MeiraGTx(MGTX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for MeiraGTx Holdings plc and its subsidiaries, including the balance sheets, statements of operations and comprehensive loss, statements of shareholders' equity, and statements of cash flows, along with accompanying notes - The financial statements are unaudited and include normal recurring adjustments, prepared in conformity with GAAP[41][42] Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change (in thousands) | | :-------------------- | :------------ | :---------------- | :-------------------- | | Cash and cash equivalents | $32,166 | $103,659 | $(71,493) | | Total Current Assets | $47,084 | $123,518 | $(76,434) | | Total Assets | $198,716 | $269,751 | $(71,035) | | Total Current Liabilities | $53,436 | $60,783 | $(7,347) | | Total Liabilities | $195,756 | $201,924 | $(6,168) | | Total Shareholders' Equity | $2,960 | $67,827 | $(64,867) | Condensed Consolidated Statements of Operations and Comprehensive Loss | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) (in thousands) | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | :-------------------------- | | Total revenue | $3,691 | $282 | +$3,409 | $5,617 | $979 | +$4,638 | | Total operating expenses | $48,484 | $46,191 | +$2,293 | $92,006 | $93,660 | $(1,654) | | Loss from operations | $(44,793) | $(45,909) | +$1,116 | $(86,389) | $(92,681) | +$6,292 | | Net loss | $(38,795) | $(48,620) | +$9,825 | $(78,776) | $(69,062) | $(9,714) | | Basic and diluted net loss per ordinary share | $(0.48) | $(0.76) | +$0.28 | $(0.99) | $(1.08) | +$0.09 | Condensed Consolidated Statement of Shareholders' Equity | Metric (in thousands) | December 31, 2024 | June 30, 2025 | Change (in thousands) | | :-------------------- | :---------------- | :------------ | :-------------------- | | Total Shareholders' Equity | $67,827 | $2,960 | $(64,867) | | Capital in excess of par value | $773,565 | $791,280 | +$17,715 | | Accumulated deficit | $(702,022) | $(780,798) | $(78,776) | Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) (in thousands) | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------------- | | Net cash used in operating activities | $(80,775) | $(56,197) | $(24,578) | | Net cash (used in) provided by investing activities | $(2,471) | $26,011 | $(28,482) | | Net cash provided by financing activities | $7,163 | $333 | +$6,830 | | Net decrease in cash, cash equivalents and restricted cash | $(76,083) | $(29,853) | $(46,230) | | Cash, cash equivalents and restricted cash at end of period | $34,424 | $101,025 | $(66,601) | Notes to Condensed Consolidated Financial Statements 1. Organization and Basis of Presentation This note describes the company's business as a clinical-stage genetic medicines company, details the strategic collaboration with Hologen Limited, and outlines the asset purchase and related agreements 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 capabilities[29] - The company entered into a strategic collaboration with Hologen Limited on March 9, 2025, involving an upfront cash payment of $200 million ($23 million received by Q3 2025) and up to $230 million in additional funding[30][147] - On December 20, 2023, MeiraGTx sold and assigned the UCLB RPGR License Agreement for botaretigene sparoparvovec (bota-vec) to Johnson & Johnson Innovative Medicine for a $65.0 million upfront payment and potential future contingent consideration of up to $350.0 million, with $60.0 million in milestones received in 2024[39][40] - As of June 30, 2025, the company had an accumulated deficit of $780.8 million and $34.4 million in cash, cash equivalents, and restricted cash[43][45] 2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements This note outlines the company's significant accounting policies, including consolidation, use of estimates, restricted cash, fair value measurements, asset retirement obligations, IDA Ireland grant recognition, revenue recognition, research and development expense treatment, and net loss per ordinary share calculation - The company's financial statements consolidate Meira Holdings and its wholly-owned subsidiaries, eliminating all intercompany balances and transactions[49][51] - Management uses significant estimates in areas such as service revenue, fair value of nonfinancial assets, share-based compensation, and leases, which may differ materially from actual results[52] - Restricted cash totaled $2.3 million as of June 30, 2025, primarily for a guarantee required by an IDA Ireland research and innovation grant[53] - A $1.3 million gain on termination of lease liabilities was recorded during Q1 2025 due to a change in estimate for an asset retirement obligation[60] - Revenue recognition follows a five-step model, allocating transaction price to performance obligations based on estimated standalone selling prices[66][71] - Research and development costs are expensed as incurred, encompassing employee-related expenses, third-party vendor costs for clinical/preclinical studies, and manufacturing-related expenses[78][79] 3. Equity Method and Other Investments This note 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) | Cost Basis (in thousands) | | :------- | :-------------- | :------------------- | :---------------------------- | :------------------------ | | Visiogene LLC | Equity Method Investment | 25.0 % | $5,133 | $5,165 | | Other | Equity Investment | 0.9 % | $1,616 | $1,500 | | Total | | | $6,749 | $6,665 | 4. Accrued Expenses This note provides a breakdown of accrued expenses, showing a significant decrease from December 31, 2024, to June 30, 2025, primarily driven by a reduction in compensation and benefits | Accrued Expense (in thousands) | June 30, 2025 | December 31, 2024 | Change (in thousands) | | :----------------------------- | :------------ | :---------------- | :-------------------- | | Professional fees | $4,925 | $6,326 | $(1,401) | | Research and development | $3,254 | $2,234 | +$1,020 | | Manufacturing costs | $2,239 | $1,540 | +$699 | | Clinical trial costs | $1,879 | $3,864 | $(1,985) | | Compensation and benefits | $1,790 | $11,197 | $(9,407) | | Consulting | $1,055 | $1,530 | $(475) | | Fixed assets | $102 | $326 | $(224) | | Rent and facilities costs | $79 | $257 | $(178) | | Other | $160 | $140 | +$20 | | Total | $15,483 | $27,414 | $(11,931) | 5. Share-Based Compensation This note details the company's equity incentive plans, including share options and restricted share units (RSUs), and the associated compensation expense recognized | Expense Category (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Research and development | $2,091 | $2,832 | $4,139 | $5,707 | | General and administrative | $3,573 | $2,978 | $6,412 | $7,063 | | Total | $5,664 | $5,810 | $10,551 | $12,770 | - As of June 30, 2025, total unrecognized compensation expense for unvested options was $6.2 million (expected over 3.9 years) and for unvested RSUs was $33.7 million (expected over 3.8 years)[99][103] 6. Ordinary Shares This note describes the company's "at-the-market" (ATM) equity offering program, through which it raised additional capital by selling ordinary shares - During the six months ended June 30, 2025, the company raised gross proceeds of $9.9 million through the sale of 1,510,300 ordinary shares via its "at-the-market" equity offering program[106] - An additional $81.8 million of ordinary shares may be sold under the existing "at-the-market" equity program[106] 7. Income Taxes The company did not record an income tax provision due to sustained losses and maintains a full valuation allowance against its deferred tax assets - No provision for income taxes was recorded for the three and six months ended June 30, 2025 and 2024, as the company generated losses in all periods[107] - A full valuation allowance is maintained against deferred tax assets in the United States, United Kingdom, Ireland, and Netherlands due to uncertainty regarding their realizability[108] 8. Related-Party Transactions This note details the Asset Purchase Agreement and related Supply Agreement with Johnson & Johnson Innovative Medicine for the RPGR Product, including milestone payments and revenue recognition - Under the Asset Purchase Agreement with Johnson & Johnson Innovative Medicine, MeiraGTx received a $65.0 million upfront payment (Dec 2023) and $60.0 million in milestone payments (2024), with eligibility for up to $350.0 million in future contingent milestones[109] - The transaction price of $92.3 million was allocated to four performance obligations: PPQ services, material rights for commercial supply, manufacturing technology transfer, and the sale of nonfinancial assets[110] - Recognized $2.3 million (H1 2025) and $1.0 million (H1 2024) of deferred revenue as service revenue from PPQ services under the Asset Purchase Agreement[117] - The company entered into a Notes Purchase Agreement with Perceptive (an affiliate of a >10% shareholder) for an initial $75.0 million, maturing August 2, 2026, with an annual interest rate of 14.33% at June 30, 2025[121][128] 9. Leases This note outlines the company's commitments under operating and finance leases for various facilities and equipment, detailing lease costs, balance sheet amounts, and future minimum lease payments | Lease Cost (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Finance lease cost | $305 | $281 | $588 | $560 | | Operating lease cost | $1,113 | $1,437 | $2,397 | $2,872 | | Short-term lease cost | $100 | $41 | $195 | $87 | | Total Lease Cost | $1,518 | $1,759 | $3,180 | $3,519 | - Future minimum lease payments under non-cancellable operating leases totaled $7.8 million as of June 30, 2025, with total lease liabilities of $6.7 million[126] - An early termination option on an operating lease for laboratory and office space was exercised in Q1 2025, leading to a remeasurement of the ROU asset and lease liability[124] 10. Debt Financing This note provides further details on the senior secured financing arrangement, the Notes Purchase Agreement with Perceptive, including the principal amount, interest rate, maturity, security, and covenants - The Notes Purchase Agreement provides for an initial $75.0 million notes issuance (Tranche 1 Notes) maturing on August 2, 2026[128] - Outstanding amounts bear interest at 10.00% plus the one-month SOFR (subject to a 1.00% floor), resulting in an annual interest rate of 14.33% at June 30, 2025[128] - The company's obligations are secured by its London and Shannon manufacturing facilities, $3.0 million of cash, bank accounts of Subsidiary Guarantors, and their equity interests[129] - 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, 2027[131] 11. Commitments and Contingencies This note states that there were no new material commitments or contingencies during the six-month period ended June 30, 2025 - No new material commitments or contingencies were entered into during the six-month period ended June 30, 2025[133] 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 and results of operations, including an overview of its business, recent strategic transactions, development highlights, and a detailed analysis of revenues, expenses, and liquidity - MeiraGTx is a clinical-stage genetic medicines company with a broad pipeline and internal end-to-end manufacturing capabilities[135] - The company reported net losses of $38.8 million for Q2 2025 and $78.8 million for H1 2025, with an accumulated deficit of $780.8 million as of June 30, 2025[139] - Current cash, cash equivalents, and restricted cash of $34.4 million, along with anticipated Hologen proceeds, are expected to fund operations into 2027 and repay the $75.0 million debt due August 2026[138][142] - A strategic collaboration with Hologen Limited, involving a $200 million upfront payment and up to $230 million in additional funding, is expected to close in Q3 2025[147][148] Overview - 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[135] - The company has internal end-to-end manufacturing capabilities, including two GMP viral vector production facilities and internal plasmid production[135] - Operations have been financed primarily through equity sales ($632.2 million), debt financing ($75.0 million), and upfront/milestone payments from Johnson & Johnson Innovative Medicine ($130.0 million from Collaboration Agreement, $125.0 million from Asset Purchase Agreement)[136][138] - As of June 30, 2025, the company had $34.4 million in cash, cash equivalents, and restricted cash, and an accumulated deficit of $780.8 million[138][139] Hologen Transactions - MeiraGTx entered into a strategic collaboration with Hologen Limited on March 9, 2025, for multi-modal generative AI foundation models in clinical medicine and drug development[147] - The collaboration includes a $200 million upfront cash payment (with $23 million received by Q3 2025) and up to $230 million in additional funding from Hologen[147] - A joint venture, Hologen Neuro AI Ltd, is being formed to finance the development of AAV-GAD for Parkinson's disease and other CNS therapies, with MeiraGTx Neuro UK holding 30% ownership and leading clinical development and manufacturing[152][167] - Hologen will acquire a minority interest in MeiraGTx Manufacturing and contribute to its annual funding, with an option to increase its stake to 40% within 12 months[155][157] Acquisition of Smart Immune Assets - In July 2025, MeiraGTx Cell Therapies acquired certain assets and operations of Smart Immune, a French clinical-stage biotechnology company, for €250,000 plus a €100,000 transfer fee[158] - The acquisition includes Smart Immune's ProTcell platform, a T-cell progenitor-based cell therapy, intended to advance off-the-shelf, allogenic ProTcell-derived CAR-T therapies incorporating MeiraGTx's riboswitch technology[158] Recent Development Highlights and Anticipated Milestones - AAV2-hAQP1 for Radiation-Induced Xerostomia received RMAT designation in December 2024, with Phase 2 AQUAx2 enrollment targeting completion in Q4 2025 and pivotal data readout in late 2026[161] - AAV-GAD for Parkinson's disease received RMAT designation in May 2025, based on positive data from three clinical studies, and a Phase 3 study is planned for initiation in 2025[161][162] - AAV-AIPL1 for LCA4 showed meaningful responses in 11/11 treated children, leading to preparation for MAA submission in the UK and BLA in the US[168] - The Riboswitch Gene Regulation Technology Platform is progressing with compelling preclinical data in metabolic peptides and hormones, with the first IND using this platform (leptin) likely in 2025[172] - Manufacturing facilities in the UK and Ireland successfully renewed licenses and expanded capabilities, with the Shannon site now authorized for viral vector manufacturing for clinical trials[172][176] Components of Our Results of Operations - Service revenue primarily consists of process performance qualification (PPQ) services under the Asset Purchase Agreement[177] - Operating expenses include general and administrative costs, research and development costs, and cost of service revenue, with R&D expenses expected to increase but partially offset by Hologen funding for AAV-GAD[178][184] - Other non-operating income (expense) includes foreign currency gains/losses, interest income, interest expense, and gain on sale of nonfinancial assets[187][189][190][191] Results of Operations Comparison of Three Months Ended June 30, 2025 and 2024 (in thousands) | Metric | 2025 | 2024 | Change (in thousands) | | :---------------------------------- | :--- | :--- | :-------------------- | | Service revenue - related party | $3,691 | $282 | +$3,409 | | Cost of service revenue - related party | $2,676 | $0 | +$2,676 | | General and administrative | $12,313 | $11,257 | +$1,056 | | Research and development | $33,495 | $34,934 | $(1,439) | | Loss from operations | $(44,793) | $(45,909) | +$1,116 | | Foreign currency gain (loss) | $8,624 | $(284) | +$8,908 | | Interest income | $408 | $827 | $(419) | | Interest expense | $(3,034) | $(3,254) | +$220 | | Net loss | $(38,795) | $(48,620) | +$9,825 | Comparison of Six Months Ended June 30, 2025 and 2024 (in thousands) | Metric | 2025 | 2024 | Change (in thousands) | | :---------------------------------- | :--- | :--- | :-------------------- | | Service revenue - related party | $5,617 | $979 | +$4,638 | | Cost of service revenue - related party | $4,054 | $0 | +$4,054 | | General and administrative | $21,677 | $24,404 | $(2,727) | | Research and development | $66,275 | $69,256 | $(2,981) | | Loss from operations | $(86,389) | $(92,681) | +$6,292 | | Foreign currency gain (loss) | $12,311 | $(819) | +$13,130 | | Interest income | $1,379 | $1,924 | $(545) | | Interest expense | $(6,077) | $(6,504) | +$427 | | Gain on sale of nonfinancial assets | $0 | $29,018 | $(29,018) | | Net loss | $(78,776) | $(69,062) | $(9,714) | - Service revenue increased significantly due to increased progress of PPQ services under the Asset Purchase Agreement[196][210] - Research and development expenses decreased primarily due to reclassification of manufacturing costs and bota-vec funding shift to Johnson & Johnson Innovative Medicine, partially offset by increased AAV-GAD clinical trial expenses[203][217] - A substantial foreign currency gain was recognized in both periods due to the weakening of the U.S. dollar against the pound sterling and euro[205][218] Liquidity and Capital Resources - The company used $80.8 million in cash flows from operations for the six months ended June 30, 2025, reflecting ongoing operating losses[221] - As of June 30, 2025, cash, cash equivalents, and restricted cash totaled $34.4 million[225] - Current funds, including a $17.0 million deposit from Hologen and remaining collaboration proceeds, are estimated to fund operating expenses and capital expenditures into 2027 and repay the $75.0 million debt due August 2026[224] Cash Flow Summary (in thousands) for the Six Months Ended June 30, | Activity | 2025 | 2024 | Change (in thousands) | | :-------------------------------------- | :--- | :--- | :-------------------- | | Net cash used in operating activities | $(80,775) | $(56,197) | $(24,578) | | Net cash (used in) provided by investing activities | $(2,471) | $26,011 | $(28,482) | | Net cash provided by financing activities | $7,163 | $333 | +$6,830 | | Net decrease | $(76,083) | $(29,853) | $(46,230) | Off-Balance Sheet Arrangements - The company has not entered into any off-balance sheet arrangements or holds any variable interest entities[234] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, specifically foreign currency exchange risk and interest rate risk, and provides quantitative estimates of their potential impact - The company is exposed to foreign currency exchange risk, primarily between the U.S. Dollar and the British pound sterling and euro, due to international operations[236] - A 10% unfavorable movement in foreign currency exchange rates is estimated to result in an additional foreign currency loss of approximately $2.2 million for the six months ended June 30, 2025[236] - The company is exposed to interest rate risk from its Notes Purchase Agreement, which bears a fluctuating interest rate (14.33% at June 30, 2025, on $75.0 million outstanding debt)[237] - A hypothetical 1% increase in the SOFR would increase annual interest expense by approximately $0.8 million[237] Item 4. Controls and Procedures This section addresses the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[239] - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control during the quarter ended June 30, 2025[240] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently subject to any material legal proceedings - The company is not subject to any material legal proceedings[242] ITEM 1A. RISK FACTORS This section outlines various risks that could materially and adversely affect the company's business, financial condition, results of operations, and future growth prospects - Investing in the company's ordinary shares involves a high degree of risk, encompassing financial, operational, technological, regulatory, and other risks[46][243] Risks Related to Our Financial Position and Need for Additional Capital This sub-section details risks associated with the company's financial health, including a history of significant losses, the need for additional capital, uncertainties regarding milestone payments from collaborations, and potential difficulties in managing debt obligations - The company has incurred significant losses since inception ($78.8 million net loss for H1 2025, $780.8 million accumulated deficit) and anticipates continued losses, potentially never achieving profitability[244] - There is no guarantee of timely receipt of additional milestone payments (up to $285.0 million) under the Asset Purchase Agreement with Johnson & Johnson Innovative Medicine or revenues from commercial supply of the RPGR Product[249][250] - Additional capital will be required to fund operations, which may not be available on acceptable terms, potentially forcing delays or reductions in R&D programs[251] - The company may not have sufficient cash flows to satisfy debt obligations or comply with covenants under its financing arrangements, risking acceleration of debt and adverse business impacts[255][256] Risks Related to Discovery, Development, Clinical Testing, Manufacturing and Regulatory Approval This sub-section highlights the extensive and unpredictable challenges in developing gene therapies, including the high failure rate of clinical trials, regulatory uncertainties, manufacturing complexities, and the potential for adverse events or smaller-than-projected patient populations - Future success is substantially dependent on the successful development, manufacturing, regulatory approval, and commercialization of product candidates, with no guarantee of marketability[259] - Gene therapy development is difficult to predict in terms of time and cost due to its novelty and limited approvals in the US or Europe, with potential for unexpected adverse events or toxicities[262][264] - Clinical trials are expensive, time-consuming, difficult to design, and involve uncertain outcomes, with potential for substantial delays due to patient enrollment, regulatory consensus, or manufacturing issues[272][276] - Manufacturing facilities are subject to significant GMP regulation, and issues such as contamination, raw material shortages, or failure to meet regulatory requirements could delay clinical development or commercialization[307][308][312] - Product candidates may cause serious adverse events or undesirable side effects, potentially leading to clinical trial interruptions, restrictive labels, or denial of regulatory approval[318][322] Risks Related to Healthcare Laws and Other Legal Compliance Matters This sub-section addresses the complex and evolving regulatory environment for healthcare, including legislation impacting pricing and reimbursement, fraud and abuse laws, data privacy regulations, environmental compliance, and 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 could affect pricing[346][350] - Business operations are subject to various healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA), with potential for significant civil, criminal, and administrative penalties for non-compliance[362][364] - The company is subject to complex and evolving data privacy and protection laws (e.g., HIPAA, CCPA, GDPR, UK GDPR), with compliance being costly and potential failures leading to fines, litigation, and reputational harm[365][370][372] - International operations are subject to anti-corruption laws (e.g., UK Bribery Act, FCPA) and Trade Control laws, with non-compliance risking criminal and civil penalties, disgorgement, and reputational damage[376][379] Risks Related to Commercialization This sub-section details the challenges in commercializing product candidates, including intense competition, difficulties in securing adequate reimbursement, achieving market acceptance, and establishing sales and marketing capabilities - The gene therapy market is highly competitive, with major pharmaceutical and biotechnology companies developing similar or more effective therapies, potentially impacting market position and pricing[381][385] - Successful commercialization depends on obtaining adequate coverage and reimbursement from governmental and private payors, which is uncertain and subject to increasing cost-containment pressures[386][387] - Even if approved, product candidates may fail to achieve market acceptance by physicians, patients, and third-party payors due to factors like efficacy, cost, convenience, or competition[393][395] - The company lacks existing sales, marketing, and distribution infrastructure, and establishing it is costly and risky; reliance on third-party collaborators may not be successful[396][397] - Commercialization outside the US, UK, or EU involves additional risks, including differing regulatory requirements, intellectual property protection, economic instability, and currency fluctuations[403] Risks Related to Our Dependence on Third Parties This sub-section outlines the risks associated with relying on third parties for manufacturing, clinical trials, and collaborations, including potential supply shortages, quality control issues, delays, and the challenges of managing external relationships - If internal GMP manufacturing facilities cannot meet demand, reliance on third-party manufacturers increases risks of insufficient supply, unacceptable costs, and delays, potentially impacting development or commercialization[410][411] - Failure of third-party manufacturers to comply with GMP regulations or meet contractual requirements could result in sanctions, delays, or supply disruptions[413][414] - Challenges in establishing and maintaining collaborative relationships (e.g., with Sanofi, Hologen) due to shifting priorities, unsatisfactory results, or disputes could significantly limit product development and commercialization[416][418] - Reliance on CROs and other third parties for preclinical and clinical trials means limited direct control over their performance, risking extended trials, compromised data, and increased costs if they perform unsatisfactorily[419][422] Risks Related to Intellectual Property This sub-section details the critical importance and inherent vulnerabilities of the company's intellectual property, including dependence on licensed technology, challenges in obtaining and maintaining broad patent protection, risks of infringement claims, and the potential for changes in patent laws - The company depends on proprietary technology licensed from others; loss of existing licenses or inability to acquire additional rights could prevent continued product development[424] - Obtaining and maintaining broad patent protection is challenging, expensive, and uncertain; patents may be challenged, narrowed, or invalidated, impacting competitive effectiveness[428][429][433] - Risk of third parties asserting patent infringement claims, leading to substantial costs, delays, or inability to commercialize products, and potentially requiring costly litigation or licensing[434][438] - Changes in patent laws (e.g., AIA) or jurisprudence could diminish the value of patents, weakening the ability to obtain new patents or enforce existing ones[445][448] - Reliance on trade secrets and confidentiality agreements for protection, but these are difficult to maintain as confidential and vulnerable to misappropriation or unauthorized disclosure[455][459] Risks Related to Employee Matters and Managing Growth This sub-section addresses risks related to human capital, including challenges in managing organizational growth, retaining key personnel, potential product liability, and the impact of misconduct or system failures - Managing organizational growth (e.g., hiring, integration) can be difficult, potentially disrupting operations, diverting management attention, and increasing expenses[464] - Future success depends on retaining key personnel (CEO Alexandria Forbes, COO/CFO Rich Giroux, CDO Stuart Naylor) and attracting qualified talent in a competitive industry[465][466] - The use of product candidates in clinical trials and commercial sales exposes the company to product liability claims, which could result in substantial liabilities, costs, and reputational damage[469] - The company's IT systems and those of its partners are vulnerable to cybersecurity risks, potentially leading to data loss, operational disruption, and liabilities[474][477] - The use of new and evolving technologies, such as AI, may increase operational risks due to flawed algorithms, biased data, regulatory scrutiny, litigation, and potential release of confidential information[478][479] Risks Related to Our Ordinary Shares This sub-section discusses factors that could affect the market price and trading of the company's ordinary shares, including volatility, dilution from capital raises, influence of principal shareholders, reduced disclosure requirements, anti-takeover provisions, and challenges in enforcing foreign judgments - The market price of ordinary shares is likely to be volatile due to various factors, including clinical trial results, competitive products, regulatory developments, and general market conditions[482][483] - Future equity offerings, including through the "at-the-market" program, could substantially dilute existing shareholders' ownership interests[484] - Executive officers, directors, and principal shareholders (holding ~55.2% as of June 30, 2025) have significant influence over matters submitted to shareholders for approval[485][488] - The company's status as a "smaller reporting company" allows for reduced disclosure, which may make its ordinary shares less attractive to some investors and increase price volatility[489][490] - Anti-takeover provisions in organizational documents and Cayman Islands law may discourage or prevent a change of control, even if beneficial to shareholders[491] - The company may be classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which could result in adverse tax consequences for U.S. investors[498] General Risk Factors This sub-section covers broader operational and financial risks, including those related to acquisitions, exchange rate fluctuations, management's discretion over capital use, public company costs, analyst coverage, and environmental, social, and governance (ESG) expectations - Engaging in acquisitions (e.g., Smart Immune assets) could disrupt business, dilute shareholders, or reduce financial resources, with integration challenges and potential undiscovered liabilities[505] - Exchange rate fluctuations, particularly between the U.S. dollar, pound sterling, and euro, may adversely affect results of operations and financial condition due to international scope[506] - The company incurs substantial costs as a public company, requiring significant management time for compliance with new and existing initiatives and corporate governance practices[508] - Expectations related to environmental, social, and governance (ESG) factors may impose additional costs and expose the company to new risks, potentially affecting investor perception and reputation[511][513] - The company does not anticipate paying any cash dividends on its ordinary shares in the foreseeable future, making capital appreciation the sole source of gain for investors[514] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities This section states that there were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities to report - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities were reported[515] Item 3. Defaults Upon Senior Securities This section indicates that there were no defaults upon senior securities - No defaults upon senior securities were reported[516] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[517] Item 5. Other Information This section reports that no directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[518] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications, XBRL documents, and the cover page interactive data file - Exhibits include certifications (31.1, 31.2, 32.1, 32.2), Inline XBRL Instance Document (101.INS), and Cover Page Interactive Data File (104)[519] Signatures This section contains the required signatures for the Form 10-Q, confirming its submission by authorized officers - The report was signed by Alexandria Forbes (Chief Executive Officer) and Richard Giroux (Chief Financial Officer and Chief Operating Officer) on August 14, 2025[523]