PEPG

PepGen Inc. 2026 Q2 10-Q Filing Summary

Business Context and Reporting Period

PepGen Inc. is a clinical-stage biotechnology company developing oligonucleotide therapeutics for severe neuromuscular and neurologic diseases. The company is an Emerging Growth Company and a Smaller Reporting Company. This report covers the quarterly period ended June 30, 2026. As of August 2, 2026, the company had 69,259,517 shares of common stock outstanding.

Key Financial Metrics

Note: The company has no debt obligations listed on the balance sheet. Total liabilities consist primarily of operating lease liabilities ($16.1 million) and accrued expenses ($4.7 million).

Material Changes vs. Prior Period

• Reduced Operating Loss: Net loss decreased by $5.3 million (23%) for the quarter and $17.7 million (33%) year-to-date compared to the prior year periods. This improvement is primarily driven by a significant reduction in Research and Development (R&D) expenses.
• R&D Expense Reduction: R&D expenses decreased by $5.9 million for the quarter and $18.2 million year-to-date. This was largely due to the discontinuation of the Duchenne Muscular Dystrophy (DMD) program (PGN-EDO51) in May 2025, resulting in lower clinical trial and manufacturing costs.
• Increased G&A Expenses: General and Administrative expenses increased by $0.9 million for the quarter and $0.9 million year-to-date, primarily due to higher personnel-related costs and stock-based compensation.
• Cash Flow: Net cash used in operating activities improved to $34.2 million for the six months ended June 30, 2026, compared to $46.5 million in the prior year period.

Guidance, Outlook, and Risks

• Clinical Progress: The company is focused on its lead candidate, PGN-EDODM1, for Myotonic Dystrophy Type 1 (DM1). The Phase 1 FREEDOM study is complete. The Phase 2 FREEDOM2 study is ongoing in Canada, the UK, South Korea, Australia, and New Zealand. However, the study remains on a partial clinical hold in the U.S. as the company works with the FDA to address questions regarding preclinical pharmacology and toxicology studies.
• Liquidity Outlook: Management believes current cash, cash equivalents, and marketable securities ($117.2 million) are sufficient to fund operations into the fourth quarter of 2027. The company expects to incur losses for the foreseeable future and will need to raise additional capital to advance clinical trials and commercialization.
• Key Risks:
  • Regulatory Uncertainty: The partial clinical hold in the U.S. poses a risk to enrollment timelines and the overall development plan for PGN-EDODM1.
  • Capital Needs: Failure to raise additional funding could force the company to delay, scale back, or discontinue development programs.
  • Manufacturing Supply Chain: The company relies on third-party manufacturers, including WuXi AppTec, which faces potential restrictions under the U.S. BIOSECURE Act. The company is working to secure secondary sources.
  • Single Product Dependence: The business is substantially dependent on the success of PGN-EDODM1, as the DMD program was discontinued.

Investor Verification Checklist

• U.S. Clinical Hold Status: Verify the current status of the FDA partial clinical hold on the FREEDOM2 study and the timeline for resolution.
• Cash Runway: Confirm the burn rate and the sufficiency of the $117.2 million liquidity position to reach the projected Q4 2027 milestone without dilutive financing.
• Manufacturing Contingency: Assess the progress of securing secondary suppliers for the active pharmaceutical ingredient (API) in light of the BIOSECURE Act risks associated with current vendors.
• Phase 2 Data Readouts: Monitor the expected data release for the 10 mg/kg cohort of the FREEDOM2 study (anticipated November 2026) and the 12.5 mg/kg cohort (anticipated H1 2027).
• Stock-Based Compensation: Review the impact of the November 2025 option repricing on future non-cash expenses and dilution.