Metagenomi(US:MGX)2025-05-13 20:40PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited financial statements for Q1 2025 reflect a net loss of $25.0 million, a decrease in total assets, and reduced collaboration revenue, balanced by lower operating expenses Condensed Balance Sheets As of March 31, 2025, total assets decreased to $297.9 million, primarily due to a reduction in marketable securities, while total liabilities also decreased, resulting in stockholders' equity of $212.7 million Condensed Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $29,195 | $27,386 | | Available-for-sale marketable securities | $196,775 | $220,921 | | Total current assets | $233,195 | $257,960 | | Total assets | $297,866 | $324,599 | | Liabilities & Equity | | | | Total current liabilities | $39,893 | $37,309 | | Total liabilities | $85,208 | $89,742 | | Total stockholders' equity | $212,658 | $234,857 | Condensed Statements of Operations and Comprehensive Loss For Q1 2025, collaboration revenue significantly decreased to $4.1 million, while research and development and general and administrative expenses also fell, resulting in a net loss of $25.0 million Condensed Statement of Operations Highlights (in thousands, except per share data) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Collaboration revenue | $4,127 | $11,159 | | Research and development | $25,142 | $31,439 | | General and administrative | $6,805 | $8,752 | | Loss from operations | ($27,820) | ($29,032) | | Net loss | ($25,039) | ($25,148) | | Net loss per share, basic and diluted | ($0.68) | ($1.19) | Condensed Statements of Cash Flows Net cash used in operating activities improved to $22.8 million in Q1 2025, while investing activities provided $24.7 million, leading to a net increase in cash, cash equivalents, and restricted cash of $1.8 million Condensed Statement of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($22,842) | ($29,850) | | Net cash provided by (used in) investing activities | $24,728 | ($94,732) | | Net cash provided by (used in) financing activities | ($77) | $86,537 | | Net increase (decrease) in cash | $1,809 | ($38,045) | Notes to Unaudited Condensed Financial Statements Notes to the financial statements confirm $226.0 million in liquidity, detail ongoing collaborations with Ionis and Affini-T, the termination of the Moderna agreement, a pending class action lawsuit, and the establishment of a $75.0 million ATM program - Management believes that existing cash, cash equivalents, and available-for-sale marketable securities of $226.0 million as of March 31, 2025, will be sufficient to fund its current operating plan for at least the next 12 months38142 - The collaboration agreement with Moderna was mutually terminated on April 26, 2024, resulting in Metagenomi regaining full rights to its base editing and RNA-mediated integration systems60 - Under the Ionis agreement, the company recognized $4.0 million in revenue for Q1 2025, with approximately $36.8 million in remaining performance obligations expected over the next three years81 - A class action lawsuit was filed against the company in September 2024, alleging misleading statements in its IPO registration materials concerning the Moderna collaboration, with the outcome currently unpredictable83161 - In March 2025, the company established an At-The-Market (ATM) sales agreement to sell up to $75.0 million of its common stock, with no shares sold as of March 31, 202589119138 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion highlights the company's precision gene editing platform, progress on lead program MGX-001, ongoing collaborations, a $7.0 million decrease in Q1 2025 collaboration revenue, reduced operating expenses, and $226.0 million in liquidity expected to fund operations for at least 12 months Overview Metagenomi, a precision gene editing company, is advancing its lead program MGX-001 for hemophilia A towards 2026 regulatory submissions, progressing collaborations with Ionis and Affini-T, and recently completed an IPO and established an ATM program - The lead program, MGX-001 for hemophilia A, is a knock-in therapy targeting IND/CTA submissions in 2026 following pre-IND meetings in H2 2025103107 - The collaboration with Ionis has achieved in vivo rodent proof-of-concept for all four Wave 1 genetic targets in cardiometabolic diseases, with one to two development candidates planned for nomination in 2025109 - The collaboration with Affini-T for ex vivo cell therapy applications is progressing, triggering a $0.3 million payment to Metagenomi upon an option exercise on April 14, 2025110 - The company completed its IPO on February 13, 2024, raising net proceeds of approximately $80.7 million11888 Results of Operations Collaboration revenue decreased by $7.0 million in Q1 2025 due to the Ionis agreement and Moderna termination, while R&D and G&A expenses also fell, resulting in a stable net loss of $25.0 million Collaboration Revenue Breakdown (in thousands) | Collaborator | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Ionis | $3,974 | $8,065 | ($4,091) | | Moderna | $0 | $2,795 | ($2,795) | | Affini-T | $153 | $299 | ($146) | | Total | $4,127 | $11,159 | ($7,032) | Research and Development Expense Breakdown (in thousands) | Expense Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Employee-related expenses | $9,381 | $10,641 | ($1,260) | | R&D supplies and services | $7,441 | $9,698 | ($2,257) | | Stock-based compensation | $1,280 | $3,998 | ($2,718) | | Total R&D Expense | $25,142 | $31,439 | ($6,297) | - General and administrative expenses decreased by $1.9 million year-over-year, primarily due to a $1.3 million decrease in professional services and consulting costs135 Liquidity and Capital Resources As of March 31, 2025, the company held $226.0 million in liquidity, expected to fund operations for at least 12 months, with past funding from preferred stock, collaborations, and IPO proceeds, and future plans for additional capital via an ATM program and other sources - As of March 31, 2025, the company had $226.0 million in cash, cash equivalents and available-for-sale marketable securities, estimated to be sufficient to fund operations for at least the next 12 months142177 - Primary sources of liquidity include sales of redeemable convertible preferred units (~$351.7 million), net proceeds from the February 2024 IPO (~$80.7 million), and upfront payments from collaboration agreements (~$120.0 million)137 - Net cash used in operating activities decreased to $22.8 million in Q1 2025 from $29.9 million in Q1 2024144146147 - The company will require substantial additional funding to support its continuing operations, including advancing its portfolio, conducting clinical trials, and potential commercialization139176 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Metagenomi is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Metagenomi is not required to provide quantitative and qualitative disclosures about market risk156 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025157 - No material changes were made to the company's internal control over financial reporting during the first quarter of 2025158 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in a securities class action lawsuit filed September 26, 2024, alleging misleading statements in its IPO registration materials regarding the Moderna collaboration, with the outcome currently unpredictable - A class action lawsuit was filed against the company, certain officers, and directors on September 26, 2024, alleging violations of the Securities Act related to disclosures about the Moderna collaboration in its IPO filings83431 - The company cannot currently predict the outcome of the lawsuit or estimate a range of possible loss83432 Item 1A. Risk Factors The company faces extensive risks including a history of losses and need for funding, early-stage development challenges, reliance on third parties, significant regulatory hurdles, and substantial intellectual property litigation risks in the rapidly evolving genome editing field Risks Related to Financial Position and Need for Capital The company has a history of significant losses, including a $25.0 million net loss in Q1 2025 and an accumulated deficit of $248.0 million, necessitating substantial additional funding for future operations and raising concerns about long-term viability - The company has incurred significant losses since inception, with a net loss of $25.0 million for Q1 2025 and an accumulated deficit of $248.0 million as of March 31, 2025166 - Substantial additional funding is required for operations, and failure to raise capital could force delays or termination of R&D programs and commercialization efforts176 - The company's short operating history and early stage of development make it difficult to assess its future viability and performance182183 Risks Related to Business, Technology, and Industry The company faces significant business risks including early-stage development with no clinical candidates, challenges with novel genome editing technology, complex manufacturing, intense competition, and potential negative public perception of gene editing and AI use - The company is in a very early development stage with no product candidates in IND-enabling studies or clinical trials, and commercialization is many years away, if ever187 - The novel nature of genome editing technology presents additional risks, including changing regulatory guidance, potential for off-target effects, and immunological reactions191192 - Manufacturing genetic therapies is complex and difficult, potentially leading to production problems, lot failures, or insufficient supply that could delay development programs216 - The company faces significant competition from numerous companies in the rapidly evolving genome editing field, including those with more advanced or effective therapies and greater financial resources221223224 - The use of artificial intelligence (AI) in the company's platform introduces risks related to inaccuracy, bias, IP infringement, and an uncertain legal landscape, potentially leading to reputational harm and legal liability254255 Risks Related to Third Party Relationships The company's reliance on third-party collaborations and CMOs for research, development, and manufacturing creates risks including conflicting priorities, non-performance, agreement termination, and supply chain disruptions, which could significantly impair its programs - Conflicts with collaborators or strategic partners could lead them to act in a manner adverse to the company, such as developing competing products or withdrawing support for programs320321 - The success of collaborations with partners like Ionis and Affini-T is not guaranteed and depends on the collaborator's efforts, resources, and strategic focus, over which Metagenomi has limited control322323 - The company relies on third-party CMOs for manufacturing materials like gRNA and DNA templates, which creates risks related to regulatory compliance (cGMP), quality assurance, and potential supply disruptions338339 - Reliance on third parties for conducting clinical trials (CROs) and research reduces direct control over these activities and their timelines, and any failure by these parties to perform could harm development programs333335 Risks Related to Our Intellectual Property The company's success hinges on its intellectual property, facing risks from a competitive and litigious genome editing patent landscape, potential patent invalidation or infringement claims, and challenges in protecting trade secrets, all of which could impede product commercialization - Commercial success depends on protecting proprietary technology, but the scope of patent protection may not be broad enough to prevent competitors from developing similar products358361 - The patent landscape for biotechnology is uncertain, and patents may be challenged and invalidated, making it difficult and costly to ensure IP protection366374375 - The company may be sued for infringing third-party IP rights, which could be costly, time-consuming, and prevent or delay the development and commercialization of its genome editing systems404405 - The field of CRISPR-based technology is subject to extensive patent filings and complex litigation, with multiple third-party patent portfolios potentially relevant to the company's work407408 - The company relies on trade secrets, which are difficult to protect, and unauthorized disclosure by employees, collaborators, or contractors could impair its competitive position415416 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered equity sales in Q1 2025 and confirmed no material change in the planned use of $80.7 million net proceeds from its February 2024 IPO - The company closed its IPO on February 13, 2024, receiving net proceeds of approximately $80.7 million after $13.0 million in costs464465 - There has been no material change in the planned use of the net proceeds from the IPO as described in the final prospectus466 Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - The company reports no defaults upon senior securities467 Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the company468 Item 5. Other Information The company reported no other material information for the quarter, confirming no director or officer adopted or terminated a Rule 10b5-1 trading arrangement - During the quarter ended March 31, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement470 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including required certifications by the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents