Vigil Neuroscience(US:VIGL)2025-08-05 10:45PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited condensed consolidated financial statements provide a snapshot of the company's financial position and performance Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $86,699 | $117,691 | | Total Liabilities | $45,443 | $46,056 | | Total Stockholders' Equity | $41,256 | $71,635 | | Cash and cash equivalents | $41,214 | $39,019 | | Marketable securities | $25,771 | $58,776 | Condensed Consolidated Statements of Operations and Comprehensive Loss Three Months Ended June 30 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :--------------------------- | :------------------ | :------------------ | :-------------------- | | Research and development | $17,410 | $15,540 | $1,870 | | General and administrative | $10,081 | $6,938 | $3,143 | | Total operating expenses | $27,491 | $22,478 | $5,013 | | Loss from operations | $(27,491) | $(22,478) | $(5,013) | | Interest income, net | $836 | $1,254 | $(418) | | Net loss | $(26,663) | $(21,227) | $(5,436) | | Net loss per share (basic & diluted) | $(0.56) | $(0.52) | $(0.04) | Six Months Ended June 30 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :--------------------------- | :------------------ | :------------------ | :-------------------- | | Research and development | $33,921 | $29,866 | $4,055 | | General and administrative | $17,039 | $14,027 | $3,012 | | Total operating expenses | $50,960 | $43,893 | $7,067 | | Loss from operations | $(50,960) | $(43,893) | $(7,067) | | Interest income, net | $1,896 | $2,731 | $(835) | | Net loss | $(49,076) | $(41,167) | $(7,909) | | Net loss per share (basic & diluted) | $(1.05) | $(1.02) | $(0.03) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' Equity Changes (in thousands) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :---------------- | :------------ | | Common Stock | $4 | $5 | | Additional Paid-in Capital | $378,632 | $397,354 | | Accumulated Other Comp. Income (Loss) | $27 | $1 | | Accumulated Deficit | $(307,028) | $(356,104) | | Total Stockholders' Equity | $71,635 | $41,256 | - Additional paid-in capital increased by $13,266 thousand from issuance of common stock and $5,183 thousand from stock-based compensation during the six months ended June 30, 202523 - Accumulated deficit increased by $49,076 thousand due to net loss for the six months ended June 30, 20252321 Condensed Consolidated Statements of Cash Flows Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :---------------------------------- | :----- | :----- | | Net cash used in operating activities | $(44,372) | $(37,383) | | Net cash provided by investing activities | $33,027 | $17,510 | | Net cash provided by financing activities | $13,540 | $5,193 | | Net change in cash and cash equivalents | $2,195 | $(14,680) | | Cash, cash equivalents and restricted cash at end of period | $42,141 | $38,239 | - Operating activities primarily used cash due to net losses, partially offset by non-cash expenses like stock-based compensation145146 - Investing activities provided cash mainly from proceeds from sales and maturities of marketable securities147148 - Financing activities provided cash from the issuance of common stock (ATM facility) and stock option exercises149 Notes to Condensed Consolidated Financial Statements 1. Nature of the Business and Basis of Presentation - Vigil Neuroscience, Inc is a clinical-stage biotechnology company focused on developing disease-modifying therapeutics for rare and common neurodegenerative diseases by restoring microglia function29104 - The company entered into a Merger Agreement with Sanofi on May 21, 2025, for Sanofi to acquire Vigil for $8.00 per share in cash plus a $2.00 Contingent Value Right (CVR) per share, contingent on the first commercial sale of VG-392731105 - The rights to iluzanebart (VGL101) will be returned to Amgen Inc, the original licensor, prior to the closing of the Merger34105 - As of June 30, 2025, the company had an accumulated deficit of $356.1 million and has incurred recurring losses since inception, leading to substantial doubt about its ability to continue as a going concern4144111 - During the six months ended June 30, 2025, the company sold 5,784,772 shares of common stock under its ATM facility for net proceeds of $13.3 million4282 2. Summary of Significant Accounting Policies - The preparation of financial statements requires management to make significant estimates and assumptions, particularly for research and development expenses, prepaid/accrued costs, and stock-based compensation51 - Cash equivalents primarily consist of money market funds and government securities, while marketable securities are classified as available-for-sale and reported at fair value5254 - The company adopted ASU No 2023-07 (Segment Reporting) as of January 1, 2024, resulting in additional segment reporting disclosures60 3. Fair Value Measurements and Financial Instruments Fair Value Measurement at June 30, 2025 (in thousands) | Asset Category | Level 1 | Level 2 | Level 3 | Total | | :------------- | :------ | :------ | :------ | :---- | | Cash equivalents | $29,733 | $— | $— | $29,733 | | Marketable securities | $— | $25,771 | $— | $25,771 | | Restricted cash | $927 | $— | $— | $927 | | Total | $30,660 | $25,771 | $— | $56,431 | - As of June 30, 2025, the company held 13 marketable securities, with 6 in an unrealized loss position, totaling $(4) thousand in gross unrealized losses6263 4. Prepaid Expenses and Other Current Assets Prepaid Expenses and Other Current Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Research and development | $1,239 | $1,231 | | Business insurance | $509 | $113 | | Other receivables | $347 | $228 | | Interest receivable | $211 | $371 | | Other | $1,002 | $846 | | Total | $3,308 | $2,789 | 5. Accrued Expenses and Other Current Liabilities Accrued Expenses and Other Current Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Research and development | $4,636 | $5,734 | | Merger-related costs | $3,272 | $— | | Payroll and employee related | $2,603 | $4,402 | | Professional fees | $763 | $710 | | Other | $172 | $289 | | Total | $11,446 | $11,135 | 6. Stock-Based Compensation - The 2021 Stock Option and Incentive Plan's evergreen provision increased shares reserved for future grants by 2,044,338 on January 1, 202567 - A one-time stock option repricing occurred on May 3, 2024, for options with an exercise price greater than $3.03 per share, repricing them to $3.03 per share, resulting in $0.8 million in incremental stock-based compensation expense7071 Stock-Based Compensation Expense (in thousands) | Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Research and development | $1,927 | $1,716 | | General and administrative | $3,256 | $3,300 | | Total | $5,183 | $5,016 | - As of June 30, 2025, there was approximately $14.1 million in unrecognized stock-based compensation expense related to unvested options and $0.2 million for unvested RSUs72 7. Preferred Stock - On July 1, 2024, the company issued 537,634 shares of Series A non-voting convertible preferred stock to Sanofi for net proceeds of $39.6 million437378 - In connection with the SPA, the company granted Genzyme Corporation (a Sanofi subsidiary) an exclusive Right of First Negotiation (ROFN) for its small molecule TREM2 agonist program, including VG-392773 - Holders of Series A preferred stock do not have voting rights but are entitled to receive dividends on an as-if-converted basis7677 8. Common Stock - During the six months ended June 30, 2025, the company sold 5,784,772 shares of common stock under its At-the-Market (ATM) facility for net proceeds of $13.3 million82 - All pre-funded warrants to purchase 2,980,889 shares of common stock were exercised as of June 30, 202583 Common Stock Reserved for Future Issuance (Shares) | Category | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Common stock options | 9,301,334 | 7,500,591 | | Restricted Stock Units | 35,000 | — | | Series A convertible preferred stock | 5,376,340 | 5,376,340 | | Pre-funded warrants | — | 926,094 | | Shares available for 2021 Plan | 2,368,584 | 2,248,964 | | Shares available for 2021 ESPP | 572,254 | 572,254 | | Total | 17,653,512| 16,624,243 | 9. Net Loss per Share Net Loss per Share Attributable to Common Stockholders (Basic and Diluted) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | $(0.56) | $(0.52) | | Six Months Ended June 30 | $(1.05) | $(1.02) | - Potentially dilutive securities were excluded from the computation of diluted net loss per common share as their effect would be anti-dilutive87 10. Leases - The company has an operating lease for laboratory and office space in Watertown, MA, with a weighted-average remaining lease term of 7.4 years as of June 30, 20258890 Operating Lease Expense (in thousands) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | $0.6 | $0.6 | | Six Months Ended June 30 | $1.2 | $1.2 | Future Minimum Lease Payments (as of June 30, 2025, in thousands) | Year | Operating Leases | | :--- | :--------------- | | 2025 | $984 | | 2026 | $2,027 | | 2027 | $2,088 | | 2028 and thereafter | $11,269 | | Total lease payments | $16,368 | | Less: imputed interest | $(3,931) | | Total future minimum lease payments | $12,437 | 11. Commitments and Contingencies - A $20.0 million contract liability was recognized on July 1, 2024, related to Sanofi's Right of First Negotiation (ROFN) for the small molecule TREM2 agonist program (VG-3927)94 - The company contributed $0.5 million to its 401(k) Plan during the six months ended June 30, 202597 - The company is not currently a party to any material legal proceedings99 12. Segment Reporting - The company operates as a single operating segment, with all assets located in the United States and no revenue generated through June 30, 2025100 Significant Segment Expenses (Six Months Ended June 30, 2025, in thousands) | Expense Category | Amount | | :---------------------------------- | :----- | | Iluzanebart external R&D | $9,375 | | Small molecule TREM2 external R&D | $7,636 | | Other external R&D | $3,613 | | General and administrative external | $7,770 | | Facilities, personnel-related, and other | $22,566 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Sanofi merger, program updates, financial results, and the ongoing need for substantial additional funding - Vigil Neuroscience is a clinical-stage biotechnology company focused on developing microglia-targeted therapies for neurodegenerative diseases104 - The company entered into a definitive merger agreement with Sanofi on May 21, 2025, for an acquisition price of $8.00 per share in cash plus a $2.00 CVR per share105 - The Phase 2 IGNITE clinical trial for iluzanebart in ALSP patients showed no beneficial effects, leading to the discontinuation of the program106105 - Phase 1 clinical trial data for VG-3927 demonstrated a favorable safety profile and a robust, dose-dependent reduction of sTREM2 (up to ~50%) in CSF107108 - As of June 30, 2025, the company had $67.0 million in cash, cash equivalents, and marketable securities, and an accumulated deficit of $356.1 million110111113152156 Components of Our Results of Operations - Operating expenses consist solely of research and development (R&D) and general and administrative (G&A) expenses118 - R&D expenses are expensed as incurred and include costs for discovery, preclinical/clinical development, and manufacturing, while G&A expenses cover personnel, corporate facilities, and professional fees120123127 - Interest income, net, is primarily derived from cash, cash equivalents, and marketable securities129 Results of Operations Three Months Ended June 30, 2025 vs. 2024 (in thousands) | Metric | 2025 | 2024 | Change | | :--------------------------- | :----- | :----- | :----- | | Research and development | $17,410 | $15,540 | $1,870 | | General and administrative | $10,081 | $6,938 | $3,143 | | Total operating expenses | $27,491 | $22,478 | $5,013 | | Net loss | $(26,663) | $(21,227) | $(5,436) | | Interest income, net | $836 | $1,254 | $(418) | Six Months Ended June 30, 2025 vs. 2024 (in thousands) | Metric | 2025 | 2024 | Change | | :--------------------------- | :----- | :----- | :----- | | Research and development | $33,921 | $29,866 | $4,055 | | General and administrative | $17,039 | $14,027 | $3,012 | | Total operating expenses | $50,960 | $43,893 | $7,067 | | Net loss | $(49,076) | $(41,167) | $(7,909) | | Interest income, net | $1,896 | $2,731 | $(835) | - The increase in R&D expenses for the six months ended June 30, 2025, was primarily due to $2.0 million in iluzanebart expenses and $1.7 million in personnel-related expenses136137138 - The increase in G&A expenses for both periods was primarily related to increased legal and professional fees associated with the proposed merger with Sanofi133139 Liquidity and Capital Resources - Since inception through June 30, 2025, the company has raised approximately $376.5 million in gross proceeds primarily from equity offerings141 - As of June 30, 2025, cash, cash equivalents, and marketable securities totaled $67.0 million141 Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :---------------------------------- | :----- | :----- | | Net cash used in operating activities | $(44,372) | $(37,383) | | Net cash provided by investing activities | $33,027 | $17,510 | | Net cash provided by financing activities | $13,540 | $5,193 | | Net increase in cash, cash equivalents and restricted cash | $2,195 | $(14,680) | - The company expects its existing cash, cash equivalents, and marketable securities to fund operations into 2026, after which substantial additional funding will be required156 Critical Accounting Policies and Significant Judgments and Estimates - There have been no material changes to the significant accounting policies previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024159 Emerging Growth Company Status - The company qualifies as an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards161401402 Recently Issued Accounting Pronouncements - There have been no other material changes to the significant accounting policies previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024162 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company has elected scaled disclosure requirements available to Smaller Reporting Companies - The company is electing scaled disclosure requirements available to Smaller Reporting Companies, making this item not applicable163 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - Management, with the participation of the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures and concluded they were effective at the reasonable assurance level as of June 30, 2025165 - There were no changes in internal control over financial reporting during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting166 PART II OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently a party to any litigation or legal proceedings that, in the opinion of management, are probable to have a material adverse effect on its business168 Item 1A. Risk Factors The company faces significant risks related to the Sanofi merger, its financial position, product development, and regulatory hurdles - Risks related to the proposed merger with Sanofi include the possibility of non-completion, adverse effects on stock price and business if the merger fails, and business uncertainties during the pending period170171172174176177 - The company has a limited operating history, has incurred significant operating losses since inception (accumulated deficit of $356.1 million), and will require additional financing, raising substantial doubt about its ability to continue as a going concern180181185 - Development efforts are early-stage, highly dependent on the clinical advancement of VG-3927, and face risks of delays and extensive regulatory hurdles, as demonstrated by the discontinuation of the iluzanebart Phase 2 trial106205212219224231236 - The company relies heavily on third parties for product manufacturing, research, and clinical testing, and is dependent on single-source suppliers, which could lead to disruptions270279280 - Intellectual property risks include the inability to obtain and maintain broad patent protection, challenges to inventorship or ownership, and potential claims of infringement from third parties287295319 - The company is subject to extensive and ongoing government regulation, including post-approval requirements, potential healthcare legislative reforms, and compliance with anti-kickback laws236350356 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable to the company for the reported period - Not applicable433 Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reported period - Not applicable434 Item 4. Mine Safety Disclosures This item is not applicable to the company for the reported period - Not applicable435 Item 5. Other Information No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the fiscal quarter ended June 30, 2025 - None of the company's directors or officers adopted or terminated a Rule 10b5-1 trading plan or arrangement during the fiscal quarter ended June 30, 2025436 Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q - Key exhibits include the Agreement and Plan of Merger with Sanofi (May 21, 2025), corporate organizational documents, and certifications of the Principal Executive and Financial Officers440 Signatures - The report was signed on August 5, 2025, by Ivana Magovčević-Liebisch, President and Chief Executive Officer, and Jennifer Ziolkowski, Chief Financial Officer444