enGene Therapeutics Inc.

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.

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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.

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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.

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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:

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:

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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

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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):