Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes and Management's Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 17, 2025. As discussed in the section titled "Special Note Regarding Forward-Looking Statements," the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the "Risk Factors" section under Part II, Item 1A below.

Overview

We are an in vivo genome editing company capitalizing on our proprietary technologies to create curative genetic medicines for patients. We were founded on the science of metagenomics, the study of genetic materials recovered from the natural environment, to discover and develop a suite of novel editing tools potentially capable of correcting any type of genetic mutation found anywhere in the human genome. We focus on high value programs in disease indications with well-understood biology and clearly defined clinical development and regulatory pathways. We are committed to advancing our most compelling programs that have the highest probability of success, and potential to address unmet needs and create near-term value.

Wholly Owned Programs

MGX-001 - Novel, Durable, Site-specific Genome Integration for Expression of Factor VIII (FVIII) and Other Secreted Protein Deficiencies

MGX-001 is designed to provide life-long protection from bleeding events and joint damage in adults and children with hemophilia A. MGX-001 is designed to insert a Factor VIII ("FVIII") DNA cassette into a "safe harbor location" within an intron of the albumin gene, leveraging the strong native albumin promoter to express FVIII.

New dose range finding data presented in November 2025 demonstrated curative factor VIII (FVIII) activity in non-human primates (NHPs). The data also demonstrated clear dose dependency across both the AAV and LNP components of MGX-001, informing our clinical dose-regimen strategy. The new data builds upon earlier data which demonstrated durable and stable FVIII activity in NHPs over an approximately 19-month study. The new study also confirmed the encouraging preclinical safety profile of MGX-001. Additionally, MGX-001 has shown no identifiable off-target editing in a series of orthogonal assays employed to discover and validate potential off-target sites.

We plan to advance MGX-001 into clinical development, conduct pre-IND regulatory meetings by the end of 2025, submit investigational new drug ("IND") and clinical trial application ("CTA") submissions in the fourth quarter of 2026, and initiate clinical trials in 2027.

Secreted Protein Deficiencies

Leveraging the MGX-001 site-specific genome integration approach, we are advancing additional wholly owned therapeutic candidates targeting secreted protein deficiencies with the goal of achieving targeted and durable protein replacement. We plan to demonstrate NHP proof-of-concept for our lead secreted protein deficiency target in 2025.

Ionis Collaboration

In November 2022, we entered into a Collaboration and License Agreement with Ionis Pharmaceuticals, Inc. ("Ionis") to research, develop and commercialize investigational medicines using our genome editing technologies. Wave 1 of the collaboration is comprised of four cardiometabolic targets including transthyretin ("TTR") for transthyretin amyloidosis and angiotensinogen ("AGT") for refractory hypertension, as well as two undisclosed programs.

In partnership with Ionis, we plan to nominate a development candidate from the Wave 1 targets in 2025. In 2026, we plan to initiate IND-enabling activities for the development candidate nominated in 2025 and nominate additional development candidates from the remaining Wave 1 targets.

Future Programs

We are exploring opportunities to pursue neuromuscular disease targets and liver disease targets such as A1AT and Wilson Disease, as well as partnerships including cell therapy applications.

Technology Platform

Going forward, we intend to continue to expand our pipeline by exploiting our most advanced, signature technologies for site specific deletion, integration and correction. This includes:

Our novel nucleases, where we have demonstrated our capabilities across our MGX-001, secreted protein deficiencies and Ionis programs, including precise and specific genetic editing in vivo with no off-target editing; and our SMall Arginine-Rich sysTems ("SMART") genome editing systems, which are small enough to be packaged within an adeno associated virus ("AAV") for delivery.

Our novel Adenine Base Editors ("ABEs"), which achieved greater than 90% editing efficiency simultaneously at seven genomic targets in primary T-cells, with high specificity and no adverse effects on cell health.

Our RNA and DNA Mediated Integration Systems, which leverage RNA and DNA templates to repair diverse mutations.

Initial Public Offering

On February 13, 2024, we completed our initial public offering ("IPO") in which we issued 6,250,000 shares of our common stock at a price to the public of $15.00 per share. We received net proceeds of approximately $80.7 million, after deducting underwriting discounts and commissions and other offering costs totaling approximately $13.0 million.

ATM Program

On March 17, 2025, we entered into an Open Market Sale AgreementSM(the "ATM Sales Agreement") with Jefferies LLC ("Jefferies"), pursuant to which we may issue and sell, from time to time and at our sole discretion, shares of our common stock, through Jefferies as the sales agent, by any method permitted by law deemed to be an "at the market" ("ATM") offering as defined in Rule 415(a)(4) promulgated under the Securities Act, having an aggregate offering price of up to $75.0 million. We will pay Jefferies a commission fee of up to 3.0% of the gross proceeds of any shares sold through Jefferies under the ATM Sales Agreement, and have also provided Jefferies with customary indemnification and contribution rights. As of September 30, 2025, no shares have been sold under the ATM Sales Agreement.

Since our inception, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, research and development activities, building our intellectual property portfolio and providing general and administrative support for these operations. We have historically financed our operations primarily through issuing redeemable convertible preferred stock and convertible promissory notes, sales of our common stock and entering into collaboration agreements.

Macroeconomic Trends

Unfavorable conditions in the economy in the United States ("U.S.") and abroad may negatively affect the growth of our business and our results of operations. For example, macroeconomic events, including, inflationary pressures, interest rate and currency rate fluctuations, increased U.S. trade tariffs, reciprocal and retaliatory tariffs from other countries, and trade disputes with other countries, new laws and regulations enacted by the Trump administration, including, but not limited to, the recently enacted One Big Beautiful Bill Act (the "OBBBA"), 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, have led to economic uncertainty and volatility globally. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. To date, the macroeconomic trends discussed above have not had a material adverse impact on our business, financial condition or results of operations, but we continue to monitor these developments closely. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed. For further discussion of the potential impacts of macroeconomic events on our business, financial condition, and operating results, refer to the section titled "Risk Factors" included elsewhere in this Quarterly Report on Form 10-Q.

Collaboration and License Agreements

As part of our strategy, we have entered into license and collaboration agreements with third parties for one or more of our programs or product candidates we may develop. For example, in September 2025, we entered into the Acuitas License Agreement to license certain Acuitas LNP technology, including LNP patents, formulation processes, and analytical characterization methods for manufacturing products that incorporate the Company's proprietary genome editing constructs formulated with Acuitas LNP technology, to research, develop, sell, and commercialize certain licensed products in connection with a single target. In November 2022, we entered into a Collaboration and License Agreement with Ionis to research, develop and commercialize investigational medicines using our genome editing technologies. Refer to Note 7, "Significant Agreements," in our condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information related to the terms of the agreements between us and our collaborators.

Components of Results of Operations

Collaboration Revenue

We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products for the foreseeable future. Our ability to generate product revenues will depend on the successful development and eventual commercialization of any product candidates that we identify. If we fail to complete the development of any future product candidates in a timely manner or to obtain regulatory approval for such product candidates, our ability to generate future revenue and our results of operations and financial position would be materially adversely affected.

To date, all of our revenue consists of collaboration revenue, earned from collaboration agreements. These agreements may include the following types of promised goods or services: (i) grants of licenses; (ii) performance of research and development services and (iii) participation on joint research and/or development committees. They also may include options to obtain licenses to our intellectual property or to extend the term of the research activities. Our revenues under such collaboration agreements were $8.7 million and $21.3 million for the three and nine months ended September 30, 2025, respectively, and $11.5 million and $42.7 million for the three and nine months ended September 30, 2024, respectively.

For additional information about our revenue recognition policy related to our collaboration agreements, refer to Note 2, "Summary of Significant Accounting Policies" in our consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2024.

Operating Expenses

Research and Development

The largest component of our total operating expenses since our inception has been research and development activities. Research and development expenses consist primarily of personnel costs for research and development employees, including stock-based compensation; the costs of acquiring research and development supplies and services; manufacturing process development costs; the research and development expenses that we share with our collaboration partners for co-development programs; other outside services and consulting costs; and allocated facilities, information technology and overhead expenses. Research and development costs are expensed as incurred.

We have not reported program costs since our inception because we have not historically tracked or recorded our research and development expenses on a program-by-program basis. We use our personnel and infrastructure resources across the breadth of our research and development activities, which are directed toward developing our platform.

We expect that our research and development expenses will increase substantially as we advance our programs through their planned preclinical and clinical development.

General and Administrative

General and administrative expenses consist primarily of personnel costs, including stock-based compensation expense, and other expenses for outside professional services, including legal fees relating to intellectual property and corporate matters; professional fees for accounting, auditing, consulting and tax services; insurance costs; administrative travel expenses; website development costs; marketing and public relations costs; and facilities, information technology and other allocated overhead costs.

We anticipate that our general and administrative expenses will increase in the future to support our increased research and development activities. We also expect to continue to incur costs associated with being a public company and maintaining controls over financial reporting, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC requirements, director and officer insurance costs, and investor and public relations costs.

Total Other Income (Expense), Net

Total other income (expense), net, includes interest income from our investments in available-for-sale marketable securities and changes in the fair value of our investments in Affini-T.

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations for the periods indicated (in thousands):

Collaboration Revenue

Collaboration revenue included the following for the periods indicated (in thousands):

Collaboration revenue decreased by $2.9 million for the three months ended September 30, 2025, as compared to the corresponding prior year period, primarily due to a $1.5 million decrease in revenue related to the Affini-T Agreement and a$1.4 million decrease in revenue related to the Ionis Agreement.

Collaboration revenue decreased by $21.4 million for the nine months ended September 30, 2025, as compared to the corresponding prior year period, primarily due to a $18.7 million decrease in revenue related to the Moderna Agreement due to the recognition of all remaining deferred revenue during the year ended December 31, 2024 as a result of the Termination Agreementand a $2.3 million decrease in revenue related to the Affini-T Agreement.

Research and Development Expenses

The following table summarizes our research and development expenses for the periods indicated (in thousands):

Research and development expenses decreased $1.0 million for the three months ended September 30, 2025, as compared to the corresponding prior year period, primarily due to decreases of $1.6 million in employee-related expenses and $0.5 million in facilities and overhead costs, partially offset by increases of $0.7 million in research and development supplies and services and $0.2 million in stock-based compensation expense.

Research and development expenses decreased $13.1 million for the nine months ended September 30, 2025, as compared to the corresponding prior year period, primarily due to decreases of $5.1 million in employee-related expenses, $3.9 million in research and development supplies and services and $3.4 million in stock-based compensation expense.

General and Administrative Expenses

General and administrative expenses decreased $1.4 million for the three months ended September 30, 2025, as compared to the corresponding prior year period, primarily related to decreases of $0.6 million in professional services and consulting costs, $0.4 million in stock-based compensation expense, $0.3 million in employee-related expenses, and $0.1 million in facilities and overhead costs.

General and administrative expenses decreased $4.9 million for the nine months ended September 30, 2025, as compared to the corresponding prior year period, primarily related to decreases of $2.3 million in professional services and consulting costs, $1.4 million in employee-related expenses, and $1.0 million in facilities and overhead costs.

Total Other Income (Expense), Net

Total other income (expense), net increased $0.7 million for the three months ended September 30, 2025, as compared to the corresponding prior year period, primarily related to a higher loss from the change in fair value of our long-term investment in Affini-T in the prior year period, partially offset by a decrease in interest income.

Total other income (expense), net decreased $3.1 million for the nine months ended September 30, 2025, as compared to the corresponding prior year period, primarily related to a decrease in interest income, partially offset by higher loss from the change in fair value of our long-term investment in Affini-T in the prior year period.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have historically funded our operations primarily through sales of our redeemable convertible preferred units and convertible promissory notes, which generated approximately $351.7 million in aggregate gross proceeds, in addition to net proceeds of approximately $80.7 million received in February 2024 upon the closing of our IPO. Additionally, through September 30, 2025, we received approximately $120.0 million upfront cash payments from collaboration and licensing agreements.

On March 17, 2025, we entered into the ATM Sales Agreement with Jefferies, pursuant to which we may issue and sell shares of our common stock from time to time and at our sole discretion, through Jefferies as our sales agent, by any method permitted that is deemed to be an "at the market offering" as defined in Rule 415(a)(4) promulgated under the Securities Act having an aggregate offering price of up to $75.0 million. As of September 30, 2025, we have not sold any shares under the ATM Sales Agreement.

Our revenue to date has been generated from collaboration agreements. We will not generate revenue from product sales unless and until we successfully initiate and complete clinical development and obtain regulatory approval for one or more product candidates. If we obtain regulatory approval for any product candidate and do not enter into a commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, manufacturing, marketing, and distribution. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, reduce or eliminate the development and commercialization of our platform or delay our pursuit of potential in-licenses or acquisitions.

We have incurred significant operating losses since inception and we expect to continue to incur substantial losses for the foreseeable future. Our net losses were $78.1 million and $68.3 million for the years ended December 31, 2024 and 2023, respectively, and $65.3 million and $54.7 million for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $288.3 million.

Future Funding Requirements

We expect our short and long-term expenses to increase substantially in connection with our ongoing activities, particularly as we advance our portfolio towards candidate nomination and preclinical trials. In addition, we expect to incur additional costs associated with operating as a public company. The timing and amount of our operating expenditures will depend largely on:

As of September 30, 2025, we had $184.1 million in cash, cash equivalents and available-for-sale marketable securities. Based on our current operating plan, we estimate that our existing cash, cash equivalents and available-for-sale marketable securities will be sufficient to fund our projected operating expenses and capital expenditure requirements for at least the next 12 months from the date of issuance of this Quarterly Report on Form 10-Q. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See "Liquidity and Capital Resources" and "Risk Factors-Risks Related To Our Financial Position and Need for Additional Capital." We expect that we will require additional funding to: continue our current research development activities; develop, maintain, expand and protect our intellectual property portfolio; further develop our platform; and hire additional research, clinical and scientific personnel. If we receive regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize our products.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our short and long-term cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest for existing investors may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect existing investors' rights as a stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Cash Flows

The following table summarizes our sources and uses of cash for the periods presented (in thousands):

Cash Flows from Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2025, was $65.3 million and consisted primarily of our net loss of $65.3 million and changes in our net operating assets and liabilities of $15.8 million, offset by net non-cash charges of $15.8 million. The net change in operating assets and liabilities consisted primarily of decreases of $18.0 million in deferred revenue as we recognized revenue under our collaboration agreements and $4.1 million in operating lease liabilities, partially offset by a decrease of $3.8 million in prepaid expenses and other current assets and an increase of $1.5 million in accrued expenses and other current liabilities. The net non-cash charges consisted primarily of $9.2 million in stock-based compensation expense, $4.0 million of depreciation expense, $3.9 million in non-cash lease expense, $1.3 millionchange in fair value related to our investment in Affini-T, partially offset by $2.5 million in accretion of discounts on available-for-sale marketable securities.

Net cash used in operating activities for the nine months ended September 30, 2024, was $82.8 million and consisted primarily of our net loss of $54.7 million and changes in our net operating assets and liabilities of $44.2 million, partially offset by net non-cash charges of $16.1 million. The changes in our net operating assets and liabilities consisted primarily of a decrease of $38.4 million in deferred revenue as we recognized revenue under our collaboration agreements, a decrease of $3.3 million in income tax payable due to payment of our 2023 income tax liability, a decrease of $2.2 million in operating lease liabilities, a decrease of $2.0 million in other non-current liabilities and an increase of $1.2 million in prepaid expenses and other current assets, offset by a decrease of $1.9 million in accounts receivable related to the Affini-T Agreement and the Moderna Agreement and an increase of $1.5 million in accounts payable due to the timing of payments to our vendors. The net non-cash charges consisted primarily of $12.8 million in stock-based compensation expense, $3.9 million of depreciation expense, $3.4 million in non-cash lease expense, and a $2.1 million change related to the fair value of our investments in Affini-T, partially offset by $4.8 million in amortization of discounts on available-for-sale marketable securities and $1.6 million in amortization of non-cash collaboration revenue related to the Affini-T Agreement.

Cash Flows from Investing Activities

Net cash provided by investing activities for the nine months ended September 30, 2025, was $71.2 million primarily due to net maturities of available-for-sale marketable securities of $71.6 million.

Net cash used in investing activities for the nine months ended September 30, 2024, was $116.7 million primarily due to net purchases of available-for-sale marketable securities of $113.6 million and purchases of property and equipment of $2.8 million.

Cash Flows from Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2025, was $0.4 million primarily due to a payment of deferred financing costs.

Net cash provided by financing activities for the nine months ended September 30, 2024, was $84.0 million due to net proceeds from the issuance of our common stock in our IPO, net of issuance costs paid during the period.

Contractual Obligations and Commitments

Our material cash requirements include our contractual obligations for our leased office and laboratory space under three lease agreements and one vivarium lease agreement. During the nine months ended September 30, 2025, there were no material changes outside the ordinary course of our business to our material cash requirements described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 17, 2025.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2, "Summary of Significant Accounting Policies," to our condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles ("GAAP"). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods.

On an ongoing basis, we evaluate our estimates and judgments, including but not limited to those related to revenue recognition under our collaboration agreements, stock-based compensation expense, the valuation of deferred tax assets, and uncertain income tax positions. These estimates and assumptions are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates and assumptions could occur in the future. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ from these estimates under different assumptions or conditions.

During the nine months ended September 30, 2025, there were no material changes to our critical accounting estimates or in the methodology used for estimates from those described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2024.