PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for the period ended September 30, 2023, reflect the company's financial position, results of operations, and cash flows Condensed Consolidated Balance Sheet Data (unaudited) | Account | September 30, 2023 ($ in thousands) | December 31, 2022 ($ in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 63,365 | 115,516 | | Total Current Assets | 103,531 | 154,339 | | TOTAL ASSETS | 267,194 | 318,237 | | Liabilities & Equity | | | | Total Current Liabilities | 63,514 | 82,072 | | TOTAL LIABILITIES | 175,308 | 200,499 | | Accumulated deficit | (574,446) | (470,204) | | Total Shareholders' Equity | 91,886 | 117,738 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 267,194 | 318,237 | Condensed Consolidated Statements of Operations (unaudited) | Metric ($ in thousands, except per share) | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | License revenue - related party | 5,103 | 4,816 | 11,977 | 21,208 | | General and administrative | 10,009 | 10,762 | 35,169 | 32,548 | | Research and development | 27,856 | 16,862 | 70,115 | 63,960 | | Loss from operations | (32,762) | (22,808) | (93,307) | (75,300) | | Net loss | (44,297) | (37,284) | (104,242) | (102,302) | | Basic and diluted net loss per share | (0.74) | (0.83) | (1.91) | (2.29) | Condensed Consolidated Statements of Cash Flows (unaudited) | Cash Flow Activity ($ in thousands) | Nine-Month Period Ended Sep 30, 2023 | Nine-Month Period Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | (90,818) | (56,831) | | Net cash used in investing activities | (17,144) | (36,471) | | Net cash provided by financing activities | 56,312 | 70,367 | - On October 30, 2023, the company entered into an Investment Agreement with Sanofi, issuing 4,000,000 ordinary shares for gross proceeds of $30.0 million; the agreement also grants Sanofi a right of first negotiation for the company's Riboswitch gene regulation technology and other specified programs149152 Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes the company's financial condition and results, noting its clinical-stage status, history of losses, and liquidity outlook into mid-2025 - The company is a clinical-stage gene therapy company with significant operating losses since inception, reporting a net loss of $104.2 million for the nine months ended September 30, 2023, and an accumulated deficit of $574.4 million155157 - Based on existing cash, expected research funding, and Sanofi investment proceeds, the company estimates sufficient funds to support operations into mid-2025164217 - Recent strategic and clinical milestones include: - A $30.0 million strategic investment from Sanofi in October 2023 - Completion of enrollment in the pivotal Phase 3 LUMEOS trial for bota-vec for XLRP - Initiation of a Phase 2 study for AAV-hAQP1 for radiation-induced xerostomia - Anticipated completion of enrollment in the Phase 1 AAV-GAD trial for Parkinson's disease in Q4 2023169171 Results of Operations Net loss increased to $44.3 million in Q3 2023 and $104.2 million for the nine-month period, primarily due to higher R&D expenses driven by manufacturing costs Comparison of Results for the Three Months Ended September 30, | Metric ($ in thousands) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | License revenue - related party | 5,103 | 4,816 | 287 | | General and administrative | 10,009 | 10,762 | (753) | | Research and development | 27,856 | 16,862 | 10,994 | | Loss from operations | (32,762) | (22,808) | (9,954) | | Net loss | (44,297) | (37,284) | (7,013) | - The $11.0 million increase in R&D expenses for Q3 2023 was primarily driven by an $18.0 million increase in manufacturing costs, partially offset by decreases in preclinical program expenses and lower reimbursement from the Janssen collaboration198 Comparison of Results for the Nine Months Ended September 30, | Metric ($ in thousands) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | License revenue - related party | 11,977 | 21,208 | (9,231) | | General and administrative | 35,169 | 32,548 | 2,621 | | Research and development | 70,115 | 63,960 | 6,155 | | Loss from operations | (93,307) | (75,300) | (18,007) | | Net loss | (104,242) | (102,302) | (1,940) | - For the nine-month period, R&D expenses increased by $6.2 million, mainly due to a $39.2 million increase in manufacturing costs, partially offset by decreases of $12.2 million in preclinical program expenses and $9.5 million in clinical trial expenses210 Liquidity and Capital Resources As of September 30, 2023, the company had $64.4 million in cash, with net cash used in operating activities at $90.8 million, and $56.3 million provided by financing activities - As of September 30, 2023, the company had cash, cash equivalents, and restricted cash of $64.4 million, along with $22.4 million in receivables due from Janssen156219 - Net cash used in operating activities increased to $90.8 million for the nine months ended September 30, 2023, from $56.8 million in the prior-year period, primarily due to the net loss and changes in operating assets and liabilities219220221 - Net cash provided by financing activities was $56.3 million for the nine months ended September 30, 2023, mainly from the $57.8 million net proceeds of the May 2023 private placement224 Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from foreign currency exchange rate fluctuations and interest rate changes on its SOFR-linked borrowings - A hypothetical 10% unfavorable movement in foreign currency exchange rates would result in an additional foreign currency loss of approximately $29.0 million for the nine months ended September 30, 2023229 - The company's debt bears interest at 10.00% plus SOFR (subject to a 1.00% floor); a hypothetical 1% increase in SOFR would increase annual interest expense by approximately $0.8 million based on the $75.0 million outstanding balance as of September 30, 2023230 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by the report232 - There were no changes in internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls233 PART II. OTHER INFORMATION Legal Proceedings The company reports that it is not currently subject to any material legal proceedings - The company is not subject to any material legal proceedings235 Risk Factors This section outlines substantial investment risks, including the company's history of losses, dependence on clinical-stage candidates, development and regulatory challenges, and competition - Financial Risks: The company has a history of significant losses, with an accumulated deficit of $574.4 million as of September 30, 2023, and anticipates continued losses, requiring additional capital that may not be available on acceptable terms237 - Development and Regulatory Risks: The business heavily depends on the success of its advanced product candidates, operating in a novel gene therapy field with an uncertain and evolving regulatory landscape, making approval time and cost difficult to predict255264 - Manufacturing and Third-Party Risks: The company is subject to significant manufacturing facility regulation, relies on third parties for components like plasmid, posing supply disruption risks, and depends on collaborators for key program development and commercialization310417426 - Commercialization Risks: The company faces significant competition from larger pharmaceutical and biotech companies, with successful commercialization dependent on adequate payor reimbursement, market acceptance, and establishing sales and marketing capabilities388392 Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities The company reported no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the period - None reported for the period539 Other Information The company reported no other information required to be disclosed in this item for the period - None reported for the period543 Exhibits This section lists the exhibits filed with the Form 10-Q, including amendments to financing agreements, the Investment Agreement with Sanofi, officer certifications, and XBRL data files - Key exhibits filed include the Consent and Amendment to the Note Purchase Agreement with Perceptive, the Investment Agreement with Sanofi, and the associated Registration Rights Agreement545
MeiraGTx(MGTX) - 2023 Q3 - Quarterly Report