10-Q 1 mgtx-20240331x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission File Number: 001-38520

MeiraGTx Holdings plc

(Exact Name of Registrant as Specified in its Charter)

Cayman Islands

    

98-1448305

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

450 East 29th Street, 14th Floor

New York, NY

10016

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (646860-7985

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

     

Trading
Symbol(s)

    

Name of each exchange
on which registered

Ordinary Shares,
$0.00003881 par value per share

MGTX

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer    

    

Accelerated filer        

Non-accelerated filer     

Small reporting company        

Emerging growth Company    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  

As of April 30, 2024, the registrant had 64,306,613 ordinary shares, $0.00003881 par value per share, outstanding.

Forward-Looking Statements

This Quarterly Report on Form 10-Q (the “Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Form 10-Q that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding expectations regarding meetings with global regulatory authorities and the FDA, product pipeline, anticipated product benefits, goals and strategic priorities, product candidate development and status and expectations relating to clinical trials, growth expectations or targets, pre-clinical and clinical data expectations and expectations related to financing arrangements and the intended use of proceeds thereunder, as well as statements that include the words “expect,” “will,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “could,” “should,” “would,” “continue,” “anticipate” and similar statements of a future or forward-looking nature. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the important factors discussed under “Item 1A. Risk Factors” in this Form 10-Q. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this Form 10-Q. Any such forward-looking statements represent management’s estimates as of the date of this Form 10-Q. While we may elect to update such forward-looking statements at some point in the future, unless required by law, we disclaim any obligation to do so, even if subsequent events cause our views to change. Thus, one should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Form 10-Q.

i

Risk Factor Summary

We are providing the following summary of the principal risk factors contained in this Form 10-Q to enhance the readability and accessibility of our risk factor disclosures. We encourage you to carefully review in their entirety the full risk factors set forth in the section of this Form 10-Q captioned “Part II—Item 1A. Risk Factors” for additional information regarding the material factors that make an investment in our ordinary shares speculative or risky. These risks and uncertainties include, among others, the following:

We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future, and may never achieve or maintain profitability.
There is no guarantee that we will receive in a timely fashion or at all the additional milestone payments contemplated under the Asset Purchase Agreement or the revenues associated with our manufacture of the commercial supply of the RPGR Product under the Supply Agreement.
We will require additional capital to fund our operations, which may not be available on acceptable terms, if at all.
We may not have sufficient cash flows or cash on hand to satisfy our debt obligations or covenants under our financing arrangements, or we may not be able to effectively manage our business in compliance with such covenants.
Our review of potential strategic transactions may not result in an executed or consummated transaction or other strategic alternative and may not result in anticipated benefits to us or our shareholders, and the process of reviewing strategic transactions or its conclusion could be disruptive and distracting to our business operations and management.
We are heavily dependent on the success of our product candidates, which are still in development, and if none of them receive regulatory approval or are successfully commercialized, our business may be harmed.
It is difficult to predict the time and cost of product candidate development on our novel gene therapy platform. Very few gene therapies have been approved in the United States or in Europe.
Because gene therapy is novel and the regulatory landscape that governs any product candidates we may develop is uncertain and may change, we cannot predict the time and cost of obtaining regulatory approval, if we receive it at all, for any product candidates we may develop.
Clinical trials are expensive, time-consuming, difficult to design and implement, and involve an uncertain outcome. Further, we may encounter substantial delays in our clinical trials.
The affected populations for our product candidates may be smaller than we or third parties currently project, which may affect the addressable markets for our product candidates.
We and our contract manufacturers for plasmid are subject to significant regulation with respect to manufacturing our products. Our manufacturing facilities and the third-party manufacturing facilities which we rely on may not continue to meet regulatory requirements and have limited capacity.
Enacted and future healthcare legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the prices we may set.

ii

We are subject to regulation and other legal obligations relating to data privacy and protection. Compliance with these requirements is complex and costly.  The actual or perceived failure to comply with such obligations could materially harm our business, results of operations, and financial condition.
We face significant competition in an environment of rapid technological change, and there is a possibility that our competitors may achieve regulatory approval before us or develop therapies that are safer or more advanced or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize any product candidates we may develop.
We depend on proprietary technology licensed from others. If we lose our existing licenses or are unable to acquire or license additional proprietary rights from third parties, we may not be able to continue developing our product candidates.
If we are unable to obtain and maintain patent protection for our technology and product candidates or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets.
We may need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.
Our future success depends on our ability to retain our key personnel and to attract, retain and motivate qualified personnel.

Preliminary Notes

Unless the context otherwise requires, references in this Form 10-Q to “Meira,” “we,” “us”, “our” or “the Company” refer to MeiraGTx Holdings plc and its subsidiaries.

We have proprietary rights to trademarks, trade names and service marks appearing in this Form 10-Q that are important to our business. Solely for convenience, the trademarks, trade names and service marks may appear in this Form 10-Q without the ® and TM symbols, but any such references are not intended to indicate, in any way, that we forgo or will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, trade names and service marks. All trademarks, trade names and service marks appearing in this Form 10-Q are the property of their respective owners.

iii

Table of Contents

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

Condensed Consolidated Balance Sheets

1

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

Condensed Consolidated Statement of Shareholders’ Equity

3

Condensed Consolidated Statement of Shareholders’ Equity

4

Condensed Consolidated Statements of Cash Flows

5

Notes to Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

39

Item 4.

Controls and Procedures

40

PART II.

OTHER INFORMATION

41

Item 1.

Legal Proceedings

41

Item 1A.

Risk Factors

41

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

98

Item 3.

Defaults Upon Senior Securities

98

Item 4.

Mine Safety Disclosures

98

Item 5.

Other Information

98

Item 6.

Exhibits

99

Signatures

100

iv

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except share and per share amounts)

March 31, 

December 31, 

    

2024

    

2023

ASSETS

 

  

 

  

CURRENT ASSETS:

 

  

 

  

Cash and cash equivalents

$

119,206

$

129,566

Accounts receivable - related party

10,915

10,138

Prepaid expenses

 

5,076

 

5,625

Tax incentive receivable

13,171

13,277

Other current assets

 

932

 

1,016

Total Current Assets

 

149,300

 

159,622

Property, plant and equipment, net

 

111,412

 

115,896

Intangible assets, net

1,038

1,118

Restricted cash

 

1,059

 

1,083

Other assets

1,138

1,917

Equity method and other investments

6,766

6,766

Right-of-use assets - operating leases, net

14,835

15,910

Right-of-use assets - finance leases, net

23,687

24,432

TOTAL ASSETS

$

309,235

$

326,744

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

CURRENT LIABILITIES:

 

  

 

  

Accounts payable

$

21,223

$

16,042

Accrued expenses

 

17,353

 

42,639

Lease obligations, current

 

4,188

 

4,193

Deferred revenue - related party, current

 

3,772

 

2,926

Other current liabilities

 

1,007

 

1,278

Total Current Liabilities

 

47,543

 

67,078

Deferred revenue - related party

 

53,331

 

34,017

Lease obligations

 

11,796

 

12,952

Asset retirement obligations

 

2,440

 

2,401

Note payable, net

72,391

72,119

TOTAL LIABILITIES

 

187,501

 

188,567

COMMITMENTS AND CONTINGENCIES (Note 11)

 

  

 

  

SHAREHOLDERS' EQUITY:

 

  

 

  

Ordinary Shares, $0.00003881 par value, 1,288,327,750
authorized, 64,298,691 and 63,601,015 shares issued and
outstanding at March 31, 2024 and December 31, 2023, respectively

 

2

 

2

Capital in excess of par value

 

699,531

 

693,841

Accumulated other comprehensive loss

 

(3,126)

 

(1,435)

Accumulated deficit

 

(574,673)

 

(554,231)

Total Shareholders' Equity

 

121,734

 

138,177

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

309,235

$

326,744

See Notes to Condensed Consolidated Financial Statements

1

MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(in thousands, except share and per share amounts)

For the Three-Month Periods Ended March 31, 

    

2024

    

2023

Revenues:

Service revenue - related party

$

697

$

License revenue - related party

3,334

Total revenue

697

3,334

Operating expenses:

General and administrative

13,147

12,772

Research and development

 

34,322

 

22,322

Total operating expenses

 

47,469

 

35,094

Loss from operations

 

(46,772)

 

(31,760)

Other non-operating income (expense):

Foreign currency (loss) gain

(535)

3,857

Interest income

1,097

545

Interest expense

(3,250)

(3,060)

Gain on sale of nonfinancial assets

29,018

Fair value adjustment

54

Net loss

 

(20,442)

 

(30,364)

Other comprehensive loss:

Foreign currency translation loss

(1,691)

(2,353)

Comprehensive loss

$

(22,133)

$

(32,717)

Net loss

$

(20,442)

$

(30,364)

Basic and diluted net loss per ordinary share

$

(0.32)

$

(0.62)

Weighted-average number of ordinary shares outstanding

64,065,895

48,638,151

See Notes to Condensed Consolidated Financial Statements

2

MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE PERIOD ENDED MARCH 31, 2024

(unaudited)

(in thousands, except share amounts)

Accumulated Other

Total

Ordinary

Capital in Excess

Comprehensive

Accumulated

Shareholders'

    

Shares

    

Amount

    

of Par Value

    

Loss

    

Deficit

    

Equity

Balance at December 31, 2023

 

63,601,015

$

2

$

693,841

$

(1,435)

$

(554,231)

$

138,177

Share-based compensation activity

441,348

4,739

4,739

Issuance of ordinary shares in at-the-market offering

256,328

1,586

1,586

Issuance costs in connection with ordinary shares

(635)

(635)

Other comprehensive loss

 

 

 

 

(1,691)

 

 

(1,691)

Net loss for the three-month period ended March 31, 2024

 

 

 

 

 

(20,442)

 

(20,442)

Balance at March 31, 2024

 

64,298,691

$

2

$

699,531

$

(3,126)

$

(574,673)

$

121,734

See Notes to Condensed Consolidated Financial Statements

3

MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE PERIOD ENDED MARCH 31, 2023

(unaudited)

(in thousands, except share amounts)

Accumulated Other

Total

Ordinary

Capital in Excess

Comprehensive

Accumulated

Shareholders'

    

Shares

    

Amount

    

of Par Value

    

Income (Loss)

    

Deficit

    

Equity

Balance at December 31, 2022

 

48,477,209

$

2

$

581,893

$

6,047

$

(470,204)

$

117,738

Share-based compensation activity

209,054

5,201

5,201

Other comprehensive loss

 

 

 

 

(2,353)

 

 

(2,353)

Net loss for the three-month period ended March 31, 2023

 

 

 

 

 

(30,364)

 

(30,364)

Balance at March 31, 2023

 

48,686,263

$

2

$

587,094

$

3,694

$

(500,568)

$

90,222

See Notes to Condensed Consolidated Financial Statements

4

MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

For the Three-Month Periods Ended March 31, 

    

2024

    

2023

Cash flows from operating activities:

 

  

 

  

Net loss

$

(20,442)

$

(30,364)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Share-based compensation expense

 

6,960

 

6,432

Foreign currency loss (gain)

 

535

 

(3,857)

Depreciation and amortization

 

3,275

 

3,092

Net change in right-of-use assets and liabilities

(36)

(24)

Amortization of interest on asset retirement obligations

 

48

 

44

Amortization of debt discount

273

266

Fair value adjustment

 

 

(54)

Gain on sale of nonfinancial assets

(29,018)

(Increase) decrease in operating assets:

 

Accounts receivable - related party

(1,603)

(14,137)

Prepaid expenses

 

530

 

1,235

Other current assets

 

626

 

136

Other assets, net

632

Increase (decrease) in operating liabilities:

 

 

Accounts payable

 

5,198

 

14,642

Accrued expenses

 

(24,231)

 

(11,469)

Other current liabilities

 

37

 

Deferred revenue - related party

 

20,475

 

(3,334)

Net cash used in operating activities

 

(36,741)

 

(37,392)

Cash flows from investing activities:

 

  

 

  

Purchase of property, plant and equipment

 

(1,678)

 

(8,605)

Proceeds from sale of nonfinancial assets

29,018

Net cash provided by (used in) investing activities

 

27,340

 

(8,605)

Cash flows from financing activities:

 

  

 

Payments of withholdings on shares withheld for income taxes

(2,221)

(1,231)

Proceeds from the issuance of ordinary shares

 

1,586

 

Issuance costs in connection with ordinary shares

 

(635)

 

Net cash used in financing activities

 

(1,270)

 

(1,231)

Net decrease in cash, cash equivalents and restricted cash

 

(10,671)

 

(47,228)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

287

 

496

Cash, cash equivalents and restricted cash at beginning of the period

 

130,649

 

115,516

Cash, cash equivalents and restricted cash at end of the period

$

120,265

$

68,784

Supplemental disclosure of non-cash transactions:

 

  

 

  

Fixed asset acquisition included in accounts payable and accrued expenses

$

1,558

$

3,162

Supplemental disclosure of cash flow information:

 

  

 

  

Cash paid for interest

$

2,953

$

1,572

See Notes to Condensed Consolidated Financial Statements

5

MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       Organization and Basis of Presentation

The Company

MeiraGTx Holdings plc and subsidiaries (the “Company” or “Meira Holdings”), an exempted company incorporated under the laws of the Cayman Islands, is a vertically integrated, clinical-stage gene therapy company with a broad pipeline of late-stage clinical programs supported by end-to-end manufacturing capabilities. The Company has an internally developed manufacturing platform process, internal plasmid production for good manufacturing practices (“GMP”), two GMP viral vector production facilities as well as an in-house Quality Control hub for stability and release, all fit for IND through commercial supply. The Company has core capabilities in viral vector design and optimization and a potentially transformative riboswitch gene regulation platform technology that allows for the precise, dose-responsive control of gene expression by oral small molecules. The Company is focusing the riboswitch platform on delivery of metabolic peptides including GLP-1, GIP, glucagon and PYY using oral small molecules, as well as cell therapy for oncology and autoimmune diseases. Although initially focusing on the eye, central nervous system, and salivary gland, the Company has developed the technology to apply genetic medicine to more common diseases, increasing efficacy, addressing novel targets, and expanding access in some of the largest disease areas where the unmet need remains great. The Company also owns and operates a GMP, multi-product, multi-viral vector manufacturing facility in London, United Kingdom (“UK”), which includes fill and finish capabilities and can supply the Company’s clinical and potential commercial material. Additionally, the Company’s second, large scale viral vector manufacturing facility and its first plasmid and DNA production facility in Shannon, Ireland, both of which are designed to meet GMP requirements, came online in 2022.

Asset Purchase and Related Agreements with Janssen Pharmaceuticals, Inc.

On January 30, 2019, the Company entered into a Collaboration, Option and License Agreement with Janssen Pharmaceuticals, Inc. (“Janssen”), one of the Janssen Pharmaceuticals Companies of Johnson & Johnson (the “Collaboration Agreement”), for the research, development and commercialization of gene therapies for the treatment of inherited retinal diseases (“IRD”). Under the terms of the Collaboration Agreement, the Company received an upfront payment of $100.0 million in March 2019 and a $30.0 million milestone payment in December 2021. The Company also received funding for certain research, manufacturing, clinical development and commercialization costs, and had the potential to obtain additional milestone payments upon the achievement of such milestones and royalties on future net sales of products. On December 20, 2023, the Company entered into an Asset Purchase Agreement (“Asset Purchase Agreement”) with Janssen pursuant to which the Company sold and assigned to Janssen, and Janssen purchased and assumed, that certain License Agreement, dated February 5, 2019, by and between UCL Business Plc (now UCL Business Ltd.) (“UCLB”), on the one hand, and MeiraGTx UK II Limited and MeiraGTx Limited, on the other hand (the “UCLB RPGR License Agreement”), relating to the research, development, manufacture and exploitation of botaretigene sparoparvovec, or bota-vec (formerly referred to as AAV-RPGR), for the treatment of X-linked retinitis pigmentosa related to mutations in the retinitis pigmentosa GTPase regulator gene, or XLRP-RPGR (the “RPGR Product”), and other related assets as described in the Asset Purchase Agreement. In connection with entering into the Asset Purchase Agreement, the Company entered into a Termination Agreement with Janssen terminating the Collaboration Agreement. The Company and Janssen also entered into a Supply Agreement on December 20, 2023 (the “Supply Agreement”) pursuant to which the Company agreed to manufacture and supply the RPGR Product for Janssen.

Under the Asset Purchase Agreement, Janssen paid the Company a non-refundable upfront cash payment of $65.0 million in December 2023. Additionally, pursuant to and subject to the terms and conditions set forth in the Asset Purchase Agreement, Janssen agreed to pay the Company future contingent consideration of up to an aggregate of $350.0 million, as follows: (i) a milestone payment of $50.0 million in connection with the achievement of the initiation of the extension study for the Phase 3 LUMEOS clinical trial for the RPGR Product, which milestone was achieved during the first quarter of 2024; (ii) $10.0 million upon completion of certain specified development services for the drug substance for the RPGR Product; (iii) $5.0 million upon completion of certain specified

6

development services for the drug product for the RPGR Product; (iv) $175.0 million upon the first commercial sale of an RPGR Product in the United States; (v) $75.0 million upon the first commercial sale of an RPGR Product in at least one of the United Kingdom, France, Germany, Spain and Italy; (vi) $25.0 million upon completion of the transfer of certain manufacturing technology for drug substance and drug product from the Company to Janssen; and (vii) $10.0 million upon regulatory approval of a Janssen-selected manufacturing facility in each of the United States and European Union for commercial manufacture of the RPGR Product. Janssen is also responsible for any royalty or milestone amounts that become payable on the RPGR Product under the UCLB RPGR License Agreement.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Interim Financial Statements

The accompanying condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments) necessary in order to make the condensed consolidated financial statements not misleading. Operating results for the three-month period ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”).

Liquidity

The Company has not yet achieved profitable operations. There is no assurance that profitable operations, if ever achieved, could be sustained on a continuing basis. In addition, development activities, clinical and preclinical testing, and commercialization of the Company’s product candidates will require significant additional financing. The Company’s accumulated deficit at March 31, 2024 totaled $574.7 million, and management expects to incur substantial losses in future periods. The success of the Company is subject to certain risks and uncertainties, including, among others: uncertainty of product development; competition in the Company’s field of use; uncertainty of capital availability; uncertainty in the Company’s ability to enter into agreements with collaborative partners; expanding and protecting the Company’s intellectual property portfolio; dependence on third parties; and dependence on key personnel. For the three months ended March 31, 2024, the Company used $36.7 million in cash flows from operations and there are no assurances that the Company will generate positive cash flows in the future. Additionally, there are no assurances that the Company will be successful in obtaining an adequate level of financing for the development and commercialization of its product candidates.

As of March 31, 2024, the Company had cash, cash equivalents and restricted cash in the amount of $120.3 million, which consisted of depository accounts and money market accounts held at large international banks. The Company estimates that its cash, cash equivalents on-hand and accounts receivable – related party at March 31, 2024, will be sufficient to cover its expenses for at least the next twelve months from the date of issuance of these condensed consolidated financial statements.  

7

Risks and Uncertainties

The Company operates in an industry that is subject to intense competition, government regulation and rapid technological change. The Company’s operations are subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks, including the potential risk of business failure.

The Company’s capital resources and operations to date have been funded primarily with the proceeds from the Collaboration Agreement, Asset Purchase Agreement and private and public equity offerings, as well as the proceeds from the debt financing described in Note 10. In the future, the Company may seek to raise additional capital through equity offerings, debt financings, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or other sources to enable it to complete the development and potential commercialization of its product candidates.

2.       Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Certain of the Company’s significant accounting policies are described below. All of the Company’s significant accounting policies are disclosed in the notes to the audited consolidated financial statements as of and for the year ended December 31, 2023 included in the Company’s Form 10-K. 

Consolidation

The accompanying condensed consolidated financial statements include the accounts of Meira Holdings and its wholly owned subsidiaries:

MeiraGTx Limited, a limited company incorporated under the laws of England and Wales;

MeiraGTx, LLC, a Delaware limited liability company (“Meira LLC”);

MeiraGTx UK II Limited, a limited company incorporated under the laws of England and Wales (“Meira UK II”);

MeiraGTx Ireland DAC, a designated activity company incorporated under the laws of Ireland (“Meira Ireland”);

MeiraGTx Netherlands, B.V., a private company with limited liability incorporated under the laws of the Netherlands (“Meira Netherlands”);

MeiraGTx Belgium, a private company with limited liability incorporated under the laws of Belgium (“Meira Belgium”);

BRI-Alzan, Inc., a Delaware corporation (“BRI-Alzan”);

MeiraGTx Bio, Inc., a Delaware corporation (“Meira Bio”);

MeiraGTx B.V., a private company with limited liability incorporated under the laws of the Netherlands (“Meira B.V.”);

MeiraGTx Neurosciences, Inc., a Delaware corporation (“Meira Neuro”);

MeiraGTx Therapeutics, Inc., a Delaware corporation (“Meira Therapeutics”); and

MeiraGTx UK Limited, a limited company incorporated under the laws of England and Wales (“Meira UK”).

All intercompany balances and transactions between the consolidated companies have been eliminated in consolidation.

8

Use of Estimates

Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these condensed consolidated financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. In preparing these condensed consolidated financial statements, management used significant estimates in the following areas, among others: collaboration revenue, fair value of nonfinancial assets, stand-alone selling price and material rights in connection with the Asset Purchase and Supply Agreements, the accounting for research and development costs, share-based compensation, leases, asset retirement obligations, fair value of financial instruments and tax incentive receivable.

Restricted Cash

Restricted cash represents a guarantee put in place as required by the terms of the research and innovation grant from IDA Ireland which offers financial assistance in establishing the Company’s operations in Shannon, Ireland. The following table provides a reconciliation of the components of cash and cash equivalents and restricted cash reported in the Company’s condensed consolidated balance sheets to the total of the amount presented in the consolidated statements of cash flows (in thousands):

March 31, 

December 31, 

2024

2023

Cash and cash equivalents

    

$

119,206

    

$

129,566

Restricted cash

 

1,059

 

1,083

Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows

$

120,265

$

130,649

Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including the Company’s own credit risk.

The Company follows ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820, for application to financial assets and liabilities. In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1: Observable inputs such as quoted prices in active markets for identical assets the reporting entity has the ability to access as of the measurement date;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

9

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The table below represents the values of the Company's financial assets and liabilities that are required to be measured at fair value on a recurring basis (in thousands):

Fair Value Measurement Using:

    

    

Significant

    

Significant Other

    

Significant

March 31, 

Observable Inputs

Observable Inputs

Unobservable

Description

2024

(Level 1)

(Level 2)

(Level 3)

Cash equivalents

$

71,348

$

71,348

$

$

Restricted cash

$

1,059

$

1,059

$

$

Fair Value Measurement Using:

    

    

Significant

    

Significant Other

    

Significant

December 31, 

Observable Inputs

Observable Inputs

Unobservable

Description

2023

(Level 1)

(Level 2)

(Level 3)

Cash equivalents

$

46,868

$

46,868

$

$

Restricted cash

$

1,083

$

1,083

$

$

At March 31, 2024, the Company's financial instruments included cash and cash equivalents, restricted cash, accounts receivable – related party, and accounts payable. The carrying amounts reported in the Company's consolidated financial statements for these instruments approximates their respective fair values because of the short-term nature of these instruments. In addition, at March 31, 2024, the Company believed the carrying value of the Tranche 1 Notes (as defined in Note 10) approximates fair value as the interest rate is reflective of the rate the Company could obtain on debt with similar terms and conditions.

Equity Method and Other Investments

The Company accounts for equity investments under the equity method of accounting when the requirements for consolidation are not met, and the Company has significant influence over the operations of the investee. Equity method investments are initially recorded at cost and subsequently adjusted for the Company’s share of net income or loss and cash contributions and distributions and are included in equity method and other investments in the accompanying condensed consolidated balance sheets. Equity investments that do not result in consolidation and are not accounted for under the equity method are measured at fair value, with any changes in fair value recognized in net income (loss). For any such investments that do not have readily determinable fair values, the Company elects the measurement alternative to measure the investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Equity method investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If it is determined that a loss in value of the equity method investment is other than temporary, an impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods, and available information at the time the analysis is prepared.

Leases

The Company accounts for leases in accordance with FASB standard ASC 842, Leases (“ASC 842”). The Company determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a

10

depreciable asset (i.e., property, plant, and equipment), and (2) the Company has the right to control the use of the identified asset. The Company accounts for the lease and non-lease components as a single lease component.

From time to time the Company enters into direct financing lease arrangements that include a lessee obligation to purchase the leased asset at the end of the lease term, a bargain purchase option, or provides for minimum lease payments with a present value of 90% or more of the fair value of the leased asset at the date of lease inception.

Operating leases where the Company is the lessee are included in right-of-use (“ROU”) assets – operating leases, net and lease obligations on the Company’s condensed consolidated balance sheets. The lease obligations are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date and subsequent reporting periods.

Finance leases where the Company is the lessee are included in ROU assets – finance leases, net and lease obligations on the Company’s condensed consolidated balance sheets. The lease obligations are initially measured in the same manner as for operating leases and are subsequently measured at amortized cost using the effective interest method.

Key estimates and judgments include how the Company determined (1) the discount rate used to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As most of the Company’s leases where it is the lessee do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The Company uses the implicit rate when readily determinable.

The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a lessee option to extend (or not to terminate) the lease that is reasonably certain to be exercised, or an option to extend (or not to terminate) the lease controlled by the lessor.

The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date less any lease incentives received.

For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, minus any accrued lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

For finance leases, the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers ownership of the underlying asset, or the Company is reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability.

The Company has elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less at lease commencement. Lease payments associated with short-term leases are recognized as an expense on a straight-line basis over the lease term.

Asset Retirement Obligations

Accounting for asset retirement obligations requires legal obligations associated with the retirement of long-lived assets to be recognized at fair value when incurred and capitalized as part of the related long-lived asset. In the absence of quoted market prices, the Company estimates the fair value of its asset retirement obligations using Level 3 present value techniques, in which estimates of future cash flows associated with retirement activities are discounted using a credit-adjusted risk-free rate. Asset retirement obligations currently reported as other liabilities

11

on the condensed consolidated balance sheet were measured during a period of historically low interest rates. The impact on measurements of new asset retirement obligations using different rates in the future may be significant.

The Company uses estimates to determine the asset retirement obligations at the end of the lease term and discounts such asset retirement obligations using an estimated discount rate. Interest on the discounted asset retirement obligation is amortized over the term of the lease using the effective interest method and is recorded as interest expense in the condensed consolidated statements of operations and comprehensive loss.

The change in asset retirement obligations is as follows (in thousands):

For the Three-Month Periods Ended March 31, 

2024

2023

Balance at beginning of period

    

$

2,401

    

$

2,179

Amortization of interest

 

48

 

44

Effects of exchange rate changes

 

(9)

 

15

Balance at end of period

$

2,440

$

2,238

IDA Ireland Grant

In August 2021, Meira Ireland entered into an agreement pursuant to which it received a grant from IDA Ireland for financial assistance in establishing its operations in Shannon, Ireland. Under the terms of the grant, Meira Ireland is eligible to receive the lesser of €1.0 million or €10,000 for each job created (the “employment grant”) and the lesser of €1.2 million or 4% of the actual expenditure on the provision of machinery and equipment (the “capital grant”). Meira Ireland may apply for a drawdown of the employment grant once a job has been created and the position has been held for a period of at least one month, and may apply for a drawdown of the capital grant once an eligible asset has been purchased and installed, conditioned on the creation of a cumulative number of jobs by the end of the immediately preceding year. An aggregate of 100 jobs must be created to receive the maximum benefit under the capital grant. An application for a drawdown must be accompanied by an audit certification for compliance with the terms of the grant. The Company has a guarantee in place with a bank in favor of IDA Ireland, pursuant to which it restricts cash in the amount of claims made under the grant such that the Company maintains the funds to cover any portion of the grant income that may become repayable in the future. This amount is presented as restricted cash in the accompanying consolidated balance sheet. All expenditures must be completed by December 31, 2024, and the agreement terminates on the later of five years from the date of the last payment from the grant or five years from completion of the capital investment, which is expenditure of at least €30.0 million on eligible machinery and equipment.  

The Company recognizes grant income when there is reasonable assurance that the Company will comply with the conditions attached to the grant and that it will receive the grant. Grant income from the employment grant is recognized as a deduction from the amount of the related expense, and grant income from the capital grant is deducted from the carrying amount of the related asset and recognized in income over the asset’s useful life in the form of a reduced depreciation charge. The Company received its first drawdown under the grant in 2023, which was comprised of $0.6 million (€0.5 million) for the employment grant and $0.4 million (€0.4 million) for the capital grant. The Company did not recognize any grant income during the three-months ended March 31, 2024 and 2023.

During the five-year period ending on the termination of the grant agreement, Meira Ireland must maintain compliance with the terms of the grant. If the total number of jobs is less than 100 at the time of IDA Ireland’s annual review, the Company may have to repay a portion of the capital grant, and if a job for which the Company received employment grant funding remains vacant for a period in excess of six calendar months, the Company may have to repay the employment grant received for that job.

Collaboration Arrangements

The Company evaluates its collaborative arrangements pursuant to ASC 808, Collaborative Arrangements (“ASC 808”) and ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company considers the nature and

12

contractual terms of collaborative arrangements and assesses whether the arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement. If the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement, the Company accounts for the arrangement as a collaboration under ASC 808. To date, the Company has entered into two separate collaboration agreements, both of which are with Janssen, which were determined to be within the scope of ASC 808.

ASC 808 does not address recognition or measurement matters related to collaborative arrangements. Payments between participants pursuant to a collaborative arrangement that are within the scope of other authoritative accounting literature on income statement classification are accounted for using the relevant provisions of that literature. If the Company concludes that some or all aspects of the arrangement are within the scope of ASC 808 and do not represent a transaction with a customer, the Company recognizes its allocation of the shared costs incurred with respect to the jointly conducted activities pursuant to ASC 730, Research and Development. If the Company concludes that some or all aspects of the arrangement represent a transaction with a customer, the Company accounts for those aspects of the arrangement within the scope of ASC 606. If the payments are not within the scope of other authoritative accounting literature, the income statement classification for the payments is based on an analogy to authoritative accounting literature or if there is no appropriate analogy, a reasonable, rational and consistently applied accounting policy election. Payments received from a collaboration partner to which this policy applies may include upfront payments in respect of a license of intellectual property, development and commercialization-based milestones, and royalties.

Refer to the discussion in Note 8 for further information related to the accounting for the Collaboration Agreement.

Revenue Recognition

The Company evaluates the promised goods or services to determine which promises, or group of promises, represent performance obligations. In contemplation of whether a promised good or service meets the criteria required of a performance obligation, the Company considers the stage of development of the underlying intellectual property, the capabilities and expertise of the customer relative to the underlying intellectual property, and whether the promised goods or services are integral to or dependent on other promises in the contract. When accounting for an arrangement that contains multiple performance obligations, the Company must develop judgmental assumptions, which may include market conditions, reimbursement rates for personnel costs, development timelines and probabilities of regulatory success to determine the stand-alone selling price for each performance obligation identified in the contract.

When the Company concludes that a contract should be accounted for as a combined performance obligation and recognized over time, the Company must then determine the period over which revenue should be recognized and the method by which to measure revenue. The Company generally recognizes revenue using a cost-based input method.

At inception, the Company determines whether contracts are within the scope of ASC 606 or other topics. For contracts that are determined to be within the scope of ASC 606, the Company recognizes revenue when its customer or collaborator obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition the Company performs the following five steps:

i.identify the contract(s) with a customer;
ii.identify the performance obligations in the contract;
iii.determine the transaction price;
iv.allocate the transaction price to the performance obligations within the contract; and

13

v.recognize revenue when (or as) the entity satisfies a performance obligation.

The Company only applies the five-step model to contracts when it determines that it is probable it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, the Company assesses the goods or services promised within the contract to determine whether each promised good or service is a performance obligation. The promised goods or services in the Company’s arrangements typically consist of a license to the Company’s intellectual property and research, development and manufacturing services. The Company may provide options to additional items in such arrangements, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer. Performance obligations are promises in a contract to transfer a distinct good or service to the customer that (i) the customer can benefit from on its own or together with other readily available resources, and (ii) is separately identifiable from other promises in the contract. Goods or services that are not individually distinct performance obligations are combined with other promised goods or services until such combined group of promises meet the requirements of a performance obligation.

The Company determines transaction price based on the amount of consideration the Company expects to receive for transferring the promised goods or services in the contract. Consideration may be fixed, variable, or a combination of both. At contract inception for arrangements that include variable consideration, the Company estimates the probability and extent of consideration it expects to receive under the contract utilizing either the most likely amount method or expected amount method, whichever best estimates the amount expected to be received. The Company then considers any constraints on the variable consideration and includes in the transaction price variable consideration to the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The Company then allocates the transaction price to each performance obligation based on the relative standalone selling price and recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied. For performance obligations which consist of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

If there are multiple performance obligations, the Company allocates the transaction price to each performance obligation based on their estimated standalone selling prices (“SSP”). The Company estimates the SSP for each performance obligation by considering information such as market conditions, entity-specific factors, and information about its customer that is reasonably available. The Company considers estimation approaches that allow it to maximize the use of observable inputs. These estimation approaches may include the adjusted market assessment approach, the expected cost plus a margin approach or the residual approach. The Company also considers whether to use a different estimation approach or a combination of approaches to estimate the SSP for each performance obligation. Developing certain assumptions (e.g., treatable patient population, expected market share, probability of success and product profitability, and discount rate based on weighted-average cost of capital) to estimate the SSP of a performance obligation requires significant judgment.

The Company records amounts as accounts receivable when the right to consideration is deemed unconditional. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded as deferred revenue.

Amounts received prior to satisfying the revenue recognition criteria are recognized as deferred revenue in the Company’s condensed consolidated balance sheet. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue – related party, current. Amounts not

14

expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue – related party.

The Company’s collaboration and revenue arrangements include the following:

Up-front License Fees: If a license is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from nonrefundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone Payments: At the inception of an agreement that includes research and development milestone payments, the Company evaluates each milestone to determine when and how much of the milestone to include in the transaction price. The Company first estimates the amount of the milestone payment that the Company could receive using either the expected value or the most likely amount approach. The Company primarily uses the most likely amount approach as that approach is generally most predictive for milestone payments with a binary outcome. Then, the Company considers whether any portion of that estimated amount is subject to the variable consideration constraint (that is, whether it is probable that a significant reversal of cumulative revenue would not occur upon resolution of the uncertainty.) The Company updates the estimate of variable consideration included in the transaction price at each reporting date which includes updating the assessment of the likely amount of consideration and the application of the constraint to reflect current facts and circumstances.

Royalties: For arrangements that include sales-based royalties, including milestone payments based on a level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any revenue related to sales-based royalties or milestone payments based on the level of sales.

Research and Development Services: Under the Collaboration Agreement, the Company incurred research and development costs, with Janssen responsible for up to 100% of the costs, depending on the type of research and development services being performed. The Company recorded costs associated with the development activities as research and development expenses in the condensed consolidated statements of operations and comprehensive loss consistent with ASC 730, Research and Development. The reimbursement of the research and development costs by Janssen was representative of the joint risk sharing nature of the arrangement. The Company considered the guidance in ASC 808 and recognizes the payments received from Janssen as a reduction to research and development expense when the related costs are incurred.

Manufacturing Supply Services: Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the customer’s discretion are generally considered options. The Company assesses if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations at the outset of the arrangement.

Customer Options: Customer options are evaluated at contract inception to determine whether those options provide a material right (i.e., an optional good or service offered for free or at a discount) to the customer. If the customer options represent a material right, the material right is treated as a separate performance obligation at the outset of the arrangement. The Company allocates the transaction price to material rights based on the standalone selling price. As a practical alternative to estimating the standalone selling price of a material right when the underlying goods or services are both (i) similar to the original goods or services in the contract and (ii) provided in accordance with the terms of the original contract, the Company allocates the total amount of consideration expected to be received from the customer to the total goods or services expected to be provided to the customer. Amounts allocated

15

to any material right are recognized as revenue when or as the related future goods or services are transferred or when the option expires.

Research and Development

Research and development costs are charged to expense as incurred. These costs include, but are not limited to, employee-related expenses, including salaries, benefits and travel of the Company’s research and development personnel; expenses incurred under agreements with contract research organizations and investigative sites that conduct clinical and preclinical studies and for the drug product for the clinical studies and preclinical activities; facilities; supplies; rent, insurance, certain legal fees, share-based compensation, depreciation and other costs associated with clinical and preclinical activities and regulatory operations. Research funding under collaboration agreements and refundable research and development credits / tax credits are recorded as an offset to these costs.

Costs for certain development activities, such as Company funded outside research programs, are recognized based on an evaluation of the progress to completion of specific tasks with respect to their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the condensed consolidated financial statements as prepaid or accrued research and development expenses, as the case may be.

Net Loss per Ordinary Share

Basic net loss per ordinary share is computed by dividing net loss by the weighted average number of shares of the Company’s ordinary shares assumed to be outstanding during the period of computation. Diluted net loss per ordinary share is computed similar to basic net loss per share except that the denominator is increased to include the number of additional ordinary shares that would have been outstanding if the potential ordinary share equivalents had been issued at the beginning of the year and if the additional ordinary shares were dilutive (treasury stock method) or the two-class method, whichever is more dilutive. For all periods presented, basic and diluted net loss per ordinary share are the same, as any additional ordinary share equivalents would be anti-dilutive.

The following securities are considered to be ordinary share equivalents, but were not included in the computation of diluted net loss per ordinary share because to do so would have been anti-dilutive:

    

March 31, 

    

March 31, 

    

2024

    

2023

Share options

 

8,484,644

 

8,233,380

Restricted share units

4,094,750

2,738,750

Deferred share units

185,000

110,000

Warrants

700,000

700,000

Restricted ordinary shares subject to forfeiture

14,049

 

13,464,394

 

11,796,179

Segment Information

Management has concluded it has a single reporting segment for purposes of reporting financial condition and results of operations.

The Company’s license revenue, research funding and deferred revenue from the Collaboration Agreement were generated in the United Kingdom.

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The following table summarizes long-lived assets by geographical area (in thousands):

    

March 31, 

    

December 31, 

2024

2023

United States

$

10,190

$

11,071

United Kingdom

 

32,116

 

33,798

European Union

108,666

112,487

$

150,972

$

157,356

Recent Accounting Pronouncements Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This update includes a number of amendments to clarify or improve disclosure and presentation requirements of a variety of topics in order to allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements and to align the requirements in the FASB accounting standard codification with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company is currently evaluating the impact of these amendments.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is still in the process of determining the effect this ASU will have on the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

In March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements which contains amendments to the Codification that remove references to various FASB Concepts Statements. This ASU is effective for fiscal years beginning after December 15, 2024. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

3.       Equity Method and Other Investments

The Company’s investments consist of the following (in thousands):

March 31, 2024

Investee

  

Investment Type

  

Ownership Percentage

  

Carrying Value

  

Cost Basis

Visiogene LLC

Equity Method Investment

25

%

$

5,150

$

5,165

Other

Equity Investment

0.9

%

1,616

1,500

Total equity method and other investments

$

6,766

$

6,665

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4.       Accrued Expenses

Accrued expenses for the periods presented are comprised of the following (in thousands):

    

March 31, 

    

December 31, 

2024

2023

Clinical trial costs

$

5,610

$

8,713

Research and development

 

2,646

 

5,834

Professional fees

 

2,424

 

6,499

Consulting

 

1,966

 

2,104

Compensation and benefits

1,961

12,129

Manufacturing costs

 

1,804

 

2,634

Fixed assets

 

641

 

1,472

Rent and facilities costs

 

138

 

142

Other

163

 

176

Interest on Tranche 1 Notes

2,936

$

17,353

$

42,639

5.       Share-Based Compensation

Equity Incentive Plans

The Company’s 2018 Incentive Award Plan and 2016 Equity Incentive Plan (collectively, the “Plans”) were adopted by the Company’s board of directors and shareholders. Under the Plans, the Company has granted share options and restricted share units (“RSUs”) to selected officers, employees, non-employee members of the board of directors and non-employee consultants. The Company’s board of directors or a committee thereof administers the Plans. Upon the adoption of the 2018 Incentive Award Plan, the Company ceased issuing awards under the 2016 Equity Incentive Plan.

Options

A summary of the Company’s share option activity related to employees, non-employee members of the board of directors and non-employee consultants as of December 31, 2023 and for the three-month period ended March 31, 2024 is as follows (in thousands, except share and per share amounts):

Weighted-

    

    

Weighted-

    

Average

Average

Remaining

Number of

Exercise

Contractual

Options

Price

Term (years)

Outstanding at December 31, 2023

 

8,226,707

$

12.96

 

6.35

years

Granted

 

365,100

$

6.16

 

Exercised

 

$

 

Forfeited

 

(107,163)

$

16.00

 

Outstanding at March 31, 2024

 

8,484,644

$

12.65

6.17

years

Options exercisable at March 31, 2024

 

6,203,005

$

13.13

 

5.32

years

Options vested and expected to vest at March 31, 2024

8,484,644

$

12.65

6.17

years

Aggregate intrinsic value of options outstanding as of March 31, 2024

$

1,406

 

  

 

  

Aggregate intrinsic value of options exercisable as of March 31, 2024

$

1,406

 

  

 

  

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Options granted under the Plans have a maximum contractual term of ten years. Options granted generally vest 25% on the first anniversary of the date of grant and the balance ratably over the next 36 months. Options granted to directors when they join the board generally vest in 36 equal monthly installments following the date of grant, and annual options granted to directors generally vest on the earlier of the first anniversary of the date of grant or the day before the Company’s annual meeting of shareholders after the date of grant.

The Company recorded the following share-based compensation expense in connection with the options for the three-month periods ended March 31, 2024 and 2023 (in thousands):

Three-Month Periods Ended March 31, 

    

2024

    

2023

Research and development

$

1,635

$

2,046

General and administrative

1,053

1,183

Total share-based compensation

$

2,688

$

3,229

The total fair value of options vested during the three-month periods ended March 31, 2024 and 2023 was $4.3 million and $6.2 million, respectively.

The weighted-average grant date fair value of options granted during the three-month periods ended March 31, 2024 and 2023 was $3.91 per share and $5.77 per share, respectively.

The grant date fair values of the share options granted were estimated using the Black-Scholes option valuation model with the following ranges of assumptions:

    

2024

    

2023

Risk-free interest rate

 

4.04 - 4.17%

 

3.91 - 4.11%

Expected volatility

 

67%

 

72%

Expected dividend yield

 

0%

 

0%

Expected term (in years)

 

3.6 - 6.1

 

6.1

As of March 31, 2024, the total compensation expense relating to unvested options granted that had not yet been recognized was $16.1 million, which is expected to be realized over a period of 3.8 years. The Company will issue shares upon exercise of options from ordinary shares reserved under the Plans.

Restricted Share Units

A summary of the Company’s RSU activity related to employees, non-employee members of the board of directors and non-employee consultants as of December 31, 2023 and for the three-month period ended March 31, 2024 is as follows:

    

    

Weighted-

Number of

Average

Restricted

Grant Date

Share Units

Fair Value

Outstanding at December 31, 2023

 

2,661,250

$

15.24

Granted

 

2,223,500

$

6.16

Vested

(790,000)

$

20.45

Outstanding at March 31, 2024

 

4,094,750

$

9.30

RSUs granted generally vest 50% on the second anniversary of the date of grant and 25% on the third and fourth anniversaries of the date of grant. Annual RSUs granted to directors generally vest in a single installment on the earliest to occur of the first anniversary of the grant date or the day immediately prior to the date of the next annual

19

meeting of the Company’s shareholders occurring after the date of grant. The RSUs granted to the directors in June 2021 will be paid on or within 30 days after the date a director ceases to serve on the board. For RSUs granted in June 2022 and future years, the directors may annually elect whether to defer the payment of their annual RSU awards under the Deferred Compensation Plan for Non-Employee Directors, which was adopted by the board on December 17, 2021. The related share-based compensation expense, which is recognized ratably over the requisite service period, is included in general and administrative and research and development expenses, as applicable, in the condensed consolidated statements of operations and comprehensive loss.

The Company recorded the following share-based compensation expense in connection with the RSUs for the three-month periods ended March 31, 2024 and 2023 (in thousands):

Three-Month Periods Ended March 31, 

    

2024

    

2023

Research and development

$

1,240

$

980

General and administrative

3,032

2,223

Total share-based compensation

$

4,272

$

3,203

As of March 31, 2024, the total compensation expense relating to unvested RSUs granted that had not yet been recognized was $31.1 million, which is expected to be realized over a period of 3.8 years.

To satisfy employee minimum statutory tax withholding requirements for restricted share units that vest, the Company withholds a portion of the vesting ordinary shares. During the three months ended March 31, 2024 and 2023, the Company withheld 348,652 and 179,696 ordinary shares with a total value of approximately $2.2 million and $1.2 million, respectively. These amounts are presented as a cash outflow from financing activities in the accompanying condensed consolidated statement of cash flows.

During the three-month periods ended March 31, 2024 and 2023, the Company recognized total share-based compensation expense in the accompanying condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Three-Month Periods Ended March 31, 

    

2024

    

2023

Research and development

$

2,875

$

3,026

General and administrative

 

4,085

3,406

Total share-based compensation

$

6,960

$

6,432

The Company did not modify any awards during the three-month period ended March 31, 2024. During the three-month period ended March 31, 2023, the Company modified certain awards for two participants and recognized $0.1 million related to the modifications, $0.08 million of which was recognized in research and development expense and $0.02 million was recognized in general and administrative expense. The terms of such modifications included, on an award-by-award basis, acceleration of the vesting period and/or extensions of the post-employment period to exercise.

The Company does not expect to realize any tax benefits from its share option activity or the recognition of share-based compensation expense because the Company currently has net operating losses and has a full valuation allowance against its deferred tax assets. Accordingly, no amounts related to excess tax benefits have been reported in cash flows from operations or cash flows from financing activities for the three-month periods ended March 31, 2024 and 2023.

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6.       Ordinary Shares

In December 2023, the Company entered into an at-the-market sales agreement with BofA Securities, Inc., or BofA, pursuant to which the Company may sell from time to time, ordinary shares having an aggregate offering price of up to $100.0 million through BofA, acting as the Company’s agent. During the three-month period ended March 31, 2024, the Company raised gross proceeds of $1.6 million through the sale of 256,328 ordinary shares pursuant to an “at-the-market” equity offering program. Under the at-the-market equity program which is currently effective and may remain available for the Company to use in the future, the Company may sell an additional $98.4 million of ordinary shares. Whether the Company chooses to affect future sales under the at-the-market equity offering program will depend on a number of factors, including, among others, market conditions and the trading price of the Companys ordinary shares relative to other sources of capital.

7.       Income Taxes

The Company did not record a provision for income taxes for the three-month periods ended March 31, 2024 and 2023, as the Company has generated losses for all periods.

The Company periodically evaluates the realizability of its deferred tax assets based on all available evidence, both positive and negative. The realization of deferred tax assets is dependent on the Company’s ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. The Company weighed both positive and negative evidence and determined that there is a continued need for a full valuation allowance on its deferred tax assets (after consideration of the reversal of the deferred tax liabilities for the ROU assets and fixed assets) in the United States, United Kingdom, Ireland and Netherlands as of March 31, 2024. Should the Company determine that it would be able to realize its remaining deferred tax assets in the foreseeable future, an adjustment to its remaining deferred tax assets would cause a material increase to income in the period such determination is made.

8.       Related-Party Transactions

Relationship with Janssen Pharmaceuticals, Inc.

Collaboration Agreement

On January 30, 2019, the Company entered into a Collaboration Agreement with Janssen for the research, development and commercialization of gene therapies for the treatment of IRDs. Under the agreement, Janssen paid the Company a non-refundable upfront fee of $100.0 million. Janssen and the Company agreed to collaborate to develop the Company’s clinical programs in retinitis pigmentosa and two genetic forms of achromatopsia and Janssen had the exclusive right to commercialize these three product candidates (“Clinical IRD Product Candidates”) globally.

Pursuant to the Collaboration Agreement, the Company and Janssen also agreed on a research collaboration to develop a pipeline of preclinical inherited retinal disease gene therapy candidates (“Research IRD Product Candidates”). The parties agreed to select and prioritize the Research IRD Product Candidates and Janssen had the right to opt-in for a fee for each of the specified targets (each an “Option Target”) to obtain certain development, manufacturing and commercialization rights for the Research IRD Product Candidates.

Unless terminated earlier under certain termination clauses, the Collaboration Agreement was to continue in effect, on a product-by-product and country-by-country basis, until such time as the royalty terms expired in such country. The Company had determined enforceable rights existed in the Collaboration Agreement as the termination clauses were substantive termination penalties by way of the non-refundable upfront fee and the reversion of any licensed intellectual property granted to Janssen upon the termination of the agreement.

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Under the Collaboration Agreement, the Company and Janssen were jointly developing Clinical IRD Product Candidates to permit Janssen to commercialize such Clinical IRD Product Candidates under an exclusive license from the Company. In general, the Company had the primary responsibility to develop each Clinical IRD Product Candidate in accordance with the development plan for each Clinical IRD Product Candidate, including where applicable, conducting any necessary research in order to submit the applicable regulatory filings to regulatory authorities. The Company agreed to manufacture these products in its GMP manufacturing facilities for both clinical and commercial supply. Janssen agreed to pay 100% of the clinical and commercialization costs of the products and the Company was eligible to receive untiered 20% royalties on net sales of products and additional development and commercialization milestones up to $340.0 million.  The Company received a milestone payment of $30.0 million in December 2021. In connection with entering into the Asset Purchase Agreement, the Company entered into a Termination Agreement with Janssen terminating the Collaboration Agreement.

Asset Purchase and Related Agreements

On December 20, 2023, the Company entered into the Asset Purchase Agreement with Janssen pursuant to which the Company sold and assigned to Janssen, and Janssen purchased and assumed, the UCLB RPGR License Agreement relating to the research, development, manufacture and exploitation of the RPGR Product, and other related assets as described in the Asset Purchase Agreement. Simultaneously, the Company and Janssen also entered into a Supply Agreement pursuant to which the Company agreed to manufacture and supply the RPGR Product for Janssen. Under the Supply Agreement, MeiraGTx UK II, together with its affiliates, will manufacture commercial supply of the RPGR Product for Janssen for an initial term of four years, with Janssen having an option to extend the Supply Agreement for a fifth year upon written notification. Janssen may terminate the Supply Agreement for convenience upon 90 days’ written notice with payment of a termination fee. Under the Asset Purchase Agreement, Janssen paid the Company a non-refundable upfront fee of $65.0 million in December 2023 and the Company is eligible to receive fees from commercial supply of the RPGR Product and in addition, milestones of up to $350.0 million,  as follows: (i) a milestone payment of $50.0 million in connection with the achievement of the initiation of the extension study for the Phase 3 LUMEOS clinical trial for the RPGR Product, which milestone was achieved during the first quarter of 2024; (ii) $10.0 million upon completion of certain specified development services for the drug substance for the RPGR Product; (iii) $5.0 million upon completion of certain specified development services for the drug product for the RPGR Product; (iv) $175.0 million upon the first commercial sale of an RPGR Product in the United States; (v) $75.0 million upon the first commercial sale of an RPGR Product in at least one of the United Kingdom, France, Germany, Spain and Italy; (vi) $25.0 million upon completion of the transfer of certain manufacturing technology for drug substance and drug product from the Company to Janssen; and (vii) $10.0 million upon regulatory approval of a Janssen-selected manufacturing facility in each of the United States and European Union for commercial manufacture of the RPGR Product. Janssen is also responsible for any royalty or milestone amounts that become payable on the RPGR Product under the UCLB RPGR License Agreement.

Revenue Recognition under the Janssen Agreements

Collaboration Agreement

The Company evaluated the potential performance obligations in the Collaboration Agreement pursuant to ASC 606, which included the exclusive license to Clinical IRD Product Candidates, the research, development and manufacturing services (“the services”), and the participation in various joint committees and determined that none of the performance obligations by themselves were distinct. Goods and services that are not distinct are bundled with other goods or services in the contract until a bundle of goods or services that is distinct is created. The services, when combined with the licenses, represent a bundle and should be accounted for as a single performance obligation due to the relevance of the services to the value of the early-stage license and the potential for the intellectual property to be significantly modified during the services period. The Company also evaluated whether or not the right to purchase exclusive option rights for specified Research IRD Product Candidates represents future performance obligations and concluded that these represent a separate buyer decision at market rates, rather than a material right performance obligation. As such, these options were excluded from the initial allocation of transaction price and the Company would have accounted for these options as separate contracts when and if Janssen had elected to exercise the options.

22

Under ASC 606, the Company recognized collaboration revenue using the cost-to-cost input method, which it believes best depicts the transfer of control to the customer. Under the cost-to-cost input method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the combined performance obligation by the potential product candidate. Under this method, revenue is being recorded as a percentage of the estimated transaction price based on the extent of progress towards completion. Under ASC 606, the estimated transaction price includes variable consideration subject to constraints. The Company does not include variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will occur when any uncertainty associated with the variable consideration is resolved. The estimate of the Company’s measure of progress and estimate of variable consideration included in the transaction price was updated at each reporting date as a change in estimate. The amount related to the unsatisfied portion was recognized as that portion was satisfied over time.

Under ASC 606 the Company accounts for (i) the licenses it conveyed with respect to the Clinical IRD Product Candidates and (ii) its obligations to perform services as a single performance obligation under the Collaboration Agreement with Janssen on a product candidate basis. Janssen’s right to purchase exclusive options to obtain certain development, manufacturing and commercialization rights were accounted for separately as they did not represent material rights, based on the criteria of ASC 606. Upon the exercise of any purchased option by Janssen, the contract promises associated with an Option Target would have used a separate cost-to-cost model for purposes of revenue recognition under ASC 606.

In 2019, the Company received a $100.0 million non-refundable upfront fee from Janssen and during the year ended December 31, 2021, the Company received a $30.0 million milestone payment. The Company allocated these amounts plus other variable consideration not subject to constraint to each identified performance obligation using a combination of methods allowable under ASC 606. The Company applies the practical expedient in Topic 606 and does not include disclosures regarding amounts for variable consideration allocated to wholly-unsatisfied performance obligations or wholly-unsatisfied distinct goods that form part of a single performance obligation, if any. This variable consideration includes expected reimbursement of research and development costs.

Asset Purchase and Related Agreements

The agreements entered into in December 2023 were executed at the same time and were negotiated with a single commercial objective; therefore, the contracts were combined and accounted for as a single contract. These agreements were accounted for as a termination of the existing Collaboration Agreement and the creation of a new contract where the transaction price includes the remaining deferred revenue – related party from the terminated agreement of $30.6 million, the fixed upfront payment of $65.0 million under the Asset Purchase Agreement, and an aggregate of $1.8 million estimated variable consideration for transition services, offset by a credit of $5.1 million for pre-funded inventory, totaling $92.3 million. The transaction price was allocated to four performance obligations on a relative SSP basis, subject to certain exceptions for discounts and variable consideration. As the SSPs are not directly observable for any of the distinct goods and services, the SSPs were estimated based on a valuation. The total transaction price of $92.3 million was allocated to the performance obligations with respect to SSPs as follows: process performance qualification (“PPQ”) services in the amount of $2.9 million, material rights representing the commercial supply of RPGR Product and an in-substance contract renewal option in the amount of $6.9 million, manufacturing technology transfer in the amount of $28.7 million, and the sale of nonfinancial assets representing the sale and transfer of all the Company’s right, title, and interest in the intellectual property related to the RPGR Product and the assignment of the UCLB RPGR License Agreement to Janssen in the amount of $53.8 million.

During the first quarter of 2024, the Company received a $50.0 million milestone payment in connection with the achievement of the initiation of the extension study for the Phase 3 LUMEOS clinical trial for the RPGR Product. The milestone payment was allocated to the four performance obligations on the same basis noted above increasing the value of each performance obligation as follows: PPQ services in the amount of $1.6 million, material rights representing the commercial supply of RPGR Product and an in-substance contract renewal option in the amount of $3.8 million, manufacturing technology transfer in the amount of $15.6 million, and the sale of nonfinancial assets representing the sale and transfer of all the Company’s right, title, and interest in the intellectual property related to

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the RPGR Product and the assignment of the UCLB RPGR License Agreement to Janssen in the amount of $29.0 million.

The transaction price allocated to PPQ services will be recognized over time using an inputs method measure of progress. The transaction price allocated to the material right for the commercial supply of RPGR Product will be recorded as deferred revenue until Janssen exercises its option to purchase supply and the Company transfers control of such supply to Janssen. The transaction price allocated to the in-substance renewal option (material right) will be recorded as deferred revenue until Janssen exercises the option and the Company transfers control of the underlying goods or services to Janssen. The Company will account for the exercise of the in-substance renewal option (material right) as a continuation of the existing contract (i.e., a change in the transaction price). The transaction price allocated to the technology transfer will be recognized over time using an inputs method measure of progress. The Company will recognize a gain for the difference between the carrying amount of the nonfinancial assets and the consideration allocated to that unit of account when control of the nonfinancial assets transfers in accordance with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.

During the three-month period ended March 31, 2024, the Company recognized a gain of $29.0 million related to the sale of nonfinancial assets which is included in other income in the condensed consolidated statements of operations and comprehensive loss.

As of March 31, 2024, the aggregate transaction price allocated to unsatisfied performance obligations was $57.1 million which the Company expects to recognize over an estimated period of approximately 3.8 years.

A summary of the deferred revenue recognition is as follows (in thousands):

Deferred revenue at December 31, 2023

$

36,943

Milestone payment allocated to performance obligations

20,982

Deferred revenue recognized as service revenue during the three-month period ended March 31, 2024

(697)

Effects of exchange rate changes

(125)

Deferred revenue at March 31, 2024

$

57,103

During the three-month period ended March 31, 2024, the Company recognized $0.7 million of deferred revenue – related party as service revenue in connection with PPQ services under the Asset Purchase Agreement and related agreements. During the three-month period ended March 31, 2023, the Company recognized $3.3 million of deferred revenue – related party in connection with the Collaboration Agreement as license revenue.

The Company also recognized $0.4 million during the three-month period ended March 31, 2024 related to transition services the Company provided to Janssen and $22.6 million during the three-month period ended March 31, 2023, related to the reimbursement of research and development expenses under the Collaboration Agreement, which were recorded as an offset to research and development expenses.

Private Placement

On February 27, 2019, in connection with a private placement, the Company issued 2,898,550 ordinary shares to JJDC, the investment arm of Johnson & Johnson and owner of Janssen, on the same terms and conditions as the other investors in the offering. After the offering, JJDC became a related party. On November 9, 2022, the Company entered into a securities purchase agreement with JJDC, pursuant to which the Company, in a private placement, agreed to issue and sell to JJDC an aggregate of 3,742,514 ordinary shares at a purchase price of $6.68 per share, for gross proceeds of approximately $25.0 million.

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Debt Financing

On August 2, 2022 the Company, as borrower, and Meira UK II and Meira Ireland, as guarantors (the “Subsidiary Guarantors”), entered into a senior secured financing arrangement (the “Financing Agreement”) by and among the Company, the Subsidiary Guarantors, the lenders and other parties from time to time party thereto and Perceptive Credit Holdings III, LP, as administrative agent and lender (“Perceptive”). On December 19, 2022, the Financing Agreement was converted to a notes purchase agreement and guaranty (the “Notes Purchase Agreement”) between the same parties and under substantially the same terms and conditions as the Financing Agreement, subject to certain customary note constitution terms. Perceptive Advisors, LLC, an affiliate of Perceptive, is a greater than 10% holder of the ordinary shares of the Company. Additionally, Ellen Hukkelhoven, Ph.D., a director of the Company, is an employee of Perceptive Advisors, LLC. Refer to the discussion in Note 10 for further information related to the accounting for the debt financing.  

9.       Leases

The Company has commitments under operating leases for laboratory, warehouse, clinical trial sites and office space. The Company also has finance leases for manufacturing space and office equipment. The Company’s leases have initial lease terms ranging from 3 years to 191 years. Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include fixed payments.

Total rent expense under these leases was $1.4 million and $1.4 million for the three-month periods ended March 31, 2024 and 2023, respectively.

There were no leases recognized during the three-month periods ended March 31, 2024 and 2023.

The components of lease cost for the three-month periods ended March 31, 2024 and 2023 are as follows (in thousands):

Three-Month Periods Ended March 31, 

2024