Vigil Neuroscience, Inc. [VIGL] Filings

10-Q 1 vigl-20240630.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended 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 001-41200

VIGIL NEUROSCIENCE, INC.

(Exact name of Registrant as specified in its Charter)


Delaware	85-1880494
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
100 Forge Road, Suite 700 Watertown, MA	02472
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (857) 254-4445

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

    VIGL

    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 ☒

The number of shares of Registrant’s Common Stock outstanding as of July 31, 2024 was 39,647,533, par value $0.0001 per share.

Table of Contents


		Page
PART I	FINANCIAL INFORMATION	4

Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders' Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28

PART II	OTHER INFORMATION	29

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 3.	Defaults Upon Senior Securities	77
Item 4.	Mine Safety Disclosures	77
Item 5.	Other Information	77
Item 6.	Exhibits	78
Signatures		79

SUMMARY RISK FACTORS

We are subject to numerous risks and uncertainties, including those further described below in the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q, that represent challenges that we face in connection with the successful implementation of our strategy and the growth of our business. In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could materially adversely affect our business, financial conditions, results of operations, future growth prospects, or cause a decline in the price of our common stock:

•

We have a limited operating history, have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future. We may never generate any revenue or become profitable, and, if we achieve profitability, we may not be able to sustain it.

•

We will require additional financing to achieve our goals, and a failure to obtain this necessary capital when needed and on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our development programs, commercialization efforts or other operations.

•

We are early in our development efforts and have never successfully completed any late-stage clinical trials, and if we are unable to identify and advance therapeutic candidates through preclinical studies and clinical trials, obtain marketing approval and ultimately commercialize them, or experience significant delays in doing so, our business will be materially harmed.

•

The results of early preclinical studies are not necessarily predictive of the results of later preclinical studies and any clinical trials of our therapeutic candidates, and interim, topline and preliminary data from our preclinical studies and planned and ongoing clinical trials that we announce or publish from time to time may change as more data become available and are subject to audit and verification procedures that could result in material changes in the final data.

•

We may expend our limited resources to pursue a particular therapeutic candidate or indication, such as our initial focus on developing iluzanebart for ALSP and VG-3927 for Alzheimer's disease (AD), and fail to capitalize on therapeutic candidates or indications that may be more profitable or for which there is a greater likelihood of success. As such, our business is highly dependent on the clinical advancement of our programs and is especially dependent on the success of our lead clinical candidate, iluzanebart.

•

We have concentrated a substantial portion of our research and development efforts on the treatment of neurodegenerative diseases, a field that has seen limited success in drug development. Further, our therapeutic candidates are based on new approaches, which makes it difficult to predict the time and cost of therapeutic candidate development and subsequently obtaining regulatory approval.

•

We may encounter substantial delays in the commencement, enrollment or completion of our on-going and planned clinical trials, which could prevent us from receiving necessary regulatory approvals or commercializing any therapeutic candidates we develop on a timely basis, if at all.

•

Use of our therapeutic candidates could be associated with side effects, adverse events or other properties or safety risks, which could delay or preclude approval, cause us to suspend or discontinue clinical trials, abandon a therapeutic candidate, limit the commercial profile of an approved label or result in other significant negative consequences that could severely harm our business, prospects, operating results and financial condition.

•

Our therapeutic candidates are subject to extensive regulation and compliance, which is costly and time-consuming, and such regulation may cause unanticipated delays or prevent the receipt of the required approvals to commercialize our therapeutic candidates.

•

We rely, and expect to continue to rely, on third parties to conduct some or all aspects of our product manufacturing, research and preclinical and clinical testing, and these third parties may not perform satisfactorily.

•

If we are unable to obtain and maintain patent protection for our therapeutic programs and other proprietary technologies we develop, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our therapeutic programs and other proprietary technologies we may develop may be adversely affected.

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. 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 contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

the timing, progress, results and cost of developing iluzanebart and VG-3927, as well as our other research and development programs and our current and future preclinical and clinical studies, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available and our current and future programs;

•

the application of our precision medicine approach to develop microglia-targeted therapies for patients with rare, genetically defined neurodegenerative diseases and subsequently advance into neurodegenerative diseases affecting larger patient populations;

•

the expansion of our modality agnostic product pipeline to other microglial targets beyond Triggering Receptor Expressed on Myeloid Cells 2, or TREM2, and subsequent plans to expand into larger and more common neurodegenerative indications;

•

the ability of our preclinical studies and clinical trials to demonstrate safety and efficacy of our product candidates, as well as the beneficial characteristics, therapeutic effects and other positive results;

•

our estimates of the number of patients that we will enroll and our ability to initiate, recruit and enroll patients in and conduct, and successfully complete, our clinical trials, including at the pace that we project;

•

the ability to efficiently discover, identify, research and develop product candidates;

•

the timing, scope and likelihood of regulatory filings and approvals, including timing of any Investigational New Drug applications, or INDs, accelerated approval pathway applications, and final U.S. Food and Drug Administration, or FDA, approval of our current product candidates or any future product candidates;

•

the timing, scope or likelihood of foreign regulatory filings and approvals;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and other product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;

•

our ability to scale up our manufacturing and processing approaches to appropriately address our anticipated commercial needs, which will require significant resources;

•

the ability and willingness of our third-party strategic collaborators to continue research and development activities relating to our development candidates and product candidates;

•

our ability to obtain funding for our operations necessary to complete further development and commercialization of our product candidates;

•

our ability to commercialize our products, if approved;

•

the pricing and reimbursement of our product candidates, if approved;

•

the implementation of our business model, and strategic plans for our business, product candidates, and technology;

•

estimates of our future expenses, revenues and capital requirements and our needs for additional financing;

•

future agreements with third parties in connection with the development and commercialization of product candidates and any other approved product;

•

the size and growth potential of the markets for our product candidates and our ability to serve those markets;

•

our financial performance;

•

the rate and degree of market acceptance of our product candidates;

•

regulatory developments in the United States and foreign countries;

•

our ability to attract and retain key scientific or management personnel;

•

our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

•

our ability to produce our products or product candidates with advantages in turnaround times or manufacturing cost;

•

the success of competing therapies that are or may become available;

•

the impact of laws and regulations;

•

developments relating to our competitors and our industry;

•

the effect of a public health crisis on any of the foregoing or other aspects of our business operations, including any negative impact on enrollment in our ongoing clinical trial as well as any other impacts on our existing and future clinical trials or our preclinical studies; and

•

other risks and uncertainties, including those listed under the caption “Risk Factors.”

In some cases, you can identify forward-looking statements by terminology such as “may,” “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. 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. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed above under “Summary Risk Factors” and under the section titled “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 Securities and Exchange Commission, or the SEC, as exhibits hereto 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.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for our 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 titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

VIGIL NEUROSCIENCE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)


	June 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	37,312		$	51,992
Marketable securities		49,362			65,948
Prepaid expenses and other current assets		3,542			3,967
Total current assets		90,216			121,907
Property and equipment, net		1,535			1,745
Operating lease right-of-use assets		15,452			16,147
Financing lease right-of-use assets		39			49
Restricted cash		927			927
Other assets		295			83
Total assets	$	108,464		$	140,858
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,418		$	1,946
Accrued expenses and other current liabilities		8,368			8,810
Operating lease liabilities		969			905
Total current liabilities		10,755			11,661
Operating lease liabilities, net of current portion		12,437			12,945
Total liabilities		23,192			24,606
Commitments and contingencies (Note 11)
Stockholders’ equity:
Undesignated preferred stock, $0.0001 par value, 10,000,000 shares authorized as of June 30, 2024 and December 31, 2023, respectively; 0 share issued and outstanding at June 30, 2024 and December 31, 2023, respectively		—			—
Common stock, $0.0001 par value; 150,000,000 shares authorized at June 30, 2024 and December 30, 2023; 37,633,635 shares issued as of June 30, 2024 and 35,929,035 shares issued as of December 31, 2023; and 37,589,312 shares outstanding as of June 30, 2024 and 35,884,712 shares outstanding as of December 31, 2023		4			4
Additional paid-in capital		349,233			339,025
Accumulated other comprehensive income (loss)		(26	)		(5	)
Accumulated deficit		(263,939	)		(222,772	)
Total stockholders’ equity		85,272			116,252
Total liabilities and stockholders’ equity	$	108,464		$	140,858

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

VIGIL NEUROSCIENCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Operating expenses:
Research and development (1)	$	15,540		$	14,903		$	29,866		$	28,737
General and administrative		6,938			7,010			14,027			13,951
Total operating expenses		22,478			21,913			43,893			42,688
Loss from operations		(22,478	)		(21,913	)		(43,893	)		(42,688	)
Other income (expense):
Interest income, net		1,254			1,746			2,731			2,731
Other income (expense), net		(3	)		(7	)		(5	)		(12	)
Total other income, net		1,251			1,739			2,726			2,719
Net loss	$	(21,227	)	$	(20,174	)	$	(41,167	)	$	(39,969	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.52	)	$	(0.52	)	$	(1.02	)	$	(1.04	)
Weighted-average common shares outstanding, basic and diluted		40,564,580			38,657,205			40,214,345			38,601,916
Comprehensive loss:
Net loss	$	(21,227	)	$	(20,174	)	$	(41,167	)	$	(39,969	)
Unrealized gain (loss) on available for sale securities		4			(176	)		(21	)		(70	)
Total comprehensive loss	$	(21,223	)	$	(20,350	)	$	(41,188	)	$	(40,039	)

(1)

Includes related party amounts of $0 for the three and six months ended June 30, 2024, and $7 and $50 for the three and six months ended June 30, 2023 (see Note 10).

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

VIGIL NEUROSCIENCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)


	Common Stock				Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balances at December 31, 2022		35,620,335	$	4	$	329,211	$	—		$	(140,134	)	$	189,081
Exercise of stock options		45,449		—		214		—			—			214
Stock-based compensation		—		—		1,734		—			—			1,734
Unrealized gain (loss) on available for sale securities		—		—		—		106			—			106
Net loss		—		—		—		—			(19,795	)		(19,795	)
Balances at March 31, 2023		35,665,784	$	4	$	331,159	$	106		$	(159,929	)	$	171,340
Exercise of stock options		195,930		—		589		—			—			589
Stock-based compensation		—		—		2,257		—			—			2,257
Unrealized gain (loss) on available for sale securities		—		—		—		(176	)		—			(176	)
Net loss		—		—		—		—			(20,174	)		(20,174	)
Balances at June 30, 2023		35,861,714	$	4	$	334,005	$	(70	)	$	(180,103	)	$	153,836

Balances at December 31, 2023		35,884,712	$	4	$	339,025	$	(5	)	$	(222,772	)	$	116,252
Issuance of common stock, net of issuance costs		1,699,600		—		5,183		—			—			5,183
Stock-based compensation		—		—		2,312		—			—			2,312
Unrealized gain (loss) on available for sale securities		—		—		—		(25	)		—			(25	)
Net loss		—		—		—		—			(19,940	)		(19,940	)
Balances at March 31, 2024		37,584,312	$	4	$	346,520	$	(30	)	$	(242,712	)	$	103,782
Exercise of stock options		5,000		—		9		—			—			9
Stock-based compensation		—		—		2,704		—			—			2,704
Unrealized gain (loss) on available for sale securities		—		—		—		4			—			4
Net loss		—		—		—		—			(21,227	)		(21,227	)
Balances at June 30, 2024		37,589,312	$	4	$	349,233	$	(26	)	$	(263,939	)	$	85,272

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

VIGIL NEUROSCIENCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(41,167	)	$	(39,969	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		5,016			3,991
Non-cash operating lease expense		695			681
Depreciation and amortization		226			176
Amortization of premium/discount on marketable securities		(949	)		(1,000	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		425			2,593
Other non-current assets		(32	)		—
Accounts payable		(547	)		419
Accrued expenses and other current liabilities		(606	)		(4,193	)
Operating lease liabilities		(444	)		(237	)
Net cash used in operating activities		(37,383	)		(37,539	)
Cash flows from investing activities:
Purchases of marketable securities		(30,845	)		(102,493	)
Proceeds from sales and maturities of marketable securities		48,360			12,000
Purchases of property and equipment		(5	)		(614	)
Net cash provided (used) by investing activities		17,510			(91,107	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of offering costs		5,184			—
Payments of finance lease obligations		—			(21	)
Proceeds from stock options exercised		9			803
Net cash provided by financing activities		5,193			782
Net change in cash and cash equivalents		(14,680	)		(127,864	)
Cash, cash equivalents and restricted cash at beginning of period		52,919			187,532
Cash, cash equivalents and restricted cash at end of period	$	38,239		$	59,668
Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	—		$	14,292
Prepaid rent reclassified to right-of-use assets	$	—		$	2,887
Deferred offering costs included in accounts payable and accrued expenses	$	181		$	—

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

VIGIL NEUROSCIENCE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of the Business and Basis of Presentation

Vigil Neuroscience, Inc., together with its consolidated subsidiary, Vigil Neuroscience Security Corporation (“Vigil” or the “Company”), is a clinical-stage biotechnology company dedicated to improving the lives of patients, caregivers and families affected by rare and common neurodegenerative diseases by pursuing the development of disease-modifying therapeutics to restore the vigilance of microglia. Microglia are the sentinel immune cells of the brain and play a critical role in maintaining central nervous system (CNS) health and responding to damage caused by disease. Leveraging recent research implicating microglial dysfunction in neurodegenerative diseases, the Company utilizes a precision medicine approach to develop a pipeline of therapeutic candidates, initially addressing genetically defined patient subpopulations, that it believes will activate and restore microglial function. The Company was incorporated in the State of Delaware in June 2020 and is located in Watertown, Massachusetts.

The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry, including, but not limited to, completing preclinical studies and clinical trials, the ability to raise additional capital to fund operations, obtaining regulatory approval for therapeutic candidates, market acceptance of products, competition from substitute products, protection of proprietary intellectual property, compliance with government regulations, dependence on key personnel, reliance on third-party organizations and the clinical and commercial success of its therapeutic candidates. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Liquidity

The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As of June 30, 2024, the Company had cash, cash equivalents, and marketable securities of $86.7 million and an accumulated deficit of $263.9 million.

On March 21, 2023, the Company entered into an Open Market Sales Agreement, or the Sales Agreement, with Jefferies LLC, or the Agent, pursuant to which the Company can sell, from time to time, at its option, up to an aggregate of $100.0 million of shares of its common stock, through the Agent, as its sales agent. As of June 30, 2024, the Company sold 1,699,600 shares of common stock under the Sales Agreement at an average price of $3.14 per share, for net proceeds after deducting commissions and other offering expenses of $5.2 million. On June 27, 2024, the Company entered into a Securities Purchase Agreement (SPA) with Aventis Inc., a wholly-owned subsidiary of Sanofi, a global healthcare and pharmaceutical company, (together with Aventis Inc., "Sanofi"), pursuant to which the Company agreed to issue an aggregate of 537,634 shares of Series A non-voting convertible preferred stock, each convertible into 10 shares of common stock, at an as-converted price of $7.44 per common share for gross proceeds of $40.0 million, which was received in July 2024. In connection with the Securities Purchase Agreement, the Company granted Genzyme Corporation, a wholly-owned subsidiary of Sanofi, the exclusive right of first negotiation (ROFN) for an exclusive license, grant or transfer of rights to research, develop, manufacture and commercialize the Company's small molecule TREM2 agonist program, including VG-3927. (see Note 12). Although the Company has incurred recurring losses and expects to continue to incur losses for the foreseeable future, the Company expects that its cash, cash equivalents, and marketable securities, together with the gross proceeds received from Sanofi in July 2024 noted above, will be sufficient to fund current operations for at least the next twelve months from the issuance of these condensed consolidated financial statements.

The Company expects to seek additional funding through equity financings, government or private-party grants, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborations or other arrangements. The terms of any financing may adversely affect the holdings or rights of the Company’s stockholders.

If the Company is unable to obtain sufficient capital, the Company will be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

The condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Basis of Presentation

The accompanying condensed consolidated financial statements reflect the operations of the Company are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim periods and, in the opinion of management, include all normal and recurring adjustments that are necessary to state fairly the results of operations for the reported periods. 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”). Our condensed consolidated financial statements have also been prepared on a basis substantially consistent with, and should be read in conjunction with, our audited consolidated financial statements for the year ended December 31, 2023, which were included in our Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on March 26, 2024. The year-end condensed consolidated balance sheet data was derived from our audited financial statements but does not include all disclosures required by GAAP. The results of our operations for any interim period are not necessarily indicative of the results of our operations for any other interim period or for a full fiscal year.

The accompanying condensed consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiary. Intercompany balances and transactions have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

The Company's significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2023, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on March 26, 2024, or the 2023 Form 10-K. Since the date of those financial statements, there have been no material changes to Vigil’s significant accounting policies except as noted below.

Use of Estimates

The preparation of financial statements in conformity with 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 condensed consolidated financial statements, and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, research and development expenses and related prepaid or accrued costs and stock-based compensation. The Company bases its estimates on historical experience, known trends and other market-specific or relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with original maturities when purchased of three months or less that are readily convertible to known amounts of cash to be cash equivalents. The carrying values of these instruments approximate their respective fair value due to the short-term maturity of these investments. At June 30, 2024 and December 31, 2023, the Company’s cash equivalents were in money market funds and government securities. As of each balance sheet date and periodically throughout the year, the Company has maintained balances in various operating accounts in excess of federally insured limits.

In connection with the Company’s lease agreement entered into in September 2021 (see Note 9), the Company is required to maintain a certificate of deposit (“CD”) of $0.9 million for the benefit of the landlord.

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the condensed consolidated balance sheets that sum to the total of the amounts reported in the condensed consolidated statement of cash flows (in thousands):


	June 30, 2024		June 30, 2023

Cash and cash equivalents	$	37,312	$	58,741
Restricted cash, non-current		927		927
Total cash, cash equivalents and restricted cash	$	38,239	$	59,668

Marketable Securities

Investments in marketable securities are classified as available-for-sale. Available-for-sale securities are measured and reported at fair value using quoted prices in active markets for similar securities. Unrealized gains and losses on available-for-sale securities are

reported as a separate component of stockholders’ equity in other comprehensive loss. Premiums or discounts from par value are amortized to investment income over the life of the underlying investment. All of the Company’s available-for-sale securities are available to the Company for use in current operations. As a result, the Company classified all of its securities as current assets even if the stated maturity of some individual securities may be one year or more beyond the balance sheet date.

The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in other income (expense) within the consolidated statements of operations and comprehensive loss. If any adjustment is required to reflect a decline in the value of the investment that the Company considers to be “other than temporary”, the Company recognizes a charge to the consolidated statement of operations and comprehensive loss. No such adjustments were necessary during the periods presented.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. The Company qualifies as an ‘‘emerging growth company’’ as defined in the Jumpstart Our Business Startups Act of 2012 and has elected not to ‘‘opt out’’ of the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and non-public companies, the Company can adopt the new or revised standard at the time non-public companies adopt the new or revised standard and can do so until such time that the Company either (i) irrevocably elects to ‘‘opt out’’ of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for non-public companies.

Recently Adopted Accounting Guidance

In August 2020, the FASB issued ASU No. 2020-06, Debt, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which, among other things, provides guidance on how to account for contracts on an entity’s own equity. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. Specifically, the ASU eliminated the need for the Company to assess whether a contract on the entity’s own equity (1) permits settlement in unregistered shares, (2) whether counterparty rights rank higher than shareholder’s rights, and (3) whether collateral is required. In addition, the ASU requires incremental disclosure related to contracts on the entity’s own equity and clarifies the treatment of certain financial instruments accounted for under this ASU on earnings per share. The ASU also simplifies the accounting for convertible instruments by removing the beneficial conversion feature and cash conversion feature separation models. This ASU may be applied on a full retrospective or modified retrospective basis. This ASU is effective for smaller reporting companies for fiscal years beginning after December 15, 2023 and all other public entities, this ASU is effective for fiscal years beginning after December 15, 2021. Early adoption permitted. The Company has adopted this ASU in fiscal year 2024. The Company has determined this ASU does not materially impact its financial position and results of operations.

3. Fair Value Measurements and Financial Instruments

The following table presents the Company’s fair value hierarchy for its asset items that are measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023, by level within the fair value hierarchy (in thousands):


	Fair Value Measurement at June 30, 2024 Using:
	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	29,243	$	—	$	—		29,243
U.S. government securities		—		2,997		—		2,997
Total cash equivalents	$	29,243	$	2,997	$	—	$	32,240
Marketable securities
U.S. government securities		—		22,966		—		22,966
Corporate bonds		—		26,396		—		26,396
Total marketable securities	$	—	$	49,362	$	—	$	49,362
Restricted cash (non-current)		927		—		—		927
Total	$	30,170	$	52,359	$	—	$	82,529


	Fair Value Measurement at December 31, 2023 Using:
	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	41,649	$	—	$	—	$	41,649
U.S. government securities		—		1,997		—	$	1,997
Corporate bonds		—		2,577		—	$	2,577
Total cash equivalents	$	41,649	$	4,574	$	—	$	46,223
Marketable securities
U.S. government securities			$	21,149			$	21,149
Corporate bonds			$	44,799			$	44,799
Total marketable securities	$	—	$	65,948	$	—	$	65,948
Restricted cash (non-current)		927		—		—		927
Total	$	42,576	$	70,522	$	—	$	113,098

Marketable securities

The following table summarizes the Company’s marketable securities as of June 30, 2024 (in thousands):


	At June 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government securities	$	22,972	$	—	$	(6	)	$	22,966
Corporate bonds		26,416		2		(22	)		26,396
Total	$	49,388	$	2	$	(28	)	$	49,362


	At December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government securities	$	21,146	$	5	$	(2	)	$	21,149
Corporate bonds		44,807		31		(39	)		44,799
Total	$	65,953	$	36	$	(41	)	$	65,948

The contractual maturity dates of the Company’s marketable securities are less than one year.

As of June 30, 2024, the Company held 25 securities, 19 of which were in an unrealized loss position. The Company did not recognize any credit losses during the three and six months ended June 30, 2024 and 2023. Additionally, there were no realized gains or losses on marketable securities for the three and six months ended June 30, 2024 and 2023.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Research and development	$	1,495	$	1,563
Business insurance		578		122
Other receivables		344		1,137
Interest receivable		186		348
Other		939		797
Total	$	3,542	$	3,967

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Research and development	$	4,826	$	3,278
Payroll and employee related		2,249		4,208
Professional fees		1,153		1,000
Other		140		324
Total	$	8,368	$	8,810

6. Stock-Based Compensation

2020 Equity Incentive Plan

The Company's 2020 Equity Incentive Plan is described in detail within Note 6 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report on Form 10-K. As of June 30, 2024, 2,326,256 options were outstanding under the 2020 Plan.

2021 Stock Option and Incentive Plan

The Company's 2021 Stock Option and Incentive Plan is described in detail within Note 6 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report on Form 10-K. On January 1, 2024, the shares reserved for future grants under the 2021 Plan increased by 1,794,235 pursuant to the 2021 Plan Evergreen Provision. In March of 2024, as part of the Company's annual grant of equity, the Company granted 1,786,100 stock options to employees. As of June 30, 2024, 5,238,226 options were outstanding under the 2021 Plan.

2021 Employee Stock Purchase Plan

The Company's 2021 Employee Stock Purchase Plan is described in detail within Note 6 of the Notes to the Consolidated Financial Statements in the 2023 Annual Report on Form 10-K. There was no increase to the shares reserved for future grants under the 2021 ESPP in January 2024. As of June 30, 2024, a total of 572,254 shares of common stock were reserved for issuance under this plan. No stock-based compensation expense was recognized during the three and six months ended June 30, 2024 related to the 2021 ESPP.

Inducement Awards

The Company also maintains an inducement award program that is separate from the Company's equity plans under which inducement awards may be granted consistent with Nasdaq Listing Rule 5635(c)(4). During the six months ended June 30, 2024, the Company granted 330,000 options to purchase shares of the Company's common stock to new hires as inducements material to such employees entering into employment with the Company, of which 330,000 options remained outstanding as of June 30, 2024.

Stock Option Repricing

On May 3, 2024 (the "Effective Date"), the Company's Board of Directors approved a one-time stock option repricing (the "Option Repricing") for certain previously granted and still outstanding options held by the Company's employees and certain independent contractors. Pursuant to the Option Repricing, stock options granted under the Company's 2021 Stock Option and Incentive Plan prior to January 1, 2024, with an exercise price greater than $3.03 per share, were repriced to $3.03 per share, which was the closing trading price of the Company's common stock on the Nasdaq Global Market on the Effective Date.

Under the terms of the Option Repricing, a repriced option will revert to its original exercise price if, prior to the one-year anniversary of the Effective Date, (a) the option holder's employment is terminated by the Company with cause or by the option holder, or (b) the option is exercised. The repriced options otherwise retained their existing terms and conditions as set forth in the 2021 Stock Option and Incentive Plan. The Option Repricing resulted in $2.7 million of incremental stock compensation expense, which was calculated using the Black-Scholes option-pricing model. Of the incremental compensation cost, $0.2 million was recognized in the three months ended June 30, 2024, and $2.5 million will be recognized on the straight-line basis over the remaining vesting period of the repriced options. The incremental cost is included in general and administrative expense and research and development expense on the condensed consolidated statements of operations and comprehensive loss.

Stock-Based Compensation Expense

The Company recorded stock-based compensation expense of $2.7 million and $5.0 million during the three and six months ended June 30, 2024, respectively, and recorded $2.3 million and $4.0 million during the three and six months ended June 30, 2023, respectively. Stock-based compensation expense was classified as follows in the condensed consolidated statements of operations and comprehensive loss (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	937	$	891	$	1,716	$	1,577
General and administrative		1,767		1,366		3,300		2,414
Total stock-based compensation	$	2,704	$	2,257	$	5,016	$	3,991

At June 30, 2024, there was approximately $22.3 million unrecognized stock-based compensation expense related to unvested options, which is expected to be recognized over a weighted-average period of 2.61 years. At June 30, 2024, there was no unrecognized stock-based compensation expense related to unvested restricted stock.

7. Common Stock

Each share of common stock entitles the holder to one vote for each share of common stock held. Common stockholders are entitled to receive dividends, as may be declared by the Company’s Board. During each of the three and six months ended June 30, 2024 and 2023, no dividends have been declared or paid.

At-the-Market Facility

In March 2023, the Company established an at-the-market, or ATM, equity offering program pursuant to which it was able to offer and sell up to $100.0 million of its common stock at the then current market price from time to time. Through June 30, 2024, the Company sold 1,699,600 shares of common stock under this program with net proceeds, after deducting commissions and other offering expenses, of $5.2 million.

Pre-funded Warrants

In connection with the Private Placement, the Company issued pre-funded warrants to purchase up to an aggregate of 2,980,889 shares of common stock at a purchase price of $7.2999 per pre-funded warrant. Each pre-funded warrant is exercisable for one share of common stock at an exercise price of $0.0001 per share of common stock, is immediately exercisable and will remain exercisable until exercised in full. The pre-funded warrants have no expiration date and the price of the pre-funded warrants does not include any discounts. The Company evaluated the pre-funded warrants for liability or equity classification in accordance with the provisions of ASC Topic 480, Distinguishing Liabilities from Equity, and determined that equity treatment was appropriate because the pre-funded warrants did not meet the definition of liability instruments and met the criteria for permanent equity. As of June 30, 2024, no pre-funded warrants were exercised. In July 2024, 2,054,795 of the pre-funded warrants were exercised.

The Company has reserved the following number of shares of common stock for the exercise of outstanding stock options and future issuance of stock-based awards.


	June 30, 2024		December 31, 2023
Common stock options		7,894,482		6,208,874
Pre-funded warrants		2,980,889		2,980,889
Shares available for issuance under the 2021 Plan		1,910,307		1,160,388
Shares available for issuance under the 2021 ESPP		572,254		572,254
Total common stock reserved for future issuance		13,357,932		10,922,405

8. Net Loss per Share

Basic and diluted net loss per common share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Numerator:
Net loss attributable to common stockholders	$	(21,227	)	$	(20,174	)	$	(41,167	)	$	(39,969	)
Denominator:
Weighted-average common shares outstanding, basic and diluted		40,564,580			38,657,205			40,214,345			38,601,916
Net loss per share attributable to common stockholders, basic and diluted	$	(0.52	)	$	(0.52	)	$	(1.02	)	$	(1.04	)

Basic and diluted weighted average shares of common stock outstanding for the three and six months ended June 30, 2024 and June 30, 2023 include the weighted average effect of outstanding pre-funded warrants for the purchase of shares of common stock for which the remaining unfunded exercise price is $0.0001 or less per share.

The Company’s potentially dilutive securities have been excluded from the computation of diluted net loss per common share as the effect would be to reduce the net loss per common share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per common share is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per common share for the periods indicated because including them would have had an anti-dilutive effect:


	As of June 30,
	2024		2023
Options to purchase common stock – service based		7,683,853		5,550,413
Options to purchase common stock – performance based		210,629		210,629
Unvested restricted common stock		—		53,715
Total		7,894,482		5,814,757

9. Leases

In July 2021, the Company entered into a lease for laboratory space in Cambridge, Massachusetts, with an initial term of one year commencing in April 2021, with a month-to-month option to renew at the end of the initial lease term. At inception, the Company determined that it was reasonably certain that it would elect options to renew the lease through September 2022 and have included these renewal options into the initial determination of the lease term. In 2022, the Company further extended the lease term through February 28, 2023 and terminated the lease as of February 28, 2023 due to the Company's move to Watertown, Massachusetts as noted below.

In October 2021, the Company entered into a lease for its corporate headquarters in Cambridge, Massachusetts with an initial term of 14 months. In 2022, the Company extended the lease through January 31, 2023 and terminated the lease as of January 31, 2023 due to the Company's move to Watertown, Massachusetts as noted below.

Watertown, MA Lease

In September 2021, the Company entered into a lease for laboratory and office space in Watertown, Massachusetts with an initial term of ten years from the term commencement date of December 2022, and a five-year renewal option. The lease commenced for accounting purposes in January 2023 when the leased space was made available for the Company’s use. As of the lease commencement date, the Company has determined that it is not reasonably certain to exercise the option to extend the lease and has not included the extension period in the lease term. The monthly lease payment is approximately $0.2 million with annual escalation of approximately 3%. The lease includes a $3.7 million construction allowance. At the lease commencement date, the Company recorded an initial lease liability of $14.3 million and a right-of-use asset of $17.3 million.

Operating lease expense was $0.6 million and $

Vigil Neuroscience, Inc. [VIGL] Filings
10-Q	[2024-08-13]
10-Q	[2024-05-07]
10-K	[2024-03-26]
10-Q	[2023-11-07]
10-Q	[2023-08-08]
10-Q	[2023-05-10]
10-K	[2023-03-21]
10-Q	[2022-11-10]
S-1	[2022-09-30]
10-Q	[2022-08-08]
10-Q	[2022-05-12]
10-K	[2022-03-25]
S-1	[2021-11-19]