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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended July 31, 2026
OR
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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: 001-41854
enGene Therapeutics Inc.
(Exact Name of Registrant as Specified in its Charter)
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British Columbia, Canada |
N/A |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer
Identification No.) |
4868 Rue Levy, Suite 220 Saint-Laurent, QC, Canada |
H4R 2P1 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (514) 332-4888
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N/A |
(Former Name or Former Address, if Changed Since Last Report) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Shares |
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ENGN |
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The Nasdaq Stock Market LLC |
Warrants, each exercisable for one Common Share, at an exercise price of $11.50 per share |
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ENGNW |
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The Nasdaq Stock Market LLC |
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, a 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.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 September 2, 2026, the registrant had 67,016,316 Common Shares, with no par value per share, outstanding.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”) may constitute “forward-looking statements” within the meaning of U.S. securities laws and “forward-looking information” within the meaning of Canadian securities laws (collectively, “forward-looking statements”). Our forward-looking statements include, but are not limited to, statements regarding management teams’ expectations, hopes, beliefs, intentions, goals or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “appear,” “approximate,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “would” and similar expressions (or the negative version of such words or expressions) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report may include, for example, statements about:
•our financial performance, including financial projections and business metrics and any underlying assumptions thereunder;
•our ability to maintain the listing of the Company’s common shares (“Common Shares”) and warrants to purchase Common Shares (“Warrants”) on The Nasdaq Capital Market (“Nasdaq”) or another national securities exchange;
•our estimates regarding expenses, future revenue and capital requirements and our expectations regarding our ability to fund our operating expenses, debt obligations and capital expenditure requirements with our cash and cash equivalents;
•our estimates and expectations related to our recently announced cash conservation efforts, workforce reduction and retention initiatives and strategic priorities and plans;
•our success in retaining the continued services of our key officers, personnel or directors, and to identify, hire and retain additional qualified professionals;
•our plans and ability to execute product development, manufacturing process development, preclinical and clinical development efforts successfully and on anticipated timelines;
•our ability to design, initiate and successfully complete clinical trials and other studies for detalimogene voraplasmid, or detalimogene, formerly referred to as EG-70, and any other product candidates we develop and our plans and expectations regarding our ongoing or planned clinical trials;
•the impacts and outcomes of our later-stage and pivotal clinical trials and their influence on obtaining the U.S. Food and Drug Administration (the “FDA”) or comparable foreign regulatory approval to market detalimogene or any future product candidates;
•our plans and ability to seek, obtain and maintain marketing approval from the FDA and other regulatory authorities, including the European Medicines Agency (the “EMA”), for detalimogene or any other product candidates we develop;
•our plans and ability to commercialize detalimogene or any other product candidates we develop, if approved by applicable regulatory authorities;
•our belief as to detalimogene’s potential efficacy, durability, safety, tolerability and ease of use profile;
•the potential benefits of combining a surfactant bladder rinse with detalimogene, including the potential for increased efficacy and durability;
•the degree of market acceptance of detalimogene or any other product candidates we develop, if approved, and the availability of third-party coverage and reimbursement;
•the ability of our external contract manufacturers to support the manufacturing, release testing, stability analysis, clinical labeling and packaging of detalimogene or any other product candidates that we develop;
•our future financial performance and the sufficiency of our cash and cash equivalents to fund our operations;
•our ability to obtain additional funding on a timely basis, if at all;
•our ability to effectively manage the transition of executive-level roles to new leaders, and to attract and retain key executives and employees;
•the outcome of any known and unknown litigation and regulatory proceedings, including any legal proceedings that may be instituted against us or any of our directors or officers; and
•our ability to implement and maintain effective internal controls.
All forward looking-statements, including, without limitation, our examination of historical operating trends, are based upon our current expectations and various assumptions. Certain assumptions made in preparing the forward-looking statements include:
•we are able to retain or recruit, as applicable, qualified scientific and management personnel, establish clinical trial sites and patient registration for clinical trials and acquire technologies complementary to, or necessary for, detalimogene or any other programs;
•we are able to enroll, in a timely manner, a sufficient number of patients in the Phase 2 LEGEND trial to assess the efficacy and safety of detalimogene for the newly announced additional cohort, that incorporates a five-minute surfactant bladder rinse, polidocanol, prior to the administration of detalimogene;
•we obtain feedback from the FDA regarding the pivotal cohort of the Phase 2 LEGEND trial that supports potential submission of a Biologics License Application (“BLA”) and we are able to initiate the submission of our planned BLA in the fourth quarter of calendar year 2026 with the FDA for approval to market detalimogene in the United States as a monotherapy to treat BCG-unresponsive NMIBC with CIS;
•detalimogene’s product profile can be integrated seamlessly into community urology clinics where the vast majority of NMIBC patients are treated;
•we are able to retain commercial rights to detalimogene in the United States and commercialize detalimogene independently, while selectively partnering outside of the United States;
•we are able to execute the “pipeline-in-a-product” development strategy for detalimogene; and
•we are able to utilize the DDX gene delivery platform to develop effective, new product candidates for the delivery of genetic medicines to mucosal tissues.
You should not place undue reliance on these forward-looking statements which speak only as of the date hereof. The forward-looking statements contained in this Quarterly Report are based primarily on current expectations and projections about future events and trends that may affect our business, financial condition and operating results. The following uncertainties and factors, among other things (including those described in “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025, as amended by Amendment No. 1 to Form 10-K filed with Securities and Exchange Commission (the “SEC”) on February 19, 2026 (the “Annual Report”)) and elsewhere in this Quarterly Report and in our other filings with the SEC, could affect future performance and actual results to differ materially and adversely from those expressed in, anticipated or implied by forward-looking statements:
•risks applicable to our business, including the heavy dependence on the success of detalimogene and the extensive regulation of all aspects of our business, and competition from other existing or newly developed products and treatments;
•risks associated with the protection of intellectual property, our ability to raise additional capital to fund our product development activity, and our ability to maintain key relationships and to attract and retain talented personnel;
•the possibility that we may be adversely affected by changes in domestic and foreign laws and regulations, including but not limited to resultant changes in business, market, financial, political, legal or geopolitical conditions, including tariffs, economic sanctions and economic slowdowns or recessions, or prolonged government shutdowns or defunding;
•the risk that any regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect our business; and
•other risks and uncertainties set forth in the section entitled “Risk Factors” in our Annual Report and elsewhere in this Quarterly Report and in our other filings with the SEC.
In addition, statements that “we believe” and similar statements reflect beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
ENGENE THERAPEUTICS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
(Unaudited)
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July 31,
2026 |
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October 31, 2025 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
41,025 |
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$ |
50,152 |
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Marketable securities - short term |
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225,295 |
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143,584 |
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Restricted investments |
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79 |
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79 |
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Investment tax credits receivable |
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975 |
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927 |
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Prepaid and other current assets |
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10,526 |
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6,649 |
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Total current assets |
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277,900 |
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|
|
201,391 |
|
Marketable securities - long term |
|
|
— |
|
|
|
8,522 |
|
Property and equipment, net |
|
|
2,156 |
|
|
|
2,477 |
|
Operating lease right of use asset |
|
|
6,877 |
|
|
|
7,716 |
|
Other assets |
|
|
1,389 |
|
|
|
1,362 |
|
Total assets |
|
$ |
288,322 |
|
|
$ |
221,468 |
|
Liabilities and shareholders’ equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
2,541 |
|
|
$ |
6,688 |
|
Accrued expenses and other current liabilities |
|
|
22,220 |
|
|
|
15,275 |
|
Operating lease liabilities, current |
|
|
2,249 |
|
|
|
2,014 |
|
Current portion of note payable |
|
|
199 |
|
|
|
8,002 |
|
Total current liabilities |
|
|
27,209 |
|
|
|
31,979 |
|
Note payable, net of current portion |
|
|
25,155 |
|
|
|
15,324 |
|
Operating lease liabilities, net of current portion |
|
|
5,668 |
|
|
|
6,455 |
|
Total liabilities |
|
|
58,032 |
|
|
|
53,758 |
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
Common shares, no par value; unlimited shares authorized, 67,014,067 and 52,018,658 shares issued and outstanding as of July 31, 2026 and October 31, 2025, respectively. |
|
|
632,021 |
|
|
|
513,281 |
|
Additional paid-in capital |
|
|
64,132 |
|
|
|
27,349 |
|
Accumulated other comprehensive loss |
|
|
(1,351 |
) |
|
|
(888 |
) |
Accumulated deficit |
|
|
(464,512 |
) |
|
|
(372,032 |
) |
Total shareholders’ equity |
|
|
230,290 |
|
|
|
167,710 |
|
Total liabilities and shareholders’ equity |
|
$ |
288,322 |
|
|
$ |
221,468 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ENGENE THERAPEUTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
Nine Months Ended July 31, |
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
20,090 |
|
|
$ |
22,575 |
|
|
$ |
64,540 |
|
|
$ |
62,758 |
|
General and administrative |
|
|
13,924 |
|
|
|
7,372 |
|
|
|
32,627 |
|
|
|
20,926 |
|
Total operating expenses |
|
|
34,014 |
|
|
|
29,947 |
|
|
|
97,167 |
|
|
|
83,684 |
|
Loss from operations |
|
|
34,014 |
|
|
|
29,947 |
|
|
|
97,167 |
|
|
|
83,684 |
|
Other expenses (income), net: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(2,401 |
) |
|
|
(2,233 |
) |
|
|
(7,804 |
) |
|
|
(7,451 |
) |
Interest expense |
|
|
843 |
|
|
|
758 |
|
|
|
2,320 |
|
|
|
2,244 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
488 |
|
|
|
— |
|
Other expenses, net |
|
|
45 |
|
|
|
280 |
|
|
|
309 |
|
|
|
448 |
|
Total other income, net |
|
|
(1,513 |
) |
|
|
(1,195 |
) |
|
|
(4,687 |
) |
|
|
(4,759 |
) |
Net loss before income taxes |
|
|
32,501 |
|
|
|
28,752 |
|
|
|
92,480 |
|
|
|
78,925 |
|
Provision for income taxes |
|
|
— |
|
|
|
239 |
|
|
|
- |
|
|
|
497 |
|
Net loss |
|
$ |
32,501 |
|
|
$ |
28,991 |
|
|
$ |
92,480 |
|
|
$ |
79,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss (income): |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss (gain) on available-for-sale investments |
|
|
210 |
|
|
|
240 |
|
|
|
463 |
|
|
|
(210 |
) |
Total comprehensive loss |
|
$ |
32,711 |
|
|
$ |
29,231 |
|
|
$ |
92,943 |
|
|
$ |
79,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share of common shares, basic and diluted |
|
$ |
0.47 |
|
|
$ |
0.57 |
|
|
$ |
1.34 |
|
|
$ |
1.56 |
|
Weighted-average common shares outstanding, basic and diluted |
|
|
69,734,610 |
|
|
|
51,097,711 |
|
|
|
68,898,554 |
|
|
|
51,031,618 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ENGENE THERAPEUTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares |
|
|
Additional Paid in |
|
|
Accumulated Other
Comprehensive |
|
|
Accumulated |
|
|
Total Shareholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
Equity |
|
Balance at October 31, 2024 |
|
|
50,976,676 |
|
|
$ |
509,811 |
|
|
$ |
18,950 |
|
|
$ |
(1,419 |
) |
|
$ |
(254,730 |
) |
|
$ |
272,612 |
|
Exercise of stock options |
|
|
884 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
1,809 |
|
|
|
— |
|
|
|
— |
|
|
|
1,809 |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
144 |
|
|
|
— |
|
|
|
144 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(24,616 |
) |
|
|
(24,616 |
) |
Balance at January 31, 2025 |
|
|
50,977,560 |
|
|
$ |
509,812 |
|
|
$ |
20,759 |
|
|
$ |
(1,275 |
) |
|
$ |
(279,346 |
) |
|
$ |
249,950 |
|
Exercise of stock options |
|
|
93,291 |
|
|
|
309 |
|
|
|
(109 |
) |
|
|
— |
|
|
|
— |
|
|
|
200 |
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
2,650 |
|
|
|
— |
|
|
|
— |
|
|
|
2,650 |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
306 |
|
|
|
— |
|
|
|
306 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25,815 |
) |
|
|
(25,815 |
) |
Balance at April 30, 2025 |
|
|
51,070,851 |
|
|
$ |
510,121 |
|
|
$ |
23,300 |
|
|
$ |
(969 |
) |
|
$ |
(305,161 |
) |
|
$ |
227,291 |
|
Exercise of stock options |
|
|
34,956 |
|
|
|
43 |
|
|
|
(12 |
) |
|
|
— |
|
|
|
— |
|
|
|
31 |
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
2,581 |
|
|
|
— |
|
|
|
— |
|
|
|
2,581 |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(240 |
) |
|
|
— |
|
|
|
(240 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(28,991 |
) |
|
|
(28,991 |
) |
Balance at July 31, 2025 |
|
|
51,105,807 |
|
|
$ |
510,164 |
|
|
$ |
25,869 |
|
|
$ |
(1,209 |
) |
|
$ |
(334,152 |
) |
|
$ |
200,672 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares |
|
|
Additional Paid in |
|
|
Accumulated Other
Comprehensive |
|
|
Accumulated |
|
|
Total Shareholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
Equity |
|
Balance at October 31, 2025 |
|
|
52,018,658 |
|
|
$ |
513,281 |
|
|
$ |
27,349 |
|
|
$ |
(888 |
) |
|
$ |
(372,032 |
) |
|
$ |
167,710 |
|
Exercise of stock options |
|
|
117,868 |
|
|
|
440 |
|
|
|
(163 |
) |
|
|
— |
|
|
|
— |
|
|
|
277 |
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
2,803 |
|
|
|
— |
|
|
|
— |
|
|
|
2,803 |
|
Issuance of common shares in connection with public offering, net of issuance costs |
|
|
14,852,940 |
|
|
|
118,271 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
118,271 |
|
Issuance of pre-funded warrants, net of issuance costs |
|
|
— |
|
|
|
— |
|
|
|
21,780 |
|
|
|
— |
|
|
|
— |
|
|
|
21,780 |
|
Issuance of warrants in connection with Second Amended Term Loan |
|
|
— |
|
|
|
— |
|
|
|
411 |
|
|
|
— |
|
|
|
— |
|
|
|
411 |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
46 |
|
|
|
— |
|
|
|
46 |
|
Net loss |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
(29,752 |
) |
|
|
(29,752 |
) |
Balance at January 31, 2026 |
|
|
66,989,466 |
|
|
$ |
631,992 |
|
|
$ |
52,180 |
|
|
$ |
(842 |
) |
|
$ |
(401,784 |
) |
|
$ |
281,546 |
|
Exercise of stock options |
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
4,145 |
|
|
|
— |
|
|
|
— |
|
|
|
4,145 |
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(299 |
) |
|
|
— |
|
|
|
(299 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(30,227 |
) |
|
|
(30,227 |
) |
Balance at April 30, 2026 |
|
|
66,989,466 |
|
|
$ |
631,995 |
|
|
$ |
56,325 |
|
|
$ |
(1,141 |
) |
|
$ |
(432,011 |
) |
|
$ |
255,168 |
|
Exercise of stock options |
|
|
24,601 |
|
|
|
26 |
|
|
|
(3 |
) |
|
|
— |
|
|
|
— |
|
|
|
23 |
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
7,810 |
|
|
|
— |
|
|
|
— |
|
|
|
7,810 |
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(210 |
) |
|
|
— |
|
|
|
(210 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(32,501 |
) |
|
|
(32,501 |
) |
Balance at July 31, 2026 |
|
|
67,014,067 |
|
|
$ |
632,021 |
|
|
$ |
64,132 |
|
|
$ |
(1,351 |
) |
|
$ |
(464,512 |
) |
|
|
230,290 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ENGENE THERAPEUTICS INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended July 31, |
|
|
|
2026 |
|
|
2025 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(92,480 |
) |
|
$ |
(79,422 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Non-cash interest expense |
|
|
533 |
|
|
|
645 |
|
Loss on extinguishment of debt |
|
|
488 |
|
|
|
— |
|
Loss on impairment of assets |
|
|
147 |
|
|
|
— |
|
Non-cash lease expense |
|
|
716 |
|
|
|
125 |
|
Accretion of marketable securities |
|
|
(1,365 |
) |
|
|
(2,645 |
) |
Unrealized foreign currency losses |
|
|
11 |
|
|
|
28 |
|
Share-based compensation expense |
|
|
14,758 |
|
|
|
7,040 |
|
Depreciation of property and equipment |
|
|
547 |
|
|
|
338 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Investment tax credit receivable |
|
|
(49 |
) |
|
|
(378 |
) |
Prepaid expenses and other assets |
|
|
(3,908 |
) |
|
|
3 |
|
Accounts payable |
|
|
(4,151 |
) |
|
|
970 |
|
Accrued expenses and other current liabilities |
|
|
6,943 |
|
|
|
(1,024 |
) |
Lease liabilities |
|
|
(537 |
) |
|
|
43 |
|
Net cash used in operating activities |
|
|
(78,347 |
) |
|
|
(74,277 |
) |
Cash flows from investing activities |
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(251 |
) |
|
|
(1,048 |
) |
Purchases of marketable securities |
|
|
(261,780 |
) |
|
|
(153,095 |
) |
Proceeds from maturities of marketable securities |
|
|
189,493 |
|
|
|
88,505 |
|
Net cash used in investing activities |
|
|
(72,538 |
) |
|
|
(65,638 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
Proceeds from Second Amended Term Loan |
|
|
25,000 |
|
|
|
— |
|
Repayment of Amended Term Loan principal |
|
|
(23,053 |
) |
|
|
(699 |
) |
Payment of issuance costs associated with Second Amended Term Loan |
|
|
(545 |
) |
|
|
— |
|
Proceeds from issuance of pre-funded warrants |
|
|
23,250 |
|
|
|
— |
|
Proceeds from public offering |
|
|
126,250 |
|
|
|
— |
|
Payment of issuance cost associated with public offering and pre-funded warrants |
|
|
(9,448 |
) |
|
|
— |
|
Proceeds from exercise of stock options |
|
|
303 |
|
|
|
232 |
|
Net cash provided by financing activities |
|
|
141,757 |
|
|
|
(467 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
1 |
|
|
|
1 |
|
Net decrease in cash and cash equivalents |
|
|
(9,127 |
) |
|
|
(140,381 |
) |
Cash and cash equivalents at beginning of period |
|
|
50,152 |
|
|
|
173,004 |
|
Cash and cash equivalents at end of period |
|
$ |
41,025 |
|
|
$ |
32,623 |
|
Supplemental cash flow information: |
|
|
|
|
|
|
Cash paid for interest |
|
$ |
1,590 |
|
|
$ |
1,578 |
|
Warrant value issued as part of Second Amended Term Loan |
|
$ |
411 |
|
|
$ |
- |
|
Right of use assets obtained in exchange for lease liabilities |
|
|
— |
|
|
|
6,352 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
(Unaudited)
1.Description of Business
enGene Therapeutics Inc., formerly enGene Holdings Inc., together with its consolidated subsidiaries enGene Inc. and enGene USA, Inc. (“enGene” or the “Company”) is a clinical-stage biotechnology company focused on developing genetic medicines to improve the lives of patients, and its head office is located in Montreal, Quebec, Canada. The Company is developing non-viral genetic medicines based on its novel and proprietary dually derived chitosan, or “DDX”, gene delivery platform, which allows localized delivery of multiple gene cargos directly to mucosal tissues and other organs. We currently only have one product candidate, detalimogene, which is in a pivotal Phase 2 trial.
The Company lists its Common Shares and Warrants on the Nasdaq Global Market under the symbols “ENGN” and “ENGNW,” respectively.
Segment Information
The Company considered the Company’s organizational structure and the information regularly reviewed and evaluated by the Company’s chief operating decision maker (“CODM”) when deciding how to allocate resources and assess performance. The Company has determined that its CODM is its Chief Executive Officer (“CEO”). The CODM reviews the financial information on a consolidated basis for purposes of evaluating financial performance and allocating resources. Based on this factor, the Company determined that it operates and manages its business as a single operating segment. As of July 31, 2026, the Company had $5.5 million and $3.6 million in long-lived assets held in the United States and in Canada, respectively. As of October 31, 2025, the Company had $7.2 million and $3.0 million in long-lived assets held in the United States and in Canada, respectively.
Liquidity and Going Concern
In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are any 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 these consolidated financial statements are issued. As indicated in Note 16, Strategic Restructuring, in June 2026 the Company announced a plan to reduce its workforce by approximately 50% to streamline operations and preserve cash, in alignment with the Company’s strategic priorities. As of the issuance date of these consolidated financial statements, the Company expects that its existing cash, cash equivalents and marketable securities as of July 31, 2026 will be sufficient to fund its operating expenses and debt obligations requirements for at least the next 12 months.
The Company’s interim condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which presumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the ordinary course of business.
As an emerging growth entity, the Company has devoted substantially all of its resources since inception to organizing and staffing the Company, raising capital, establishing its intellectual property portfolio, acquiring or discovering product candidates, research and development activities for developing non-viral genetic medicines and other compounds, establishing arrangements with third parties for the manufacture of its product candidates and component materials, and providing general and administrative support for these operations. As a result, the Company has incurred significant operating losses and negative cash flows from operations since its inception and anticipates such losses and negative cash flows will continue for the foreseeable future.
The Company has incurred a net loss of $92.5 million and negative cash flows from operating activities of $78.3 million for the nine months ended July 31, 2026 and, as of that date, has an accumulated deficit of $464.5 million. The Company has not yet commercialized any product candidates and does not expect to generate revenue until the approval and subsequent launch of detalimogene or from other sources, if at all.
Even if the implementation of the workforce reduction and cash preservation strategy announced in June 2026 provides the anticipated cost savings as expected, the Company will need additional funding to support its continuing operations, service its outstanding debt and pursue its development strategy. To date, the Company has not generated any revenues and has financed its liquidity needs primarily through public and PIPE financings, offering debt, and issuance of warrants. The Company may seek additional funding through public or private equity offerings, debt financings, collaborations, strategic alliances or licensing arrangements with third parties or other means. There is no assurance that the Company will be successful in obtaining sufficient funding on acceptable terms, if at all, and it could be forced to delay, reduce or eliminate some or all of its research and development
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
programs or commercialization efforts, which could materially adversely affect the Company’s business prospects or its ability to continue operations.
2.Summary of Significant Accounting Policies
The Company’s significant accounting policies are disclosed in the audited consolidated annual financial statements for the years ended October 31, 2025 and 2024 and notes thereto, as found in our Annual Report on Form 10-K for the year ended October 31, 2025. These interim condensed consolidated financial statements should be read in conjunction with the consolidated annual financial statements. Since the date of those annual financial statements, the Company began using a blended weighted average historical volatility which includes the Company's volatility and guideline company volatilities to determine volatility for awards granted beginning in the first quarter ended January 31, 2026. There have been no other changes to the Company’s significant accounting policies.
Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and judgments that may affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements and the related reporting of expense during the reporting period. Significant estimates of accounting reflected in these consolidated financial statements include, but are not limited to, accrued research and development expenses. Actual results could differ from those estimates.
Unaudited Interim Financial Information and Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with GAAP for interim financial reporting and accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. The condensed consolidated balance sheet at October 31, 2025 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for annual financial statements. These interim financial statements include the accounts of the Company and its wholly owned subsidiaries, enGene, Inc. and enGene USA, Inc. All intercompany accounts and transactions have been eliminated in consolidation. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated annual financial statements as of October 31, 2025 and 2024 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated balance sheet as of July 31, 2026, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended July 31, 2026 and 2025, the condensed consolidated statement of shareholders' equity for the three and nine months ended July 31, 2026 and 2025, and condensed consolidated statements of cash flows for the nine months ended July 31, 2026 and 2025. The financial data and other information disclosed in these notes related to the three and nine months ended July 31, 2026 and 2025 are unaudited. The results for the three and nine months ended July 31, 2026 and 2025 are not necessarily indicative of results to be expected for the year ending October 31, 2026, any other interim periods, or any future year or period.
Foreign Currency
Transaction gains and losses from currency exchange rate fluctuations on transactions denominated in a currency other than the U.S. Dollar functional currency are recorded in Other income (expense), net in the Company's condensed consolidated statements of operations and comprehensive loss. Such transaction gain and losses may be realized or unrealized depending upon whether the transaction settled during the period or remains outstanding at the balance sheet date. The functional currency of the Company and its consolidated subsidiaries is the U.S. Dollar.
Recently Issued Accounting Pronouncements – Not Yet Adopted
In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), which establishes new guidance for the recognition, measurement, presentation, and disclosure of environmental credits and related obligations. The new guidance is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the effect of this updated standard on its consolidated financial statements and related disclosures.
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software, which removes references to project stages and clarified when the Company is required to begin capitalizing eligible costs. The new guidance is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. ASU 2025-06 may be applied retrospectively or prospectively. The Company is currently evaluating the effect of this updated standard on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, as further clarified by ASU 2025-01, Income Statement - Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, issued in January, 2025, which requires entities to disclose additional information about specific expense categories in the notes to the financial statements. This ASU is effective for annual periods beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 may be applied retrospectively or prospectively. The Company is currently evaluating the effect of this updated standard on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which improves transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU No 2023-09 is effective for the Company's annual financial statements for the year ending October 31, 2026. The Company is currently evaluating the impact of the guidance on the financial statements and related disclosures.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative, which amends GAAP to reflect updates and simplifications to certain disclosure and presentation requirements referred to FASB by the SEC. The targeted amendments incorporate 14 of the 27 disclosures referred by the SEC into codification. Each amendment in ASU 2023-06 is effective on the date on which the SEC's removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective but will not be effective if the SEC has not removed the applicable disclosure requirements by June 30, 2027. Early adoption is prohibited. The Company is currently evaluating the impact of the amendments on its financial statements and related disclosures.
3.Fair Value Measurements
The following table presents the Company's fair value hierarchy for financial assets measured at fair value as of July 31, 2026:
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July 31, 2026 |
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Description |
|
Total |
|
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1) |
|
|
Significant Other
Observable
Inputs (Level 2) |
|
|
Significant Other
Unobservable
Inputs (Level 3) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
15,640 |
|
|
$ |
15,640 |
|
|
$ |
— |
|
|
$ |
— |
|
U.S. government treasuries |
|
|
3,157 |
|
|
|
3,157 |
|
|
|
— |
|
|
|
— |
|
Short term marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government treasuries |
|
|
211,585 |
|
|
|
211,585 |
|
|
|
— |
|
|
|
— |
|
Government agency securities |
|
|
13,710 |
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|
|
— |
|
|
|
13,710 |
|
|
|
— |
|
Total financial assets |
|
$ |
244,092 |
|
|
$ |
230,382 |
|
|
$ |
13,710 |
|
|
$ |
— |
|
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
The following table presents the Company's fair value hierarchy for financial assets measured at fair value as of October 31, 2025:
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October 31, 2025 |
|
Description |
|
Total |
|
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1) |
|
|
Significant Other
Observable
Inputs (Level 2) |
|
|
Significant Unobservable
Inputs (Level 3) |
|
Assets |
|
|
|
|
|
|
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|
|
|
|
|
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
8,642 |
|
|
$ |
8,642 |
|
|
$ |
— |
|
|
$ |
— |
|
U.S. government treasuries |
|
|
21,623 |
|
|
|
21,623 |
|
|
|
— |
|
|
|
— |
|
Government agency securities |
|
|
3,249 |
|
|
|
— |
|
|
|
3,249 |
|
|
|
— |
|
Short term marketable securities: |
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|
|
|
|
|
|
|
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|
|
U.S. government treasuries |
|
|
125,467 |
|
|
|
125,467 |
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|
|
— |
|
|
|
— |
|
Government agency securities |
|
|
18,117 |
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|
|
— |
|
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|
18,117 |
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|
|
— |
|
Long term marketable securities: |
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U.S. government treasuries |
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|
8,522 |
|
|
|
8,522 |
|
|
|
— |
|
|
|
— |
|
Total financial assets |
|
$ |
185,620 |
|
|
$ |
164,254 |
|
|
$ |
21,366 |
|
|
$ |
— |
|
As of July 31, 2026 and October 31, 2025, the Company classified its government agency marketable securities as Level 2 within the valuation hierarchy. The Company estimates the fair value of these marketable securities by taking into consideration valuations obtained from third-party pricing sources. These pricing sources utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly to estimate fair value. These inputs include market pricing based on real time trade data for the same or similar securities, issuer credit spreads, benchmark yields, and other observable inputs.
During the three and nine months ended July 31, 2026 and 2025, there were no transfers or reclassifications between fair value measurement levels of assets or liabilities. The carrying values of all other financial current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.
The Company invests in money market funds, U.S. Treasury and government agency debt securities; all marketable securities are classified as available-for-sale and carried at fair value, with unrealized changes in fair value reflected in the other comprehensive income in the condensed consolidated statements of shareholders' equity.
As of July 31, 2026, the marketable securities consisted of the following:
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July 31, 2026 |
|
Description |
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Aggregate Fair Value |
|
Cash equivalents and short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds, included in cash and cash equivalents |
|
$ |
15,640 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
15,640 |
|
U.S. government treasuries |
|
|
215,071 |
|
|
|
8 |
|
|
$ |
(337 |
) |
|
$ |
214,742 |
|
Government agency securities |
|
|
13,720 |
|
|
|
— |
|
|
|
(10 |
) |
|
$ |
13,710 |
|
Total cash equivalents and short-term investments |
|
$ |
244,431 |
|
|
$ |
8 |
|
|
$ |
(347 |
) |
|
$ |
244,092 |
|
As of July 31, 2026, all marketable securities held by the Company had remaining contractual maturities of one year or less.
As of July 31, 2026, the Company held 59 securities, 52 of which, with an aggregate fair value of $136.1 million, were in an unrealized loss position. All investments in an unrealized loss position were in this position for less than 12 months except for one security that has sustained an unrealized loss position for greater than 12 months; the unrealized loss on this security is immaterial, representing less than 1% of its total value. There has been no change in the credit risk of such securities during the three and nine months ended July 31, 2026. The Company does not intend to sell its investments and it is not more likely than not that the Company
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
will be required to sell the securities before recovery of the amortized cost basis of its debt securities. No allowance for credit losses was recorded as of July 31, 2026 because the decline in fair value below amortized cost is not related to credit losses. Securities are evaluated at the end of each reporting period for evidence of the credit-related impairment. The unrealized losses on U.S. treasury and government agency securities range from 0-1% of their amortized cost.
As of October 31, 2025, the marketable securities consisted of the following:
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October 31, 2025 |
|
Description |
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Aggregate Fair Value |
|
Cash equivalents and short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds, included in cash and cash equivalents |
|
$ |
8,642 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
8,642 |
|
U.S. government treasuries |
|
|
146,984 |
|
|
|
131 |
|
|
|
(25 |
) |
|
|
147,090 |
|
Government agency securities |
|
|
21,368 |
|
|
|
7 |
|
|
|
(9 |
) |
|
|
21,366 |
|
Total cash equivalents and short-term investments |
|
$ |
176,994 |
|
|
$ |
138 |
|
|
$ |
(34 |
) |
|
$ |
177,098 |
|
Long-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government treasuries |
|
|
8,498 |
|
|
|
25 |
|
|
|
(1 |
) |
|
|
8,522 |
|
Total long-term investments |
|
|
8,498 |
|
|
|
25 |
|
|
|
(1 |
) |
|
|
8,522 |
|
Total |
|
|
185,492 |
|
|
|
163 |
|
|
|
(35 |
) |
|
|
185,620 |
|
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|
As of October 31, 2025, all marketable securities held by the Company had remaining contractual maturities of one year or less, except for certain government agency securities that had maturities of one to two years.
As of October 31, 2025, the Company held 50 securities, 14 of which, with an aggregate fair value of $55.9 million, were in unrealized loss position. All investments in an unrealized loss position were in this position for less than 12 months. The Company does not intend to sell its investments before recovery of the amortized cost basis of its debt securities at maturity and no allowance for credit losses was recorded as of October 31, 2025 because the decline in fair value below amortized cost is not related to credit losses. Securities are evaluated at the end of each reporting period. The unrealized losses on U.S. Treasury and government agency securities range from 0-1% of their amortized cost.
Accrued interest receivable on the Company's marketable securities totaled $1.9 million and $1.3 million as of July 31, 2026 and October 31, 2025, respectively, and was presented within prepaids and other current assets on the Company's condensed consolidated balance sheets. No accrued interest receivable was written off during the three and nine months ended July 31, 2026 and 2025.
There were no material realized gains or losses recognized related to available-for-sale securities during the three and nine months ended July 31, 2026 and 2025.
5.Property and Equipment, Net
As of July 31, 2026, and October 31, 2025, property and equipment consisted of the following:
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July 31, |
|
|
October 31, |
|
|
|
2026 |
|
|
2025 |
|
Lab equipment |
|
$ |
3,249 |
|
|
$ |
3,134 |
|
Office furniture |
|
|
879 |
|
|
|
871 |
|
Computer equipment |
|
|
298 |
|
|
|
169 |
|
Leasehold improvements |
|
|
220 |
|
|
|
262 |
|
Computer software |
|
|
144 |
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|
|
144 |
|
Property and equipment |
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|
4,790 |
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|
|
4,580 |
|
Less: Accumulated depreciation and amortization |
|
|
2,634 |
|
|
|
2,103 |
|
Property and equipment, net |
|
$ |
2,156 |
|
|
$ |
2,477 |
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ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
Depreciation and amortization expense related to property and equipment was $0.1 million for each of the three months ended July 31, 2026 and 2025. Depreciation and amortization expense related to property and equipment was $0.5 million and $0.3 million for the nine months ended July 31, 2026 and 2025, respectively.
6.Accrued Expenses and Other Current Liabilities
As of July 31, 2026, and October 31, 2025, accrued expenses and other current liabilities consisted of the following:
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|
|
July 31, |
|
|
October 31, |
|
|
|
2026 |
|
|
2025 |
|
Research and development expenses |
|
$ |
13,464 |
|
|
$ |
9,397 |
|
Employee compensation and related benefits |
|
|
7,102 |
|
|
|
4,053 |
|
Professional fees |
|
|
989 |
|
|
|
1,229 |
|
Other |
|
|
665 |
|
|
|
577 |
|
Income taxes payable |
|
|
- |
|
|
|
19 |
|
Total accrued expenses and other current liabilities |
|
$ |
22,220 |
|
|
$ |
15,275 |
|
7.License Agreement and Clinical Research Organization
License Agreement – Nature Technology Corporation
On April 10, 2020, the Company entered into a Non-Exclusive License Agreement (the “License Agreement”) with Nature Technology Corporation (“NTC”) whereby the Company licenses certain rights to NanoplasmidTM technology from NTC for commercialization. Under the terms of the License Agreement, NTC granted to the Company and its affiliates a world-wide, non-exclusive, royalty-bearing, sublicensable license to research, have researched, develop, have developed, make, have made, use, have used, import, have imported, sell, offer to sell, and have sold or offered for sale any product in the defined license field. Unless terminated earlier, the NTC license agreement will continue until no valid claim of any licensed patent exists in any country. The Company can voluntarily terminate the license agreement with prior notice to NTC.
The Company paid NTC an initial, upfront fee of $50 thousand which was recorded as research and development expense upon entering into the License Agreement. Beginning on the first anniversary of the effective date of the License Agreement and on each subsequent anniversary, the Company is required to pay NTC a $50 thousand annual maintenance fee. The Company is also required to make a payment to NTC of $50 thousand upon assigning the License Agreement to a third party.
The License Agreement provides for a one-time payment of $50 thousand for the first dose of a milestone product, as defined in the License Agreement, in the first patient in a Phase I clinical trial or, if there is no Phase I clinical trial, in a Phase II clinical trial, as well as a one-time payment of $450 thousand upon regulatory approval of a milestone product by the FDA. The first milestone, related to the first dose of a milestone product, was achieved during the year ended October 31, 2021. The second milestone - regulatory approval of a milestone product, has not yet been achieved as of July 31, 2026. The Company is also required to pay NTC a royalty percentage in the low single digits of the aggregate net product sales in a calendar year by the Company, its affiliates or sublicensees on a product-by-product and country-by-country basis, as long as the composition or use of the applicable product is covered by a valid claim in the country where the net sales occurred. Royalty obligations under the license agreement will continue until the expiration of the last valid claim of a licensed patent covering such licensed product in such country.
In the event that the Company or any of its affiliates or sublicensees manufactures any Good Manufacturing Practice (“GMP”) lot of a product, then the Company or any such affiliate or sublicensee will be obligated to pay NTC an amount per manufactured gram of GMP (or its equivalent) lot of product, which varies based on the volume manufactured. The payment will expire on a product-by-product basis upon receipt of regulatory approval to market a product in any country in the licensed territory.
During each of the three and nine months ended July 31, 2026 and 2025, the Company incurred $13 and $38 thousand, respectively, of expenses related to the annual maintenance fee under the License Agreement. As of July 31, 2026, the Company had not incurred fees related to the manufacturing payment under the License Agreement. All expenses related to License Agreement are recorded within research and development expenses.
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
Amended Loan and Security Agreement and the First and Second Amendments
On December 30, 2021, the Company entered into a Loan and Security Agreement (the "2021 Loan Agreement") with Hercules Capital, Inc. ("Hercules") for the issuance of a term loan facility with an aggregate principal amount of up to $20.0 million (the “2021 Term Loan”). On December 22, 2023 (the "Original Closing Date"), the Company entered into an Amended and Restated Loan and Security Agreement (the “2023 Loan Agreement”), with Hercules, as agent and lender, and the several banks and other financial institutions or entities from time to time parties thereto (the "Lenders"). The 2023 Loan Agreement amended and restated in its entirety the 2021 Loan Agreement. The 2023 Loan Agreement provided for a term loan facility of up to $50.0 million available in multiple tranches (the “2023 Term Loan”), as follows: (i) an initial term loan advance (the “Tranche 1 Advance”) that was made on the Tranche 1 Advance closing of $22.5 million, approximately $8.6 million of which was applied to refinance in full the term loans outstanding under the 2021 Loan Agreement, (ii) subject to the achievement of the specified Interim Milestone (the “Interim Milestone”), which includes no default or event of default, delivery of written notice to the Lenders that the Company has conducted an analysis of interim efficacy of data from the clinical evaluation of detalimogene in the Phase 2 clinical study, and satisfaction of certain other conditions precedent, a right of the Company to request that the Lenders make additional term loan advances in an aggregate principal amount of up to $7.5 million from the date of achievement of the Interim Milestone through the earlier of (x) 60 days following the achievement of the Interim Milestone and (y) March 31, 2025, and (iii) an uncommitted tranche subject to the Lenders’ investment committee approval and satisfaction of certain other conditions precedent (including payment of a 0.75% facility charge on the amount borrowed), pursuant to which the Company may request from time to time up to and including the Amortization Date (as defined below) that the Lenders make additional term loan advances to the Company in an aggregate principal amount of up to $20.0 million. The Company is required to pay on January 1, 2028, an end of term fee equal to 5.50% of the aggregate principal amount of the 2023 Term Loan (the “2023 End of Term Charge”). The Company was also required to pay on July 1, 2025, $0.7 million representing the 2021 Term Loan end of term charge.
On December 18, 2024, the Company entered into a First Amendment to Amended and Restated Loan and Security Agreement (the "First Amendment", and together with the 2023 Loan Agreement, the “First Amended Loan Agreement”) with the Lenders. The First Amendment modified the 2023 Loan Agreement to reallocate the $7.5 million previously available under Tranche 2 (as described in the Second Amended Loan Agreement, as defined below), which was not drawn by the Company upon achievement of the Interim Milestone, to Tranche 3 (as defined in the Second Amended Loan Agreement). Pursuant to the First Amendment, the $7.5 million advance originally available upon achievement of the Interim Milestone was added to the uncommitted tranche subject to the Lenders' investment committee approval and satisfaction of certain other conditions precedent (including payment of a 0.75% facility charge on the amount borrowed), pursuant to which the Company could request from time to time that the Lenders make additional loan advances to the Company in an aggregate principal amount of up to $27.5 million. The First Amendment did not change the total term loan facility available to the Company of up to $50.0 million. The First Amendment further provided for certain administrative changes in accordance with the foregoing.
On January 20, 2026 (the “Second Amendment Closing Date”), the Company entered into a Second Amendment to its Amended and Restated Loan and Security Agreement (the "Second Amendment", and together with the First Amended Loan Agreement, the “Second Amended Loan Agreement”) with the Lenders. The Second Amendment modified the First Amended Loan Agreement to, amongst other things: (i) increase the term loan facility from $50.0 million up to $125.0 million to be made available to the Company upon the achievement of certain milestones (the “2026 Term Loan”), (ii) extend the maturity date of the facility, and (iii) provide for certain other updates.
The Second Amended Loan Agreement provides for up to $125.0 million available for advances in multiple tranches, as follows: (i) an initial term loan advance of $25.0 million to refinance in full the term loans outstanding under the First Amended Loan Agreement, which advance was issued to the Company on the Second Amendment Closing Date; (ii) an aggregate principal amount of up to $35.0 million, subject to the achievement of the Clinical Milestone (as defined in the Second Amended Loan Agreement) and satisfaction of certain other conditions precedent, and continuing through March 31, 2027; (iii) an aggregate principal amount of up to $20.0 million, subject to the achievement of the specified Approval Milestone (as defined in the Second Amended Loan Agreement) and continuing through the earlier of (x) 90 days following the Approval Milestone and (y) December 15, 2027; (iv) an aggregate principal amount of up to $20.0 million, subject to the achievement of the specified Commercial Milestone (as defined in the Second Amended Loan Agreement) and continuing through the earlier of (x) 90 days following the Commercial Milestone and (y) December 15, 2028; and (v) an uncommitted tranche subject to the Lenders’ investment committee approval and satisfaction of certain other conditions precedent, pursuant to which enGene may request from time to time up to and including the Amortization Date (as defined in the Second Amended Loan Agreement) that the Lenders make additional term loan advances in an aggregate principal amount of up to $25.0 million.
The 2026 Term Loan matures on January 1, 2030 (the “2026 Term Loan Maturity Date”). The Company is required to pay to the
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
Lenders upon the earlier of (i) the 2026 Term Loan Maturity Date; (ii) payment in full of the 2026 Term Loan; or (iii) the date that the Secured Obligations (as defined in the Second Amended Loan Agreement) become due and payable, an end of term fee equal to 5.95% of the aggregate principal amount of the advances made for the 2026 Term Loan (the "2026 End of Term Charge"). Advances under each tranche are subject to a facility charge, ranging from 0.50% to 0.75% of the aggregate principal amount advanced. The 2026 Term Loan bears cash interest payable monthly at an annual rate equal to the greater of (a) the prime rate of interest as reported in the Wall Street Journal plus 2.25% (capped at 10.25%) and (b) 9.25%. After the Amortization Date, the outstanding 2026 Term Loan and interest shall be repayable in equal monthly payments of principal and accrued interest until the 2026 Term Loan Maturity Date. The Interim Milestone under the First Amended Loan Agreement was achieved during the year ended October 31, 2024. No other milestones under the Second Amended Loan Agreement have been achieved as of July 31, 2026. The effective interest rate of the 2026 Term Loan was 12.1% as of July 31, 2026.
At the Company's option, the Company may elect to prepay all, but not less than all, of the outstanding term loans by paying the entire principal balance and all accrued and unpaid interest thereon plus a prepayment charge equal to the following percentage of the principal amount being prepaid: (i) 3.0% of the principal amount outstanding if the prepayment occurs in any of the first twelve months following the Second Amendment Closing Date; (ii) 2.0% of the principal amount outstanding if the prepayment occurs after the first twelve months following the Second Amendment Closing Date but on or prior to twenty-four months following the Second Amendment Closing Date; and (iii) 1.0% of the principal amount outstanding if prepayment were to occur at any time thereafter but prior to the 2026 Term Loan Maturity Date.
As of July 31, 2026, the Company had borrowed $25.0 million under the Second Amended Loan Agreement and incurred $2.9 million of debt discount and issuance costs inclusive of legal fees and the 2023 End of Term Charge and 2026 End of Term Charge. The remaining $100.0 million of the uncommitted tranches subject to satisfaction of certain other milestone conditions precedent described above remains undrawn and available to the Company if conditions and milestones are met.
The Company accounted for the Second Amended Loan Agreement as an extinguishment of the 2023 Term Loan. As a result of the extinguishment, the Company recorded a loss of $0.5 million as a component within other income and expense in the Company's consolidated statement of operations during the nine months ended July 31, 2026, which represented the difference between the fair value of the Second Amended Term Loan, including fees and the fair value of warrants provided directly to the lender, and the carrying value of the Prior Term Loan at the time of extinguishment. No loss on extinguishment was recorded during the three months ended July 31, 2026.
Pursuant to the Second Amended Loan Agreement, the Company has granted Hercules a security interest senior to any current and future debts and to any security interest in all of the Company’s right, title, and interest in, to and under all of the Company’s property and other assets, subject to limited exceptions including the Company’s intellectual property.
The Second Amended Loan Agreement contains negative covenants that, among other things and subject to certain exceptions, could restrict the Company's ability to incur additional liens, incur additional indebtedness, make investments, including acquisitions, engage in fundamental changes, sell or dispose of assets that constitute collateral, including certain intellectual property, pay dividends or make any distribution or payment on or redeem, retire or purchase any equity interests, amend, modify or waive certain material agreements or organizational documents and make payments of certain subordinated indebtedness. The Second Amended Loan Agreement also contains certain events of default, including but not limited to those arising from material adverse events (as defined in the Second Amended Loan Agreement), and representations, warranties and both financial and non-financial covenants of the Company. As of July 31, 2026 and the date hereof, the Company is in compliance with all covenants, including the financial covenant requiring the Company to maintain a balance of $10.0 million in unrestricted cash.
Hercules Warrants
In connection with the First Amended Loan Agreement, the Company agreed to issue to the Lenders in connection with each advance of 2023 Term Loans warrants to purchase that number of the Company’s common shares as was equal to 2% of the aggregate principal amount of such 2023 Term Loan advance, divided by the warrants per share exercise price of $7.21 (which exercise price equals the ten-day volume weighted average price for the ten (10) trading days preceding the Original Closing Date and is subject to customary adjustments under the terms of such warrants) (the "Hercules 2023 Warrants"). Each Hercules 2023 Warrant is exercisable for a period of seven years from its issuance. In connection with the Tranche 1 Advance of the 2023 Term Loans, the Company issued to the Lenders an aggregate number of 62,413 Hercules 2023 Warrants on the Original Closing Date.
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
In connection with the Second Amended Loan Agreement, the Company also agreed to issue to the Lenders in connection with each advance of 2026 Term Loans warrants to purchase that number of the Company’s common shares as shall be equal to 1.50% of the aggregate principal amount of such 2026 Term Loan advance divided by the warrant per share exercise price of $9.18 (which exercise price equals the three-day volume weighted average price for the three (3) trading days preceding the Second Amendment Closing Date and is subject to customary adjustments under the terms of such warrants) (the “Hercules 2026 Warrants” and, together with the Hercules 2023 Warrants, the “Hercules Warrants”). Each Hercules 2026 Warrant is exercisable for a period of seven years from issuance.
In connection with the 2026 Tranche 1 Advance of 2026 Term Loans, the Company issued to the Lenders an aggregate number of 40,850 Hercules 2026 Warrants on the Second Amendment Closing Date.
Under the terms of the Second Amended Loan Agreement, the maximum number of Hercules 2026 Warrants and resultant underlying common shares of the Company that can be issued is 204,248 (i.e. 1.50% of the $125,000,000 total commitment amount divided by the exercise price of $9.18). The Hercules Warrants have been determined to be equity classified as they do not meet the definition of a liability under ASC 480 and are considered indexed to the Company’s common shares as prescribed by ASC 815. Upon entering into the Second Amended Loan Agreement, $0.3 million of the total $25.0 million 2026 Tranche 1 Advance was allocated to the Hercules 2026 Warrants, on a relative fair value basis, and recorded within additional paid in capital.
Warrants subsequently issued under the Second Amended Loan Agreement shall be substantially in the form of the Hercules 2026 Warrants.
As of July 31, 2026 and October 31, 2025, the carrying value of the term loans consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
July 31, 2026 |
|
|
October 31, 2025 |
|
Note payable, including End of Term Charge |
|
$ |
27,725 |
|
|
$ |
24,231 |
|
Debt discount, net of accretion |
|
|
(2,570 |
) |
|
|
(1,088 |
) |
Accrued interest |
|
|
199 |
|
|
|
183 |
|
Note payable, net of discount |
|
$ |
25,354 |
|
|
$ |
23,326 |
|
As of July 31, 2026, the Company classified accrued interest as current and the entire note payable as long-term as no principal payments were due in the next 12 months. As of October 31, 2025, the Company classified $8.0 million of the note payable as current. During the three months ended July 31, 2026 and 2025, the Company recognized $0.8 million of interest expense related to the term loans for each period, of which $0.2 million was related to the amortization of the debt discounts for each period. During the nine months ended July 31, 2026 and 2025, the Company recognized $2.3 million and $2.2 million of interest expense related to the term loans, for each period, of which $0.6 million and $0.4 million was related to the amortization of the debt discounts for each period.
Estimated future principal payments due under the Term Loan, including the contractual End of Term Charges and paid in kind interest are as follows as of July 31, 2026:
|
|
|
|
|
|
|
|
Note Principal
Payments |
|
2026 |
|
|
— |
|
2027 |
|
|
— |
|
2028 |
|
|
1,238 |
|
2029 |
|
|
18,991 |
|
2030 |
|
|
7,496 |
|
Total principal payments, including End of Term Charge |
|
|
27,725 |
|
As of July 31, 2026, based on borrowing rates available to the Company for loans with similar terms and consideration of the Company’s credit risk, the carrying value of the Company’s variable interest rate debt, excluding unamortized debt issuance costs, approximates fair value.
The Company has an unlimited number of Common Shares authorized for issuance, with no par value. As of July 31, 2026 and October 31, 2025, there were 67,014,067 and 52,018,658 Common Shares outstanding, respectively.
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
The holders of the Common Shares are entitled to one vote per Common Share held on all matters submitted to a vote of shareholders. Common shareholders are entitled to receive dividends, as may be declared by the Company's board of directors, or the "Board", if any, subject to the preferential dividend rights of preferred shares. Through July 31, 2026, no cash dividends had been declared or paid.
On March 9, 2026, the Company entered into a Sales Agreement (the “Sales Agreement”) with Leerink Partners LLC (“Leerink”), as agent, pursuant to which the Company may offer and sell, from time to time, through Leerink, up to $100,000,000 of Common Shares, and concurrently terminated the prior Open Market Sale Agreement dated December 20, 2024 by and between the Company and Jefferies LLC (the “Prior Open Market Sale Agreement”). Through July 31, 2026, the Company sold no Common Shares under the Sales Agreement or the Prior Open Market Sale Agreement, prior to its termination date.
On November 12, 2025, the Company entered into an underwriting agreement with Jefferies LLC, Leerink Partners LLC and Wells Fargo Securities, LLC, as representatives of the several underwriters named therein (collectively, the “Underwriters”) relating to the issuance and sale by the Company, in an underwritten public offering, of 12,558,823 Common Shares at an offering price of $8.50 per Common Share and pre-funded warrants to purchase 2,735,295 Common Shares at an offering price of $8.4999 per pre-funded warrant (the "Pre-Funded Warrants"), in each case before underwriting discounts and commissions. The offering closed on November 14, 2025. The aggregate gross proceeds from the offering were approximately $130.0 million, before deducting the underwriting discounts and commissions and offering expenses of approximately $8.2 million.
The Company also granted to the Underwriters a 30-day option to purchase up to 2,294,117 additional Common Shares at the public offering price, less underwriting discounts and commissions (the “Option”), which the Underwriters exercised in full pursuant to a Notice of Exercise dated November 14, 2025. The aggregate gross proceeds from the Option exercise were approximately $19.5 million, before deducting the underwriting discounts and commissions and offering expenses of approximately $1.2 million. The offering closed on November 18, 2025, with respect to the Option.
Pre-Funded Warrants to Purchase Common Shares
As of July 31, 2026, the Company had 2,735,295 Pre-Funded Warrants to purchase common shares outstanding. The Pre-Funded Warrants have an exercise price of $0.0001 and do not expire. A holder may not exercise any portion of a pre-funded warrant to the extent that immediately prior to or after giving effect to such exercise the holder would own more than 9.99% of the Company’s outstanding Common Shares immediately after exercise, which percentage may be changed at the holder’s election to a lower or higher percentage not in excess of 19.99% (if exceeding such percentage would result in a change of control under Nasdaq Listing Rule 5635(b) or any successor rule) upon 61 days’ notice to the Company, subject to the terms of the Pre-Funded Warrants. The common share Pre-Funded Warrants have been determined to be equity classified as they do not meet the definition of a liability under ASC 480 and are considered indexed to the Company’s common shares as prescribed by ASC 815.
Warrants to Purchase Common Shares
As of July 31, 2026, the Company had 8,552,818 warrants to purchase common shares outstanding. As of October 31, 2025, the Company had 8,511,968 warrants to purchase common shares outstanding.
Of the warrants to purchase common shares outstanding as of July 31, 2026, 8,449,555 of the warrants have an exercise price of $11.50, and are exercisable through October 31, 2028 (the "Public Warrants"). The Company may elect to call in the warrants for redemption if the share price of the Company equals or exceeds $18.00 for any twenty (20) trading days within the thirty (30) trading-day period ending on the third (3rd) trading day prior to the date on which notice of the redemption is given, subject to adjustments as provided in the terms of the warrant agreement. The Public Warrants have been determined to be equity classified as they do not meet the definition of a liability under ASC 480 and are considered indexed to the Company’s common shares as prescribed by ASC 815. The Public Warrants are listed on the Nasdaq Capital Market under the symbol “ENGNW”.
An additional 62,413 Hercules 2023 Warrants outstanding as of July 31, 2026 were issued to the Lenders in connection with the First Amended Loan Agreement on December 22, 2023, have an exercise price of $7.21, are exercisable at any time beginning on December 22, 2023, and expire on December 22, 2030, or seven years from the issuance date.
An additional 40,850 Hercules 2026 Warrants outstanding as of July 31, 2026 were issued to the Lenders in connection with the Second Amended Loan Agreement on January 20, 2026, have an exercise price of $9.18, are exercisable at any time beginning on January 20, 2026, and expire on January 20, 2033, or seven years from the issuance date.
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
The Hercules Warrants have been determined to be equity classified as they do not meet the definition of a liability under ASC 480 and are considered indexed to the Company’s common shares as prescribed by ASC 815. Please refer to Note 10, Share-Based Compensation, below for the summary of the Common Shares reserved for the exercise of Common Share warrants, share options, and remaining shares reserved for future issuance under and outside the Company's Amended and Restated enGene Therapeutics Inc. 2023 Incentive Equity Plan (as defined below).
10.Share-Based Compensation
Amended and Restated enGene Therapeutics Inc. 2023 Incentive Equity Plan
The Company's Amended and Restated enGene Therapeutics Inc. 2023 Incentive Equity Plan (the "2023 Plan") was adopted on May 15, 2024 and superseded all prior plans. The 2023 Plan is administered by the Board or, at the discretion of the Board, by a committee of the Board, (the "Committee"). The exercise prices, vesting and other restrictions are determined at the discretion of the Board, or its committee if so delegated, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the Common Shares on the date of grant and the term of stock option may not be greater than ten years. Common Shares that are expired, terminated, surrendered or cancelled under the 2023 Plan without having been fully exercised will be available for future awards. The Plan authorizes the award of incentive stock options, or ISOs, non-qualified stock options, or NQSOs, Stock Units, Stock Appreciation Rights, or SARs, and other share-based awards including performance awards and share bonus awards. The Plan contains the evergreen provision (the "Evergreen Provision") pursuant to which on the first business day of each calendar year, the aggregate number of Common Shares that could be issued or transferred thereunder (the "Plan Share Reserve") and the number of Common Shares available for options intended to qualify as incentive stock options (the "ISO Sublimit") each increase by such number of Common Shares as equals 5% of the aggregate number of Common Shares outstanding on the final day of the immediately preceding calendar year (or such smaller number of shares as is determined by the compensation committee), and the ISO Sublimit by the lesser of 2,500,000 Common Shares and the increase in the Plan Share Reserve (or such smaller number of shares may be determined by the compensation committee of the Company’s board of directors). On January 1, 2026, the Committee allowed the full 5% increase for 2026 under the Evergreen Provision.
As of July 31, 2026, inclusive of (i) the Common Shares subject to the outstanding grants under the prior plans, and (ii) 3,349,283 Common Shares added effective January 1, 2026 under the Evergreen Provision, there were 11,858,023 of Common Shares reserved for issuance under the Plan and there are 1,741,100 shares remaining for issuance.
2025 Employee Stock Purchase Plan
On June 10, 2025, at its 2025 Annual General Meeting of shareholders, the shareholders of enGene Therapeutics Inc. approved the adoption of the 2025 Employee Stock Purchase Plan (the "ESPP"), pursuant to which 2,000,000 common shares of the Company, no par value, will be reserved for issuance. The price of common stock purchased under the ESPP is equal to 85% of the lower of the fair market value of the common stock on the first trading day of the offering period or the relevant purchase date and is subject to change by a Plan Administrator prior to each purchase period. As of July 31, 2026, there were no shares issued and 2,000,000 shares remained available for issuance.
Inducement Grants
The Company may grant an inducement equity award consisting of a non-qualified stock option to purchase Common Shares to newly hired employees as an inducement material to such employees entering into employment with the Company in accordance with NASDAQ Listing Rule 5635(c)(4), which awards are granted outside of the 2023 Plan. No inducement awards have been granted during the three and nine months ended July 31, 2026. As of July 31, 2026, 3,352,550 non-qualified stock options have been granted as inducement equity awards, of which 1,404,261 have vested, 557,411 have been forfeited and none have expired. All options remain outstanding.
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
As of July 31, 2026, and October 31, 2025, the Company has reserved the following Common Shares for the exercise of Common Share warrants, share options, restricted share units, and remaining shares reserved for future issuance under the 2023 Plan and options granted outside of the 2023 Plan as part of the inducement grants:
|
|
|
|
|
|
|
|
|
|
|
|
July 31, |
|
|
October 31, |
|
|
|
2026 |
|
|
2025 |
|
Warrants to purchase common shares |
|
|
8,552,818 |
|
|
|
8,511,968 |
|
Incentive options to purchase common shares awarded pursuant to the 2023 Plan * |
|
|
9,750,523 |
|
|
|
5,717,948 |
|
Inducement grant stock options awarded outside of the 2023 Plan |
|
|
2,795,139 |
|
|
|
3,315,350 |
|
Restricted share units awarded pursuant to the 2023 Plan * |
|
|
366,400 |
|
|
|
— |
|
Pre-funded warrants to purchase common shares |
|
|
2,735,295 |
|
|
|
— |
|
Remaining shares reserved for future issuance under the 2023 Plan |
|
|
1,741,100 |
|
|
|
2,933,304 |
|
Remaining shares reserved for future issuance under ESSP |
|
|
2,000,000 |
|
|
|
2,000,000 |
|
Total |
|
|
27,941,275 |
|
|
|
22,478,570 |
|
*Includes performance options and awards
June 2026 Performance-Based Equity Retention Awards
On June 16, 2026, the compensation committee of the board of directors approved the issuance of performance-based equity retention awards under the 2023 Plan to certain executive employees and non-executive employees. The awards were issued in the form of performance-based non-qualified stock options of 1,696,625 (the “performance-based retention options”) and performance-based restricted share units of 197,475 (the “performance-based retention share units” and together with the performance-based retention options, the “performance-based equity retention awards”).
Subject to the recipient remaining actively employed and in good standing with the Company, the performance-based equity retention awards will vest, if at all, based on the achievement of the following detalimogene milestones:
•Confirmation from the FDA that the Company’s filing of the BLA with the FDA with respect to detalimogene has been completed and accepted by the FDA, provided that such confirmation is received by the Company from the FDA no later than September 30, 2027; and
•FDA regulatory approval with respect to detalimogene, provided that such regulatory approval is received by the Company from the FDA no later than December 31, 2028.
The grant date fair value of the awards is approximately $2.8 million with non-cash stock-based compensation expense to be recorded in connection with the vesting, if any, of these performance-based equity retention awards. Approximately 50% of the performance-based restricted share units are expected to vest for each milestone resulting in approximately $1.4 million of non-cash stock-based compensation expense.
As of July 31, 2026, the Company concluded that achievement of these performance-based vesting conditions associated with these awards were not satisfied for accounting purposes under ASC 718, Compensation - Stock Compensation. Accordingly, for the three months ended July 31, 2026, no stock-based compensation expense related to these performance-based equity retention awards had been recognized.
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
Stock Options
The assumptions that the Company used to determine the grant-date fair value of stock options during the three and nine months ended July 31, 2026 and 2025 are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended July 31, |
|
|
Nine months ended July 31, |
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
Expected term (in years) |
|
5.27-6.28 |
|
|
5.5-6.08 |
|
|
|
5.27-6.28 |
|
|
5.5-6.08 |
|
|
Expected volatility |
|
107.88-112.23% |
|
|
79.13-83.53% |
|
|
|
82.39-112.23% |
|
|
79.13-83.53% |
|
|
Risk-free interest rate |
|
4.18-4.24% |
|
|
4.06-4.14% |
|
|
|
3.9-4.24% |
|
|
4.0-4.49% |
|
|
Expected dividend yield |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
Fair value of common shares and exercise price of options (USD) |
$ |
|
1.75 |
|
$ |
3.31-3.83 |
|
|
$ |
1.75-9.53 |
|
$ |
3.31-7.39 |
|
|
The following table summarizes the Company’s stock option activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares |
|
|
Weighted-
Average
Exercise
Price |
|
|
Weighted-
Average
Remaining
Contractual
Term (in years) |
|
|
Aggregate
Intrinsic
Value |
|
Outstanding as of October 31, 2025 |
|
|
9,033,298 |
|
|
$ |
6.93 |
|
|
|
8.5 |
|
|
$ |
10,979 |
|
Granted |
|
|
3,837,940 |
|
|
|
8.14 |
|
|
|
|
|
|
|
Granted - performance-based retention options (June 2026) |
|
|
1,696,625 |
|
|
|
1.75 |
|
|
|
|
|
|
|
Exercised |
|
|
(142,469 |
) |
|
|
2.12 |
|
|
|
|
|
|
|
Forfeited or expired |
|
|
(1,879,732 |
) |
|
|
8.00 |
|
|
|
|
|
|
|
Outstanding as of July 31, 2026 |
|
|
12,545,662 |
|
|
$ |
6.47 |
|
|
|
7.1 |
|
|
$ |
624 |
|
Options vested and exercisable as of July 31, 2026 |
|
|
5,525,626 |
|
|
$ |
6.99 |
|
|
|
4.7 |
|
|
$ |
532 |
|
Options unvested as of July 31, 2026 |
|
|
7,020,036 |
|
|
$ |
6.07 |
|
|
|
9.1 |
|
|
$ |
92 |
|
The aggregate intrinsic value of share options is calculated as the difference between the exercise price of the share options and the fair value of the Company’s common share as of each reporting date.
The weighted-average grant-date fair value per share of share options granted during the three months ended July 31, 2026 and 2025 was $1.46 and $2.53, respectively. The weighted-average grant-date fair value per share of share options granted during the nine months ended July 31, 2026 and 2025, was $4.55 and $4.59, respectively.
Restricted Share Units
Restricted share units are granted under the 2023 Plan and are expensed based on the fair value of the award, which equals the share price on the grant date, on a straight-line basis over the four-year service period of the award. Performance-based restricted share units are granted under the 2023 Plan and are expensed based on the fair value of the award, which equals the share price on grant date, when each milestone is met. The following table summarizes the restricted share unit activity under the 2023 Plan:
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares |
|
|
Weighted-
Average
Grant Date Fair Value |
|
Outstanding as of October 31, 2025 |
|
|
- |
|
|
$ |
— |
|
Granted |
|
|
272,925 |
|
|
9.53 |
|
Granted - performance-based retention share units (June 2026) |
|
|
197,475 |
|
|
1.75 |
|
Exercised |
|
|
- |
|
|
|
- |
|
Forfeited or expired |
|
|
(104,000 |
) |
|
|
8.56 |
|
Outstanding as of July 31, 2026 |
|
|
366,400 |
|
|
$ |
5.61 |
|
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
Share-based Compensation Expense
Share-based compensation expense included in the Company’s consolidated statements of operations and comprehensive loss was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
Nine Months Ended July 31, |
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Research and development |
|
$ |
2,112 |
|
|
$ |
854 |
|
|
$ |
4,743 |
|
|
$ |
2,367 |
|
General and administrative |
|
|
5,698 |
|
|
|
1,727 |
|
|
|
10,015 |
|
|
|
4,673 |
|
Total share-based compensation expense |
|
$ |
7,810 |
|
|
$ |
2,581 |
|
|
$ |
14,758 |
|
|
$ |
7,040 |
|
As of July 31, 2026, there was $29.7 million of unrecognized compensation, which is expected to be recognized over a weighted-average period of 2.8 years.
The following table sets forth the computation of the Company’s basic and diluted net loss per share for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
Nine Months Ended July 31, |
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common shareholders, basic and diluted |
|
$ |
32,501 |
|
|
$ |
28,991 |
|
|
$ |
92,480 |
|
|
$ |
79,422 |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares used in net loss per share, basic and diluted (1) |
|
|
69,734,610 |
|
|
|
51,097,711 |
|
|
|
68,898,554 |
|
|
|
51,031,618 |
|
Net loss per common share, basic and diluted |
|
$ |
0.47 |
|
|
$ |
0.57 |
|
|
$ |
1.34 |
|
|
$ |
1.56 |
|
(1) Pre-funded warrants of 2,735,295 are included within the weighted-average number of common shares calculation for 2026.
The Company excluded the following shares from the computation of diluted net loss per share attributable to common shareholders for the three and nine months ended July 31, 2026 and 2025 because including them would have had an anti-dilutive effect:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
Nine Months Ended July 31, |
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Warrants to purchase common shares |
|
|
8,552,818 |
|
|
|
8,511,968 |
|
|
|
8,552,818 |
|
|
|
8,511,968 |
|
Options to purchase common shares |
|
|
12,545,662 |
|
|
|
9,408,647 |
|
|
|
12,545,662 |
|
|
|
9,408,647 |
|
Restricted share units |
|
|
366,400 |
|
|
|
— |
|
|
|
366,400 |
|
|
|
— |
|
Total |
|
|
21,464,880 |
|
|
|
17,920,615 |
|
|
|
21,464,880 |
|
|
|
17,920,615 |
|
There was no income tax expense incurred during the three and nine months ended July 31, 2026. During the three and nine months ended July 31, 2025, the Company recorded income tax expense of $239 thousand and $497 thousand, respectively.
The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets, which primarily consist of net operating loss carryforwards. The Company has considered its history of cumulative net losses, estimated future taxable income and prudent and feasible tax planning strategies and has concluded that it is more likely than not that the Company will not realize the benefits of its deferred tax assets. As a result, as of July 31, 2026, the Company has maintained a full valuation allowance against its remaining net deferred tax assets.
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
The Company’s leases are comprised of operating leases for office and lab space.
On December 29, 2022, the Company signed a lease for approximately 10,620 square feet of new laboratory and office space at 4868 Rue Levy, Montreal, QC. The term of the lease is for 10 years, beginning on the commencement date, and requires an annual initial base rent of $36.50 CAD per square foot, which is subject to annual increases of 2%. The lease commenced in November 2023. Upon commencement the Company recognized an initial lease liability and corresponding right of use asset of $1.4 million.
On January 1, 2024, enGene USA, Inc. entered into a lease agreement, in which the Company is sub-leasing approximately 6,450 square feet of office space located at 200 Fifth Avenue, Waltham, MA. The Company will make an aggregate amount of base rental payments of $0.5 million under the initial term of the lease, which is set to expire on December 30, 2026 and does not have an option to renew. Upon commencement, the Company recognized an initial lease liability and corresponding right of use asset of $0.4 million.
On June 4, 2025, enGene USA, Inc. entered into a lease agreement, pursuant to which the Company agreed to lease approximately 26,335 square feet of office space located at 99 High Street, Boston, Massachusetts. The Company is expected to make an aggregate amount of base rental payments of $10.6 million, under the initial term of the lease, which is set to expire in November 2030. In connection with the lease, enGene Therapeutics Inc. has delivered a guaranty, dated June 4, 2025, pursuant to which the Company guaranteed enGene USA's payment and performance. The lease commenced in June 2025 and upon commencement, the Company recognized an initial lease liability of $6.4 million and corresponding right of use asset of $6.5 million.
During the three and nine months ended July 31, 2026 and 2025, the components of operating lease cost were as follows, and are reflected in general and administrative expenses and research and development expenses, as determined by the underlying activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
Nine Months Ended July 31, |
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Lease Cost: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease cost |
|
$ |
680 |
|
|
$ |
438 |
|
|
$ |
1,863 |
|
|
$ |
668 |
|
Variable operating lease cost |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
Total operating lease cost |
|
$ |
680 |
|
|
$ |
438 |
|
|
$ |
1,863 |
|
|
$ |
668 |
|
Maturities of the Company's operating lease liabilities as of July 31, 2026 are as follows:
|
|
|
|
|
|
2026 |
|
$ |
623 |
|
2027 |
|
|
2,390 |
|
2028 |
|
|
2,407 |
|
2029 |
|
|
2,455 |
|
2030 |
|
|
2,501 |
|
Thereafter |
|
|
1,076 |
|
Total |
|
|
11,452 |
|
Less: Interest |
|
|
(3,535 |
) |
Total lease liability |
|
$ |
7,917 |
|
14.Commitments and Contingencies
Legal Proceedings
From time to time, in the ordinary course of business, the Company is subject to litigation and regulatory examinations as well as information gathering requests, inquiries and investigations. As of July 31, 2026, and October 31, 2025, there were no such matters which would have a material impact on the Company’s financial results.
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
Purchase and Other Obligations
The Company enters into contracts in the normal course of business with CROs, CDMOs and other third-party vendors for nonclinical research studies and testing, clinical trials and testing and manufacturing services. Most contracts do not contain minimum purchase commitments and are cancellable by us upon written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including non-cancelable obligations of services and those incurred by subcontractors of our suppliers.
The Company operates and manages its business as one operating segment and one reportable segment, which is focused on developing genetic medicines to improve the lives of patients suffering from bladder cancer. The CODM manages the Company’s operations on a consolidated basis, assesses performance for the operating segment and decides how to allocate resources based on consolidated net loss, which is reported on the consolidated statements of operations.
The CODM uses consolidated net loss to evaluate the Company’s spend, deploy resources across research and development activities and monitor budget versus actual results. The monitoring of budgeted versus actual results is used in assessing the performance of the operating segment and in establishing resource allocation across the organization.
Factors used in determining the reportable segment include the nature of the Company's operating activities, the organizational and reporting structure and the type of information reviewed by the CODM to allocate resources and evaluate financial performance. The accounting policies of the segment are the same as those described in Note 2, Summary of Significant Accounting Policies. The measure of segment assets used in determining how to manage and allocate resources is reported within the Company's consolidated balance sheets as cash and cash equivalents and marketable securities.
The following table summarizes significant segment expenses, other segment items and the measure of segment net loss of the Company's reportable segment for the three and nine months ended July 31, 2026 and 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
Nine Months Ended July 31, |
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
Research and development expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Chemistry, Manufacturing and Controls(1) |
$ |
4,814 |
|
|
$ |
11,278 |
|
|
$ |
22,968 |
|
|
$ |
30,657 |
|
|
Clinical operations(2) |
|
4,261 |
|
|
|
4,837 |
|
|
|
13,426 |
|
|
|
12,951 |
|
|
Other research and development expenses(3) |
|
2,026 |
|
|
|
1,139 |
|
|
|
5,426 |
|
|
|
4,792 |
|
|
Personnel-related expenses, excluding stock-based compensation |
|
6,877 |
|
|
|
4,467 |
|
|
|
17,977 |
|
|
|
11,991 |
|
|
Stock based compensation |
|
2,112 |
|
|
|
854 |
|
|
|
4,743 |
|
|
|
2,367 |
|
|
Total research and development expenses |
|
20,090 |
|
|
|
22,575 |
|
|
|
64,540 |
|
|
|
62,758 |
|
|
General and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Personnel-related expenses, excluding stock-based compensation |
|
5,135 |
|
|
|
2,772 |
|
|
|
11,642 |
|
|
|
7,859 |
|
|
Stock based compensation |
|
5,698 |
|
|
|
1,727 |
|
|
|
10,015 |
|
|
|
4,673 |
|
|
Other general and administrative expenses(4) |
|
3,091 |
|
|
|
2,873 |
|
|
|
10,970 |
|
|
|
8,394 |
|
|
Total general and administrative expenses |
|
13,924 |
|
|
|
7,372 |
|
|
|
32,627 |
|
|
|
20,926 |
|
|
Other segment items(5) |
|
(1,513 |
) |
|
|
(956 |
) |
|
|
(4,687 |
) |
|
|
(4,262 |
) |
|
Net loss |
$ |
32,501 |
|
|
$ |
28,991 |
|
|
$ |
92,480 |
|
|
$ |
79,422 |
|
|
(1) External expenses associated with clinical manufacturing of the Company's lead compound, detalimogene.
(2) External and internal expenses associated with clinical operations related to research and development of the Company's lead compound, detalimogene.
(3) Represents research and development expenses associated with preclinical, medical affairs, regulatory, quality, program management and facility related costs.
(4) Represents general and administrative costs associated with external legal fees, facilities, professional fees, and other overhead costs.
(5) Other segment items include interest income, interest expense, loss on extinguishment of debt and other expenses. A breakdown of each category by period can be seen within the Condensed Statements of Operations and Comprehensive Loss.
16.Strategic Restructuring
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
On June 15, 2026, the Company announced the implementation of a plan to reduce its workforce by approximately 50% to streamline operations and preserve cash. The Company’s board of directors approved this strategic restructuring, effective June 14, 2026, in order to preserve shareholder capital as the Company awaits additional durability data and meetings with the FDA in connection with the Company’s LEGEND pivotal cohort. The Company has retained personnel and resources required to meet its key strategic goals and milestones, including completion of the LEGEND Cohort 1; enrolling the detalimogene plus surfactant cohort; meeting with the FDA and planning for BLA initiation in the fourth quarter of calendar year 2026; and completing necessary pre-commercial activities required to support the commercial launch of detalimogene in 2027, if approved. The Company currently estimates it will incur restructuring costs of approximately $5.6 million to $6.1 million, consisting primarily of employee severance, benefits, and other related costs, as well as approximately $5.0 million to $5.5 million in non-cash stock-based compensation expense primarily associated with accelerated vesting of stock options.
The estimated charges that the Company expects to incur as a result of the restructuring are subject to several assumptions, and actual results may differ materially from these estimates. The Company may incur additional costs due to events associated with or resulting from the strategic restructuring and workforce reduction.
Termination Benefits
Employees impacted by the restructuring obtained involuntary termination benefits that are provided pursuant to a one-time benefit arrangement. For employees who were notified of their termination in June 2026 and have no requirement to provide future service, the Company recognized the liability for the termination benefits in full for the period ended July 31, 2026. For employees who are required to render services beyond a minimum retention period to receive their one-time termination benefits, the Company will recognize termination benefits ratably over their future service periods. The service periods began in June 2026 and end at various periods through October 2026. As of July 31, 2026, the Company has incurred approximately $5.2 million in employee termination benefits expense and $3.4 million in non-cash stock-based compensation expense primarily associated with accelerated vesting of stock options. The Company expects to continue to incur expenses through October 2026 related to employees who have future service period requirements.
Retention Awards
In connection with the strategic restructuring, the Company approved retention incentives intended to retain key employees through specified clinical and regulatory objectives. As further described below, these retention incentives are separate from one-time termination benefits and include performance-based cash retention awards and performance-based equity retention awards, each of which requires continued employment and is contingent on the achievement of specified milestones.
Performance-Based Cash Retention Awards
On June 14, 2026, the Company’s board of directors approved performance-based cash retention awards for certain executive employees and the non-executive employees of the Company. Subject to remaining actively employed and in good standing with the Company, aggregate cash retention awards of approximately $1.6 million will be paid upon the achievement of two milestones: (i) completion of the pre-BLA meeting with the FDA relating to detalimogene on or prior to December 31, 2026, and (ii) confirmation from the FDA that the Company’s filing of the BLA with the FDA with respect to detalimogene has been completed and accepted by the FDA, provided that such confirmation is received by the Company from the FDA no later than September 30, 2027. No expense has been recognized as of July 31, 2026 for these awards.
Performance-Based Equity Retention Awards
On June 16, 2026, the compensation committee of the board of directors approved the issuance of performance-based equity retention awards under the 2023 Plan to certain executive employees and non-executive employees, to be issued in the form of performance-based non-qualified stock options and performance-based restricted share units. Subject to the applicable recipient remaining actively employed and in good standing with the Company, the awards will vest, if at all, based upon the achievement of two milestones: (i) confirmation from the FDA that the Company’s BLA filing with respect to detalimogene has been completed and accepted by the FDA, provided that such confirmation is received by September 30, 2027, and (ii) FDA regulatory approval with respect to detalimogene, provided that such regulatory approval is received by December 31, 2028.
The Company estimates that it will incur up to approximately $2.8 million in non-cash stock-based compensation expense in connection with the vesting of performance-based equity retention awards, with approximately $1.4
ENGENE THERAPEUTICS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF USD, EXCEPT FOR SHARE AND PER SHARE DATA)
million of non-cash stock-based compensation expense recognized upon vesting for each milestone. No expense has been recognized as of July 31, 2026 for these awards.
The Company records restructuring charges and a restructuring liability within the “employee compensation and related benefits” accrued expenses (Note 6) when the criteria for recognition are met. Of the $5.2 million in employee termination benefit expense recognized, $3.3 million was recognized as general and administrative expenses and $1.9 million was recognized as research and development expenses. The following table summarizes termination benefit expenses recognized and paid during the period:
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
July 31, 2026 |
|
Accrued employee termination benefits beginning balance |
|
|
- |
|
Employee termination benefit expense incurred during the period |
|
|
5,150 |
|
Amounts paid or otherwise settled during the period |
|
|
(491 |
) |
Accrued employee termination benefits as of period end |
|
|
4,659 |
|
Non-cash stock-based compensation expense associated with accelerated vesting of stock options and, if achieved, vesting of performance-based equity retention awards is recognized in stock-based compensation expense and does not result in a cash restructuring liability.
The Company has evaluated subsequent events through the date these financial statements were issued. The Company concluded that no subsequent events have occurred that require disclosure except as follows. Subsequent to July 31, 2026, the FDA and the Company reached agreement on the timing of the pre-BLA meeting. Under the terms of certain employee retention agreements, this event results in the related milestone condition being considered probable for accounting purposes. As a result, the Company expects to recognize approximately $0.7 million of expense in the fourth quarter of 2026 related to this milestone.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Throughout this section, unless otherwise noted, “we”, “our”, “us”, “enGene” and the “Company” refer to enGene Therapeutics Inc. and all of its subsidiaries.
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. See the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in our Annual Report on Form 10-K for the year ended October 31, 2025 and elsewhere in this Quarterly Report and other filings made with the SEC for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by these forward-looking statements.
Overview
Business Overview
We are a clinical-stage biotechnology company mainstreaming genetic medicine through the delivery of therapeutics to mucosal tissues and other organs, with the goal of creating new ways to address diseases with high clinical needs, beginning with non-muscle invasive bladder cancer ("NMIBC"). We are developing non-viral genetic medicines based on our novel and proprietary dually derived oligochitosan, or “DDX”, gene delivery platform, which allows localized delivery of complex genetic cargos directly to mucosal tissues and other organs. Our lead product candidate, detalimogene voraplasmid, or detalimogene, formerly known as EG-70, is a therapy designed to promote a pro-inflammatory, anti-tumor microenvironment throughout the bladder urothelium. We believe this enables the immune system to durably clear the tumor and develop memory to resist recurrence. Because this treatment is designed to work by delivering genetic cargo to the broader tumor tissue environment rather than tumor cells specifically, we believe it has the potential to be utilized across a variety of tumor types. Currently, we are developing detalimogene as a monotherapy to treat NMIBC with carcinoma in situ (“CIS”) with or without concomitant papillary disease in patients that have been unresponsive to treatment with Bacillus Calmette-Guérin, or “BCG,” or what is referred to as “BCG-unresponsive NMIBC with CIS.” BCG is established as the first-line therapy for patients diagnosed with high-risk NMIBC; however, supply constraints have resulted in a shortage of BCG in the United States for over a decade. We are also exploring the clinical application of detalimogene to various additional NMIBC patient populations, namely, high-risk papillary-only BCG-unresponsive NMIBC (i.e., high-risk NMIBC without CIS), as well as high-risk BCG-naïve NMIBC patients with CIS and high-risk BCG-exposed NMIBC patients with CIS (i.e., patients who have not received an adequate course of BCG and who do not qualify as BCG-unresponsive in accordance with FDA and urology practice guidelines).
In NMIBC, carcinoma in situ, or CIS, is a flat, high-grade tumor that can invade the deeper layers of the bladder wall if left untreated. A “high-” or “low-” tumor risk describes the degree to which the tumor pathology appears more likely to grow quickly and invade non-cancerous tissue. NMIBC with CIS, which is high-risk, is typically initially treated with a solution containing the bacterium BCG that is instilled into the bladder multiple times over the course of several months. Despite high initial response rates to this treatment, many of these patients will experience a recurrence that is unresponsive to additional BCG, allowing the cancer to spread throughout, and deeper into, the bladder, often requiring surgical removal of the bladder (this procedure is called a radical cystectomy). We believe patients with BCG-unresponsive NMIBC with CIS are currently underserved with limited FDA-approved treatment options, and that there is a market opportunity for detalimogene as a monotherapy for patients with this condition. While the potential market for detalimogene may not ultimately be limited to these patients, that is our current initial focus in working to bring detalimogene to market.
Within the United States, we estimate that there are approximately 90,000 new patients each year diagnosed with bladder cancer, of which up to 80% present with non-muscle invasive disease. Bladder cancer also poses a long-term management burden with an estimated 740,000 people living with disease.
Detalimogene is currently being studied in a combined Phase 1/2 open-label trial, referred to as “LEGEND” (ClinicalTrials.gov identifier NCT04752722). The Phase 2 portion of LEGEND is comprised of multiple cohorts: Cohort 1 is a pivotal cohort studying detalimogene in patients with high-risk BCG-unresponsive NMIBC with CIS with or without concomitant papillary disease for which we have completed enrollment with 125 patients; Cohort 2a is evaluating detalimogene in patients with high-risk BCG-naïve NMIBC with CIS, Cohort 2b is evaluating detalimogene in patients with high-risk BCG-exposed NMIBC with CIS; and Cohort 3 is evaluating detalimogene in patients with high-risk BCG-unresponsive NMIBC who have papillary disease only. As discussed further below in “—Recent Developments—Legend Trial”, a newly added cohort incorporates a short surfactant bladder rinse using diluted polidocanol solution, prior to the administration of detalimogene.
Recent Developments
LEGEND Trial
In May 2026, we reported updated interim results from the pivotal cohort of the LEGEND trial. As of April 21, 2026, detalimogene demonstrated an any-time complete response (“CR”) rate of 54.0% among evaluable patients, with CR rates of 43.0%, 32.7%, and 13.3% at six, nine, and twelve months, respectively. Kaplan-Meier estimated CR rates were 39.4%, 31.6%, and 24.5% at six, nine, and twelve months, respectively. The trial results remain subject to ongoing data collection and cleaning.
In conjunction with our May 2026 pivotal Cohort 1 update, we announced the expansion of LEGEND to include an additional cohort, which incorporates a short surfactant bladder rinse using diluted polidocanol solution, prior to the administration of detalimogene. Polidocanol is an FDA-approved product used for the treatment of spider and reticular veins. When instilled into the bladder, polidocanol disrupts the bladder’s mucosal barrier. Surfactants have been shown to boost efficacy with other gene therapies in preclinical models and were subsequently incorporated into clinical development. The first patients have been enrolled, and the Company may enroll up to 80 patients in this global study.
Further, as part of cash conservation efforts, the Company has stopped enrollment in all additional cohorts of the LEGEND trial and plans to reevaluate its strategy for these cohorts following discussion with the FDA in the fourth quarter of calendar year 2026. We expect updated data on key regulatory endpoints for the pivotal cohort of the Phase 2 LEGEND trial, engagement with the FDA regarding our planned BLA filing, and to initiate a BLA submission in the fourth quarter of calendar year 2026.
Workforce Reduction and Strategic Restructuring
On June 15, 2026, we announced the implementation of a plan to reduce our workforce by approximately 50% to streamline operations and preserve cash. The Company’s board of directors approved this strategic restructuring, effective June 14, 2026, in order to preserve shareholder capital as the Company awaits additional durability data and meetings with the FDA in connection with the Company’s LEGEND pivotal cohort. The Company has retained personnel and resources required to meet its key strategic goals and milestones, including completion of the LEGEND Cohort 1; enrolling the detalimogene plus surfactant cohort; meeting with the FDA and planning for BLA initiation in the fourth quarter of calendar year 2026; and completing necessary pre-commercial activities required to support the commercial launch of detalimogene in 2027, if approved. The Company currently estimates it will incur restructuring costs of approximately $5.6 million to $6.1 million, consisting primarily of employee severance, benefits, and other related costs, as well as approximately $5.0 million to $5.5 million in non-cash stock-based compensation expense primarily associated with accelerated vesting of stock options. As of July 31, 2026, $5.2 million in employee termination benefits and $3.4 million in non-cash stock-based compensation expense related to the restructuring had been incurred. The remaining expense is expected to be incurred in the fourth quarter of 2026 and includes expenses for individuals who were notified but had not left the company as of July 31, 2026.
The estimated charges that the Company expects to incur as a result of the restructuring are subject to several assumptions, and actual results may differ materially from these estimates. The Company may incur additional costs due to events associated with or resulting from the strategic restructuring and workforce reduction.
In connection with the strategic restructuring, the Company approved retention incentives intended to retain key employees through specified clinical and regulatory objectives. As further described below, these retention incentives are separate from one-time termination benefits and include performance-based cash retention awards and performance-based equity retention awards, each of which requires continued employment and is contingent on the achievement of specified milestones.
Performance-Based Cash Retention Awards
On June 14, 2026, the Company’s board of directors approved performance-based cash retention awards for certain executive employees and the non-executive employees of the Company. Subject to remaining actively employed and in good standing with the Company, aggregate cash retention awards of approximately $1.6 million will be paid upon the achievement of two milestones: (i) completion of the pre-BLA meeting with the FDA relating to detalimogene on or prior to December 31, 2026, and (ii) confirmation from the FDA that the Company’s filing of the BLA with the FDA with respect to detalimogene has been completed and accepted by the FDA, provided that such confirmation is received by the Company from the FDA no later than September 30, 2027.
Performance-Based Equity Retention Awards
On June 16, 2026, the compensation committee of the board of directors approved the issuance of performance-based equity retention awards under the 2023 Plan to certain executive employees and non-executive employees, to be issued in the form of performance-based non-qualified stock options and performance-based restricted share units. Subject to the applicable recipient remaining actively employed and in good standing with the Company, the awards will vest, if at all, based upon the achievement of two milestones: (i) confirmation from the FDA that the Company’s BLA filing with respect to detalimogene has been completed and accepted by the FDA, provided that such confirmation is received by September 30, 2027, and (ii) FDA regulatory approval with respect to detalimogene, provided that such regulatory approval is received by December 31, 2028.
The Company estimates that it will incur up to approximately $2.8 million in non-cash stock-based compensation expense in connection with the vesting of performance-based equity retention awards, with approximately $1.4 million of non-cash stock-based compensation expense recognized upon vesting for each milestone.
Liquidity
Since our inception, we have devoted substantially all of our efforts to organizing and staffing our Company, business planning, raising capital, establishing our intellectual property portfolio, acquiring or discovering product candidates, research and development activities for our primary program, detalimogene voraplasmid, or detalimogene. We do not have any products approved for sale and have not generated any revenue from product sales. We operate as a single operating segment focused on research, discovery, and clinical development of detalimogene. Since our merger with Forbion European Acquisition Company in 2023, we have financed the Company through a series of public and private investment in public equity (“PIPE”) financings, debt arrangements, and issuance of warrants and pre-funded warrants.
We have never been profitable and have incurred net losses since inception. Our net loss was $32.5 million and $92.5 million for the three and nine months ended July 31, 2026, respectively, and $29.0 million and $79.4 million for the three and nine months ended July 31, 2025, respectively. As of July 31, 2026 and October 31, 2025 we had an accumulated deficit of $464.5 million and $372.0 million, respectively, and cash, cash equivalents and marketable securities of $266.3 million and $202.3 million, respectively. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance the ongoing LEGEND study of detalimogene, including the pivotal cohort of patients with BCG-unresponsive NMIBC, to completion; enrolling the detalimogene plus surfactant cohort; meeting with the FDA and planning for potential BLA initiation in the fourth quarter of calendar year 2026; and completing necessary manufacturing processes and pre-commercial activities required to support the potential approval of commercial launch of detalimogene in 2027, if approved. As a result, we expect to need additional funding to support our continuing operations and pursue our 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 public or private equity offerings and debt financings, or other capital sources, which could include potential collaboration agreements, strategic alliances, or licensing arrangements. We may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop our product candidates. While we have historically been successful in securing financing, raising additional funds is dependent on a number of factors outside of our control, including but not limited to the price of our common shares, and as such there is no assurance that we will be able to do so in the future, if at all. Refer to “Liquidity and Capital Resources” section below.
We expect that our existing cash, cash equivalents and marketable securities as of July 31, 2026 will be sufficient to fund our operating expenses, debt obligations, and capital expenditure requirements for at least the next 12 months from the issuance date of the condensed consolidated financial statements included within this Quarterly Report, and neither the interim clinical data the Company reported in May 2026 and the recently announced additional cohort of LEGEND, nor the reduction in workforce announced in June 2026 have impacted this expectation.
Resignation of CMO; Appointment of Interim CMO
On June 13, 2026, Dr. Hussein Sweiti, the Company's Chief Medical Officer and Head of Research and Development, notified the Company of his intent to resign from the Company, effective as of June 14, 2026. The Company has entered into an agreement with Dr. Sweiti providing for a general release and waiver of claims against the Company. As a result, Dr. Sweiti is entitled to receive the severance benefits under his Amended and Restated Employment Agreement with enGene USA, Inc., effective May 6, 2026, as described in the Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on May 7, 2026 (the "A&R Sweiti Employment Agreement"). The Company has incurred $0.7 million of personnel related costs and $1.2 million in non-cash stock-based compensation expense, primarily associated with accelerated vesting of stock options, related to Dr. Sweiti's resignation under the A&R Sweiti Employment Agreement. Effective June 15, 2026, Dr. William Grossman, a member of the board of directors of the Company, has been appointed as Interim Chief Medical Officer of the Company.
Components of Our Results of Operations
Revenue
We do not have any product candidates approved for sale, have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products or from other sources in the near future, if at all. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a product candidate, if ever. If our development efforts for our current lead product candidate, detalimogene or additional product candidates that we may develop in the future are successful and result in marketing approval or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license agreements.
Operating Expenses
Research and Development
Research and development expenses account for a significant portion of our operating expenses and consist primarily of costs incurred for our research activities, including our drug discovery efforts and the development of our product candidates. We expense research and development costs as incurred, which include:
•the cost of acquiring and manufacturing nonclinical and clinical trial materials, including manufacturing registration and validation batches;
•expenses incurred under agreements with CROs that are primarily engaged in the oversight and conduct of our clinical trials; CMOs that are primarily engaged to provide drug substance and product for our clinical trials, research and development programs, as well as investigative sites and consultants that conduct our clinical trials, nonclinical studies and other scientific development services;
•personnel-related expenses including, salaries, benefits, share-based compensation, termination benefits, and other related costs for individuals involved in research and development activities; and
•costs associated with other research and development expenses including costs related to outside consultants, costs related to compliance with quality and regulatory requirements, payments made under third-party licensing agreements, and costs related to facilities, supplies, rent, insurance, certain legal fees.
We expense research and development costs as incurred. We recognize direct development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors or our estimate of the level of service that has been performed at each reporting date. Payments for these development activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid expenses or accrued expenses.
A significant portion of our research and development costs to date have been third-party costs, which we track on an individual product candidate basis after a clinical product candidate has been identified. Currently, our main clinical product candidate is detalimogene. Our indirect research and development costs are primarily personnel-related costs, facilities, and other costs. Employees and infrastructure are not directly tied to any one program and are deployed across our programs. As such, we do not track these costs on a specific program basis. We utilize third party contractors for our research and development activities and CMOs for our manufacturing activities and we do not have our own manufacturing facilities.
Research and development activities are central to our business model. Currently, the Company’s sole laboratory facility is located in Montreal, Quebec, Canada, and as such, a portion of the Company’s research and development and other operating expenses are incurred in Canada and denominated in the Canadian dollar. We expect that our research and development expenses will vary from period to period, and may increase or decrease, depending on the timing and progress of our ongoing Phase 1/2 clinical trial for detalimogene, including enrollment rates and the pace of clinical activities, our decisions regarding the discovery and development of additional product candidates and other strategic prioritization, and our efforts to maintain, expand and enforce our intellectual property portfolio. Our operating plans and related spending levels are also expected to reflect our streamlined operations following our recent restructuring and workforce reduction implemented to preserve cash. If detalimogene or any future product candidates enter into later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. There are numerous factors associated with the successful development and commercialization of any product candidates we may develop in the future, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development program and plans.
The duration, costs, and timing of clinical studies and development of our product candidate will depend on a variety of factors, any of which could mean a significant change in the costs and timing associated with the development of our product candidate including:
•the scope, rate of progress, and expense of our ongoing as well as any additional clinical studies and other research and development activities we undertake;
•future clinical study results;
•uncertainties in clinical study enrollment rates;
•new manufacturing processes or protocols that we may choose to or be required to implement in the manufacture of our drug substance and drug product;
•regulatory feedback on requirements for regulatory approval, as well as changing standards for regulatory approval; and
•the timing and receipt of any regulatory approvals.
Any changes in the outcome of any of these variables with respect to the development of detalimogene or any future product candidates in nonclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any clinical trials following the applicable regulatory authority’s acceptance and clearance, we could be required to expend significant additional financial resources and time to complete clinical development than we currently expect. We may never obtain regulatory approval for any product candidates that we develop.
The successful development of detalimogene or any product candidates we may develop in the future is highly uncertain. Therefore, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development and commercialization of detalimogene and any other product candidates we may develop. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of detalimogene or any future product candidate, if approved. This is due to the numerous risks and uncertainties associated with product development.
General and Administrative
General and administrative expenses consist primarily of personnel-related expenses, including salaries, benefits, termination benefits, and share-based compensation expenses for personnel in executive and other administrative functions. Other significant general and administrative expenses include professional services, including legal, accounting and audit services, and other consulting fees, as well as facility costs not otherwise included in research and development expenses, insurance, and other operating costs.
If we obtain regulatory approval for our current product candidate or any product candidates we may develop in the future and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing, and distribution activities.
Other (Income) Expense, Net
Interest Expense
Interest expense is made of interest paid on our term loans, as well as non-cash interest expense for amortization of our debt discounts.
Interest Income
Interest income is associated with our interest-bearing cash, cash equivalents, and marketable securities.
Other expense, net
Other, net primarily consists of foreign exchange gains and losses.
Income Taxes
Since our inception, we have not recorded any income tax benefits for the net losses we have incurred in each period or for deductible temporary differences, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credits will not be realized. As of July 31, 2026 and October 31, 2025, we have recorded a full valuation allowance against our deferred tax assets.
Critical Accounting Estimates
This management’s discussion and analysis is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements and related disclosures requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, and expenses, as well as related disclosures during the reported periods. We base our estimates on historical experience, known trends and events, and various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates, if any, will be reflected in the financial statements prospectively from the date of change in estimates. Our critical accounting policies are described under the heading “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 October 31, 2025. There were no material changes to our critical accounting policies through July 31, 2026 from those disclosed in our Annual Report on Form 10-K for the year ended October 31, 2025.
Results of Operations
Comparison of the three and nine months ended July 31, 2026 and 2025
The following table summarizes our results of operations for each of the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
|
|
|
Nine Months Ended July 31, |
|
|
|
|
|
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
20,090 |
|
|
$ |
22,575 |
|
|
$ |
(2,485 |
) |
|
$ |
64,540 |
|
|
$ |
62,758 |
|
|
$ |
1,782 |
|
General and administrative |
|
|
13,924 |
|
|
$ |
7,372 |
|
|
|
6,552 |
|
|
|
32,627 |
|
|
$ |
20,926 |
|
|
|
11,701 |
|
Total operating expenses |
|
|
34,014 |
|
|
|
29,947 |
|
|
|
4,067 |
|
|
|
97,167 |
|
|
|
83,684 |
|
|
|
13,483 |
|
Loss from operations |
|
|
34,014 |
|
|
|
29,947 |
|
|
|
4,067 |
|
|
|
97,167 |
|
|
|
83,684 |
|
|
|
13,483 |
|
Other expenses (income), net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(2,401 |
) |
|
|
(2,233 |
) |
|
|
(168 |
) |
|
|
(7,804 |
) |
|
|
(7,451 |
) |
|
|
(353 |
) |
Interest expense |
|
|
843 |
|
|
|
758 |
|
|
|
85 |
|
|
|
2,320 |
|
|
|
2,244 |
|
|
|
76 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
488 |
|
|
|
— |
|
|
|
488 |
|
Other expense, net |
|
|
45 |
|
|
|
280 |
|
|
|
(235 |
) |
|
|
309 |
|
|
|
448 |
|
|
|
(139 |
) |
Total other income, net |
|
|
(1,513 |
) |
|
|
(1,195 |
) |
|
|
(318 |
) |
|
|
(4,687 |
) |
|
|
(4,759 |
) |
|
|
72 |
|
Net loss before income tax |
|
|
32,501 |
|
|
|
28,752 |
|
|
|
3,749 |
|
|
|
92,480 |
|
|
|
78,925 |
|
|
|
13,555 |
|
Provision for income tax |
|
|
— |
|
|
|
239 |
|
|
|
(239 |
) |
|
|
— |
|
|
|
497 |
|
|
|
(497 |
) |
Net loss |
|
$ |
32,501 |
|
|
$ |
28,991 |
|
|
$ |
3,510 |
|
|
$ |
92,480 |
|
|
$ |
79,422 |
|
|
$ |
13,058 |
|
Research and Development expenses
The following table summarizes our research and development expenses for each of the periods presented (in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
Nine Months Ended July 31, |
|
|
|
2026 |
|
|
2025 * |
|
|
Change |
|
|
2026 |
|
|
2025 * |
|
|
Change |
|
Research and Development expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chemistry, Manufacturing and Controls |
|
$ |
4,814 |
|
|
$ |
11,278 |
|
|
$ |
(6,464 |
) |
|
$ |
22,968 |
|
|
$ |
30,657 |
|
|
$ |
(7,689 |
) |
Clinical Operations |
|
$ |
4,261 |
|
|
$ |
4,837 |
|
|
$ |
(576 |
) |
|
|
13,426 |
|
|
|
12,951 |
|
|
$ |
475 |
|
Personnel-related expenses, including stock-based compensation |
|
$ |
8,989 |
|
|
$ |
5,321 |
|
|
$ |
3,668 |
|
|
|
22,720 |
|
|
|
14,358 |
|
|
$ |
8,362 |
|
Other research and development expenses |
|
$ |
2,026 |
|
|
$ |
1,139 |
|
|
$ |
887 |
|
|
|
5,426 |
|
|
|
4,792 |
|
|
$ |
634 |
|
Total research and development expenses |
|
$ |
20,090 |
|
|
$ |
22,575 |
|
|
$ |
(2,485 |
) |
|
$ |
64,540 |
|
|
$ |
62,758 |
|
|
$ |
1,782 |
|
* Certain amounts reported in prior years have been reclassified to conform to the current year's presentation.
Research and development expenses decreased by $2.5 million from $22.6 million for the three months ended July 31, 2025 to $20.1 million for the three months ended July 31, 2026. This decrease was primarily attributable to the following:
•a $6.5 million decrease in detalimogene manufacturing activities driven by timing of process validation activities as the Company prepares to execute on its plans to initiate the submission of a BLA in the fourth quarter of calendar year 2026; partially offset by
•a $3.7 million increase in personnel-related costs, including a $1.3 million increase in stock-based compensation, driven by costs related to the workforce reduction announced in June 2026; and
•a $0.9 million increase in other research and development, primarily driven by increased medical affairs activities.
Research and development expenses increased by $1.8 million from $62.8 million for the nine months ended July 31, 2025 to $64.5 million for the nine months ended July 31, 2026. This increase was attributable to the following:
•a $8.4 million increase in personnel-related costs, including a $2.4 million increase in stock-based compensation, driven by costs related to the workforce reduction announced in June 2026 and, for a portion of the year, increased headcount and contractor expense as the Company was scaling development functions to support our LEGEND study of detalimogene; partially offset by
•a $7.7 million decrease in detalimogene manufacturing activities driven by timing of process validation activities as the Company prepares to execute on its plans to initiate the submission of a BLA in the fourth quarter of calendar year 2026.
General and Administrative Expenses
The following table summarizes our general and administrative expenses for each of the periods presented (in thousands):
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
|
|
|
Nine Months Ended July 31, |
|
|
|
|
|
|
2026 |
|
|
2025 * |
|
|
Change |
|
|
2026 |
|
|
2025* |
|
|
Change |
|
Personnel-related expenses, including stock-based compensation |
|
$ |
10,833 |
|
|
$ |
4,499 |
|
|
$ |
6,334 |
|
|
$ |
21,657 |
|
|
$ |
12,532 |
|
|
$ |
9,125 |
|
Other general and administrative expenses |
|
|
3,091 |
|
|
|
2,873 |
|
|
|
218 |
|
|
|
10,970 |
|
|
|
8,394 |
|
|
|
2,576 |
|
Total general and administrative expenses |
|
$ |
13,924 |
|
|
$ |
7,372 |
|
|
$ |
6,552 |
|
|
$ |
32,627 |
|
|
$ |
20,926 |
|
|
$ |
11,701 |
|
* Certain amounts reported in prior years have been reclassified to conform to the current year's presentation.
General and administrative expenses increased by $6.6 million from $7.4 million for the three months ended July 31, 2025 to $13.9 million for the three months ended July 31, 2026. This increase was primarily attributable to the following:
•a $6.3 million increase in personnel-related expenses, including a $4.0 million increase in stock-based compensation, driven by costs related to the workforce reduction announced in June 2026 and, for a portion of the year, increased headcount.
General and administrative expenses increased by $11.7 million from $20.9 million for the nine months ended July 31, 2025 to $32.6 million for the nine months ended July 31, 2026. This increase was primarily attributable to the following:
•a $9.1 million increase in personnel-related expenses, including a $5.3 million increase in stock-based compensation, driven by costs related to the workforce reduction announced in June 2026 and, for a portion of the year, increased headcount; and
•a $2.6 million increase in other general and administrative expense, driven by increased market research costs.
Other (Income) Expense, Net
Other income increased by approximately $0.3 million from income of $1.2 million for the three months ended July 31, 2025 to income of $1.5 million for the three months ended July 31, 2026, primarily due to increased interest income and decreased realized foreign exchange losses.
Other income decreased by approximately $0.1 million from income of $4.8 million for the nine months ended July 31, 2025 to income of $4.7 million for the nine months ended July 31, 2026, primarily due to the loss on extinguishment of debt.
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have incurred significant losses in each period and on an aggregate basis. We have not yet commercialized any product candidates, and we do not expect to generate revenue from sales of any product candidates or from other sources for several years, if at all. As of July 31, 2026, we had cash, cash equivalents and marketable securities of approximately $266.3 million, and we
had an accumulated deficit of $464.5 million. To date, the Company has not generated any revenues and has financed its liquidity needs primarily through public and PIPE financings, offering debt, and issuance of warrants.
Based on our current operating plans, we expect our cash, cash equivalents and marketable securities as of July 31, 2026 will be sufficient to fund the Company’s operating expenses and debt obligations requirements for at least the next 12 months from the issuance date of the condensed consolidated financial statements included within this Quarterly Report, without giving effect to $100.0 million we may be eligible to drawdown further under our debt facility with Hercules, subject to achieving the milestones therein, and the $100.0 million limit under our Sales Agreement with Leerink Partners LLC, which was entered into on March 9, 2026. Our current operating plan is based on various assumptions. If we use our capital resources sooner than expected, we will evaluate reductions in expense or obtaining additional financing. This may include pursuing a combination of public or private equity offerings, debt financings, collaborations, strategic alliances or licensing arrangements with third parties. There can be no assurance that such financing will be available in sufficient amounts or on acceptable terms, if at all, and some could be dilutive to existing stockholders. If we are unable to obtain additional funding on a timely basis, we may be forced to significantly curtail, delay, or discontinue one or more of our planned research or development programs or be unable to expand our operations.
Funding Requirements
Our primary uses of capital are, and we expect will continue to be, research and development activities, compensation and related expenses and general overhead costs. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase significantly in connection with our ongoing activities. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy.
Because of the numerous risks and uncertainties associated with research, development, and commercialization of product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on, and could increase significantly as a result of many factors, including:
•the initiation, timing, costs, progress and results of our planned clinical trials of detalimogene and any other product candidates we develop;
•the scope, progress, results, and costs of our earlier-stage research programs, including the progress of preclinical development and possible clinical trials;
•the scope, progress, results and costs of our research programs and preclinical development of any future product candidates we may pursue;
•the cost of regulatory submissions and timing of regulatory approvals;
•the progress of the development efforts of parties with whom we may in the future enter into collaborations and/or research and development agreements;
•the timing and amount of milestone and other payments we are obligated to make under our Nature Technology Corporation Agreement or any future license agreements;
•the cash requirements of any future acquisitions or discovery of product candidates;
•our ability to establish and maintain collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties on favorable terms, if at all;
•the costs to acquire or in-license any products, product candidates or technologies;
•the costs associated with maintaining, expanding and protecting our intellectual property portfolio, including costs involved in prosecuting and enforcing patent and other intellectual property claims;
•the costs of manufacturing detalimogene and any other product candidates we develop by third parties;
•the cost of establishing commercial launch capabilities in anticipation of a potential regulatory approval of detalimogene or any other product candidates we develop;
•the cost of commercialization activities if detalimogene or any future product candidates we develop are approved for sale, including marketing, sales and distribution costs;
•our efforts to add operational, financial and management information systems, enhance existing operational, financial and management information systems and hire or retain qualified personnel, including personnel to support development of our
product candidates, commercial launch preparation and commercialization efforts and our other operations as a public company,
•the price of our Common Shares, and our ability to maintain the listing of the Company’s Common Shares and Warrants on the Nasdaq or another national securities exchange; and
•the costs of operating as a public company.
A change in the outcome of any of these or other variables with respect to the development of our lead candidates or any product or development candidate we may develop in the future could significantly change the costs and timing associated with our development plans. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings or other capital sources, which could include collaborations, strategic alliances or licensing arrangements. Adequate additional financing, if available, may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing shareholders may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights of such shareholders. Debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research program 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 when needed, we may be required to delay, limit, reduce or terminate 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. Our ability to raise additional funds may be adversely impacted by the price of our Common Shares, our ability to maintain the listing of our Common Shares and Warrants on the Nasdaq or another national securities exchange, potential worsening global economic conditions and disruptions to and volatility in the credit and financial markets in the United States and worldwide. Because of the numerous risks and uncertainties associated with product development, there is no assurance that we will ever be profitable or generate positive cash flow from operating activities.
Cash Flows
Comparison of the nine months ended July 31, 2026 and 2025
The following table provides information regarding our cash flows for each of the periods presented (in thousands):
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|
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|
|
|
Nine Months Ended July 31, |
|
|
|
2026 |
|
|
2025 |
|
Net cash used in operating activities |
|
$ |
(78,347 |
) |
|
$ |
(74,277 |
) |
Net cash used in investing activities |
|
|
(72,538 |
) |
|
|
(65,638 |
) |
Net cash provided by financing activities |
|
|
141,757 |
|
|
|
(467 |
) |
Effect of exchange rate changes on cash |
|
|
1 |
|
|
|
1 |
|
Net decrease in cash and cash equivalents |
|
$ |
(9,127 |
) |
|
$ |
(140,381 |
) |
Net Cash Used in Operating Activities
Net cash used in operating activities for the nine months ended July 31, 2026 was $78.3 million and was primarily due to our net loss of $92.5 million, partially offset by adjustments for non-cash charges totaling $15.9 million. Further changes were driven by a $1.7 million increase in net working capital adjustments.
Net cash used in operating activities for the nine months ended July 31, 2025 was $74.3 million and was primarily due to our net loss of $79.4 million, partially offset by adjustments for non-cash charges totaling $5.5 million. Further changes were driven by a $0.3 million increase in net working capital adjustments.
Net Cash Used in Investing Activities
Net cash used in investing activities for each of the nine months ended July 31, 2026 and 2025 was $72.5 million and $65.6 million, respectively, consisting of net purchases of marketable securities and property and equipment.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the nine months ended July 31, 2026 was $141.8 million, primarily resulting from net proceeds of $140.1 million related to the public offering and issuance of 12,558,823 common shares of the Company and 2,735,295 Pre-Funded Warrants to purchase common shares in November 2025, and $1.6 million of net proceeds related to the 2026 Term Loan and closing of the Second Amended Loan Agreement with Hercules in January 2026. See Note 9 and Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for discussion of the public offering, and the terms and conditions of the Hercules debt facility, respectively.
Net cash provided by financing activities for the nine months ended July 31, 2025 was $0.2 million.
Contractual Obligations and Other Commitments
Notes Payable
The Company has entered into a debt facility with Hercules, under which we have drawn $25.0 million and may be able to draw an additional $100.0 million, subject to the terms and conditions of the Second Amended Loan Agreement with Hercules. Refer to disclosures in Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for the terms and conditions of the Hercules debt facility, as well as the estimated cashflow payment requirements needed to satisfy the Company’s debt obligations as of July 31, 2026.
License Agreement with Nature Technology Corporation
On April 10, 2020, we entered into the License Agreement with NTC pursuant to which NTC granted us a worldwide non-exclusive, royalty-bearing and sublicensable license to certain patents and know-how relating to the Nanoplasmid™ vector backbone that is used in detalimogene voraplasmid to research, develop, make, use, import, sell and offer and sell, any gene and cell therapy products incorporating the Nanoplasmid™ vector backbone (excluding any such products in the field of dermatology). Unless terminated earlier, the License Agreement will continue until no valid claim of any licensed patent exists in any country. We can voluntarily terminate the License Agreement with prior notice to NTC. During the three and nine months ended July 31, 2026 and 2025, the Company incurred $13 and $38 thousand in expenses related to the annual maintenance fee under the terms of agreement, respectively. As of July 31, 2026 the Company had not incurred fees related to the manufacturing payment under the License Agreement.
For a more detailed description of this agreement, see Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.
Lease Obligations
Our leases are comprised of all operating leases for Montreal, Canada, Boston, MA USA and Waltham, MA USA office space and Montreal, Canada lab space. Refer to Note 13 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for expenses related to the lease obligations in the three and nine months ended July 31, 2026, and the future payment requirements under the lease agreements.
Purchase and Other Obligations
We enter into contracts in the normal course of business with CROs, CDMOs and other third-party vendors for nonclinical research studies and testing, clinical trials and testing and manufacturing services. Most contracts do not contain minimum purchase commitments and are cancellable by us upon written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including those incurred by subcontractors of our suppliers.
The Company does not have material capital expenditure commitments as of July 31, 2026.
Emerging Growth Company and Smaller Reporting Company Status
We are an “emerging growth company” as defined by the JOBS Act. Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply (that is, those that have not had a registration statement under the Securities Act declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected to opt out of such extended transition period. In addition, for so long as we are an emerging growth company, we are
permitted and intend to take advantage of exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the initial public offering of Forbion European Acquisition Corporation, the special purpose acquisition company we merged with, which occurred on December 14, 2021, (b) in which we have total annual revenue of at least $1.23 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common shares held by non-affiliates exceeds $250 million as of the prior April 30, or (2) our annual revenues exceed $100 million during such completed fiscal year and the market value of our common shares held by non-affiliates exceeds $700 million as of the prior April 30. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial reporting with that of other public companies difficult or impossible. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations including regarding executive compensation.
Recent Accounting Pronouncements
We have reviewed all recently issued accounting pronouncements and have determined that, other than as disclosed in Note 2 to the interim financial statements of this Quarterly Report, such standards will not have a material impact on our financial statements or do not otherwise apply to our operations.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Outstanding Share Data
As of September 2, 2026, we had 67,016,316 Common Shares issued and outstanding, restricted share units of 366,400 Common Shares, outstanding public warrants to purchase an additional 8,449,555 Common Shares, outstanding warrants issued to Hercules as part of our debt facility to purchase an additional 103,263 Common Shares, outstanding pre-funded warrants to purchase an additional 2,735,295 Common Shares, and outstanding stock options to purchase an additional 12,543,413 Common Shares.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item 3.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report, management, under the supervision of and with the participation of our Chief Executive Officer (principal executive officer) and our Senior Vice President, Finance and Treasurer (principal financial officer and principal accounting officer), carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) to determine whether such disclosure controls and procedures provide reasonable assurance that information to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and such information is accumulated and communicated to management, including our principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure.
As discussed in our Annual Report on Form 10-K for the year ended October 31, 2025, the Company previously concluded that material weaknesses, as defined under the Exchange Act, existed in our internal control over financial reporting for each of the fiscal years ended 2024, 2023 and 2022. These material weaknesses were remediated as of October 31, 2025.
Based on our assessment, our management, including our principal executive officer and our principal financial officer, concluded that, as of July 31, 2026, our disclosure controls and procedures were effective.
Inherent Limitations on Effectiveness of Controls and Procedures
Our disclosure controls and procedures were developed through a process in which our management applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding the control objectives. You should note that the design of any system of disclosure controls and procedures is based in part upon various assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended July 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in legal proceedings that arise in the regular course of our business. Our management believes that we are not currently involved in any legal proceedings that are likely to have a significant negative effect on our business. However, legal proceedings can negatively affect our business, financial condition, results, and future prospects, regardless of the outcome, due to costs associated with defense and settlement, as well as the diversion of management resources, among other factors.
Item 1A. Risk Factors.
We are a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item 1A. For a detailed discussion of our risk factors, see the information disclosed in Part 1, Item 1A. of our Annual Report on Form 10-K for the year ended October 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Insider Adoption or Termination of Trading Arrangements.
During the fiscal quarter ended July 31, 2026, none of our directors or officers informed us of the adoption or termination of a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as each term is defined in Item 408(a) of Regulation S-K).
Item 6. Exhibits.
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Exhibit Number |
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Description |
10.1#* |
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Employment Agreement, dated June 24, 2026, by and between enGene USA, Inc. and Kathleen Richton. |
10.2#* |
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Employment Agreement, dated June 15, 2026, by and between enGene USA, Inc. and William Grossman. |
10.3#* |
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Separation Agreement and General Release, dated June 15, 2026, by and between enGene USA, Inc. and Ryan Daws. |
10.4#* |
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Separation Agreement and General Release, dated June 15, 2026, by and between enGene USA, Inc. and Lee G. Giguere. |
10.5#* |
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Separation Agreement and General Release, dated July 16, 2026, by and between enGene USA, Inc. and Alexander Nichols. |
10.6#* |
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Transition Services Agreement and General Release, dated July 8, 2026, by and between enGene, Inc. and Anthony T. Cheung. |
10.7# |
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Amended and Restated Employment Agreement, dated May 5, 2026, by and between enGene USA, Inc. and Hussein Sweiti (incorporated by reference to Exhibit 10.3 to enGene’s Quarterly Report on Form 10-Q for the period ended April 30, 2026). |
10.8#* |
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Form of Executive Cash Retention Agreement. |
10.9(a)#* |
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Form of Employee Cash Retention Agreement (U.S. version). |
10.9(b)#* |
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Form of Employee Cash Retention Agreement (Canadian version). |
10.10#* |
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Form of Performance Stock Option Agreement under the Amended and Restated 2023 Incentive Equity Plan. |
10.11#* |
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Form of Performance RSU Agreement under the Amended and Restated 2023 Incentive Equity Plan. |
31.1* |
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Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1* |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2* |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |
|
Inline XBRL Instance Document |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
# Indicates a management contract or compensatory plan or arrangement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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enGene Therapeutics Inc. |
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Date: September 8, 2026 |
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By: |
/s/ Ronald H.W. Cooper |
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Name: Ronald H. W. Cooper |
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Title: Chief Executive Officer and President |
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Date: September 8, 2026 |
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By: |
/s/ Kathleen Richton |
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Name: Kathleen Richton |
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Title: Senior Vice President, Finance and Treasurer |
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Exhibit 10.5