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ROC

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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: 001-41949

 

Metagenomi, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

81-3909017

(State or other jurisdiction of

incorporation or organization)

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

5959 Horton Street, 7th Floor

Emeryville, California

94608

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (510) 871-4880

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.0001 per share

 

MGX

 

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

Smaller 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 May 8, 2024, the registrant had 37,464,201 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets

3

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

4

 

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

5

 

Condensed Consolidated Statements of Cash Flows

6

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

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

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

 

 

 

PART II.

OTHER INFORMATION

32

 

 

 

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

84

Item 3.

Defaults Upon Senior Securities

85

Item 4.

Mine Safety Disclosures

85

Item 5.

Other Information

85

Item 6.

Exhibits

86

Signatures

87

 

 

i


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management and which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

the initiation, timing, progress and results of our research and development programs, preclinical studies and future clinical trials;
our ability to demonstrate, and the timing of, preclinical proof-of-concept in vivo and ex vivo for multiple programs;
our ability to advance any product candidates that we may identify and successfully complete any clinical studies, including the manufacture of any such product candidates;
our ability to quickly leverage programs within our initial target indications and to progress additional programs to further develop our pipeline;
the timing of our Investigational New Drug (“IND”) applications submissions;
the implementation of our strategic plans for our business, programs and technology;
the scope of protection we are able to establish and maintain for intellectual property rights covering our genome editing technology and platform;
developments related to our competitors and our industry;
our ability to leverage the clinical, regulatory, and manufacturing advancements made by genome editing programs to accelerate our clinical trials and approval of product candidates;
our ability to identify and enter into future license agreements and collaborations;
developments related to our genome editing technology and platform;
regulatory developments in the United States and foreign countries;
our ability to attract and retain key scientific and management personnel; and
estimates of our expenses, capital requirements, and needs for additional financing.

In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and are subject to change. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect results. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

1


 

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for our programs and product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from our own internal estimates and research as well as from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. While we are not aware of any misstatements regarding any third-party information presented in this Quarterly Report on Form 10-Q, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties and are subject to change based on various factors, including those discussed under the section entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

Trademarks and Service Marks

This Quarterly Report on Form 10-Q contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q, including logos, artwork and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entity.

Market, Industry and Other Data

Unless otherwise indicated, information contained in this Quarterly Report on Form 10-Q concerning our industry and the markets in which we operate, including our general expectations about our product candidates, market position, market opportunity, market size, competitive position and the incidence of certain medical conditions, is based on or derived from publicly available information released by industry analysts and third-party sources, independent market research, industry and general publications and surveys, governmental agencies, our internal research and our industry experience. Our estimates of the potential market opportunities for our product candidates include a number of key assumptions based on our industry knowledge and industry publications, the latter of which may be based on small sample sizes and fail to accurately reflect such information, and you are cautioned not to give undue weight to such estimates. While we believe that our internal assumptions are reasonable, no independent source has verified such assumptions. Industry publications and third-party research often indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information and such information is inherently imprecise. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate is necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in Part II, Item 1A of this Quarterly Report on Form 10-Q titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. These and other factors could cause results to differ materially from those expressed in the estimates made by independent third parties and by us.

2


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Metagenomi, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

 

 

March 31,

 

 

December 31,

 

 

2024

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

102,558

 

 

$

140,603

 

Available-for-sale marketable securities

 

 

224,847

 

 

 

130,579

 

Accounts receivable

 

 

2,082

 

 

 

2,451

 

Prepaid expenses and other current assets

 

 

6,156

 

 

 

4,640

 

Total current assets

 

 

335,643

 

 

 

278,273

 

Property and equipment, net

 

 

20,960

 

 

 

21,542

 

Long-term investments

 

 

10,676

 

 

 

10,676

 

Operating lease right-of-use assets

 

 

42,497

 

 

 

43,611

 

Other assets

 

 

379

 

 

 

5,492

 

Restricted cash

 

 

5,248

 

 

 

5,248

 

Total assets

 

$

415,403

 

 

$

364,842

 

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

6,843

 

 

$

1,791

 

Income tax payable

 

 

3,266

 

 

 

3,266

 

Accrued expenses and other current liabilities

 

 

7,079

 

 

 

11,472

 

Current portion of operating lease liabilities

 

 

4,382

 

 

 

3,427

 

Collaboration advance

 

 

837

 

 

 

837

 

Deferred revenue

 

 

48,294

 

 

 

48,068

 

Total current liabilities

 

 

70,701

 

 

 

68,861

 

Non-current portion of operating lease liabilities

 

 

43,680

 

 

 

44,802

 

Deferred revenue, non-current

 

 

20,310

 

 

 

30,926

 

Other non-current liabilities

 

 

5,079

 

 

 

5,079

 

Total liabilities

 

 

139,770

 

 

 

149,668

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Redeemable convertible preferred stock: zero shares authorized, issued and outstanding as of March 31, 2024; 41,813,375 shares authorized, issued and outstanding as of December 31, 2023; liquidation preference of $352,044 as of December 31, 2023

 

 

 

 

 

350,758

 

Stockholders equity (deficit):

 

 

 

 

 

 

Preferred stock: $0.0001 par value; 10,000,000 shares and zero shares authorized as of March 31, 2024 and December 31, 2023, respectively; zero shares issued and outstanding

 

 

 

 

 

 

Common stock: $0.0001 par value; 500,000,000 shares and 66,000,000 shares authorized as of March 31, 2024 and December 31, 2023, respectively; 37,468,078 and 3,404,585 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

 

4

 

 

 

 

Additional paid-in-capital

 

 

445,999

 

 

 

9,457

 

Accumulated other comprehensive loss

 

 

(278

)

 

 

(97

)

Accumulated deficit

 

 

(170,092

)

 

 

(144,944

)

Total stockholders’ equity (deficit)

 

 

275,633

 

 

 

(135,584

)

Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)

 

$

415,403

 

 

$

364,842

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

Metagenomi, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share data)

 

 

Three Months Ended
March 31,

 

 

2024

 

 

2023

 

Collaboration revenue

 

$

11,159

 

 

$

8,657

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

31,439

 

 

 

20,130

 

General and administrative

 

 

8,752

 

 

 

6,465

 

Total operating expenses

 

 

40,191

 

 

 

26,595

 

Loss from operations

 

 

(29,032

)

 

 

(17,938

)

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

3,934

 

 

 

4,003

 

Other expense, net

 

 

(50

)

 

 

(1

)

Total other income, net

 

 

3,884

 

 

 

4,002

 

Net loss before provision for income taxes

 

 

(25,148

)

 

 

(13,936

)

Provision for income taxes

 

 

 

 

 

(2,197

)

Net loss

 

$

(25,148

)

 

$

(16,133

)

Other comprehensive income (loss):

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale marketable securities

 

 

(181

)

 

 

21

 

Comprehensive loss

 

$

(25,329

)

 

$

(16,112

)

Net loss per share attributable to common stockholders, basic and diluted

 

$

(1.19

)

 

$

(4.74

)

Weighted average common shares outstanding, basic and diluted

 

 

21,137,868

 

 

 

3,404,585

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

Metagenomi, Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(Unaudited)

(In thousands, except share data)

 

 

Redeemable Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional Paid-In

 

 

Accumulated Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity (Deficit)

 

BALANCE—December 31, 2023

 

 

41,813,375

 

 

$

350,758

 

 

 

 

3,404,585

 

 

$

 

 

$

9,457

 

 

$

(97

)

 

$

(144,944

)

 

$

(135,584

)

Issuance of common stock and restricted common stock in exchange for profits interests upon Reorganization

 

 

 

 

 

 

 

 

 

3,884,740

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Conversion of redeemable convertible preferred stock to common stock upon initial public offering

 

 

(41,813,375

)

 

 

(350,758

)

 

 

 

23,935,594

 

 

 

2

 

 

 

350,756

 

 

 

 

 

 

 

 

 

350,758

 

Issuance of common stock in connection with initial public offering, net of issuance costs

 

 

 

 

 

 

 

 

 

6,250,000

 

 

 

1

 

 

 

80,729

 

 

 

 

 

 

 

 

 

80,730

 

Forfeiture of unvested common stock

 

 

 

 

 

 

 

 

 

(6,841

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,057

 

 

 

 

 

 

 

 

 

5,057

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(181

)

 

 

 

 

 

(181

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,148

)

 

 

(25,148

)

BALANCE—March 31, 2024

 

 

 

 

$

 

 

 

 

37,468,078

 

 

$

4

 

 

$

445,999

 

 

$

(278

)

 

$

(170,092

)

 

$

275,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE—December 31, 2022

 

 

41,478,621

 

 

$

346,103

 

 

 

 

3,404,585

 

 

$

 

 

$

2,535

 

 

$

(274

)

 

$

(76,689

)

 

$

(74,428

)

Issuance of Series B-1 redeemable convertible preferred stock

 

 

334,754

 

 

 

4,655

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeiture of unvested common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

529

 

 

 

 

 

 

 

 

 

529

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21

 

 

 

 

 

 

21

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,133

)

 

 

(16,133

)

BALANCE—March 31, 2023

 

 

41,813,375

 

 

$

350,758

 

 

 

 

3,404,585

 

 

$

 

 

$

3,064

 

 

$

(253

)

 

$

(92,822

)

 

$

(90,011

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

Metagenomi, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

Three Months Ended
March 31,

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(25,148

)

 

$

(16,133

)

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

5,057

 

 

 

529

 

Depreciation

 

 

1,273

 

 

 

841

 

Loss on fixed assets write-off

 

 

4

 

 

 

 

Non-cash lease expense

 

 

1,126

 

 

 

983

 

Amortization of premiums and discounts on available-for-sale marketable securities

 

 

(1,221

)

 

 

(2,155

)

Amortization of non-cash collaboration revenue

 

 

(30

)

 

 

(78

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

369

 

 

 

 

Contract assets

 

 

 

 

 

1,274

 

Prepaid expenses and other assets

 

 

(938

)

 

 

(97

)

Accounts payable

 

 

3,159

 

 

 

1,205

 

Income tax payable

 

 

 

 

 

1,937

 

Deferred revenue and collaboration advance

 

 

(10,360

)

 

 

(7,790

)

Accrued expenses and other current liabilities

 

 

(2,962

)

 

 

(1,304

)

Operating lease liabilities

 

 

(179

)

 

 

(467

)

Other non-current liabilities

 

 

 

 

 

260

 

Net cash used in operating activities

 

 

(29,850

)

 

 

(20,995

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(915

)

 

 

(2,668

)

Purchases of available-for-sale marketable securities

 

 

(174,663

)

 

 

(119,198

)

Maturities of available-for-sale marketable securities

 

 

80,846

 

 

 

49,798

 

Net cash used in investing activities

 

 

(94,732

)

 

 

(72,068

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs

 

 

86,537

 

 

 

 

Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs

 

 

 

 

 

4,295

 

Net cash provided by financing activities

 

 

86,537

 

 

 

4,295

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(38,045

)

 

 

(88,768

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

145,851

 

 

 

190,514

 

Cash, cash equivalents and restricted cash at end of period

 

$

107,806

 

 

$

101,746

 

Supplemental disclosure of non-cash information

 

 

 

 

 

 

Conversion of redeemable convertible preferred stock to common stock upon initial public offering

 

 

350,758

 

 

 

 

Issuance of common stock and restricted common stock in exchange for profits interests upon Reorganization

 

 

9,457

 

 

 

 

Initial public offering costs included in accounts payable, accrued liabilities and other current liabilities

 

 

2,524

 

 

 

 

Reclassification of deferred offering costs paid in prior year to stockholders’ equity

 

 

3,283

 

 

 

 

Purchases of property and equipment included in accounts payable, accrued expenses and other current liabilities

 

 

418

 

 

 

1,425

 

Operating lease right-of-use assets obtained in exchange for new lease liabilities

 

 

 

 

 

30,608

 

Remeasurement of operating right-of use asset and lease liability

 

 

12

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash

 

 

 

 

 

 

Cash and cash equivalents

 

$

102,558

 

 

$

95,673

 

Restricted cash

 

 

5,248

 

 

 

6,073

 

Cash, cash equivalents and restricted cash at end of period

 

$

107,806

 

 

$

101,746

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


 

Metagenomi, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(Unaudited)

1.
Description of Business, Organization and Liquidity

Organization and business

Metagenomi, Inc. (“Metagenomi” or the “Company”) is a precision genetic medicines company committed to developing curative therapeutics for patients using our proprietary, comprehensive metagenomics-derived genome editing toolbox.

Formation and group reorganizations

Metagenomi.co was incorporated in September 2016 in the State of Delaware and is headquartered in Emeryville, California. In September 2018, Metagenomi.co formed a subsidiary, Metagenomi Technologies, LLC (“Metagenomi LLC”) as its sole member. In November 2018, the two companies completed a reorganization where Metagenomi LLC became the parent of Metagenomi.co. The reorganization was a transaction of entities under common control and did not change the group. In December 2018, Metagenomi LLC formed another wholly owned subsidiary, Metagenomi IP Technologies, LLC. Metagenomi IP Technologies, LLC did not have any operations except for the initial transfer of IP from Metagenomi.co and an ongoing license of its technology to Metagenomi.co. Key activities of Metagenomi LLC were raising capital to support operations of Metagenomi.co. In April 2020, Metagenomi.co changed its name to Metagenomi, Inc. In December 2021, the group completed another tax-free reorganization, whereby Metagenomi IP Technologies, LLC merged with and into Metagenomi, Inc.

Reorganization and Reverse Stock Split

On January 24, 2024, the Company completed a series of transactions pursuant to which Metagenomi LLC merged with and into Metagenomi, Inc., with Metagenomi, Inc. continuing as the surviving corporation (the “Reorganization”). In connection with the Reorganization, (i) all of the outstanding common unitholders received shares of common stock of Metagenomi, Inc., (ii) all of the outstanding preferred unitholders received shares of redeemable convertible preferred stock of Metagenomi, Inc. with the same rights and privileges and (iii) certain holders of profits interest units received shares of common stock and unvested restricted common stock in Metagenomi, Inc. as determined by the applicable provisions of the Amended and Restated Limited Liability Company Agreement dated December 20, 2022, as amended on July 31, 2023 (the “LLC Agreement”) in effect immediately prior to the Reorganization. In connection with the Reorganization, by operation of law, Metagenomi, Inc. acquired all assets of Metagenomi LLC, and assumed all of its liabilities and obligations. The Reorganization is expected to be a non-taxable transaction to Metagenomi, Inc. for U.S. income tax purposes.

On January 26, 2024, following the Reorganization, Metagenomi, Inc. effected a reverse stock split of the shares of common stock at a ratio of 1-for-1.74692 (the “Reverse Stock Split”). The number of authorized shares and par value per share were not adjusted as a result of the Reverse Stock Split. The Reorganization and the Reverse Stock Split was accounted for as a reorganization of entities under common control. Accordingly, all redeemable convertible preferred stock, common stock, additional paid-in-capital and per share amounts for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this Reorganization and Reverse Stock Split.

In connection with the Reorganization and also effecting the reverse stock split:

holders of Metagenomi LLC’s outstanding Series A-1 redeemable convertible preferred units (“Series A-1 preferred units”) received one share of Series A-1 redeemable convertible preferred stock (“Series A-1 preferred stock”) of Metagenomi, Inc. for each Series A-1 preferred unit, with an aggregate of 7,501,002 shares of Series A-1 preferred stock outstanding, and after giving effect to the reverse stock split, such shares of Series A-1 preferred stock shall become convertible into an aggregate of 4,293,867 shares of common stock;
holders of Metagenomi LLC’s outstanding Series A-2 redeemable convertible preferred units (“Series A-2 preferred units”) received one share of Series A-2 redeemable convertible preferred stock (“Series A-2 preferred stock”) of Metagenomi, Inc. for each Series A-2 preferred unit, with an aggregate of 774,473 shares of Series A-2 preferred stock outstanding, and after giving effect to the reverse stock split, such shares of Series A-2 preferred stock shall become convertible into an aggregate of 443,338 shares of common stock;
holders of Metagenomi LLC’s outstanding Series A-3 redeemable convertible preferred units (“Series A-3 preferred units”) received one share of Series A-3 redeemable convertible preferred stock (“Series A-3 preferred stock”) of Metagenomi, Inc. for each Series A-3 preferred unit, with an aggregate of 1,513,860 shares of Series A-3 preferred stock outstanding, and after giving effect to the reverse stock split, such shares of Series A-3 preferred stock shall become convertible into an aggregate of 866,589 shares of common stock;

7


 

holders of Metagenomi LLC’s outstanding Series A-4 redeemable convertible preferred units (“Series A-4 preferred units”) received one share of Series A-4 redeemable convertible preferred stock (“Series A-4 preferred stock”) of Metagenomi, Inc. for each Series A-4 preferred unit, with an aggregate of 8,280,360 shares of Series A-4 preferred stock outstanding, and after giving effect to the reverse stock split, such shares of Series A-4 preferred stock shall become convertible into an aggregate of 4,740,000 shares of common stock;
holders of Metagenomi LLC’s outstanding Series A-5 redeemable convertible preferred units (“Series A-5 preferred units”) received one share of Series A-5 redeemable convertible preferred stock (“Series A-5 preferred stock”) of Metagenomi, Inc. for each Series A-5 preferred unit, with an aggregate of 1,580,937 shares of Series A-5 preferred stock outstanding, and after giving effect to the reverse stock split, such shares of Series A-5 preferred stock shall become convertible into an aggregate of 904,990 shares of common stock;
holders of Metagenomi LLC’s outstanding Series B redeemable convertible preferred units (“Series B preferred units”) received one share of Series B redeemable convertible preferred stock (“Series B preferred stock”) of Metagenomi, Inc. for each Series B preferred unit, with an aggregate of 15,054,263 shares of Series B preferred stock outstanding, and after giving effect to the reverse stock split, such shares of Series B preferred stock shall become convertible into an aggregate of 8,617,649 shares of common stock;
holders of Metagenomi LLC’s outstanding Series B-1 redeemable convertible preferred units (“Series B-1 preferred units”) received one share of Series B-1 redeemable convertible preferred stock (“Series B-1 preferred stock”) of Metagenomi, Inc. for each Series B-1 preferred unit, with an aggregate of 7,108,480 shares of Series B-1 preferred stock outstanding, and after giving effect to the reverse stock split, such shares of Series B-1 preferred stock shall become convertible into an aggregate of 4,069,161 shares of common stock;
holders of Metagenomi LLC’s outstanding common units received one share of common stock of Metagenomi, Inc. for each common unit, with an aggregate of 3,404,585 shares of common stock outstanding, after giving effect to the reverse stock split; and
holders of Metagenomi LLC’s outstanding profits interests received 0 - 0.997816 shares of common stock in accordance with the Metagenomi LLC operating agreement for each profits interest, with an aggregate of 3,884,740 shares of common stock outstanding (which includes 1,036,833 shares of unvested restricted common stock), after giving effect to the reverse stock split. Vesting terms of outstanding profits interests did not change.

Initial Public Offering

On February 8, 2024, Metagenomi, Inc.’s Form S-1 Registration Statement for its initial public offering (the “IPO”) was declared effective and the common stock of Metagenomi, Inc. began trading on the Nasdaq Global Select Market under the symbol “MGX.” On February 13, 2024, the closing date of IPO, the Company issued 6,250,000 shares of common stock at a price to the public of $15.00 per share. In connection with the closing of the IPO, the Company received gross proceeds of approximately $93.8 million and net proceeds of approximately $80.7 million, after deducting underwriting discounts and commissions and other offering costs totaling approximately $13.0 million.

Immediately prior to the IPO closing, each share of Metagenomi, Inc.’s redeemable convertible preferred stock then outstanding converted into shares of common stock at a conversion ratio of 1.74692, based on the formula set forth in Metagenomi, Inc.’s amended and restated certificate of incorporation in effect immediately prior to the closing of the IPO and giving effect to the reverse stock split. In connection with the closing of the IPO, Metagenomi, Inc. increased the authorized number of shares of common stock to 500,000,000 shares, $0.0001 par value per share, and 10,000,000 shares of preferred stock, $0.0001 par value per share.

Liquidity and going concern

The Company has incurred significant losses from operations since its inception. As of March 31, 2024, the Company had an accumulated deficit of $170.1 million. The Company has historically financed its operations primarily through issuance of redeemable convertible preferred stock, convertible promissory notes, its collaboration agreements, and sales of its common stock. In February 2024, the Company completed its IPO for aggregate net proceeds of approximately $80.7 million, after deducting underwriting discounts and commissions and other offering costs totaling approximately $13.0 million. The Company expects to continue to incur substantial losses, and its ability to achieve and sustain profitability will depend on the successful development, approval, and commercialization of any product candidates it may develop, and on the achievement of sufficient revenue to support its cost structure. The Company may never achieve profitability and, unless and until it does, it will need to continue to raise additional capital. Management believes that existing cash, cash equivalents and available-for-sale marketable securities as of March 31, 2024 of $327.4 million will be sufficient to fund its current operating plan for at least the next 12 months from the date of issuance of these unaudited condensed consolidated financial statements.

8


 

2.
Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies” to the consolidated financial statements included in the Annual Report for the year ended December 31, 2023. There have been no material changes to these policies during the three months ended March 31, 2024.

Basis of presentation

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchanges Commission (“SEC”). Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, these financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the Company’s condensed consolidated financial statements for the periods presented. These interim financial results are not necessarily indicative of results to be expected for the full fiscal year ending December 31, 2024, or any other future period. Readers should read these interim unaudited condensed consolidated financial statements in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC. The Company’s significant accounting policies are detailed in its Annual Report on Form 10-K for the year ended December 31, 2023. During the three months ended March 31, 2024, the Company’s significant accounting policies have not changed materially from December 31, 2023. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The accompanying condensed consolidated financial statements include the accounts of Metagenomi, Inc. and the accounts of Metagenomi LLC, retroactively adjusted for the Reorganization and Reverse Stock Split (see Note 1). All intercompany balances and transactions have been eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. On an ongoing basis, the Company evaluates estimates and assumptions, including but not limited to those related to revenue recognition under its collaboration agreements, the fair value of its common stock, stock-based compensation expense, accruals for research and development expenses, the fair value of long-term investments, the valuation of deferred tax assets and uncertain income tax positions. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates.

Recently issued accounting pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact the adoption of this standard on its financial statements.

3.
Fair Value Measurements

Assets and liabilities recorded at fair value on a recurring basis in the condensed consolidated balance sheets, are categorized based upon the level of judgment associated with inputs used to measure their fair values. The accounting guidance for fair value provides a framework for measuring fair value and requires certain disclosures about how fair value is determined. The accounting guidance establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while

9


 

unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows:

Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 — Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3 — Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. An assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. The Company recognizes transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs.

The Company’s financial instruments measured at fair value on a recurring basis consist of Level 1, Level 2, and Level 3 financial instruments. Usually, marketable securities are considered Level 2 when their fair values are determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In addition, Level 2 financial instruments are valued using comparisons to like-kind financial instruments and models that use readily observable market data as their basis. U.S. Government bonds, corporate debt obligations, commercial paper, government agency obligations and asset-backed securities are valued primarily using market prices of comparable securities, bid/ask quotes, interest rate yields and prepayment spreads and are included in Level 2. Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. The Company’s investments in preferred stock and common stock of Affini-T Therapeutics, Inc. (“Affini-T”) (see Note 5) are Level 3 financial assets.

The following tables summarize financial assets that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

 

 

March 31, 2024

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (included in cash and cash equivalents)

 

$

90,752

 

 

$

90,752

 

 

$

 

 

$

 

U.S. treasury bills

 

 

46,613

 

 

 

 

 

 

46,613

 

 

 

 

U.S. government bonds

 

 

49,459

 

 

 

 

 

 

49,459

 

 

 

 

Government agency obligations

 

 

61,272

 

 

 

 

 

 

61,272

 

 

 

 

Corporate debt obligations

 

 

18,236

 

 

 

 

 

 

18,236

 

 

 

 

Commercial paper

 

 

48,547

 

 

 

 

 

 

48,547

 

 

 

 

Asset-backed securities

 

 

8,278

 

 

 

 

 

 

8,278

 

 

 

 

Foreign debt securities

 

 

2,424

 

 

 

 

 

 

2,424

 

 

 

 

Long-term investments (Note 5)

 

 

8,521

 

 

 

 

 

 

 

 

 

8,521

 

Total fair value of assets

 

$

334,102

 

 

$

90,752

 

 

$

234,829

 

 

$

8,521

 

 

 

December 31, 2023

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (included in cash and cash equivalents)

 

$

137,216

 

 

$

137,216

 

 

$

 

 

$

 

U.S. Treasury bills

 

 

9,831

 

 

 

 

 

 

9,831

 

 

 

 

U.S. Government bonds

 

 

2,989

 

 

 

 

 

 

2,989

 

 

 

 

Government agency obligations

 

 

46,409

 

 

 

 

 

 

46,409

 

 

 

 

Corporate debt obligations

 

 

10,973

 

 

 

 

 

 

10,973

 

 

 

 

Commercial paper

 

 

54,727

 

 

 

 

 

 

54,727

 

 

 

 

Asset-backed securities

 

 

2,171

 

 

 

 

 

 

2,171

 

 

 

 

Foreign debt securities

 

 

3,479

 

 

 

 

 

 

3,479

 

 

 

 

Long-term investments (Note 5)

 

 

8,521

 

 

 

 

 

 

 

 

 

8,521

 

Total fair value of assets

 

$

276,316

 

 

$

137,216

 

 

$

130,579

 

 

$

8,521

 

 

10


 

 

In addition, restricted cash of $5.2 million as of March 31, 2024 and December 31, 2023, collateralized by the Company’s cash equivalents, are financial assets measured at fair value and are Level 1 financial instruments under the fair value hierarchy.

The Company accounts for its investments in preferred stock and common stock of Affini-T by applying an option-pricing model backsolve method for inferring the total equity value implied by a recent Series A preferred stock financing round of Affini-T. Key assumptions used in the valuation model as of March 31, 2024 and December 31, 2023 included an expected holding period of two years, a risk free interest rate of 4.87%, a dividend yield of 0.0% and an estimated volatility of 83.0%. Estimated volatility was calculated based on the historical volatility of a selected peer group of public companies comparable to Affini-T. There were no changes in the fair value of the Company’s investment in Affini-T during the three months ended March 31, 2024 and 2023.

4.
Available-For-Sale Marketable Securities

The following tables summarize the amortized cost, unrealized gains (losses) and fair value of available-for-sale marketable securities (in thousands):

 

 

March 31, 2024

 

 

Amortized
cost

 

 

Unrealized
gains

 

 

Unrealized
losses

 

 

Fair value

 

Money market funds

 

$

90,752

 

 

$

 

 

$

 

 

$

90,752

 

U.S. treasury bills

 

 

46,613

 

 

 

1

 

 

 

(1

)

 

 

46,613

 

U.S. government bonds

 

 

49,509

 

 

 

12

 

 

 

(62

)

 

 

49,459

 

Government agency obligations

 

 

61,372

 

 

 

1

 

 

 

(101

)

 

 

61,272

 

Corporate debt obligations

 

 

18,250

 

 

 

1

 

 

 

(15

)

 

 

18,236

 

Commercial paper

 

 

48,639

 

 

 

 

 

 

(92

)

 

 

48,547

 

Asset-backed securities

 

 

8,293

 

 

 

 

 

 

(15

)

 

 

8,278

 

Foreign debt securities

 

 

2,431

 

 

 

 

 

 

(7

)

 

 

2,424

 

Total

 

 

325,859

 

 

 

15

 

 

 

(293

)

 

 

325,581

 

Less: amounts classified as cash equivalents

 

 

(100,734

)

 

 

 

 

 

 

 

 

(100,734

)

Total available-for-sale marketable securities

 

$

225,125

 

 

$

15

 

 

$

(293

)

 

$

224,847

 

 

 

December 31, 2023

 

 

Amortized
cost

 

 

Unrealized
gains

 

 

Unrealized
losses

 

 

Fair value

 

Money market funds

 

$

137,216

 

 

$

 

 

$

 

 

$

137,216

 

U.S. treasury bills

 

 

9,826

 

 

 

5

 

 

 

 

 

 

9,831

 

U.S. government bonds

 

 

3,005

 

 

 

 

 

 

(16

)

 

 

2,989

 

Government agency obligations

 

 

46,446

 

 

 

4

 

 

 

(41

)

 

 

46,409

 

Corporate debt obligations

 

 

11,014

 

 

 

 

 

 

(41

)

 

 

10,973

 

Commercial paper

 

 

54,724

 

 

 

4

 

 

 

(1

)

 

 

54,727

 

Asset-backed securities

 

 

2,177

 

 

 

 

 

 

(6

)

 

 

2,171

 

Foreign debt securities

 

 

3,484

 

 

 

 

 

 

(5

)

 

 

3,479

 

Total

 

 

267,892

 

 

 

13

 

 

 

(110

)

 

 

267,795

 

Less: amounts classified as cash equivalents

 

 

(137,216

)

 

 

 

 

 

 

 

 

(137,216

)

Total available-for-sale marketable securities

 

$

130,676

 

 

$

13

 

 

$

(110

)

 

$

130,579

 

 

As of March 31, 2024 and December 31, 2023, no significant facts or circumstances were present to indicate a deterioration in the creditworthiness of the issuers of the available-for-sale securities, and the Company has no requirement or intention to sell these securities before maturity or recovery of their amortized cost basis. The Company considered the current and expected future economic and market conditions and determined that its investments were not significantly impacted. For all securities with a fair value less than its amortized cost basis, the Company determined the decline in fair value below amortized cost basis to be immaterial and non-credit related, and therefore no allowance for losses has been recorded. During the three months ended March 31, 2024 and 2023, the Company did not recognize any impairment losses on its investments.

Accrued interest receivable included in prepaid expenses and other current assets as of March 31, 2024 and December 31, 2023 was $1.3 million and $1.0 million, respectively. The company has not written off any accrued interest receivable during the three months ended March 31, 2024 and 2023.

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The amortized cost and fair value of available-for-sale marketable securities by contractual maturity were as follows (in thousands):

 

 

March 31, 2024

 

 

December 31, 2023

 

 

Amortized
Cost

 

 

Fair Value

 

 

Amortized
Cost

 

 

Fair Value

 

Maturing within one year

 

$

176,387

 

 

$

176,134

 

 

$

129,823

 

 

$

129,728

 

Maturing in one to five years