Part I Financial Information Financial Statements For the six months ended June 30, 2024, Neurogene reported a net loss of $35.4 million, an increase from the $24.1 million loss in the same period of 2023, driven by higher research and development and administrative expenses. The company's cash, cash equivalents, and short-term investments decreased to $153.9 million from $197.2 million at year-end 2023. Net cash used in operating activities was $37.5 million. The financial statements also reflect liabilities related to Contingent Value Rights (CVRs) from the reverse merger with Neoleukin Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $111,032 | $148,210 | | Short-term investments | $42,873 | $48,947 | | Total Assets | $179,823 | $222,573 | | Total current liabilities | $13,073 | $22,973 | | Total Liabilities | $24,809 | $36,549 | | Total Stockholders' Equity | $155,014 | $186,024 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Income Statement Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue under licensing agreements | $925 | $0 | $925 | $0 | | Research and development expenses | $15,744 | $10,321 | $29,285 | $20,600 | | General and administrative expenses | $5,315 | $2,275 | $10,553 | $5,020 | | Loss from operations | ($20,134) | ($12,596) | ($38,913) | ($25,630) | | Net Loss | ($18,492) | ($11,860) | ($35,413) | ($24,120) | | Net loss per share, basic and diluted | ($1.09) | ($26.68) | ($2.09) | ($54.90) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Item | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($37,543) | ($22,880) | | Net cash provided by (used in) investing activities | $6,321 | ($110) | | Net cash (used in) provided by financing activities | ($6,125) | $20 | | Net decrease in cash, cash equivalents and restricted cash | ($37,347) | ($22,970) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the increased net loss for the second quarter and first half of 2024 primarily to higher research and development (R&D) and general and administrative (G&A) expenses. R&D costs rose due to advancing clinical trials for NGN-401 (Rett syndrome) and NGN-101 (Batten disease), alongside increased preclinical activities. G&A expenses grew from increased headcount and costs associated with operating as a public company post-reverse merger. The company reported $153.9 million in cash, cash equivalents, and investments as of June 30, 2024, which is expected to fund operations into the second half of 2026 - The company's lead program, NGN-401 for Rett syndrome, was selected for the FDA's START Pilot Program to accelerate development. Preliminary clinical data from the first cohort is expected in Q4 202499100 - For the NGN-101 program for CLN5 Batten disease, enrollment is complete, and interim clinical data is expected in Q4 2024. The company plans to meet with the FDA in Q4 2024 to discuss a potential streamlined registration pathway101 Research and Development Expenses Breakdown (in thousands) | Program/Expense Category | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Rett syndrome | $2,798 | $1,466 | $4,817 | $2,252 | | Batten disease | $1,734 | $1,307 | $2,924 | $2,553 | | Early Discovery | $1,705 | $494 | $3,171 | $886 | | Personnel-related | $4,557 | $3,509 | $9,275 | $7,378 | | Share-based compensation | $1,375 | $241 | $1,940 | $415 | | Manufacturing | $2,815 | $2,490 | $5,620 | $5,301 | | Total R&D Expenses | $15,744 | $10,321 | $29,285 | $20,604 | - As of June 30, 2024, the company had $153.9 million in cash, cash equivalents, and short-term investments. Management believes these funds are sufficient to support operations into the second half of 2026107142182 Quantitative and Qualitative Disclosures About Market Risk The company is a "smaller reporting company" as defined by the Exchange Act and is therefore not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Neurogene is exempt from providing disclosures about market risk under Item 305 of Regulation S-K171 Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2024. There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by the report173 - No material changes to the company's internal control over financial reporting occurred during the quarter ended June 30, 2024173 Part II Other Information Legal Proceedings The company is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or operations - Neurogene is not presently involved in any legal proceedings that management believes would have a material adverse effect on the company176 Risk Factors The company identifies significant risks related to its limited operating history, substantial need for additional capital, and history of net losses. Key operational risks include dependence on the success of its early-stage clinical programs (NGN-401 and NGN-101), potential development delays, manufacturing challenges for complex gene therapies, and reliance on academic collaborations. Regulatory hurdles, market acceptance, and the volatility of its common stock are also highlighted as major uncertainties - The company has a limited operating history, has incurred significant losses since inception, and will require substantial additional capital to finance future operations178 - Neurogene is substantially dependent on the success of its most advanced product candidates, NGN-401 and NGN-101, which are in early stages of development and may fail or suffer significant delays178 - The company faces risks related to developing its own manufacturing capabilities and relies on academic collaborations, particularly with the University of Edinburgh, for key aspects of its R&D programs178 - The regulatory approval process for gene therapies is lengthy and unpredictable, and the market price of the company's common stock may continue to be volatile178 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - The company reported no unregistered sales of equity securities for the period325 Defaults Upon Senior Securities There were no defaults upon senior securities during the period - The company reported no defaults upon senior securities326 Mine Safety Disclosures This item is not applicable to the company - Mine safety disclosures are not applicable to Neurogene's business326 Other Information On August 6, 2024, the company entered into a nonexclusive license agreement with Stanford University for certain biological materials used in its manufacturing process. The agreement has a ten-year term with total potential licensing fees of up to $0.5 million. Additionally, no directors or Section 16 officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the quarter - On August 6, 2024, Neurogene entered into a 10-year nonexclusive license agreement with Stanford University for biological materials used in manufacturing its product candidates, with potential fees up to $0.5 million326 - No directors or Section 16 officers made changes to any Rule 10b5-1 trading arrangements during the quarter ended June 30, 2024327 Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL documents - The report includes standard exhibits such as CEO and CFO certifications (31.1, 31.2, 32.1) and Inline XBRL data files (101 series)329
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