - Financing activities provided $1.7 million in Q1 2025, primarily from an at-the-market equity offering, contrasting with a $1.3 million use in Q1 202428207208 Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of the company's accounting policies, significant transactions, and financial statement items 1. Organization and Basis of Presentation This section details the company's business as a clinical-stage genetic medicines company, its strategic collaboration with Hologen Limited, and the asset purchase agreement with Johnson & Johnson Innovative Medicine - MeiraGTx is a vertically integrated, clinical-stage genetic medicines company with late-stage clinical programs in Parkinson's disease, radiation-induced xerostomia, and AIPL1-associated retinal dystrophy, supported by internal end-to-end manufacturing capabilities29 - The company entered into a strategic collaboration with Hologen Limited on March 9, 2025, which includes an upfront cash payment of $200 million and up to an additional $230 million in funding for a joint venture (Hologen Neuro AI Ltd) focused on CNS genetic medicines3033139 - Under the Hologen Neuro Framework Agreement, MeiraGTx Neuro US will grant exclusive, worldwide, royalty-free licenses for its Clinical Programs (AAV-GAD, AAV-BDNF) and Delivery Device to Hologen Neuro and Hologen Neuro UK33 - The Manufacturing Framework Agreement involves Hologen acquiring a minority interest in MeiraGTx Manufacturing and contributing to annual funding, with an option for Hologen to increase its stake to 40% within 12 months3638 - The Asset Purchase Agreement with Johnson & Johnson Innovative Medicine, signed December 20, 2023, involved the sale of RPGR Product assets for an upfront payment of $65.0 million and potential future contingent consideration of up to $350.0 million, of which $60.0 million has been received3940106 - The company has an accumulated deficit of $742.0 million as of March 31, 2025, and expects to incur substantial losses, but anticipates its current cash, receivables, and the Hologen collaboration proceeds will fund operations into 2027 and cover its $75.0 million debt obligation4345135 2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements This section outlines the company's key accounting policies, including consolidation, use of estimates, restricted cash, fair value measurements, revenue recognition, and research and development expensing - The company's financial statements are prepared in conformity with GAAP and include the accounts of Meira Holdings and its wholly-owned subsidiaries, with all intercompany balances eliminated414951 - Restricted cash of $2.087 million at March 31, 2025, is held as a guarantee for a research and innovation grant from IDA Ireland, which offers financial assistance for operations in Shannon, Ireland5361 - Revenue recognition follows a five-step model, allocating transaction price to performance obligations based on estimated standalone selling prices, with variable consideration estimated using the most likely amount method666971 - Research and development costs are expensed as incurred, including employee-related expenses, third-party vendor costs for clinical/preclinical studies, and manufacturing facility development78172173 - The company has one reportable and operating segment: the development and manufacturing of genetic medicines83 - Recent accounting pronouncements (ASU 2023-06, ASU 2023-09, ASU 2024-03, ASU 2025-01) are being evaluated, with ASU 2023-09 not expected to have a material impact888990 3. Equity Method and Other Investments This section details the company's equity method and other investments, primarily in Visiogene LLC and another equity investment | Investee | Investment Type | Ownership Percentage | Carrying Value (in thousands) | | :--------- | :--------------------- | :------------------- | :---------------------------- | | Visiogene LLC | Equity Method Investment | 25% | $5,133 | | Other | Equity Investment | 0.9% | $1,616 | | Total | | | $6,749 | 4. Accrued Expenses This section provides a breakdown of accrued expenses, highlighting changes in compensation, professional fees, and clinical trial costs between December 31, 2024, and March 31, 2025 | Accrued Expense (in thousands) | March 31, 2025 | December 31, 2024 | | :----------------------------- | :------------- | :---------------- | | Compensation and benefits | $8,129 | $11,197 | | Professional fees | $4,163 | $6,326 | | Research and development | $2,857 | $2,234 | | Interest on Tranche 1 Notes | $2,620 | — | | Clinical trial costs | $2,421 | $3,864 | | Manufacturing costs | $2,104 | $1,540 | | Consulting | $1,326 | $1,530 | | Total Accrued Expenses | $23,964 | $27,414 | - Accrued expenses decreased by $3.45 million from December 31, 2024, to March 31, 2025, primarily due to decreases in compensation and benefits, professional fees, and clinical trial costs9293 5. Share-Based Compensation This section details the company's equity incentive plans, including share options and restricted share units (RSUs), and the associated share-based compensation expense recognized during the periods | Share-Based Compensation (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $2,046 | $2,875 | | General and administrative | $2,841 | $4,085 | | Total share-based compensation | $4,887 | $6,960 | - Total share-based compensation expense decreased by $2.073 million, from $6.96 million in Q1 2024 to $4.887 million in Q1 2025102 - As of March 31, 2025, unrecognized compensation expense for unvested options was $6.8 million (expected over 2.9 years) and for unvested RSUs was $18.5 million (expected over 3.1 years)98100 6. Ordinary Shares This section describes the company's at-the-market (ATM) equity offering program, through which it raises capital by selling ordinary shares - During Q1 2025, the company raised gross proceeds of $4.5 million by selling 563,379 ordinary shares through its at-the-market offering program103 - An additional $87.1 million of ordinary shares remain available for sale under the current at-the-market equity program103 7. Income Taxes This section explains that the company did not record income tax provisions due to sustained losses and maintains a full valuation allowance against its deferred tax assets - No provision for income taxes was recorded for Q1 2025 or Q1 2024, as the company has generated losses104 - The company maintains a full valuation allowance against its deferred tax assets in the United States, United Kingdom, Ireland, and Netherlands due to uncertainty regarding their realizability105 8. Related-Party Transactions This section details the financial aspects of the Asset Purchase Agreement and related Supply Agreement with Johnson & Johnson Innovative Medicine, including milestone payments, revenue recognition, and the debt financing arrangement with Perceptive Credit Holdings III, LP - Under the Asset Purchase Agreement with Johnson & Johnson Innovative Medicine, the company is eligible for up to $350.0 million in future contingent consideration, with $60.0 million already received106 - The transaction price of $92.3 million from the Asset Purchase Agreement and related agreements was allocated to four performance obligations: PPQ services, material rights for commercial supply, manufacturing technology transfer, and sale of nonfinancial assets107 - During Q1 2024, a gain of $29.0 million related to the sale of nonfinancial assets was recognized; no such gain was recognized in Q1 2025110 - As of March 31, 2025, $63.9 million in aggregate transaction price was allocated to unsatisfied performance obligations, expected to be recognized over approximately 2.8 years111 - The company recognized $0.7 million of deferred revenue as service revenue in both Q1 2025 and Q1 2024 in connection with PPQ services112 - The company has a senior secured financing arrangement (Notes Purchase Agreement) with Perceptive Credit Holdings III, LP, for an initial $75.0 million, maturing August 2, 2026, with an annual interest rate of 14.34% at March 31, 2025119120 9. Leases This section outlines the company's lease commitments for operating and finance leases, including lease costs, right-of-use assets, and future minimum lease payments | Lease Cost (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Finance lease cost | $138 | $281 | | Operating lease cost | $1,284 | $1,437 | | Short-term lease cost | $95 | $41 | | Total lease cost | $1,517 | $1,759 | - Total lease cost decreased from $1.759 million in Q1 2024 to $1.517 million in Q1 2025118 - The company exercised an early termination option on an operating lease for laboratory and office space in Q1 2025, resulting in a $1.3 million gain on termination of lease liabilities60117 | Lease Type | Right-of-Use Assets (Mar 31, 2025, in thousands) | Capitalized Lease Obligations (Mar 31, 2025, in thousands) | Weighted-Average Remaining Lease Term (years) | Weighted-Average Discount Rate (%) | | :--------- | :----------------------------------------------- | :--------------------------------------------------------- | :------------------------------------ | :--------------------------------- | | Operating | $6,348 | $7,383 | 4.0 | 11.7 | | Finance | $22,728 | N/A | 173.7 | 8.0 | 10. Debt Financing This section details the company's senior secured financing arrangement, including the Tranche 1 Notes, interest rates, collateral, covenants, and associated warrants and debt discounts - The company has a Notes Purchase Agreement for an initial $75.0 million (Tranche 1 Notes) with Perceptive, maturing on August 2, 2026, with interest-only payments during the term119120 - The annual interest rate was 14.34% at March 31, 2025, and the outstanding balance of Tranche 1 Notes was $75.0 million plus $2.6 million in accrued interest120 - Obligations are secured by manufacturing facilities in London and Shannon, $3.0 million of cash, bank accounts of subsidiary guarantors, and equity interests of subsidiary guarantors121 - The company granted warrants to Perceptive to purchase 700,000 ordinary shares at exercise prices of $15.00 and $20.00 per share, expiring August 2, 2027123 - A debt discount of $2.3 million for warrants and $2.1 million for lender/legal costs ($4.4 million total) is being amortized to interest expense over the term of the Notes Purchase Agreement123124 11. Commitments and Contingencies This section states that there were no new material commitments or contingencies during the three-month period ended March 31, 2025 - No new material commitments or contingencies were entered into during the three months ended March 31, 2025126 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This section provides management's perspective on the company's financial condition, results of operations, and liquidity, including an overview of its business, recent strategic collaborations, development highlights, and a detailed comparison of financial performance for the three months ended March 31, 2025, and 2024 Overview MeiraGTx is a clinical-stage genetic medicines company focused on developing gene therapies for various conditions, supported by its integrated manufacturing capabilities, and continues to incur significant losses while requiring additional capital for future development and commercialization - MeiraGTx is a vertically integrated, clinical-stage genetic medicines company with a broad pipeline including Parkinson's disease, radiation-induced xerostomia, and AIPL1-associated retinal dystrophy, leveraging proprietary manufacturing and gene regulation platforms128 - The company has incurred significant operating losses since inception, with net losses of $40.0 million and $20.4 million for the three months ended March 31, 2025, and 2024, respectively, and an accumulated deficit of $742.0 million as of March 31, 2025132 - Total operating expenses were $43.5 million in Q1 2025, down from $47.5 million in Q1 2024, but the company expects continued high costs for clinical activities, pipeline expansion, and manufacturing133 - Current cash, receivables, and anticipated proceeds from the Hologen collaboration are estimated to fund operations into 2027 and cover the $75.0 million debt obligation, excluding potential $285.0 million in milestones from the Johnson & Johnson Innovative Medicine Asset Purchase Agreement135200 Hologen Strategic Collaboration MeiraGTx entered into a strategic collaboration with Hologen Limited in March 2025, involving an upfront cash payment, additional funding for a joint venture (Hologen Neuro AI Ltd) focused on CNS genetic medicines, and Hologen acquiring a minority stake in MeiraGTx's manufacturing subsidiary - On March 9, 2025, MeiraGTx entered a strategic collaboration with Hologen Limited, a generative AI developer, expecting an upfront cash payment of $200 million and up to $230 million in additional funding for a joint venture139 - The collaboration includes the formation of Hologen Neuro AI Ltd, a joint venture where MeiraGTx Neuro UK will hold 30% ownership and lead clinical development and manufacturing for AAV-GAD and other CNS genetic medicines143155 - Hologen will acquire a minority interest in MeiraGTx Manufacturing, contributing to annual funding and deploying AI capabilities to optimize manufacturing146155 - The closing of these transactions is expected in Q2 2025, subject to customary conditions including UK foreign direct investment clearances140 Recent Development Highlights and Anticipated Milestones This section highlights recent regulatory designations and clinical trial progress for key product candidates, including AAV-GAD for Parkinson's disease, AAV2-hAQP1 for xerostomia, AAV-AIPL1 for LCA4, and botaretigene sparoparvovec for XLRP, along with updates on the riboswitch platform and manufacturing capabilities Strategic Collaboration with Hologen AI This section details the financial and operational aspects of the strategic collaboration with Hologen AI, including upfront payments, joint venture structure, and manufacturing involvement - MeiraGTx will receive $200 million upfront cash and Hologen will commit up to an additional $230 million to a joint venture (Hologen Neuro AI Ltd) for AAV-GAD and other CNS therapies155 - MeiraGTx will hold 30% ownership in the joint venture and lead clinical development and manufacturing, with Hologen licensing its multi-modal generative foundation models (LMMs)155 - Hologen will acquire a minority stake in MeiraGTx's manufacturing subsidiary, contributing funding and AI capabilities for manufacturing optimization155 AAV-GAD for the Treatment of Parkinson's Disease This section outlines the recent RMAT designation and positive clinical data for AAV-GAD in Parkinson's disease, along with plans for a Phase 3 study - On May 8, 2025, AAV-GAD received Regenerative Medicine Advanced Therapy (RMAT) designation from the FDA for Parkinson's disease not adequately controlled by anti-Parkinsonian medications155 - Positive data from three clinical studies (Phase 1, Phase 2, and a bridging study) demonstrated significant clinically meaningful benefit on UPDRS Part 3 and other measures155 - AI analysis of data showed disease-modifying changes in brain circuitry and potentially protective changes in the substantia nigra and cognition/mood regions155 - A Phase 3 study for AAV-GAD is planned for initiation in the second half of 2025155 RMAT Designation This section explains the criteria and benefits of the Regenerative Medicine Advanced Therapy (RMAT) designation from the FDA - RMAT designation requires the drug candidate to be an advanced regenerative medicine targeting a serious condition with clinical evidence of potential to address an unmet need152 - Benefits of RMAT include Fast Track and Breakthrough Therapy designations, rolling review, potential Priority Review, and increased interaction with the FDA for development and manufacturing strategy153 AAV2-hAQP1 for the Treatment of Xerostomia This section details the RMAT designation for AAV2-hAQP1 in radiation-induced xerostomia and the progress of the ongoing Phase 2 AQUAx2 study - In December 2024, AAV2-hAQP1 received RMAT designation from the FDA for the treatment of Grade 2/3 radiation-induced xerostomia154156 - The company has aligned with the FDA on clinical and CMC requirements for the ongoing Phase 2 AQUAx2 study to support a potential BLA157 - Enrollment for the Phase 2 AQUAx2 study's high dose cohorts is ongoing, with target completion in Q4 2025 and potential BLA filing by end of 2026157 AAV-AIPL1 for LCA4 Caused by Mutations in the AIPL1 Gene This section presents positive clinical data for AAV-AIPL1 in LCA4 and outlines the company's regulatory submission plans in the UK and US - Data published in The Lancet in February 2025 showed substantial benefit in 4 out of 4 young children with LCA4 treated unilaterally with rAAV8.hRKp.AIPL1, with improved visual acuity, functional vision, and protection against retinal degeneration158 - All 11 LCA4 children treated to date (including 7 bilaterally) showed meaningful responses158 - The company is preparing to submit a Marketing Authorization Application (MAA) under exceptional circumstances to the MHRA based on these results, with no further clinical data required158 - Positive engagement with the FDA has led to alignment on clinical, non-clinical, and CMC requirements for potential expedited approval in the US158 Botaretigene Sparoparvovec for the Treatment of X-linked Retinitis Pigmentosa (XLRP) This section summarizes the Phase 3 LUMEOS trial data for botaretigene sparoparvovec (bota-vec) in XLRP, highlighting its efficacy and safety profile, and potential future revenues - Phase 3 LUMEOS trial data for botaretigene sparoparvovec (bota-vec) in XLRP showed the primary endpoint (Visual Mobility Assessment) was not met but was directionally supportive158 - All but one secondary endpoint, across functional vision, retinal function, and visual function domains, showed benefit with 95% CI intervals not including 0158 - 40% of treated patients (22/55) showed improvement in ≥2 endpoints in different vision domains, compared to 0% in the control group158 - The safety profile was as expected, with >90% of treatment-related inflammation adverse events being mild158 - MeiraGTx is eligible to receive up to $285 million upon first commercial sales of bota-vec in the US and EU and manufacturing tech transfer, and anticipates additional revenue from a commercial supply agreement with Johnson & Johnson Innovative Medicine158 Riboswitch Gene Regulation Technology Platform for in vivo Delivery This section describes the progress of the company's riboswitch technology platform, focusing on its application in obesity, metabolic disease, neuropathic pain, and CAR-T - The company is progressing its riboswitch technology platform with an initial focus on obesity and metabolic disease, neuropathic pain, and CAR-T160 - Compelling preclinical data with metabolic peptides and hormones suggest greater efficacy on weight loss and positive impact on fat-to-muscle ratio with novel peptide combinations160 - First-in-human studies using the riboswitch platform are intended to be initiated in 2025160 Manufacturing This section details the regulatory authorizations and capabilities of the company's manufacturing facilities in the UK and Ireland, highlighting their GMP compliance and readiness for clinical and commercial production - The UK manufacturing facility holds two MHRA authorizations (MIA(IMP) and Specials Licence) and successfully renewed its licenses in May 2024, confirming GMP compliance for IMPs and readiness for commercial MIA161 - The Shannon, Ireland facility holds two HPRA authorizations (MIA Licence for QC testing of commercial products and MIA(IMP) Licence for QC testing of IMPs)162165 - A February 2025 HPRA inspection renewed QC licenses and added viral vector manufacturing to the MIA(IMP) license, making Shannon the first gene therapy facility in Ireland authorized to manufacture clinical trial material166 Components of Our Results of Operations This section defines the various components of the company's financial results, including service revenue, operating expenses (cost of service revenue, general and administrative, research and development), and other non-operating income/expense items (foreign currency, interest, gain on asset sale), as well as critical accounting policies - Service revenue is derived from process performance qualification (PPQ) services related to the Asset Purchase Agreement167 - Operating expenses include cost of service revenue (for PPQ services), general and administrative expenses (salaries, legal, professional fees), and research and development expenses (employee costs, clinical/preclinical studies, manufacturing facilities)168169170172 - Other non-operating income/expense includes foreign currency gains/losses, interest income/expense, and gains on sale of nonfinancial assets177179180181 - The company's critical accounting policies involve significant estimates in areas such as service revenue, share-based compensation, and accrued expenses183 Results of Operations This section provides a detailed comparison of the company's financial performance for the three months ended March 31, 2025, and 2024, highlighting changes in revenue, operating expenses, and non-operating items that led to the net loss | Metric (in thousands) | 2025 | 2024 | Change | | :-------------------- | :---------- | :---------- | :---------- | | Service revenue - related party | $1,926 | $697 | $1,229 | | Total operating expenses | $43,522 | $47,469 | $(3,947) | | Loss from operations | $(41,596) | $(46,772) | $5,176 | | Foreign currency gain (loss) | $3,687 | $(535) | $4,222 | | Gain on sale of nonfinancial assets | $0 | $29,018 | $(29,018) | | Net loss | $(39,981) | $(20,442) | $(19,539) | - Service revenue increased by $1.2 million to $1.9 million in Q1 2025, driven by increased progress in PPQ services186 - Cost of service revenue was $1.4 million in Q1 2025, with no comparable cost in Q1 2024, reflecting the initiation of PPQ services187 - General and administrative expenses decreased by $3.8 million to $9.4 million in Q1 2025, primarily due to lower share-based compensation, legal/accounting fees, and a gain from lease termination188 - Research and development expenses decreased by $1.5 million to $32.8 million in Q1 2025, mainly due to lower manufacturing costs and other R&D expenses, partially offset by reduced Johnson & Johnson Innovative Medicine reimbursements and increased AAV-hAQP1 program costs193 - A foreign currency gain of $3.7 million was recorded in Q1 2025, a $4.2 million positive change from a $0.5 million loss in Q1 2024, due to the weakening U.S. dollar194 - The absence of a $29.0 million gain on sale of nonfinancial assets (recognized in Q1 2024) was the primary driver of the increased net loss in Q1 2025197 Liquidity and Capital Resources This section discusses the company's cash position, historical funding sources, future capital requirements, and cash flow activities for the three months ended March 31, 2025, and 2024 - As of March 31, 2025, the company had $68.6 million in cash, cash equivalents, and restricted cash202 - The company expects its current cash, receivables, and anticipated proceeds from the Hologen collaboration to fund operating expenses and capital expenditures into 2027 and cover its $75.0 million debt obligation due in August 2026200 - Net cash used in operating activities was $36.8 million in Q1 2025, consistent with Q1 2024, primarily due to net losses and R&D expenses203204 - Net cash used in investing activities was $1.7 million in Q1 2025 for property and equipment, a shift from $27.3 million provided in Q1 2024 due to proceeds from the sale of nonfinancial assets205 - Net cash provided by financing activities was $1.7 million in Q1 2025, mainly from an at-the-market offering, compared to $1.3 million used in Q1 2024207208 - The company has no off-balance sheet arrangements209 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section updates the company's market risk disclosures, focusing on foreign currency exchange risk and interest rate risk - The company is exposed to foreign currency exchange rate fluctuations, primarily between the U.S. Dollar, British pound sterling, and euro211 - A hypothetical 10% unfavorable movement in foreign currency exchange rates would result in an additional foreign currency loss of approximately $11.0 million for Q1 2025211 - The company is exposed to interest rate risk from its Notes Purchase Agreement, which bears a fluctuating interest rate (14.34% at March 31, 2025)212 - A hypothetical 1% increase in the Secured Overnight Financing Rate (SOFR) would increase annual interest expense by approximately $0.8 million212 Item 4. Controls and Procedures This section addresses the effectiveness of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025214 - No changes in internal control over financial reporting occurred during Q1 2025 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting215 PART II. OTHER INFORMATION Item 1. Legal Proceedings This section states that the company is not currently subject to any material legal proceedings - The company is not subject to any material legal proceedings217 ITEM 1A. RISK FACTORS This comprehensive section outlines various risks that could materially and adversely affect the company's business, financial condition, results of operations, and future growth prospects, categorized by financial position, development, regulatory approval, commercialization, third-party dependence, intellectual property, employee matters, and ordinary shares Risks Related to Our Financial Position and Need for Additional Capital This section details risks associated with the company's financial stability, including historical losses, reliance on future payments, and the need for additional capital - The company has incurred significant losses since inception ($742.0 million accumulated deficit as of March 31, 2025) and anticipates continued losses, with no guarantee of achieving or maintaining profitability219 - There is no guarantee of timely receipt of additional milestone payments (up to $285.0 million remaining) under the Asset Purchase Agreement with Johnson & Johnson Innovative Medicine or revenues from the Supply Agreement, as these depend on Johnson & Johnson's development and commercialization success223224225 - The company will require additional capital to fund operations, which may not be available on acceptable terms, leading to potential delays or termination of R&D programs and dilution for shareholders if raised through equity226229 - Insufficient cash flows or non-compliance with debt covenants under the Notes Purchase Agreement could lead to acceleration of debt obligations, materially harming the business231232233 - The review of potential strategic transactions, such as the Hologen collaboration, may not result in anticipated benefits or could be disruptive to business operations234 Risks Related to Discovery, Development, Clinical Testing, Manufacturing and Regulatory Approval This section outlines risks inherent in the discovery, development, clinical testing, manufacturing, and regulatory approval processes for the company's genetic medicines - The company is heavily dependent on the success of its product candidates (AAV-hAQP1, AAV-GAD, AAV-AIPL1, riboswitch platform), which are still in development, and failure to receive regulatory approval or commercialize them would harm the business235 - Predicting the time and cost of gene therapy product development is difficult due to the novelty of the platform and the limited number of approved gene therapies, with potential for unexpected adverse events or toxicities238240 - The regulatory landscape for gene therapy is uncertain and evolving, making it difficult to predict the time and cost of obtaining regulatory approval, which may be lengthy and expensive242246 - Clinical trials are expensive, time-consuming, and involve uncertain outcomes, with potential for substantial delays due to patient enrollment, regulatory disagreements, or manufacturing issues248249252 - The affected patient populations for product candidates may be smaller than projected, impacting addressable markets and financial results264265 - Negative public opinion of gene therapy or increased regulatory scrutiny could adversely impact public perception, clinical trial enrollment, and commercialization266267 - Failure to maintain or obtain regulatory designations (e.g., RMAT, Fast Track, Orphan Drug, Rare Pediatric Disease Designation) or their associated benefits could delay development or commercialization, and such designations do not guarantee approval271273281284 - Manufacturing facilities and contract manufacturers are subject to significant regulation (GMP), and failure to meet requirements or limited capacity could lead to delays, increased costs, or regulatory sanctions286288291 - Product candidates may cause serious adverse events or undesirable side effects, leading to clinical trial delays/halts, restrictive labeling, or denial of regulatory approval296300 - Success in preclinical studies or early clinical trials is not indicative of future results, and the regulatory approval processes are lengthy, unpredictable, and subject to change302304306308 - Interim or preliminary clinical trial data may change upon comprehensive review, potentially leading to different conclusions or impacting regulatory approval317320 Risks Related to Healthcare Laws and Other Legal Compliance Matters This section addresses risks related to compliance with complex and evolving healthcare laws, data privacy regulations, environmental laws, and international anti-corruption laws - Enacted and future healthcare legislation (e.g., ACA, IRA) may increase the difficulty and cost of obtaining marketing approval and commercializing product candidates, and may affect pricing324328331 - Business operations are subject to various healthcare regulatory laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Physician Payments Sunshine Act), and non-compliance could lead to significant penalties340342344 - The company is subject to complex and evolving data privacy and protection laws (e.g., GDPR, UK GDPR, CCPA), and failure to comply could result in substantial costs, fines, and reputational harm343348350351 - Operations are subject to environmental, health, and safety laws, with potential for liability and substantial expenses in connection with compliance or remediation activities352353 - International operations expose the company to anti-corruption laws (e.g., UK Bribery Act, FCPA) and Trade Control laws, with non-compliance potentially leading to civil or criminal penalties354356357 Risks Related to Commercialization This section covers risks associated with commercializing product candidates, including competition, market acceptance, reimbursement, and international market challenges - The company faces significant competition from major pharmaceutical, biotechnology, and gene therapy companies, with competitors potentially achieving regulatory approval sooner or developing safer/more effective therapies359361363 - Successful commercialization depends on governmental authorities and health insurers establishing coverage, adequate reimbursement levels, and favorable pricing policies; failure to obtain these could limit market access and revenue364365369 - Even with regulatory approval, product candidates may fail to achieve market acceptance by physicians, patients, or third-party payors, impacting product revenues and profitability371373 - Inability to establish sales, marketing, and distribution capabilities, either independently or through collaborations, could hinder commercialization efforts and delay product launch374375378 - Commercialization outside the US, UK, or EU involves risks such as differing regulatory requirements, intellectual property protection, foreign currency fluctuations, and political instability381 - Product candidates approved as biologics may face competition sooner than anticipated from biosimilars, potentially reducing market exclusivity and competitive advantage386387 Risks Related to Our Dependence on Third Parties This section addresses risks arising from the company's reliance on third-party manufacturers, collaborators, and contract research organizations for various aspects of its business - If internal GMP manufacturing facilities cannot meet supply needs, the company will rely on third-party manufacturers, increasing risks of insufficient quantities, unacceptable costs, and delays in development or commercialization388389391 - Failure to establish and maintain collaborative relationships for product development, manufacturing, and commercialization could significantly limit the ability to successfully develop and commercialize product candidates394397 - Reliance on third parties (CROs, clinical trial sites) to conduct preclinical studies and clinical trials poses risks if they perform unsatisfactorily, leading to delays, increased costs, or compromised data quality398401 Risks Related to Intellectual Property This section details risks concerning the company's intellectual property, including dependence on licenses, patent protection, infringement claims, and trade secret safeguarding - Dependence on licensed proprietary technology means loss of existing licenses or inability to acquire new ones could prevent continued product candidate development403 - Failure to obtain and maintain broad patent protection for technology and product candidates could impair competitive effectiveness, as the patent prosecution process is expensive, time-consuming, and uncertain407408 - Third parties may assert infringement claims, or the company may need to defend/enforce its patents, leading to substantial costs, delays, or loss of proprietary rights413417419 - Incorrect identification or interpretation of third-party patents could lead to infringement claims and negatively impact development and marketing420422423 - Changes in patent laws or jurisprudence (e.g., AIA, Supreme Court rulings) could diminish patent value and protection for product candidates424427 - Limited geographical patent protection and inadequate patent terms may expose the company to competition and limit its competitive position428430 - Proprietary rights may not adequately protect technologies, and reliance on third parties increases the risk of trade secret misappropriation or disclosure434437438 - Inadequate protection of trademarks and trade names could hinder brand recognition and adversely affect the business439 - The need to license or acquire additional intellectual property from third parties, which may not be available or on commercially reasonable terms, could harm the business440441 Risks Related to Employee Matters and Managing Growth This section addresses risks related to human capital, including managing organizational changes, retaining key personnel, potential product liability, and employee misconduct - The company may face difficulties in managing organizational changes, including hiring and integrating new personnel or reducing staff, which could disrupt operations and divert management attention443 - Future success depends on retaining key personnel (e.g., CEO, COO, CDO) and attracting/motivating qualified new hires, which is challenging in a competitive industry444445447 - Potential product liability lawsuits could result in substantial liabilities, costs, and limit commercialization, while insurance may not cover all risks or be sufficient448449 - Employee or contractor misconduct (e.g., non-compliance with regulations, fraudulent data) could harm the business through regulatory sanctions, reputational damage, and legal actions453 Risks Related to Our Ordinary Shares This section outlines risks specific to the company's ordinary shares, including market price volatility, dilution, shareholder influence, and tax implications for investors - The market price of ordinary shares may be volatile due to various factors, including clinical trial results, regulatory developments, competition, and general market conditions, potentially leading to substantial losses for investors461462 - Raising additional capital through equity offerings (including at-the-market programs) could substantially dilute existing shareholders' investment463 - Executive officers, directors, and principal shareholders collectively hold approximately 56.0% of outstanding ordinary shares, giving them significant influence over shareholder matters and potentially discouraging change of control464467 - As a 'smaller reporting company,' reduced disclosure requirements may make ordinary shares less attractive to some investors, potentially leading to a less active trading market and more volatile share price468469 - Difficulties may arise in enforcing foreign judgments against management or the company due to directors/assets being outside the US and differences in Cayman Islands law compared to US corporate law471473 - The company expects to be treated as a UK tax resident but may be a dual resident, potentially restricting UK tax reliefs475476 - Classification as a Passive Foreign Investment Company (PFIC) for US federal income tax purposes could result in adverse tax consequences for US investors477 - US holders owning ≥10% of ordinary shares may be subject to adverse US federal income tax consequences related to Controlled Foreign Corporations (CFCs)478 General Risk Factors This section covers broad risks that could impact the company, including those related to acquisitions, exchange rate fluctuations, management discretion over funds, public company costs, analyst coverage, ESG expectations, and dividend policy - Acquisitions could disrupt business, dilute shareholders, or reduce financial resources if not executed favorably or integrated successfully484 - Exchange rate fluctuations, particularly between the U.S. dollar, pound sterling, and euro, may adversely affect results of operations and financial condition485 - Management has broad discretion over the use of financing proceeds, and investments may not yield favorable returns or align with shareholder preferences486 - Operating as a public company incurs substantial costs and requires significant management time for compliance initiatives (e.g., Sarbanes-Oxley Act, Nasdaq requirements)487488 - Cessation of analyst coverage or adverse/misleading opinions could negatively impact share price and trading volume489 - Expectations related to environmental, social, and governance (ESG) factors may impose additional costs, expose the company to new risks, and affect investor perception490492 - The company does not anticipate paying cash dividends in the foreseeable future, making capital appreciation the sole source of gain for shareholders493 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities. This section indicates that there were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the reporting period - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities occurred during the period494 Item 3. Defaults Upon Senior Securities. This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred during the period495 Item 4. Mine Safety Disclosures. This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable496 Item 5. Other Information. This section confirms that no directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025 - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025497 Item 6. Exhibits. This section lists the exhibits filed with the Form 10-Q, including a lease agreement, certifications of principal executive and financial officers, and XBRL-related documents - Exhibits include a lease agreement, certifications of principal executive and financial officers (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), and Inline XBRL documents498 SIGNATURES This section contains the signatures of the registrant's authorized officers, Alexandria Forbes (CEO) and Richard Giroux (CFO and COO), certifying the report - The report is signed by Alexandria Forbes, Chief Executive Officer, and Richard Giroux, Chief Financial Officer and Chief Operating Officer, on May 13, 2025502