MEIRAGTX HOLDINGS PLC You should read the following discussion and analysis of financial condition and
operating results together with our financial statements and related notes
appearing in this Quarterly Report on Form 10-Q ("Form 10-Q") and those included
in our Annual Report on Form 10-K for the year ended
Overview
We are a vertically integrated, clinical-stage gene therapy company with six programs in clinical development and a broad pipeline of preclinical and research programs. We have core capabilities in viral vector design and optimization, gene therapy manufacturing, as well as a potentially transformative gene regulation technology. Led by an experienced management team, we have taken a portfolio approach by licensing, acquiring and developing technologies that give us depth across both product candidates and indications. Our initial focus is on three distinct areas of unmet medical need: ocular, including both inherited retinal diseases as well as large degenerative ocular diseases, neurodegenerative diseases, and severe forms of xerostomia. Though initially focusing on the eye, central nervous system and salivary gland, we intend to expand our focus in the future to develop additional gene therapy treatments for patients suffering from a range of serious diseases.
We are an exempted company incorporated under the laws of the
We are a clinical stage company and have not generated any product revenues to
date. We have six clinical programs and a pipeline of preclinical programs.
Since inception, we have incurred significant operating losses. Our net losses
for the three-month periods ended
Additionally, pursuant to the Collaboration Agreement, we are eligible to receive research and development funding and additional potential milestone payments and royalties.
Our total operating expenses for the three-month periods ended
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development activities related to our product candidates, including the ongoing
Phase 3 Lumeos clinical trial of botaretigene sparoparvovec, formerly referred
to as AAV-RPGR, for the treatment of patients with XLRP and the initiation of a
Phase 3 clinical trial of AAV-RPE65 for the treatment of retinal dystrophy
associated with mutations in the RPE65 gene, we believe that certain of these
increases will be partially offset by the research funding in connection with
the Collaboration Agreement. In addition, we expect to continue incurring
increasing costs associated with our clinical activities for AAV-hAQP1 for the
treatment of radiation-induced xerostomia and xerostomia associated with
Sjogren's syndrome. We expect to file an IND application for AAV-GAD in the
first half of 2022. We also incurred expenses during the three-month period
ended
We will require additional capital in the future, which we may raise through equity offerings, debt financings, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or other sources to enable us to complete the development and potential commercialization of our product candidates. Furthermore, we expect to continue incurring costs associated with being a public company. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative effect on our financial condition and our ability to pursue our business strategy. In addition, attempting to secure additional financing may divert the time and attention of our management from day-to-day activities and harm our product candidate development efforts. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce or eliminate certain of our research and development programs.
Based on our cash and cash equivalents at
Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder. Any future debt financing or preferred equity or other financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially dilute your ownership interests.
If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development programs or any future commercialization efforts or further development of our manufacturing facilities or processes, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Because of the numerous risks and uncertainties associated with drug development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
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Highlights and Recent Developments
Recent Development Highlights and Anticipated Milestones
Botaretigene Sparoparvovec (AAV-RPGR) for the Treatment of XLRP:
? We and Janssen continue to enroll and dose patients in the Phase 3 Lumeos
clinical trial.
We will provide an update on the patients treated in the Phase 1/2 clinical
? trial of XLRP (MGT009), including the randomized expansion cohort of the study,
during the second quarter of 2022, and we and Janssen intend to present the
full data from this study at medical meetings later this year.
AAV-hAQP1 for the Treatment of Grade 2/3 Radiation-Induced Xerostomia:
We intend to present data from all four cohorts (n=12) in the unilateral dose
? escalation Phase 1 AQUAx trial as well as data from the bi-lateral cohorts
(n=12) in the fourth quarter of 2022.
? We are currently planning a randomized, double-blind, placebo-controlled Phase
2 study and expect to initiate this trial by the end of 2022.
AAV-GAD for the Treatment of Parkinson's Disease:
? We are filing an Investigational New Drug (IND) application in
material manufactured in our cGMP facility in
AAV-CNGB3 and AAV-CNGA3 for the Treatment of Achromatopsia (ACHM):
With development partner Janssen, we expect to initiate further clinical
? studies in 2022 for both AAV-CNGB3 and AAV-CNGA3 for the treatment of ACHM
associated with mutations in the CNGB3 and CNGA3 genes.
Proprietary Promoter Platforms:
? We continue to expand our libraries of novel small, strong, synthetic
promoters.
? We have generated in-vivo data in multiple tissues demonstrating significant
increases in promoter strength and tissue specificity.
Riboswitch Gene Control Platform:
We are advancing several small molecule candidates through IND-enabling studies
? with the aim of initiating first-in-human safety and tolerability studies by
the end of 2022.
Novel regulation platform can be used to precisely control gene expression in
? cell therapy, gene editing, with any gene and any vector with unprecedented
dynamic range using an oral small molecule.
Components of Our Results of Operations
License Revenue
Our license revenue consisted of the amortization of the upfront and milestone payments we received in connection with the Collaboration Agreement.
Operating Expenses
Our operating expenses since inception have consisted primarily of general and administrative costs and research and development costs.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including share-based compensation, for personnel in our executive, finance, legal, business development and administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters; professional fees for accounting, auditing, tax and consulting services; insurance costs; travel expenses; and office facility-related expenses, which include direct depreciation costs.
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We expect that our general and administrative expenses will increase in the
future as we increase our personnel headcount to support increased research and
development activities. We have also incurred, and expect to continue to incur,
increased expenses associated with being a public company, including costs of
accounting, audit, legal, regulatory and tax-related services associated with
maintaining compliance with Nasdaq and
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, and include:
? employee-related expenses, including salaries, benefits and travel of our
research and development personnel;
expenses incurred in connection with third-party vendors that conduct clinical
? and preclinical studies and manufacture the drug product for the clinical
trials and preclinical activities;
? acquisition of in process research and development;
costs associated with clinical and preclinical activities including costs
? related to facilities, supplies, rent, insurance, certain legal fees,
share-based compensation, and depreciation; and
? expenses incurred with the development and operation of our manufacturing
facilities.
We expense research and development costs as incurred.
Research and development activities are central to our business model. We expect
that our research and development expenses will continue to increase
substantially for the foreseeable future as we initiate additional preclinical
and clinical trials of our existing product candidates, including the ongoing
Phase 3 Lumeos trial of botaretigene sparoparvovec for the treatment of patients
with XLRP and the initiation of a Phase 3 clinical trial of AAV-RPE65 for the
treatment of retinal dystrophy associated with mutations in the RPE65 gene, and
continue to discover and develop additional product candidates. Certain of these
increases in research and development costs will be partially offset by the
research funding provided in connection with the Collaboration Agreement we
entered into in
We cannot determine with certainty the duration and costs of future clinical trials of our product candidates or any other product candidate we may develop or if, when, or to what extent we will generate revenue from the commercialization and sale of any product candidate for which we obtain marketing approval. We may never succeed in obtaining marketing approval for any product candidate. The duration, costs and timing of clinical trials and development of our existing product candidates or any other product candidate we may develop will depend on a variety of factors, including:
the scope, rate of progress, expense and results of clinical trials of our
? existing product candidates, as well as of any future clinical trials of other
product candidates and other research and development activities that we may
conduct;
? uncertainties in clinical trial design and patient enrollment rates;
the actual probability of success for our product candidates, including the
? safety and efficacy, early clinical data, competition, manufacturing capability
and commercial viability;
? significant and changing government regulation and regulatory guidance;
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? the timing and receipt of any marketing approvals;
? the expense of filing, prosecuting, defending and enforcing any patent claims
and other intellectual property rights; and
? business interruption from the COVID-19 pandemic that may affect any of the
foregoing.
A change in the outcome of any of these variables with respect to the
development of a product candidate could mean a significant change in the costs
and timing associated with the development of that product candidate. For
example, if the FDA or another
Other non-operating income (expense)
Other non-operating income (expense) includes the following:
Foreign currency (loss) gain
Our condensed consolidated financial statements are presented in
Other comprehensive income (loss)
Other comprehensive income (loss) includes the following:
Foreign currency translation gain (loss)
Expenses of subsidiaries have been translated into
Critical Accounting Policies and Use of Estimates
Management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and judgements that affect the reporting amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. On an ongoing basis, we evaluate our estimates and judgements, including those related to license and collaboration revenue, share-based compensation and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities that are not readily apparent from our sources. Actual results may differ from these estimates under different assumptions.
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The Company's critical accounting policies, significant judgements and estimates
are included in the Company's Form 10-K for the year ended
Results of Operations
Comparison of Three Months Ended
2022 2021 Change
(in thousands)
License revenue - related party $ 5,633 $ 4,595 $ 1,038
Operating expenses:
General and administrative $ 11,268 $ 9,918 $ 1,350
Research and development 23,099 16,709 6,390
Total operating expenses 34,367 26,627 7,740
Loss from operations (28,734) (22,032) (6,702)
Other non-operating income (expense)
Foreign currency loss (2,647) (1,615) (1,032)
Interest income 16 89 (73)
Interest expense (77) (59) (18)
Fair value adjustment 397 - 397
Net loss (31,045) (23,617) (7,428)Other comprehensive income (loss): Foreign currency translation gain (loss) 1,932 (271) 2,203 Total comprehensive loss
$ (29,113) $ (23,888) $ (5,225) License Revenue
License revenue was
General and Administrative Expenses
General and administrative expenses were
Research and Development Expenses
Research and development expenses for the three months ended
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Foreign Currency Loss
Foreign currency loss was
Fair Value Adjustments
Fair value adjustment was
Other Comprehensive Income (Loss) - Foreign Currency Translation Gain (Loss)
Foreign currency translation adjustments resulted in a translation gain of
Liquidity and Capital Resources
Since our inception, we have incurred significant operating losses. For the
three months ended
We do not currently have any approved products and have never generated any
revenue from product sales. We have historically financed our operations
primarily through cash on hand and proceeds from the sale of our ordinary
shares, series A ordinary shares and convertible preferred C shares. In
Based on our current cash and cash equivalents at
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Cash Flows
As of
The following table summarizes our sources and uses of cash for the period
presented:
For the Three Months Ended March 31,
2022 2021
(in thousands)
Net cash (used in) provided by operating activities $ (8,208) $ 9,086
Net cash used in investing activities (12,460) (18,868)
Net cash (used in) provided by financing activities (2,582) 136
Decrease in cash $ (23,250) $ (9,646)
Operating Activities
During the three months ended
During the three months ended
Investing Activities
Net cash used in investing activities for the three months ended
Net cash used in investing activities for the three months ended
Financing Activities
Net cash used in financing activities was
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Net cash provided by financing activities was
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements under applicable
Emerging Growth Company Status
The Jumpstart Our Business Startups Act of 2012, (the "JOBS Act"), permits an "emerging growth company," which we are, to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period.
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