Part I - Financial Information Financial Statements Neurogene Inc.'s unaudited condensed consolidated financial statements as of March 31, 2024, report a $16.9 million net loss and $169.5 million in cash and investments, detailing the December 2023 reverse merger Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $150,140 | $148,210 | | Short-term investments | $19,393 | $48,947 | | Total current assets | $174,141 | $200,348 | | Total assets | $195,350 | $222,573 | | Liabilities & Equity | | | | Total current liabilities | $11,818 | $22,973 | | Total liabilities | $24,573 | $36,549 | | Accumulated deficit | $(204,075) | $(187,154) | | Total stockholders' equity | $170,777 | $186,024 | Condensed Consolidated Statement of Operations (Unaudited) | Account | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Research and development expenses | $13,541 | $10,283 | | General and administrative expenses | $5,238 | $2,752 | | Loss from operations | $(18,779) | $(13,035) | | Interest income | $2,320 | $777 | | Net loss | $(16,921) | $(12,263) | | Net loss per share, basic and diluted | $(1.00) | $(28.28) | Condensed Consolidated Statement of Cash Flows Highlights (Unaudited) | Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(21,650) | $(13,555) | | Net cash provided by (used in) investing activities | $29,935 | $(29) | | Net cash (used in) provided by financing activities | $(6,524) | $107 | | Net increase (decrease) in cash | $1,761 | $(13,477) | - On December 18, 2023, the company completed a reverse merger with Neoleukin Therapeutics, Inc., becoming Neurogene Inc., and raised approximately $95.0 million through a Pre-Closing Financing2223 - As of March 31, 2024, the company held $169.5 million in cash, cash equivalents, and investments, expected to fund operations for at least one year27 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Neurogene's focus on developing genetic medicines for neurological diseases, reporting a Q1 2024 net loss of $16.9 million due to increased R&D and G&A expenses, with $169.5 million cash expected to fund operations into H2 2026 - The company is a clinical-stage biotechnology firm focused on neurological diseases, with lead programs NGN-401 for Rett syndrome and NGN-101 for CLN5 Batten disease, utilizing proprietary EXACT gene regulation technology878993 - Preliminary clinical data for NGN-401 Phase 1/2 trial is expected in Q4 2024, with interim data for NGN-101 Phase 1/2 trial in H2 20249193 Results of Operations Comparison (in thousands) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Research and development expenses | $13,541 | $10,283 | $3,258 | | General and administrative expenses | $5,238 | $2,752 | $2,486 | | Total operating expenses | $18,779 | $13,035 | $5,744 | | Net loss | $(16,921) | $(12,263) | $(4,658) | - R&D expenses increased primarily due to a $1.3 million rise in clinical trial costs for NGN-401 and a $0.9 million increase in preclinical costs118 - G&A expenses increased mainly due to higher professional fees ($0.9 million), rent ($0.5 million), and compensation costs ($0.8 million) post-reverse merger121 - As of March 31, 2024, the company held $169.5 million in cash, cash equivalents, and short-term investments, projected to fund operations into the second half of 2026126171 Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," Neurogene is exempt from providing quantitative and qualitative disclosures about market risk - As a "smaller reporting company," Neurogene is exempt from detailed market risk disclosures157 Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting during the quarter - Management concluded the company's disclosure controls and procedures were effective as of the report period end160 - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2024161 Part II - Other Information Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - Neurogene is not currently involved in any legal proceedings expected to have a material adverse effect on the company164 Risk Factors This section outlines significant risks including Neurogene's limited operating history, substantial capital needs, development and commercialization challenges for NGN-401 and NGN-101, intellectual property, third-party reliance, and stock price volatility Risks Related to Our Limited Operating History, Financial Position and Capital Requirements - The company has a limited operating history, no approved products, and an accumulated deficit of $204.1 million as of March 31, 2024168170176 - Neurogene requires substantial additional capital, with existing cash expected to fund operations into the second half of 2026, based on potentially inaccurate assumptions170171 - The company has not generated product revenue and may never achieve profitability, with speculative biotechnology investment posing risks to capital raising and operations175182 Risks Related to Discovery, Development and Commercialization - Lead product candidates NGN-401 and NGN-101 are in early clinical development and face risks of failure or delays, materially harming the business185199 - The company faces significant competition from multinational biopharmaceutical and specialized biotechnology firms with greater resources183 - Gene therapy development is novel and complex, with high failure risk; preclinical results may not predict clinical success, and adverse events could halt development192206213 - Low prevalence of targeted rare diseases may hinder patient enrollment in clinical trials, potentially delaying or preventing regulatory approvals195 Risks Related to Manufacturing - Gene therapy manufacturing is complex and subject to strict cGMP regulations; production difficulties, contamination, or non-compliance could cause delays and harm the business222223236 - Reliance on a limited number of third-party suppliers for critical raw materials poses risks of supply interruption, materially harming product candidate manufacturing227233 - Despite having its own GMP manufacturing facility, the company may face challenges in scaling up production, potentially delaying development and commercialization234237 Risks Related to Our Reliance on Third Parties - Heavy reliance on academic collaboration with the University of Edinburgh for preclinical R&D means any failure, delay, or termination would materially harm the business240241 - Dependence on third-party CROs for preclinical studies and clinical trials means poor performance or termination could delay or end clinical programs245246247 Risks Related to Our Business and Operations - High dependence on key personnel means inability to attract and retain qualified staff could impede business strategy implementation252 - Vulnerability to security breaches, exemplified by an August 2023 business email compromise attack resulting in $0.9 million misappropriation, poses risks of significant liabilities and operational disruption255 - Stringent and changing privacy and data protection laws mean non-compliance could lead to government enforcement actions, fines, and reputational harm263 - The company's ability to use $277.9 million federal and $35.1 million state net operating loss carryforwards may be limited by Section 382 ownership changes265 Risks Related to Intellectual Property - Protection of patents and proprietary rights is uncertain, with an early-stage IP portfolio, no issued patents as of March 31, 2024, and pending applications that may not result in issuance271272 - Reliance on in-licensed IP from third parties like the University of Edinburgh and UNC means termination or breach of agreements could lead to loss of product candidate development rights276280283 - The company may face patent infringement claims or need to file claims to protect its IP, incurring substantial costs, liability, and resource diversion286 Risks Related to Government Regulation - The gene therapy regulatory approval process is lengthy, complex, and unpredictable; delays or failure to obtain FDA and other authority approvals would prevent commercialization310313 - Approved products will face extensive ongoing regulatory obligations, including expensive and restrictive post-marketing studies and surveillance328 - Orphan Drug and Rare Pediatric Disease designations for NGN-401 and NGN-101 do not guarantee faster development, regulatory approval, or market exclusivity344348 - Unfavorable pricing regulations and third-party coverage/reimbursement policies could hinder competitive product pricing, harming the business334 General Risk Factors - Market opportunity estimates and growth forecasts may be inaccurate, and the addressable patient population might be less significant than anticipated349350 - Macroeconomic conditions, including economic downturns, inflation, interest rate increases, and geopolitical events, could adversely affect the business353 - Exposure to potential product liability claims from clinical trials and commercial sales means insurance may not sufficiently cover all damages351 Risks Related to Owning Our Stock - The common stock market price has been and may remain volatile due to clinical trial results, regulatory actions, and general market conditions355 - Executive officers, directors, and principal stockholders beneficially own a significant percentage of outstanding stock, influencing matters submitted for stockholder approval371 - Future sales of substantial common stock by existing stockholders, especially post-lock-up expiration, could cause stock price decline370 - A material weakness in internal control over financial reporting, related to a 2023 business email compromise attack, has been remediated, but future weaknesses could lead to inaccurate reporting and share price decline363 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the reporting period - The company reports no unregistered sales of equity securities for the period376 Defaults Upon Senior Securities No defaults upon senior securities occurred during the reporting period - The company reports no defaults upon senior securities377 Mine Safety Disclosures This item is not applicable to the company's operations - Mine safety disclosures are not applicable to Neurogene378 Other Information No directors or Section 16 officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or Section 16 officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading plans during the quarter379 Exhibits This section lists exhibits filed with Form 10-Q, including employment agreements, a consulting agreement, officer certifications, and XBRL data - Exhibits filed include new executive employment agreements, an amended consulting agreement, and required CEO/CFO certifications381
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