Metagenomi, Inc. [MGX] Filings

10-Q 1 mgx-20240630.htm 10-Q 10-Q

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 June 30, 2024


☐	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 August 7, 2024, the registrant had 37,428,994 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	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32

PART II.	OTHER INFORMATION	34

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	86
Item 3.	Defaults Upon Senior Securities	87
Item 4.	Mine Safety Disclosures	87
Item 5.	Other Information	87
Item 6.	Exhibits	88
Signatures		89

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;

•

the volatility of capital markets and other adverse macroeconomic factors, including due to inflationary pressures, interest rate and currency rate fluctuations, economic slowdown or recession, banking instability, monetary policy changes, geopolitical tensions or the outbreak of hostilities or war, including from the ongoing Russia-Ukraine conflict, the current conflict in Israel and Gaza (including any escalation or expansion) and increasing tensions between China and Taiwan; 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.

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.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Metagenomi, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share data)


	June 30,			December 31,
	2024			2023
Assets
Current assets:
Cash and cash equivalents	$	61,181		$	140,603
Available-for-sale marketable securities		238,740			130,579
Accounts receivable		1,648			2,451
Prepaid expenses and other current assets		6,010			4,640
Total current assets		307,579			278,273
Property and equipment, net		20,711			21,542
Long-term investments		10,676			10,676
Operating lease right-of-use assets		41,359			43,611
Other assets		332			5,492
Restricted cash		5,248			5,248
Total assets	$	385,905		$	364,842
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	3,453		$	1,791
Income tax payable		—			3,266
Accrued expenses and other current liabilities		10,984			11,472
Current portion of operating lease liabilities		5,396			3,427
Collaboration advance		—			837
Deferred revenue		32,977			48,068
Total current liabilities		52,810			68,861
Non-current portion of operating lease liabilities		42,545			44,802
Deferred revenue, non-current		17,328			30,926
Other non-current liabilities		3,803			5,079
Total liabilities		116,486			149,668
Commitments and contingencies (Note 8)
Redeemable convertible preferred stock: zero shares authorized, issued and outstanding as of June 30, 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 June 30, 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 June 30, 2024 and December 31, 2023, respectively; 37,459,853 and 3,404,585 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		4			—
Additional paid-in-capital		450,511			9,457
Accumulated other comprehensive loss		(265	)		(97	)
Accumulated deficit		(180,831	)		(144,944	)
Total stockholders’ equity (deficit)		269,419			(135,584	)
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)	$	385,905		$	364,842

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

Metagenomi, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Collaboration revenue	$	20,008		$	11,337		$	31,167		$	19,994
Operating expenses:
Research and development		28,320			22,681			59,759			42,811
General and administrative		8,551			6,619			17,303			13,084
Total operating expenses		36,871			29,300			77,062			55,895
Loss from operations		(16,863	)		(17,963	)		(45,895	)		(35,901	)
Other income (expense):
Interest income		3,976			3,967			7,910			7,970
Change in fair value of long-term investments		—			2,870			—			2,870
Other income (expense), net		(51	)		16			(101	)		15
Total other income, net		3,925			6,853			7,809			10,855
Net loss before benefit (provision) for income taxes		(12,938	)		(11,110	)		(38,086	)		(25,046	)
Benefit (provision) for income taxes		2,199			(1,898	)		2,199			(4,095	)
Net loss	$	(10,739	)	$	(13,008	)	$	(35,887	)	$	(29,141	)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale marketable securities		13			(176	)		(168	)		(155	)
Comprehensive loss	$	(10,726	)	$	(13,184	)	$	(36,055	)	$	(29,296	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.29	)	$	(3.82	)	$	(1.24	)	$	(8.56	)
Weighted average common shares outstanding, basic and diluted		36,625,291			3,404,585			28,901,399			3,404,585

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

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
Forfeiture of unvested common stock		—			—			(8,225	)		—		—		—			—			—
Stock-based compensation expense		—			—			—			—		4,512		—			—			4,512
Other comprehensive income		—			—			—			—		—		13			—			13
Net loss		—			—			—			—		—		—			(10,739	)		(10,739	)
BALANCE—June 30, 2024		—		$	—			37,459,853		$	4	$	450,511	$	(265	)	$	(180,831	)	$	269,419

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			—			—		—		—			—			—
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	)
Stock-based compensation expense		—			—			—			—		656		—			—			656
Other comprehensive loss		—			—			—			—		—		(176	)		—			(176	)
Net loss		—			—			—			—		—		—			(13,008	)		(13,008	)
BALANCE—June 30, 2023		41,813,375		$	350,758			3,404,585		$	—	$	3,720	$	(429	)	$	(105,830	)	$	(102,539	)

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

Metagenomi, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2024			2023
Cash flows from operating activities
Net loss	$	(35,887	)	$	(29,141	)
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation expense		9,569			1,185
Depreciation		2,582			1,852
Loss on fixed assets write-off		279			—
Non-cash lease expense		2,264			2,042
Amortization of premiums and discounts on available-for-sale marketable securities		(3,201	)		(4,536	)
Amortization of non-cash collaboration revenue		(107	)		(507	)
Change in fair value of long-term investments		—			(2,870	)
Changes in operating assets and liabilities:
Accounts receivable		803			(2,328	)
Contract assets		—			1,274
Prepaid expenses and other assets		(274	)		21
Accounts payable		1,734			882
Income tax payable		(3,266	)		1,178
Deferred revenue and collaboration advance		(29,419	)		(16,161	)
Accrued expenses and other current liabilities		340			72
Operating lease liabilities		(300	)		(717	)
Other non-current liabilities		(1,276	)		667
Net cash used in operating activities		(56,159	)		(47,087	)
Cash flows from investing activities
Purchases of property and equipment		(1,580	)		(5,818	)
Purchases of available-for-sale marketable securities		(249,166	)		(168,977	)
Maturities of available-for-sale marketable securities		142,978			84,008
Net cash used in investing activities		(107,768	)		(90,787	)
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		84,505			—
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs		—			4,295
Payments of initial public offering costs		—			(39	)
Net cash provided by financing activities		84,505			4,256
Net decrease in cash, cash equivalents and restricted cash		(79,422	)		(133,618	)
Cash, cash equivalents and restricted cash at beginning of period		145,851			190,514
Cash, cash equivalents and restricted cash at end of period	$	66,429		$	56,896
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 expenses and other current liabilities	$	492		$	—
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	$	1,088		$	1,593
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		$	—
Deferred initial public offering costs included in accounts payable, accrued expenses and other current liabilities	$	—		$	1,621
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	61,181		$	51,648
Restricted cash		5,248			5,248
Cash, cash equivalents and restricted cash at end of period	$	66,429		$	56,896

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

Metagenomi, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(Unaudited)

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. 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;

•

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 June 30, 2024, the Company had an accumulated deficit of $180.8 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 June 30, 2024 of $299.9 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.

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 six months ended June 30, 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 statement 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. 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.

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 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):


	June 30, 2024
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds (included in cash and cash equivalents)	$	59,780	$	59,780	$	—	$	—
U.S. treasury bills		16,957		—		16,957		—
U.S. government bonds		98,792		—		98,792		—
Government agency obligations		41,618		—		41,618		—
Corporate debt obligations		21,268		—		21,268		—
Commercial paper		46,915		—		46,915		—
Asset-backed securities		10,744		—		10,744		—
Foreign debt securities		2,446		—		2,446		—
Long-term investments (Note 5)		8,521		—		—		8,521
Total fair value of assets	$	307,041	$	59,780	$	238,740	$	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

In addition, restricted cash of $5.2 million as of June 30, 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 June 30, 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 calc