BEAM 10-Q
Beam Therapeutics Inc. (BEAM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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
(Exact name of Registrant as specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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.
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).
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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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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
The number of shares of registrant’s common stock outstanding as of November 1, 2023 was
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such forward-looking statements reflect, among other things:
All of these statements are subject to known and unknown important risks, uncertainties and other factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or implied by such forward-looking statements. Therefore, any statements contained herein that are not statements of historical fact may be forward-looking statements and should be evaluated as such. Without limiting the foregoing, the words “anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “targets,” “projections,” “should,” “could,” “would,” “may,” “might,” “will,” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and “Risk Factors Summary” and “Risk Factors” in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, or the 2022 Form 10-K. Unless legally required, we assume no obligation to update any such forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information.
When we use the terms “Beam,” the “Company,” “we,” “us” or “our” in this Quarterly Report on Form 10-Q, we mean Beam Therapeutics Inc. and its subsidiaries on a consolidated basis, unless the context indicates otherwise.
Table of Contents
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PART I |
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Item 1. |
1 |
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1 |
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Condensed Consolidated Statements of Operations and Other Comprehensive Loss |
2 |
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3 |
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5 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
Item 3. |
37 |
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Item 4. |
38 |
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PART II |
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Item 1. |
39 |
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Item 1A. |
39 |
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Item 6. |
46 |
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47 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Beam Therapeutics Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)
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September 30, |
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December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Restricted cash |
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Operating lease right-of-use assets |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Derivative liabilities |
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Current portion of deferred revenue |
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Current portion of lease liability |
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Current portion of equipment financing liability |
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Total current liabilities |
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Long-term lease liability |
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Long-term equipment financing liability |
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Contingent consideration liabilities |
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Long-term portion of deferred revenue |
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Other liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive (loss) income |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Beam Therapeutics Inc.
Condensed Consolidated Statements of Operations and Other Comprehensive Loss
(Unaudited)
(in thousands, except share and per share amounts)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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$ |
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$ |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other income (expense): |
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Change in fair value of derivative liabilities |
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Change in fair value of non-controlling equity investments |
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( |
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( |
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( |
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Change in fair value of contingent consideration liabilities |
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( |
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( |
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Interest and other income (expense), net |
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Total other income (expense) |
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Net loss before income taxes |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Provision for income taxes |
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— |
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( |
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— |
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( |
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Loss from equity method investment |
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— |
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( |
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— |
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( |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Unrealized gain (loss) on marketable securities |
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( |
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( |
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( |
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Comprehensive loss |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per common share, basic and diluted |
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$ |
( |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Weighted-average common shares outstanding, basic and diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Beam Therapeutics Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except share amounts)
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Purchase of common stock under ESPP |
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— |
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— |
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— |
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Issuance of common stock from At-the-Market offering, net of issuance costs of $ |
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— |
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— |
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Vesting of restricted common stock |
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( |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Exercise of common stock options |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at March 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Issuance of common stock from At-the-Market offering, net of issuance costs of $ |
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— |
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— |
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Vesting of restricted common stock |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Exercise of common stock options |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at June 30, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Purchase of common stock under ESPP |
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— |
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— |
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— |
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Vesting of restricted common stock |
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( |
) |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Exercise of common stock options |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at September 30, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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3
Beam Therapeutics Inc.
Condensed Consolidated Statements of Stockholders’ Equity - Continued
(Unaudited)
(in thousands, except share amounts)
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Purchase of common stock under ESPP |
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— |
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— |
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Issuance of common stock from At-the-Market offering, net of issuance costs of $ |
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— |
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— |
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Vesting of restricted common stock |
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( |
) |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Exercise of common stock options |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at March 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Issuance of common stock from At-the-Market offering, net of issuance costs of $ |
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— |
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— |
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Vesting of restricted common stock |
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( |
) |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Exercise of common stock options |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at June 30, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Purchase of common stock under ESPP |
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— |
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— |
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Issuance of common stock from At-the-Market offering, net of issuance costs of $ |
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— |
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— |
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Vesting of restricted common stock |
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( |
) |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Exercise of common stock options |
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— |
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— |
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Other comprehensive income (loss) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at September 30, 2023 |
|
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Beam Therapeutics Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2023 |
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2022 |
|
||
Operating activities |
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Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
||
Loss from equity method investment |
|
|
— |
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of investment discount (premiums) |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation expense |
|
|
|
|
|
|
||
Change in operating lease right-of-use assets |
|
|
|
|
|
|
||
Change in fair value of derivative liabilities |
|
|
( |
) |
|
|
( |
) |
Change in fair value of contingent consideration liabilities |
|
|
( |
) |
|
|
|
|
Change in fair value of non-controlling equity investments |
|
|
|
|
|
|
||
Other |
|
|
— |
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Accrued expenses and other liabilities |
|
|
( |
) |
|
|
( |
) |
Operating lease liabilities |
|
|
( |
) |
|
|
|
|
Collaboration receivable |
|
|
— |
|
|
|
|
|
Deferred revenue |
|
|
( |
) |
|
|
( |
) |
Other long-term liabilities |
|
|
|
|
|
( |
) |
|
Net cash provided by (used in) operating activities |
|
|
( |
) |
|
|
|
|
Investing activities |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Purchases of marketable securities |
|
|
( |
) |
|
|
( |
) |
Maturities of marketable securities |
|
|
|
|
|
|
||
Net cash provided by (used in) investing activities |
|
|
( |
) |
|
|
( |
) |
Financing activities |
|
|
|
|
|
|
||
Proceeds from issuance of common shares, net of commissions |
|
|
|
|
|
|
||
Proceeds from issuances of stock under ESPP |
|
|
|
|
|
|
||
Payment of equity offering costs |
|
|
( |
) |
|
|
( |
) |
Repayment of equipment financings |
|
|
( |
) |
|
|
( |
) |
Proceeds from exercise of stock options |
|
|
|
|
|
|
||
Net cash provided by (used in) financing activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net change in cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
( |
) |
Cash, cash equivalents and restricted cash—beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash—end of period |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Beam Therapeutics Inc.
Condensed Consolidated Statements of Cash Flows - Continued
(Unaudited)
(in thousands)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
||
Property and equipment additions in accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
||
Operating lease liabilities arising from obtaining right-of-use assets |
|
$ |
|
|
$ |
|
||
Equity issuance costs in accounts payable and accrued expenses |
|
$ |
— |
|
|
$ |
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Beam Therapeutics Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Nature of the business and basis of presentation
Organization
Beam Therapeutics Inc., which we refer to herein as the “Company” or “Beam,” is a biotechnology company committed to establishing the leading, fully integrated platform for precision genetic medicines. Beam’s vision is to provide life-long cures to patients suffering from genetic diseases. The Company was incorporated on January 25, 2017 as a Delaware corporation and began operations in July 2017. Its principal offices are in Cambridge, Massachusetts.
Liquidity and capital resources
Since its inception, the Company has devoted substantially all of its resources to building its base editing platform and advancing development of its portfolio of programs, establishing and protecting its intellectual property, conducting research and development activities, making arrangements to conduct manufacturing activities with contract manufacturing organizations, research and development costs including preclinical studies, IND-enabling studies and clinical trials, organizing and staffing the Company, maintaining its facilities and new facility build-outs, business planning, raising capital and providing general and administrative support for these operations. The Company is also in the process of developing internal manufacturing capabilities. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.
In April 2021, the Company entered into an at the market, or ATM, sales agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, pursuant to which the Company was entitled to offer and sell, from time to time at prevailing market prices, shares of the Company’s common stock having aggregate gross proceeds of up to $
In July 2021 and May 2023, the Company and Jefferies entered into amendments to the Sales Agreement to provide for increases in the aggregate offering amount under the Sales Agreement, such that as of May 10, 2023, the Company may offer and sell shares of common stock having an aggregate offering price of up to an additional $
Since its inception, the Company has incurred substantial losses and had an accumulated deficit of $
The Company expects that its cash, cash equivalents, and marketable securities as of September 30, 2023 of $
7
2. Summary of significant accounting policies
The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2022, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission, or the SEC, on February 28, 2023, or the 2022 Form 10-K. Since the date of those financial statements, there have been no material changes to the Company's significant accounting policies.
Basis of presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board.
Principles of consolidation
The accompanying condensed consolidated financial statements include the results of operations of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities as of and during the reporting period. The Company bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, incremental borrowing rate used in the calculation of lease liabilities, research and development expenses, stock-based compensation, contingent consideration liabilities, success payments and certain judgments regarding revenue recognition. Actual results could differ from these estimates.
Cash, cash equivalents, and restricted cash
Cash and cash equivalents consist of standard checking accounts, money market accounts, and all highly liquid investments with a remaining maturity of three months or less at the date of purchase. Restricted cash represents collateral provided for letters of credit issued as security deposits in connection with the Company’s leases of its corporate and manufacturing facilities.
|
|
September 30, |
|
|
September 30, |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents, and restricted cash |
|
$ |
|
|
$ |
|
||
3. Property and equipment, net
Property and equipment consist of the following (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
Leasehold improvements |
|
$ |
|
|
$ |
|
||
Lab equipment |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Computer equipment |
|
|
|
|
|
|
||
Construction in process |
|
|
|
|
|
|
||
Total property and equipment |
|
|
|
|
|
|
||
Less accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
The following table summarizes depreciation expense incurred (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Depreciation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
8
4. fair value of financial instruments
The Company’s financial instruments that are measured at fair value on a recurring basis consist of cash equivalents, marketable securities, corporate equity securities of Verve Therapeutics, Inc., or Verve, and Prime Medicine, Inc., or Prime, contingent consideration liabilities related to the agreement and plan of merger pursuant to which the Company acquired Guide, or the Guide Merger Agreement, and success payment derivative liabilities pursuant to the license agreement, or the Harvard License Agreement, between President and Fellows of Harvard University, or Harvard, and the Company, and the license agreement, or the Broad License Agreement, between The Broad Institute, Inc., or Broad Institute, and the Company.
The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at September 30, 2023 (in thousands):
|
|
Carrying |
|
|
Fair |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial paper |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Corporate notes |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
U.S. Government securities |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Corporate equity securities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Success payment liability – Harvard |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
Success payment liability – Broad Institute |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Contingent consideration liability – Technology |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Contingent consideration liability – Product |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Total liabilities |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
9
The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at December 31, 2022 (in thousands):
|
|
Carrying |
|
|
Fair |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|||
Commercial paper |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Corporate notes |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial paper |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Corporate notes |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
U.S. Government securities |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Equity securities included in marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Corporate equity securities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Success payment liability – Harvard |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
Success payment liability – Broad Institute |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Contingent consideration liability – Technology |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Contingent consideration liability – Product |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Total liabilities |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
Cash equivalents – Money market funds included within cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. Commercial paper and corporate notes are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.
Marketable securities – Marketable securities, excluding corporate equity securities, are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined using models or other valuation methodologies.
The Company holds an investment in Verve consisting of shares of Verve’s common stock. As of September 30, 2023, the Company owned
The Company also holds an investment in Prime consisting of
Pursuant to ASC 825, Financial instruments, the Company records changes in the fair value of its investments in equity securities to other income (expense), in the Company’s condensed consolidated statements of operations.
The following table summarizes other income (expense) recorded due to changes in the fair value of corporate equity securities held (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Other income (expense) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Success payment liabilities – As discussed further in Note 8, License agreements, the Company is required to make payments to Harvard and Broad Institute based upon the achievement of specified multiples of the market value of the Company's common stock, at specified valuation dates. The Company’s liability for the share-based success payments under the Harvard and Broad License Agreements is carried at fair value. To determine the estimated fair value of the success payment liability, the Company uses a Monte Carlo simulation methodology, which models the future movement of stock prices based on several key variables.
10
The following variables were incorporated in the calculation of the estimated fair value of the Harvard and Broad Institute success payment liabilities:
|
|
Harvard |
|
|
Broad Institute |
|
||||||||||
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
||||
Fair value of common stock (per share) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expected volatility |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Expected term (years) |
|
|
|
|
|
|
|
|
||||||||
The computation of expected volatility was estimated using available information about the historical volatility of stocks of similar publicly traded companies in addition to the Company's own data for a period matching the expected term assumption. In addition, the Company incorporated the estimated number, timing, and probability of valuation measurement dates in the calculation of the success payment liability.
The following table reconciles the change in the fair value of success payment liabilities based on Level 3 inputs (in thousands):
|
|
Nine Months Ended September 30, 2023 |
|
|||||||||
|
|
Harvard |
|
|
Broad Institute |
|
|
Total |
|
|||
Balance at December 31, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Change in fair value |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Contingent consideration liabilities – Under the Guide Merger Agreement, Guide’s former stockholders and option holders are eligible to receive up to an additional $
The following table reconciles the change in fair value of the contingent consideration liabilities based on level 3 inputs (in thousands):
|
|
Nine Months Ended September 30, 2023 |
|
|||||||||
|
|
Technology Milestones |
|
|
Product Milestones |
|
|
Total |
|
|||
Balance at December 31, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Change in fair value |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The following variables were incorporated in the calculation of the estimated fair value of the contingent consideration liabilities:
|
|
Technology Milestones |
|
|
Product Milestones |
|
|
||||||||||
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
|
||||
Discount Rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
||||
Probability of Achievement |
|
|
% |
|
|
|
|
|
|
|
|||||||
Projected Year of Achievement |
|
|
|
|
|
|
|
|
|
||||||||
5. Marketable securities
The following table summarizes the Company’s marketable securities held at September 30, 2023 (in thousands):
|
|
Amortized Cost |
|
|
Gross |
|
|
Gross |
|
|
Fair Value |
|
||||
Commercial paper |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Corporate Notes |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
U.S. Treasury securities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
U.S. Government securities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Corporate equity securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
11
The following table summarizes the Company’s marketable securities held at December 31, 2022 (in thousands):
|
|
Amortized Cost |
|
|
Gross |
|
|
Gross |
|
|
Fair Value |
|
||||
Commercial paper |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Corporate notes |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
U.S. Treasury securities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
U.S. Government securities |
|
|
|
|
|
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|
|
( |
) |
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|||
Corporate equity securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
The amortized cost of marketable securities is adjusted for amortization of premiums and accretion of discounts to maturity. At September 30, 2023, the balance in accumulated other comprehensive (loss) income was related to marketable securities. There were
The Company holds debt securities of companies with high credit quality and has determined that there was no material change in the credit risk of any of its debt securities.
6. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
Employee compensation and related benefits |
|
$ |
|
|
$ |
|
||
Research costs |
|
|
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|
|
|
||
Professional fees |
|
|
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|
|
||
Process development and manufacturing costs |
|
|
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|
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|
||
Other |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
The Company received correspondence from a research institution regarding a confidentiality agreement between such institution and the Company. The confidentiality agreement related to certain technology that the Company evaluated for development in connection with certain of its programs. The correspondence alleges that the Company breached the terms of the confidentiality agreement, misappropriated trade secret and other confidential information of such institution, engaged in unfair and deceptive trade practices, and was unjustly enriched in connection with developing its therapeutics, including BEAM-102 and BEAM-302. The research institution claims that it is entitled to monetary damages (including damages for the apportioned value of the Company and enhanced damages for an alleged willful violation) and certain ongoing royalty and/or milestone payments related to the technology that is the subject of the alleged breaches of contract, among other possible remedies.
As of September 30, 2023, the Company has accrued a $
7. License agreements
Harvard license agreement
Under the Harvard License Agreement, Harvard is entitled to receive success payments, in cash or shares of Company stock, determined based upon the achievement of specified multiples of the initial weighted average value of the Company’s Series A Preferred at specified valuation dates. The success payments range from $
12
In May 2021, the first success payment measurement occurred and amounts due to Harvard were calculated to be $
The following table summarizes the Company’s success payment liability for Harvard (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
Harvard success payment liability |
|
$ |
|
|
$ |
|
||
The following table summarizes the expense resulting from the change in the fair value of the success payment liability for Harvard (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Change in fair value of Harvard success payment liability |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
During the three and nine months ended September 30, 2023, the Company recognized $
During the three and nine months ended September 30, 2023, the Company did
Broad license agreement
Under the Broad License Agreement, Broad Institute is entitled to receive success payments, in cash or shares of Company common stock, determined based upon the achievement of specified multiples of the initial weighted average value of the Series A Preferred at specified valuation dates. The success payments range from $
In May 2021, the first success payment measurement occurred and amounts due to Broad Institute were calculated to be $
The following table summarizes the Company’s success payment liability for Broad Institute (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
Broad Institute success payment liability |
|
$ |
|
|
$ |
|
||
13
The following table summarizes the expense resulting from the change in the fair value of the success payment liability for Broad Institute (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Change in fair value of Broad Institute success payment liability |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
The Company determined that product development and regulatory approval milestones and royalties under the Broad License Agreement were not probable and, as such,
The Company did
Editas license agreement
In May 2018, the Company entered into a license agreement, or the Editas License Agreement, with Editas Medicine, Inc., or Editas. Pursuant to the Editas License Agreement, Editas granted to the Company licenses and options to acquire licenses to certain intellectual property rights owned or controlled by Editas, for specified uses.
The annual maintenance fees under the Editas License Agreement are recorded as research and development expense. Annual patent costs are expensed as incurred. In addition, the Company is required to make certain development, regulatory and commercial milestone payments to Editas upon the achievement of specified milestones.
8. Collaboration and license agreements
Orbital
In September 2022, the Company entered into a License and Research Collaboration Agreement, or the Orbital Agreement, with Orbital Therapeutics, Inc., or Orbital
In exchange for the licenses and services provided by the Company under the Orbital Agreement, the Company received a non-exclusive research license to certain RNA technology and nonviral delivery technology controlled by Orbital, and research and development support services as outlined in a research plan. Orbital also granted the Company an exploitation license to certain RNA technology and nonviral delivery technology controlled by Orbital. The exploitation license is exclusive in the fields of gene editing and conditioning and nonexclusive in all other fields other than vaccines and certain protein therapeutics. The Company also received
The research plan has a term of
14
The Company accounts for the Orbital Agreement under ASC 606, Revenue from Contracts with Customers, or ASC 606, as it includes a customer-vendor relationship as defined under ASC 606 and meets the criteria to be considered a contract.
The overall transaction price as of the inception of the contract was determined to be $
The Company concluded that the research and exploitation licenses are not distinct from the other promises in the Orbital Agreement, and as such the Company has determined that the licenses combined with the research and development services, know-how transfers, committee participation and materials transfer represent a combined performance obligation. The Company recognizes revenue associated with the Orbital performance obligation over time as it is satisfied during the term of the agreement, which is
Pfizer
At the inception of the Pfizer Agreement, the Company was entitled to receive a nonrefundable upfront payment of $
During the collaboration term, Pfizer has a one-time option to substitute a disease that is the subject of a specific program with one pre-defined substitute disease. The collaboration has an initial term of
The Company accounts for the Pfizer Agreement under ASC 606, as it includes a customer-vendor relationship as defined under ASC 606 and meets the criteria to be considered a contract.
The overall transaction price as of the inception of the contract was determined to be $
The Company has concluded that the licenses to its base editing technology, including the exclusive development and commercialization rights, are not capable of being distinct from the other performance obligations, and as such the Company has determined that the licenses combined with the other research and development services represent performance obligations and no up-front revenue was recognized for the licenses.
The selling price of each performance obligation was determined based on the Company’s estimated standalone selling price, or the ESSP. The Company developed the ESSP for all of the performance obligations included in the Pfizer Agreement by determining the total estimated costs to fulfill each performance obligation identified with the objective of determining the price at which it would sell such an item if it were to be sold regularly on a standalone basis. The Company allocated the stand-alone selling price to the performance obligations based on the relative standalone selling price method.
15
The Company recognizes revenue for each performance obligation as it is satisfied during the term of the agreement using an input method. The Company allocated the transaction price of $
Apellis Pharmaceuticals
As part of the collaboration, the Company was eligible to receive a total of $
The Company accounts for the Apellis Agreement under ASC 606 as it includes a customer-vendor relationship as defined under ASC 606 and meets the criteria to be considered a contract.
The overall transaction price as of the inception of the contract was determined to be $
The Company concluded that each of the six base editing programs combined with the research and development service, licenses, substitution rights and governance participation were material promises that were both capable of being distinct and were distinct within the context of the Apellis Agreement and represented separate performance obligations. The Company further concluded that the Opt-In Rights and option to extend the collaboration term did not grant Apellis a material right. The Company determined that the term of the contract is
The selling price of each performance obligation was determined based on the Company’s ESSP. The Company developed the ESSP for all of the performance obligations included in the Apellis Agreement by determining the total estimated costs to fulfill each performance obligation identified with the objective of determining the price at which it would sell such an item if it were to be sold regularly on a standalone basis. The Company allocated the stand-alone selling price to the performance obligations based on the relative standalone selling price method.
The Company recognizes revenue for each performance obligation as it is satisfied over the
16
Verve
In April 2019, the Company entered into a collaboration and license agreement with Verve, or the Verve Agreement, to investigate gene editing strategies to modify genes associated with an increased risk of coronary diseases and in July 2022, the Company and Verve amended the Verve Agreement. Under the terms of the Verve Agreement, as amended, the Company granted Verve an exclusive license to certain base editor technology and improvements and Verve granted the Company a non-exclusive license under certain know-how and patents controlled by Verve, an interest in joint collaboration technology and a non-exclusive license under certain delivery technology. The Company retained the option, after the dosing of the final patient in a Phase 1 clinical trial of a licensed product, to participate in future development and commercialization, and share
In October 2023, the Company entered into a transfer and delegation agreement, or the Transfer Agreement, with Eli Lilly and Company, or Lilly, pursuant to which Lilly acquired certain assets and other rights under the Verve Agreement, including the Company’s opt-in rights to co-develop and co-commercialize Verve’s base editing programs for cardiovascular disease, which consist of programs targeting PCSK9, ANGPTL3 and an undisclosed liver-mediated, cardiovascular target. In addition, Lilly acquired the right to receive any future milestone or royalty payments payable to the Company under the Verve Agreement. Under the terms of the Transfer Agreement, the Company received a $
In October 2023, the Company and Lilly also entered into a Stock Purchase Agreement, or the Purchase Agreement, providing for the sale and issuance of
9. Common stock
In April 2021, the Company entered into the Sales Agreement with Jefferies, pursuant to which the Company was entitled to offer and sell, from time to time at prevailing market prices, shares of the Company’s common stock having aggregate gross proceeds of up to $
In July 2021 and May 2023, the Company and Jefferies entered into amendments to the Sales Agreement to provide for increases in the aggregate offering amount under the Sales Agreement, such that as of May 10, 2023, the Company may offer and sell shares of common stock having an aggregate offering price of up to an additional $
10. Stock option and grant plan
2019 equity incentive plan
As of September 30, 2023, the Company had
Stock-based compensation expense recorded as research and development and general and administrative expenses in the condensed consolidated statements of operations and other comprehensive loss is as follows (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Research and development |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
17
Stock options
The following table provides a summary of option activity under the Company’s equity award plans:
|
|
Number |
|
|
Weighted |
|
||
Outstanding at December 31, 2022 |
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|
|
|
$ |
|
||
Granted |
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|
|
|
|
|
||
Exercised |
|
|
( |
) |
|
|
|
|
Forfeitures |
|
|
( |
) |
|
|
|
|
Outstanding at September 30, 2023 |
|
|
|
|
|
|
||
Exercisable as of September 30, 2023 |
|
|
|
|
$ |
|
||
The weighted-average grant date fair value per share of options granted in the nine months ended September 30, 2023 was $
Restricted stock
The Company issues shares of restricted common stock, including both restricted stock units and restricted stock awards. Restricted common stock issued generally vests over a period of to
The following table summarizes the Company’s restricted stock activity:
|
|
Shares |
|
|
Weighted- |
|
||
Unvested as of December 31, 2022 |
|
|
|
|
$ |
|
||
Issued |
|
|
|
|
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|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Unvested as of September 30, 2023 |
|
|
|
|
$ |
|
||
At September 30, 2023, there was approximately $
2019 employee stock purchase plan
The Company issued
Stock-based compensation recognized under the ESPP for the three and nine months ended September 30, 2023 was $
11. Net loss per share
For periods in which the Company reports a net loss, potentially dilutive securities have been excluded from the computation of diluted net loss per share as their effects would be anti-dilutive. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same.
|
|
As of September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Unvested restricted stock |
|
|
|
|
|
|
||
Outstanding options to purchase common stock |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
18
The following table summarizes the computation of basic and diluted net loss per share of the Company (in thousands, except share and per share amounts):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Numerator: |
|
|
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|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
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|
|
|
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|
||||
Weighted average common shares outstanding, basic and diluted |
|
|
|
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|
||||
Net loss per common share, basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
12. Income taxes
During the three and nine months ended September 30, 2023, the Company recorded a full valuation allowance on federal and state deferred tax assets since there is insufficient evidence that the deferred tax assets are more likely than not realizable. The Company did
13. Related party transactions
Orbital
The Company has significant influence over, but does not control, Orbital through its noncontrolling representation on Orbital's board of directors and the Company’s equity interest in Orbital. The Company and Orbital are also parties to a collaboration and license agreement and have multiple common board members.
Founders
The Company made payments of $
Verve
The Company and Verve are parties to a collaboration and license agreement and had a common board member from August 2018 to August 2022.
As of September 30, 2023, the Company owns
In October 2021, the Company entered into an agreement pursuant to which Verve subleased
Prime Medicine
The Company and Prime are parties to a collaboration and license agreement and had a common founder and had a common board member from September 2019 to September 2022.
As of September 30, 2023, the Company owns
19
14. Subsequent Events
Strategic Restructuring
On October 19, 2023, the Company announced updated portfolio priorities and strategic plans to restructure the Company to streamline its business operations. In connection with this portfolio prioritization and strategic restructuring, the Company expects to reduce its employee headcount by approximately
Transfer and Delegation Agreement with Eli Lilly and Company
On October 27, 2023, or the Execution Date, the Company entered into the Transfer Agreement with Lilly, pursuant to which Lilly acquired certain assets and other rights under the Verve Agreement, including the Company’s opt-in rights to co-develop and co-commercialize Verve’s base editing programs for cardiovascular disease, which consist of programs targeting PCSK9, ANGPTL3 and an undisclosed liver-mediated, cardiovascular target. In addition, Lilly acquired the right to receive any future milestone or royalty payments payable to the Company under the Verve Agreement. Under the terms of the Transfer Agreement, the Company received a $
Additionally, on the Execution Date, the Company and Lilly also entered into the Purchase Agreement, providing for the sale and issuance of
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve important risks, uncertainties and assumptions. Some of the numbers included herein have been rounded for the convenience of presentation. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed in “Risk Factors” in Part II, Item 1A. and elsewhere in this Quarterly Report on Form 10-Q, and in the “Risk Factors Summary” and Part I “Item 1A. Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, or the 2022 Form 10-K.
Overview
We are a biotechnology company committed to establishing the leading, fully integrated platform for precision genetic medicines. Our vision is to provide life-long cures to patients suffering from serious diseases. To achieve this vision, we have assembled a platform that includes a suite of gene editing and delivery technologies and are establishing internal manufacturing capabilities. Our suite of gene editing technologies is anchored by our proprietary base editing technology, which potentially enables a differentiated class of precision genetic medicines that target a single base in the genome without making a double-stranded break in the DNA.
We are advancing our base editing technology across three disease-area portfolios: hematology, immunology/oncology and genetic diseases. We are also pursuing a suite of both clinically validated and novel delivery modalities, depending on tissue type, including both ex vivo approaches in our hematology and immunology-oncology portfolios as well as in vivo approaches across our programs. In connection with the portfolio prioritization and strategic restructuring we announced in October 2023, our near-term research and platform investments are focused on specific applications leveraging our in vivo editing capabilities in the liver targeting both rare genetic and common disorders, as well as select opportunities in hematology and immunology/oncology.
The elegance of the base editing approach combined with a tissue specific delivery modality provides the basis for a targeted efficient, precise, and highly versatile gene editing system, capable of gene correction, gene modification, gene silencing or gene activation, and/or multiplex editing of several genes simultaneously. We are currently advancing a broad, diversified portfolio of base editing programs against distinct editing targets, utilizing the full range of our development capabilities. Furthermore, in addition to our portfolio, we are also pursuing an innovative, platform-based business model with the goal of further expanding our access to new technologies in genetic medicine and increasing the reach of our programs to more patients. Overall, we are seeking to build the leading integrated platform for precision genetic medicine, which may have broad therapeutic applicability and the potential to transform the field of precision genetic medicines.
Hematology: Ex Vivo HSCs
Aligned with our portfolio prioritization and strategic restructuring, we intend to prioritize development of our ex vivo and in vivo sickle cell disease programs, including BEAM-101, our Engineered Stem Cell Antibody Paired Evasion, or ESCAPE, improved conditioning strategy, and in vivo delivery to hematopoietic stem cells program. We are advancing hematology base editing programs in which hematopoietic stem cells, or HSCs, are collected from a patient, edited using electroporation, a clinically validated technology for the delivery of therapeutic constructs into harvested cells, and then infused back into the patient following a myeloablative conditioning regimen, such as treatment with busulfan, the standard of care in HSC transplantation today. Once reinfused, the HSCs begin repopulating a portion of the bone marrow in a process known as engraftment. The engrafted, edited HSCs give rise to progenitor cell types with the corrected gene sequences. We plan to deploy this ex vivo approach in our BEAM-101 (sickle cell disease and beta thalassemia) and ESCAPE base editing programs.
We are pursuing a long-term, staged development strategy for our base editing approach to treat hematological diseases that consists of advancing our ex vivo program, BEAM-101, in Wave 1, improving patient conditioning regimens in Wave 2, and enabling in vivo base editing with delivery directly into HSCs of patients via lipid nanoparticles, or LNPs, in Wave 3. We believe this suite of technologies – base editing, improved conditioning and in vivo delivery for editing HSCs – can maximize the potential applicability of our sickle cell disease programs to patients as well as create a platform for the treatment of many other severe genetic blood disorders.
Wave 1: Ex Vivo Base Editing via Autologous Transplant with BEAM-101
We are using base editing to pursue the development of BEAM-101 for the treatment of sickle cell disease and beta-thalassemia.
21
BEAM-101: Recreating naturally-occurring protective mutations to activate fetal hemoglobin
BEAM-101 is a patient-specific, autologous HSC investigational therapy designed to offer a potentially best-in-class profile, incorporating base edits that are intended to mimic single nucleotide polymorphisms seen in individuals with HPFH. BEAM-101 aims to alleviate the effects of sickle cell disease or beta-thalassemia by increasing fetal hemoglobin, which is expected to increase functional hemoglobin production and, in the case of sickle cell disease, inhibit hemoglobin S polymerization. We are continuing to consent patients in our Phase 1/2 clinical trial designed to assess the safety and efficacy of BEAM-101 for the treatment of sickle cell disease, which we refer to as our BEACON trial. The initial patients are moving in parallel through the screening, transfusion and mobilization activities required to enable treatment with BEAM-101. Under the trial protocol, treatment with BEAM-101 (in which the edited cell product is delivered in a bone marrow transplant) will occur on a sequential basis for a sentinel cohort of three patients, and then will be delivered in parallel for all subsequent patients. We anticipate that currently consented patients are sufficient to both fill the sentinel cohort and to initiate the expansion cohort of the trial. We will continue adding additional patients to the BEACON trial through the end of year and beyond, with a total target of 45 treated patients. The clinical trial is designed to initially include patients ages 18 to 35 with severe sickle cell disease who have received prior treatment with at least one disease-modifying agent with inadequate response or intolerance. Following mobilization, conditioning and treatment with BEAM-101, patients will be assessed for safety and tolerability, with safety endpoints including neutrophil and platelet engraftment. Patients will also be assessed for efficacy, with efficacy endpoints including the change from baseline in severe vaso-occlusive events, transfusion requirements, hemoglobin F levels, and quality of life assessments. We expect to dose the first clinical trial patient with BEAM-101 by the end of 2023 and plan to report data from multiple patients from the BEACON trial in 2024.
Wave 2: Improved Conditioning
In parallel with Wave 1 development, we also aim to improve the transplant conditioning regimen for sickle cell disease patients undergoing HSC transplantation, or HSCT, reducing toxicity challenges associated with HSCT standard of care. Conditioning is a critical component necessary to prepare a patient’s body to receive the ex vivo edited cells that must engraft in the patient’s bone marrow in order to be effective. However, today’s conditioning regimens rely on nonspecific chemotherapy or radiation, which are associated with significant toxicities. As a potential alternative to genotoxic conditioning regimens in HSCT, we are advancing our ESCAPE program. ESCAPE conditioning regimens could potentially be paired with BEAM-101 or BEAM-102, an alternative base editing approach for sickle cell disease, which is designed to directly correct the causative sickle mutation at position 6 of the beta globin gene by creating the naturally occurring HbG or “Makassar” variant of hemoglobin, as well as other base editing programs in hematology.
ESCAPE: Improved Conditioning for HSCT in sickle cell disease
ESCAPE aims to avoid toxicity challenges associated with currently available conditioning regimens for patients with sickle cell disease and beta-thalassemia ahead of autologous HSCT. ESCAPE may also have applications in other diseases of the blood and immune system where HSCT could deliver potential benefits but has been limited by toxicities associated with current standard of care conditioning regimens. In December 2022, we presented preclinical data at the 2022 American Society of Hematology Annual Meeting and Exposition, or ASH, on our ESCAPE-1 and ESCAPE-2 programs. ESCAPE-1 consists of multiplex base edited HSCs that include a therapeutic edit for sickle cell disease at the HGB1/2 gene and an additional edit at CD117. ESCAPE-2 consists of multiplex base-edited HSCs that include a therapeutic HbG-Makassar edit and an edit in CD117, which is compatible with the conditioning mAb used in ESCAPE-1. We plan to continue to invest significantly in the advancement of our ESCAPE platform.
Wave 3: In Vivo Base Editing via HSC-targeted LNPs
We are also exploring the potential for in vivo base editing programs for sickle cell disease, in which base editors would be delivered to the patient through an infusion of LNPs targeted to HSCs, eliminating the need for transplantation altogether. This approach could provide a more accessible option for patients, particularly in regions where ex vivo treatment is challenging.
Genetic Diseases: In vivo LNPs
LNPs are a clinically validated technology for delivery of nucleic acid payloads to the liver. LNPs are multi-component particles that encapsulate the base editor mRNA and one or more guides and protect them from degradation while in an external environment, enabling the transient delivery of the base editor in vivo. Multiple third-party clinical trials have demonstrated the effective delivery of silencing RNA to the liver using LNPs. Because only one dose of a base editing therapy may be needed in a course of treatment, LNPs are a suitable delivery modality that we believe is unlikely to face the complications seen with chronic use of LNPs, such as those observed when delivering oligonucleotides or mRNA for gene therapy. All of the components of the LNP, as well as the mRNA encoding the base editor, are well-defined and can be manufactured synthetically, providing the opportunity for scalable manufacturing. We are currently using LNPs to advance our programs for genetic liver diseases, including alpha-1 antitrypsin deficiency, or AATD, glycogen storage disease 1a, or GSDIa, and Hepatitis B Virus, or HBV, infection. We are also advancing certain additional in vivo liver editing programs through lead optimization.
22
BEAM-302: In Vivo LNP liver-targeting for AATD
As part of our recently announced portfolio prioritization and strategic restructuring, we are also prioritizing our development of BEAM-302, a liver-targeting LNP formulation of base editing reagents designed to offer a one-time treatment to genetically correct the E342K point mutation (PiZZ genotype) responsible for a severe form of AATD. AATD is an inherited genetic disorder that can cause early onset emphysema and liver disease. The most severe form of AATD arises when a patient has a point mutation in both copies of the SERPINA1 gene at amino acid 342 position (E342K, also known as the PiZ mutation or the “Z” allele). This point mutation causes Alpha-1 antitrypsin, or AAT, to misfold, accumulating inside liver cells rather than being secreted, resulting in very low levels (10%-15%) of circulating AAT. As a consequence, the lung is left unprotected from neutrophil elastase, resulting in progressive, destructive changes in the lung, such as emphysema, which can result in the need for lung transplants. The mutant AAT protein also accumulates in the liver, causing liver inflammation and cirrhosis, which can ultimately cause liver failure or cancer requiring patients to undergo a liver transplant. It is estimated that approximately 60,000 individuals in the United States have two copies of the Z allele. There are currently no curative treatments for patients with AATD.
With the high efficiency and precision of our base editors, we aim to utilize our ABEs to enable the programmable conversion of A-to-T and G-to-C base pairs and precisely correct the E342K point mutation back to the wild type sequence. In 2020, we showed the ability to directly correct the mutation causing AATD, providing both in vitro and in vivo preclinical proof-of-concept for base editing to correct this disease.
In November 2022, we announced BEAM-302 as a development candidate as a treatment for AATD. In September 2023, we reported preclinical data demonstrating the ability of BEAM-302 to increase levels of corrected AAT and reduce mutant PiZ AAT in multiple in vivo rodent disease models. In the first quarter of 2024, we plan to submit a regulatory application for BEAM-302 for authorization to initiate clinical trials outside of the U.S. for the program.
BEAM-301: In Vivo LNP liver-targeting for GSDIa
BEAM-301 is a liver-targeting LNP formulation of base editing reagents designed to correct the R83C mutation, the most prevalent disease-causing mutation for, and the mutation which results in the most severe form of, GSDIa. GSDIa is an autosomal recessive disorder caused by mutations in the G6PC gene that disrupts a key enzyme, G6Pase, critical for maintaining glucose homeostasis. Inhibition of G6Pase activity results in low fasting blood glucose levels that can result in seizures and be fatal. Patients with this mutation typically require ongoing corn starch administration, without which they may enter into hypoglycemic shock within one to three hours. Our approach to treating patients with GSDIa is to apply base editing via LNP delivery to repair the two most prevalent mutations that cause the disease, R83C and Q347X. It is estimated that these two point mutations account for 900 and 500 patients, respectively, in the United States, representing approximately 59% of all GSDIa patients in the United States.
In November 2022, we announced that we had initiated IND-enabling studies for BEAM-301. In October 2023, we presented new preclinical data demonstrating the ability of BEAM-301 to directly correct the R83C mutation. These data showed that a single dose of BEAM-301 restored clinically meaningful endpoints in in vivo rodent disease models out to at least one year. In the first half of 2024, we plan to submit an IND application for BEAM-301 for authorization to initiate an initial clinical trial for the program at a select number of sites in the United States.
Immunology/Oncology: Ex vivo T cell therapies
The starting material for our multiplex-edited allogeneic CAR-T cell products is white blood cells from a healthy donor, which are collected using a standard blood bank procedure known as leukapheresis. Using a single electroporation, we introduce the base editor as mRNA, and the guides encoding the target sequences. The edited cells are subsequently transduced with a lentivirus expressing the CAR. Once the T cells have been engineered, they are expanded and frozen. After the patient is lymphodepleted, the multiplex-edited, allogeneic cell product is infused.
We believe base editing is a powerful tool to simultaneously multiplex edit many genes without the unintended on-target effects that can result from simultaneous editing with nucleases through the creation of double-stranded breaks. The ability to create a large number of multiplex edits in T cells could endow CAR-T cells and other cell therapies with combinations of features that have the potential to dramatically enhance their therapeutic potential in treating hematological or solid tumors. The initial indications that we plan to target with these product candidates are relapsed, refractory T-cell acute lymphoblastic leukemia /T cell lymphoblastic lymphoma, or T-ALL/T-LL, and Acute Myeloid Leukemia, or AML. We believe that our approach has the potential to produce higher response rates and deeper remissions than existing approaches.
23
BEAM-201: Universal CD7-targeting CAR-T cells
BEAM-201 is a development candidate comprised of T cells derived from healthy donors that are simultaneously edited at TRAC, CD7, CD52 and PDCD1 and then transduced with a lentivirus encoding for an anti-CD7 chimeric antigen receptor, or CAR, that is designed to create allogeneic CD7 targeting CAR-T cells, resistant to both fratricide and immunosuppression. At the end of June 2022, we submitted an IND to the FDA for BEAM-201 for the treatment of relapsed, refractory T-ALL/T-LL, a severe disease affecting children and adults, and potentially other CD7+ malignancies. In December 2022, we received clearance from the FDA for our IND for BEAM-201. We have initiated a first-in-human Phase 1/2 clinical trial designed to evaluate the safety and efficacy of BEAM-201 in patients with relapsed/refractory T-ALL/T-LL. Multiple clinical trial sites are open for enrollment in the BEAM-201 trial and the first BEAM-201 trial patient was dosed in August 2023. Pursuant to our portfolio prioritization and strategic restructuring initiatives, we now plan to generate a focused clinical dataset for BEAM-201 solely for the treatment of T-ALL and seek potential partnership for this and other potential ex vivo CAR-T programs, including our ongoing research into creating next-generation allogeneic cell therapies with multiplex base editing. We expect to present data from the first cohort from the BEAM-201 clinical trial by the end of 2024. Key safety endpoints for the trial include treatment-emergent and treatment-related adverse events, and key efficacy endpoints include proportion of patients with complete or partial responses, proportion eligible for HSC transplant and proportion achieving minimal residual disease negative status. We believe that BEAM-201 is the first quadruple-edited, allogeneic CAR-T cell investigational therapy in clinical-stage development.
Hepatitis B Virus
HBV causes serious liver infection that can become chronic, increasing the risk of developing life-threatening health issues like cirrhosis, liver failure or liver cancer. Chronic HBV infection is characterized by the persistence of covalently closed circular DNA, or cccDNA, a unique DNA structure that forms in response to HBV infection in the nuclei of liver cells. Additionally, the HBV DNA can integrate into the human genome becoming a source of hepatitis B surface antigen, or HBsAg. While currently available treatments can manage HBV replication, they do not clear cccDNA from the infected liver cells. This inability to prevent HBV infection rebound from cccDNA is a key challenge to curing HBV. In September 2022, we presented preclinical data that demonstrated the potential of our multiplex base editors to reduce viral markers, including HBsAg expression, and prevent viral rebound of HBV in in vivo models. In October 2023, consistent with our refocused strategic priorities, we announced our decision to stop development of, and explore partnership opportunities for, our HBV program.
Stargardt disease
In alignment with our refocused strategic priorities, we have completed our research and are exploring partnership opportunities for our base editing program for Stargardt disease, a progressive macular degeneration disease.
Manufacturing
To realize the full potential of base editors as a differentiated class of medicines and to enable our parallel investment strategy in multiple delivery modalities, we are building customized and integrated capabilities across discovery, manufacturing, and preclinical and clinical development. Due to the critical importance of high-quality manufacturing and control of production timing and know-how, we have established our own manufacturing facility, which provides us the flexibility to manufacture a variety of different product modalities. We believe this investment will maximize the value of our portfolio and capabilities, the probability of technical success of our programs, and the speed at which we can provide potentially life-long cures to patients.
We have a 100,000 square foot manufacturing facility in Research Triangle Park, North Carolina intended to support a broad range of clinical programs. The facility became operational in the first quarter of 2023, and we initiated cGMP operations in late 2023. The facility is designed to support manufacturing for our ex vivo cell therapy programs in hematology and oncology and in vivo non-viral delivery programs for liver diseases, with the capability to scale-up to support potential commercial supply. For our initial waves of clinical trials, we expect to use CMOs with relevant manufacturing experience in genetic medicines alongside our internal manufacturing capabilities.
Collaborations
We believe our collection of base editing, gene editing and delivery technologies has significant potential across a broad array of genetic diseases. To fully realize this potential, we have established and plan to continue to seek out innovative collaborations, licenses, and strategic alliances with pioneering companies and with leading academic and research institutions. Additionally, we have and intend to continue to pursue relationships that potentially allow us to accelerate our preclinical research and development efforts. We believe these relationships will allow us to aggressively pursue our vision of maximizing the potential of base editing to provide life-long cures for patients suffering from serious diseases.
24
Pfizer
In December 2021, we entered into a four-year research collaboration agreement with Pfizer Inc., or Pfizer, focused on in vivo base editing programs for three targets for rare genetic diseases of the liver, muscle and central nervous system. Under the terms of the agreement, we will conduct all research activities through development candidate selection for three pre-specified, undisclosed targets, which are not included in our existing programs. Pfizer may opt in to exclusive, worldwide licenses to each development candidate, after which it will be responsible for all development activities, as well as potential regulatory approvals and commercialization, for each such development candidate. We have a right to opt in, at the end of Phase 1/2 clinical trials, upon the payment of an option exercise fee, to a global co-development and co-commercialization agreement with respect to one program licensed under the collaboration pursuant to which we and Pfizer would share net profits as well as development and commercialization costs in a 35%/65% ratio (Beam/Pfizer).
Apellis Pharmaceuticals
In June 2021, we entered into a research collaboration agreement, or the Apellis Agreement, with Apellis Pharmaceuticals, Inc., or Apellis, focused on the use of our base editing technology to discover new treatments for complement system-driven diseases. Under the terms of the Apellis Agreement, we will conduct preclinical research on six base editing programs that target specific genes within the complement system in various organs, including the eye, liver, and brain. Apellis has an exclusive option to license any or all of the six programs and will assume responsibility for subsequent development. We may elect to enter into a 50-50 U.S. co-development and co-commercialization agreement with Apellis with respect to one program licensed under the collaboration.
Verve Therapeutics
In April 2019, we entered into a collaboration and license agreement, or the Verve Agreement, with Verve Therapeutics, Inc., or Verve, a company focused on gene editing for cardiovascular disease treatments, and in July 2022, we and Verve amended the Verve Agreement. Under the terms of the Verve Agreement, as amended, we granted Verve exclusive worldwide licenses under certain of our editing technologies for human therapeutic applications against a total of three liver-mediated, cardiovascular disease targets, including use of our base editing technology for each of these targets and use of certain of our gene editing technology for two of such targets. In exchange, we received shares of Verve common stock. In October 2023, we entered into a transfer and delegation agreement, or the Transfer Agreement, with Eli Lilly and Company, or Lilly, pursuant to which Lilly acquired certain assets and other rights under the Verve Agreement, including our opt-in rights to co-develop and co-commercialize each of Verve’s base editing programs for cardiovascular disease, which consist of programs targeting PCSK9, ANGPTL3 and an undisclosed liver-mediated, cardiovascular target. In addition, Lilly acquired the right to receive any future milestone or royalty payments payable to us under the Verve Agreement. Under the terms of the Transfer Agreement, we received a $200.0 million payment and are eligible to receive up to $350.0 million in potential future development-stage payments upon the completion of certain clinical, regulatory and alliance events. In October 2023, we also entered into a Stock Purchase Agreement, or the Purchase Agreement, with Lilly providing for the sale and issuance of 2,004,811 shares, or the Shares, of our common stock to Lilly at a price of $24.94 per share, which was equal to a 15% premium to the volume-weighted average share price of our common stock over the 30 trading days prior to the date of the Purchase Agreement, for an aggregate purchase price of approximately $50 million. The Purchase Agreement contains customary representations, warranties and covenants of each party. Pursuant to the terms of the Purchase Agreement, Lilly has agreed not to, and to cause its affiliates not to, sell or transfer any of the Shares for a period of nine months following the date of issuance of the Shares, subject to specified conditions and exceptions.
Sana Biotechnology
In October 2021, we entered into an option and license agreement, or the Sana Agreement, with Sana Biotechnology, Inc., or Sana, pursuant to which we granted Sana non-exclusive research and development and commercial rights to our CRISPR Cas12b technology to perform nuclease editing for certain ex vivo engineered cell therapy programs. Under the terms of the Sana Agreement, licensed products include certain specified allogeneic T cell and stem cell-derived products directed at specified genetic targets, with certain limited rights for Sana to add and substitute such products and targets. The Sana Agreement excludes the grant of any Beam-controlled rights to perform base editing. In January 2023, Sana announced that the FDA has cleared its IND application to initiate a first-in-human study of SC291, its CD19-targeted allogeneic CAR-T cell therapy, in patients with various B-cell malignancies. In connection with this IND clearance, Sana made an immaterial milestone payment to us under the Sana Agreement.
25
Orbital Therapeutics
In September 2022, we entered into a license and research collaboration agreement, or the Orbital Agreement, with Orbital, pursuant to which each of us granted the other licenses to certain technology controlled during the three years after entry into the Orbital Agreement that are necessary or reasonably useful for the non-viral delivery or the design or manufacture of RNA for the prevention, treatment or diagnosis of human disease. Our license to Orbital is for all fields other than our exclusive field and also excludes the targets and substantially all of the indications that are the subject of our existing programs. Our exclusive field consists of all products and biologics that function in the process of gene editing or conditioning for use in cell transplantation, or that act in combination with any such products or biologics. Orbital’s license to us is for all fields other than Orbital’s exclusive field. Orbital’s exclusive field consists of products and biologics that function as vaccines and also of therapeutic proteins, other than therapeutic proteins (i) that use gene editing, (ii) for use in conditioning, (iii) for use in regenerative medicine, (iv) for use as a CAR immune therapy, including CAR-T, CAR-NK and CAR-macrophage compositions, (v) for use as a t-cell receptor therapy or (vi) that modulate certain immune responses. The licenses are exclusive in each party’s exclusive field for three years and non-exclusive in those fields thereafter. We and Orbital agreed that for a period of three years after entry into the Orbital Agreement, subject to limited exceptions, we would not research, develop and commercialize, or grant licenses to research, develop and commercialize, products or biologics within the other party’s exclusive field.
Institute of Molecular and Clinical Ophthalmology Basel
In July 2020, we announced a research collaboration with the Institute of Molecular and Clinical Ophthalmology Basel, or IOB. Founded in 2018 by a consortium that includes Novartis, the University Hospital of Basel and the University of Basel, IOB is a leader in basic and translational research aimed at treating impaired vision and blindness. Clinical scientists at IOB have also helped to develop better ways to measure how vision is impacted by Stargardt disease.
In alignment with our refocused strategic priorities, we are winding down activities under the agreement with IOB, and are exploring partnership opportunities related to Stargardt disease research conducted under the agreement.
Acquisitions
In February 2021, we acquired Guide for upfront consideration in an aggregate amount of $120.0 million, excluding customary purchase price adjustments, in shares of our common stock, based upon the volume-weighted average price of the common stock over the ten trading-day period ending on February 19, 2021. In addition, Guide’s former stockholders and option holders are eligible to receive up to an additional $100.0 million in technology milestone payments and $220.0 million in product milestone payments, payable in our common stock.
Critical accounting policies and significant judgments and estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. The preparation of our financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
Our critical accounting policies are those policies which require the most significant judgments and estimates in the preparation of our condensed consolidated financial statements. We have determined that our most critical accounting policies are those relating to stock-based compensation, variable interest entities, fair value measurements, and leases. There have been no significant changes to our existing critical accounting policies and significant judgments and estimates discussed in the 2022 Form 10-K.
26
Financial operations overview
General
We were founded in January 2017 and began operations in July 2017. Since our inception, we have devoted substantially all of our resources to building our base editing platform and advancing development of our portfolio of programs, establishing and protecting our intellectual property, conducting research and development activities, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations. To date, we have financed our operations primarily through the sales of our redeemable convertible preferred stock, proceeds from offerings of our common stock and payments received under collaboration and license agreements.
We are an early-stage company, and all of our programs are at a preclinical or early clinical stage of development. To date, we have not generated any revenue from product sales and do not expect to generate revenue from the sale of products for the foreseeable future. Our revenue to date has been primarily derived from license and collaboration agreements with partners. Since inception we have incurred significant operating losses. Our net losses for the nine months ended September 30, 2023 and 2022 were $275.3 million and $250.7 million, respectively. As of September 30, 2023, we had an accumulated deficit of $1.3 billion. We expect to continue to incur significant expenses and increasing operating losses in connection with ongoing development activities related to our internal programs and collaborations as we continue our preclinical and clinical development of product candidates; advance additional product candidates toward clinical development; operate our cGMP facility in North Carolina; further develop our base editing platform; continue to make investments in delivery technology for our base editors, including the LNP technology we acquired through our acquisition of Guide; conduct research activities as we seek to discover and develop additional product candidates; maintain, expand, enforce, defend and protect our intellectual property portfolio; and continue to hire research and development, clinical, technical operations and commercial personnel. In addition, we expect to continue to incur the costs associated with operating as a public company.
As a result of these anticipated expenditures, we will need to raise additional capital to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We can give no assurance that we will be able to secure such additional sources of capital to support our operations, or, if such capital is available to us, that such additional capital will be sufficient to meet our needs for the short or long term.
Revenue Recognition
In April 2019, we entered into the Verve Agreement with Verve, a company focused on gene editing for cardiovascular disease treatments. In June 2021, we entered into the Apellis Agreement with Apellis, focused on the use of our base editing technology to discover new treatments for complement system-driven diseases. In October 2021, we entered into the Sana Agreement with Sana, pursuant to which we granted Sana non-exclusive research and development and commercial rights to our CRISPR Cas12b technology to perform nuclease editing for certain ex vivo engineered cell therapy programs. In December 2021, we entered into the Pfizer Agreement with Pfizer, focused on in vivo base editing programs for three targets for rare genetic diseases of the liver, muscle and central nervous system. In September 2022, we entered into the Orbital Agreement with Orbital, a newly formed entity focused on advancing non-viral delivery and RNA technologies.
We have not generated any revenue to date from product sales and do not expect to do so in the near future. During the nine months ended September 30, 2023 and 2022, we recognized $61.5 million and $40.9 million of license and collaboration revenue, respectively.
Research and development expenses
Research and development expenses consist of costs incurred in performing research and development activities, which include:
27
Our external research and development expenses support our various preclinical and clinical programs. Our internal research and development expenses consist of employee-related expenses, facility-related expenses, and other indirect research and development expenses incurred in support of overall research and development. We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the benefits are consumed.
In the early phases of development, our research and development costs are often devoted to product platform and proof-of-concept preclinical studies that are not necessarily allocable to a specific target.
We expect that our research and development expenses will increase substantially as we advance our programs through their planned preclinical and clinical development.
General and administrative expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, intellectual property, business development and administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel, and direct and allocated facility related expenses and other operating costs.
We anticipate that our general and administrative expenses will increase in the future to support our increased research and development activities. We also expect to continue to incur costs associated with being a public company and maintaining controls over financial reporting, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC requirements, director and officer insurance costs, and investor and public relations costs.
Other income and expenses
Other income and expenses consist of the following items:
28
Results of operations
Comparison of the three months ended September 30, 2023 and 2022
The following table summarizes our results of operations (in thousands):
|
|
Three Months Ended September 30, |
|
|
|
|
||||||
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|||
License and collaboration revenue |
|
$ |
17,193 |
|
|
$ |
15,799 |
|
|
$ |
1,394 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
100,050 |
|
|
|
85,287 |
|
|
|
14,763 |
|
General and administrative |
|
|
25,410 |
|
|
|
21,815 |
|
|
|
3,595 |
|
Total operating expenses |
|
|
125,460 |
|
|
|
107,102 |
|
|
|
18,358 |
|
Loss from operations |
|
|
(108,267 |
) |
|
|
(91,303 |
) |
|
|
(16,964 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|||
Change in fair value of derivative liabilities |
|
|
4,700 |
|
|
|
(4,900 |
) |
|
|
9,600 |
|
Change in fair value of non-controlling equity investments |
|
|
(11,221 |
) |
|
|
10,431 |
|
|
|
(21,652 |
) |
Change in fair value of contingent consideration liabilities |
|
|
6,002 |
|
|
|
(875 |
) |
|
|
6,877 |
|
Interest and other income (expense), net |
|
|
12,698 |
|
|
|
4,982 |
|
|
|
7,716 |
|
Total other income (expense) |
|
|
12,179 |
|
|
|
9,638 |
|
|
|
2,541 |
|
Net loss before income taxes |
|
|
(96,088 |
) |
|
|
(81,665 |
) |
|
|
(14,423 |
) |
Provision for income taxes |
|
|
— |
|
|
|
(2,410 |
) |
|
|
2,410 |
|
Loss from equity method investment |
|
|
— |
|
|
|
(25,500 |
) |
|
|
25,500 |
|
Net loss |
|
$ |
(96,088 |
) |
|
$ |
(109,575 |
) |
|
$ |
13,487 |
|
License and collaboration revenue
License and collaboration revenue was $17.2 million and $15.8 million for the three months ended September 30, 2023 and 2022, respectively. License and collaboration revenue represents revenue recorded under each of the Pfizer, Apellis, Verve, and Orbital Agreements.
Research and development expenses
Research and development expenses were $100.1 million and $85.3 million for the three months ended September 30, 2023 and 2022, respectively. The following table summarizes our research and development expenses for the three months ended September 30, 2023 and 2022 (in thousands):
|
|
Three Months Ended September 30, |
|
|
|
|
||||||
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|||
External research and development expenses |
|
$ |
40,329 |
|
|
$ |
33,227 |
|
|
$ |
7,102 |
|
Employee related expenses |
|
|
26,219 |
|
|
|
23,610 |
|
|
|
2,609 |
|
Facility and IT related expenses |
|
|
17,366 |
|
|
|
14,183 |
|
|
|
3,183 |
|
Stock-based compensation expense |
|
|
15,230 |
|
|
|
13,860 |
|
|
|
1,370 |
|
Other expenses |
|
|
906 |
|
|
|
407 |
|
|
|
499 |
|
Total research and development expenses |
|
$ |
100,050 |
|
|
$ |
85,287 |
|
|
$ |
14,763 |
|
The increase of $14.8 million was primarily due to the following:
29
General and administrative expenses
General and administrative expenses were $25.4 million and $21.8 million for the three months ended September 30, 2023 and 2022, respectively. The increase of $3.6 million was primarily due to the following:
Change in fair value of derivative liabilities
During the three months ended September 30, 2023 and 2022, we recorded $4.7 million of other income and $4.9 million of other expense, respectively, related to the change in fair value of success payment liabilities due to changes in the price of our common stock over the related periods. A portion of the success payment obligations were paid in June 2021; the remaining success payment obligations are still outstanding as of September 30, 2023 and will continue to be revalued at each reporting period.
Change in fair value of non-controlling equity investments
During the three months ended September 30, 2023 and 2022, we recorded $11.2 million of other expense and $10.4 million of other income, respectively, as a result of changes in the fair value of our investment in Verve and Prime common stock.
Change in fair value of contingent consideration liabilities
During the three months ended September 30, 2023 and 2022, we recorded $6.0 million of other income and $0.9 million of other expense, respectively, related to the change in fair value of the Guide technology and product contingent consideration liabilities.
Interest and other income (expense), net
Interest and other income (expense), net was $12.7 million and $5.0 million of net income for the three months ended September 30, 2023 and 2022, respectively. The change was primarily due to increases in interest income driven by increased market rates.
Provision for income taxes
We did not record any tax provision or benefit for the three months ended September 30, 2023. We recorded an income tax provision of $2.4 million for the three months ended September 30, 2022. The provision was primarily attributable to the recognition of revenue for tax purposes under the collaboration agreements with Apellis and Pfizer, which were deferred in 2021 for tax purposes as well as the requirement under the Tax Cuts and Jobs Act of 2017 for taxpayers to capitalize and amortize research and development expenditures over five or fifteen years.
Loss from equity method investment
We record our share of gains or losses from Orbital on a quarterly basis. For the three months ended September 30, 2022, we recorded a loss from equity method investment of $25.5 million in association with a basis difference attributable to Orbital’s in-process research and development with no alternative future use, which was immediately expensed as of the date of this investment. As of September 30, 2022, the investment was written down to zero. There was no gain or loss from equity method investment recognized during the nine months ended September 30, 2023 as the our investment is zero and there is no commitment to fund any losses of Orbital. See Notes 2 and 8 to our condensed consolidated financial statements for more information regarding the equity method of accounting.
30
Comparison of the nine months ended September 30, 2023 and 2022
The following table summarizes our results of operations (in thousands):
|
|
Nine Months Ended September 30, |
|
|
|
|
||||||
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|||
License and collaboration revenue |
|
$ |
61,517 |
|
|
$ |
40,883 |
|
|
$ |
20,634 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
297,304 |
|
|
|
225,253 |
|
|
|
72,051 |
|
General and administrative |
|
|
73,556 |
|
|
|
65,124 |
|
|
|
8,432 |
|
Total operating expenses |
|
|
370,860 |
|
|
|
290,377 |
|
|
|
80,483 |
|
Loss from operations |
|
|
(309,343 |
) |
|
|
(249,494 |
) |
|
|
(59,849 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|||
Change in fair value of derivative liabilities |
|
|
9,400 |
|
|
|
20,900 |
|
|
|
(11,500 |
) |
Change in fair value of non-controlling equity investments |
|
|
(17,870 |
) |
|
|
(1,378 |
) |
|
|
(16,492 |
) |
Change in fair value of contingent consideration liabilities |
|
|
7,877 |
|
|
|
(543 |
) |
|
|
8,420 |
|
Interest and other income (expense), net |
|
|
34,612 |
|
|
|
7,686 |
|
|
|
26,926 |
|
Total other income (expense) |
|
|
34,019 |
|
|
|
26,665 |
|
|
|
7,354 |
|
Net loss before income taxes |
|
|
(275,324 |
) |
|
|
(222,829 |
) |
|
|
(52,495 |
) |
Provision for income taxes |
|
|
— |
|
|
|
(2,410 |
) |
|
|
2,410 |
|
Loss from equity method investment |
|
|
— |
|
|
|
(25,500 |
) |
|
|
25,500 |
|
Net loss |
|
$ |
(275,324 |
) |
|
$ |
(250,739 |
) |
|
$ |
(24,585 |
) |
License and collaboration revenue
License and collaboration revenue was $61.5 million and $40.9 million for the nine months ended September 30, 2023 and 2022, respectively. License and collaboration revenue represents revenue recorded under each of the Pfizer, Apellis, Verve, and Orbital Agreements.
Research and development expenses
Research and development expenses were $297.3 million and $225.3 million for the nine months ended September 30, 2023 and 2022, respectively. The following table summarizes our research and development expenses for the nine months ended September 30, 2023 and 2022 (in thousands):
|
|
Nine Months Ended September 30, |
|
|
|
|
||||||
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|||
External research and development expenses |
|
$ |
118,048 |
|
|
$ |
80,004 |
|
|
$ |
38,044 |
|
Employee related expenses |
|
|
81,144 |
|
|
|
64,177 |
|
|
|
16,967 |
|
Facility and IT related expenses |
|
|
50,911 |
|
|
|
38,829 |
|
|
|
12,082 |
|
Stock-based compensation expense |
|
|
44,973 |
|
|
|
38,581 |
|
|
|
6,392 |
|
Other expenses |
|
|
2,228 |
|
|
|
3,662 |
|
|
|
(1,434 |
) |
Total research and development expenses |
|
$ |
297,304 |
|
|
$ |
225,253 |
|
|
$ |
72,051 |
|
31
The increase of $72.1 million was primarily due to the following:
As a result of our portfolio prioritization and strategic restructuring, we expect our research and development expense to remain primarily unchanged over the next twelve months, as increasing costs related to continued and expected clinical-stage development of our lead product candidates are offset by decreases in spend on our preclinical research and development programs.
General and administrative expenses
General and administrative expenses were $73.6 million and $65.1 million for the nine months ended September 30, 2023 and 2022, respectively. The increase of $8.4 million was primarily due to the following:
32
Change in fair value of derivative liabilities
During the nine months ended September 30, 2023 and 2022, we recorded $9.4 million and $20.9 million of other income, respectively, related to the change in fair value of success payment liabilities due to a decrease in the price of our common stock over the related periods. A portion of the success payment obligations were paid in June 2021; the remaining success payment obligations are still outstanding as of September 30, 2023 and will continue to be revalued at each reporting period.
Change in fair value of non-controlling equity investments
During the nine months ended September 30, 2023 and 2022, we recorded $17.9 million and $1.4 million of other expense, respectively, as a result of changes in the fair value of our investment in Verve and Prime common stock.
Change in fair value of contingent consideration liabilities
During the nine months ended September 30, 2023 and 2022, we recorded $7.9 million of other income and $0.5 million of other expense, respectively, related to the change in fair value of the Guide technology and product contingent consideration liabilities.
Interest and other income (expense), net
Interest and other income (expense), net was $34.6 million and $7.7 million of net income for the nine months ended September 30, 2023 and 2022, respectively. The change was primarily due to increases in interest income driven by increased market rates.
Provision for income taxes
We did not record any tax provision or benefit for the nine months ended September 30, 2023. We recorded an income tax provision of $2.4 million for the nine months ended September 30, 2022. The provision was primarily attributable to the recognition of revenue for tax purposes under the collaboration agreements with Apellis and Pfizer, which were deferred in 2021 for tax purposes as well as the requirement under the Tax Cuts and Jobs Act of 2017 for taxpayers to capitalize and amortize research and development expenditures over five or fifteen years.
Loss from equity method investment
We record our share of gains or losses from Orbital on a quarterly basis. For the three months ended September 30, 2022, we recorded a loss from equity method investment of $25.5 million in association with a basis difference attributable to Orbital’s in-process research and development with no alternative future use, which was immediately expensed as of the date of this investment. As of September 30, 2022, the investment was written down to zero. There was no gain or loss from equity method investment recognized during the nine months ended September 30, 2023 as our investment is zero and there is no commitment to fund any losses of Orbital. See Notes 2 and 8 to our condensed consolidated financial statements for more information regarding the equity method of accounting.
33
Liquidity and capital resources
Since our inception in January 2017, we have not generated any revenue from product sales, have generated only limited license and collaboration revenue from our license and collaboration agreements, and have incurred significant operating losses and negative cash flows from our operations. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical and the clinical development of our product candidates.
To date, we have funded our operations primarily through equity offerings.
In April 2021, we filed a universal shelf registration statement on Form S-3 with the SEC, or the 2021 Shelf, to register for sale an indeterminate amount of our common stock, preferred stock, debt securities, warrants and/or units, which we may issue and sell in one or more offerings, which became effective upon filing with the SEC (File No. 333-254946).
In April 2021, we entered into an at the market, or ATM, sales agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, pursuant to which we were entitled to offer and sell, from time to time at prevailing market prices, shares of our common stock having aggregate gross proceeds of up to $300.0 million. We agreed to pay Jefferies a commission of up to 3.0% of the aggregate gross sale proceeds of any shares sold by Jefferies under the Sales Agreement. Between April and July 2021, we sold 2,908,009 shares of our common stock under the Sales Agreement at an average price of $103.16 per share for aggregate gross proceeds of $300.0 million, before deducting commissions and offering expenses payable by us.
In July 2021 and May 2023, we and Jefferies entered into amendments to the Sales Agreement to provide for increases in the aggregate offering amount under the Sales Agreement, such that as of May 10, 2023, we may offer and sell shares of common stock having an aggregate offering price of up to an additional $800.0 million. As of September 30, 2023, we have sold 10,860,992 additional shares of our common stock under the amended Sales Agreement at an average price of $51.93 per share for aggregate gross proceeds of $564.0 million, before deducting commissions and offering expenses payable by us.
In June 2021, we entered into the Apellis Agreement, which is focused on the use of certain of our base editing technology to discover new treatments for complement system-driven diseases. Pursuant to the Apellis Agreement, we received an upfront payment of $50.0 million in July 2021 and an additional $25.0 million payment on the one-year anniversary of the effective date of the Apellis Agreement, which was in June 2022.
In December 2021, we entered into the Pfizer Agreement, which is focused on in vivo base editing programs for three targets for rare genetic diseases of the liver, muscle and central nervous system. Under the terms of the Pfizer Agreement, we will conduct all research activities through development candidate selection for three undisclosed targets, which are not included in our existing programs. Pursuant to the Pfizer Agreement, we received an upfront payment of $300.0 million in January 2022.
In October 2023, we entered into the Transfer Agreement with Lilly, pursuant to which Lilly acquired certain assets and other rights under the Verve Agreement. Pursuant to the terms of the Transfer Agreement, we received a $200.0 million payment and are eligible to receive up to $350.0 million in potential future development-stage payments upon the completion of certain clinical, regulatory and alliance events. In October 2023, we and Lilly also entered into the Purchase Agreement, providing for the sale and issuance of the Shares at a price of $24.94 per share, for an aggregate purchase price of approximately $50.0 million.
As of September 30, 2023, we had $1.0 billion in cash, cash equivalents, and marketable securities, which does not include the payments we received from Lilly in connection with the Transfer Agreement and Purchase Agreement.
We are required to make success payments to Harvard and Broad Institute based on increases in the per share fair market value of our common stock. The amounts due may be settled in cash or shares of our common stock, at our discretion. In May 2021, the first success payment measurements occurred and success payments to Harvard and Broad Institute were calculated to be $15.0 million and $15.0 million, respectively. We elected to make each payment in shares of our common stock and issued 174,825 shares to each of Harvard and Broad Institute to settle these liabilities in June 2021. We may additionally owe Harvard and Broad Institute success payments of up to an additional $90.0 million each.
We have not yet commercialized any of our product candidates, and we do not expect to generate revenue from the sale of our product candidates for the foreseeable future. We anticipate that we may need to raise additional capital in order to continue to fund our research and development, including our planned preclinical studies and clinical trials, maintaining and operating a commercial-scale cGMP manufacturing facility, and new product development, as well as to fund our general operations. As necessary, we will seek to raise additional capital through various potential sources, such as equity and debt financings or through corporate collaboration and license agreements. We can give no assurances that we will be able to secure such additional sources of capital to support our operations, or, if such funds are available to us, that such additional financing will be sufficient to meet our needs.
34
Cash flows
The following table summarizes our sources and uses of cash (in thousands):
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Net cash provided by (used in) operating activities |
|
$ |
(284,268 |
) |
|
$ |
91,718 |
|
Net cash provided by (used in) investing activities |
|
|
(26,259 |
) |
|
|
(574,775 |
) |
Net cash provided by (used in) financing activities |
|
|
242,735 |
|
|
|
79,578 |
|
Net change in cash, cash equivalents and restricted cash |
|
$ |
(67,792 |
) |
|
$ |
(403,479 |
) |
Operating activities
Net cash used in operating activities for the nine months ended September 30, 2023 was $284.3 million, consisting of our net loss of $275.3 million, a decrease in deferred revenue of $60.0 million, decreases in accounts payable of $5.8 million, accrued expenses and other liabilities of $2.7 million, increases in prepaid expenses and other current assets of $10.0 million, and a decrease in operating lease liabilities totaling $7.2 million. In addition, we recorded noncash items consisting of amortization of investment premiums of $22.4 million, and decreases in the fair value of derivative liabilities of $9.4 million and the fair value of contingent consideration liabilities of $7.9 million, respectively.
These uses of cash were partially offset by noncash items consisting of stock-based compensation expense of $76.0 million, decreases in the fair value of non-controlling equity investments of $17.9 million, depreciation and amortization expense of $14.7 million and changes in operating lease right-of-use (ROU) assets of $7.1 million.
Net cash provided by operating activities for the nine months ended September 30, 2022 was $91.7 million, consisting primarily of the collection of collaboration receivables of $300.0 million related to the Pfizer Agreement and an increase in operating lease liabilities totaling $13.5 million, as well as noncash items consisting of stock-based compensation expense of $61.8 million, a loss from an equity method investment of $25.5 million, depreciation and amortization expense of $10.2 million, changes in operating lease ROU assets of $6.2 million, a decrease in the fair value of a non-controlling equity investment of $1.4 million, and an increase in the fair value of contingent consideration liabilities of $0.5 million. These sources of cash were partially offset by our net loss of $250.7 million, decreases in accrued expenses and other liabilities of $25.4 million, a decrease in deferred revenue of $15.9 million, net of the $25.0 million First Anniversary Payment collected from Apellis during the nine months ended September 30, 2022, an increase in prepaid expenses and other current assets of $7.2 million, decreases in other long-term liabilities of $2.5 million and accounts payable of $0.5 million, and noncash items including decreases in the fair value of derivative liabilities of $20.9 million, as well as amortization of investment premiums of $4.3 million.
Investing activities
For the nine months ended September 30, 2023, cash used in investing activities consisted of purchases of property and equipment of $30.1 million, partially offset by the net maturities of marketable securities of $3.9 million.
For the nine months ended September 30, 2022, cash used in investing activities consisted primarily of the net purchases of marketable securities of $534.1 million, and purchases of property and equipment of $40.7 million.
Financing activities
Net cash provided by financing activities for the nine months ended September 30, 2023 consisted of net proceeds from equity offerings of $236.6 million, $5.4 million of proceeds from the exercise of stock options, and $3.0 million of proceeds from the issuance of common stock under our Employee Stock Purchase Plan, offset in part by repayments of equipment financing liabilities of $1.6 million and payment of equity offering costs of $0.6 million.
Net cash provided by financing activities for the nine months ended September 30, 2022 consisted primarily of net proceeds from equity offerings of $76.4 million, $3.1 million of proceeds from the issuance of common stock under our Employee Stock Purchase Plan, and $2.0 million of proceeds from the exercise of stock options, offset in part by repayments of equipment financing liabilities of $1.7 million and equity offering costs of $0.1 million.
35
Funding requirements
We expect our operating expenses to remain primarily unchanged over the next twelve months as a result of our portfolio prioritization and strategic restructuring, as we expect increasing costs related to continued and expected clinical-stage development of our lead product candidates to be offset by decreases in spend on our preclinical research and development.
Our future operating expenses depend on a number of factors, including the extent to which we undertake the following activities:
We expect that our cash, cash equivalents and marketable securities at September 30, 2023 will enable us to fund our current and planned operating expenses and capital expenditures for at least the next 12 months from the date of issuance of our accompanying condensed consolidated financial statements. We have based these estimates on assumptions that may prove to be imprecise, and we may exhaust our available capital resources sooner that we currently expect. Because of the numerous risks and uncertainties associated with the development our programs, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.
Our future funding requirements will depend on many factors including:
36
A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. 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, collaborations, strategic alliances, and licensing arrangements. We do not have any committed external source of capital. We have historically relied on equity issuances to fund our capital needs and will likely rely on equity issuances in the future. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.
If we raise capital through additional collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates, or we may have to grant licenses on terms that may not be favorable to us. If we are unable to raise additional capital through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or, if approved, future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. We can give no assurance that we will be able to secure such additional sources of funds to support our operations, or, if such funds are available to us, that such additional funding will be sufficient to meet our needs.
Contractual obligations
We enter into contracts in the normal course of business with contract research organizations and other vendors to assist in the performance of our research and development activities and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts and not included in our calculations of contractual obligations and commitments.
We lease certain assets under noncancelable operating and finance leases. The leases relate primarily to office space and laboratory space in addition to equipment. As of September 30, 2023, aggregate future minimum commitments under these office and laboratory leases and equipment leases are $252.4 million and $0.8 million, respectively, of which $6.3 million will be payable in 2023. These minimum lease payments exclude our share of the facility operating expenses, real-estate taxes and other costs that are reimbursable to the landlord under the leases.
During the nine months ended September 30, 2023, there were no material changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2022 Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk related to changes in interest rates. As of September 30, 2023, we had cash, cash equivalents, and marketable securities of $1.0 billion, which consisted of cash, money market funds, commercial paper and corporate and government securities. Our cash and cash equivalents are primarily maintained in accounts with multiple financial institutions in the United States. At times, we may maintain cash and cash equivalent balances in excess of Federal Deposit Insurance Corporation limits. We do not believe that we are subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments are in short-term marketable securities. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, we believe an immediate 10% change in interest rates would not have a material effect on the fair market value of our investment portfolio. We have the ability to hold our investments until maturity, and therefore, we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a change in market interest rates on our investment portfolio.
We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we do contract with vendors that are located outside of the United States and may be subject to fluctuations in foreign currency rates. We may enter into additional contracts with vendors located outside of the United States in the future, which may increase our foreign currency exchange risk.
Inflation generally affects us by increasing our cost of labor and research, manufacturing and development costs. We believe that inflation has not had a material effect on our financial statements included elsewhere in this Quarterly Report on Form 10-Q. However, our operations may be adversely affected by inflation in the future.
37
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to a company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation of our disclosure controls and procedures as of September 30, 2023, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
We continuously seek to improve the efficiency and effectiveness of our internal controls. This results in refinements to processes throughout our company. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
38
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently subject to any material legal proceedings.
Item 1A. Risk Factors.
Investing in our common stock involves a high degree of risk. For a detailed discussion of the risks that affect our business. Please refer to the sections titled “Risk Factors Summary” and “Item 1A. Risk Factors” in the 2022 Form 10-K.
The risk factors set forth below represent new risk factors or those containing changes to the similarly titled risk factor included in “Item 1.A Risk Factors” of the 2022 Form 10-K.
The intellectual property landscape around gene editing technology, including base editing and delivery technology, is highly dynamic, and third parties may initiate legal proceedings alleging that we are infringing, misappropriating, or otherwise violating their intellectual property rights, the outcome of which would be uncertain and may prevent, delay or otherwise interfere with our product discovery and development efforts.
The field of gene editing, especially in the area of base editing technology, is still in its infancy, and no such product candidates have reached the market. Due to the intense research and development that is taking place by several companies, including us and our competitors, in this field and in the field of delivery technology, the intellectual property landscape is evolving and in flux, and it may remain uncertain for the coming years. There may be significant intellectual property related litigation and proceedings relating to our owned and in-licensed, and other third party, intellectual property and proprietary rights in the future.
Our commercial success depends upon our ability and the ability of our collaborators and licensors to develop, manufacture, market, and sell any product candidates that we may develop and use our proprietary technologies without infringing, misappropriating, or otherwise violating the intellectual property and proprietary rights of third parties. The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights as well as administrative proceedings for challenging patents, including interference, derivation, inter partes review, post grant review, and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions. We may be subject to and may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our base editing platform technology, delivery platform technology and any product candidates we may develop, including interference proceedings, post-grant review, inter partes review, and derivation proceedings before the USPTO and similar proceedings in foreign jurisdictions such as oppositions before the EPO. Numerous U.S. and foreign issued patents and pending patent applications that are owned by third parties exist in the fields in which we are developing our product candidates and they may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit.
As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our base editing platform technology, delivery platform technology and product candidates may give rise to claims of infringement of the patent rights of others. Moreover, it is not always clear to industry participants, including us, which patents cover various types of therapies, products or their methods of use or manufacture. We are aware of certain third-party patents and patent applications that, if issued, may be construed to cover our base editing technology, delivery technology and product candidates. There may also be third-party patents of which we are currently unaware with claims to technologies, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents.
39
Numerous third-party U.S. and foreign issued patents and pending patent applications exist in the fields in which we are developing product candidates. Our product candidates make use of CRISPR-based technology, which is a field that is highly active for patent filings. The extensive patent filings related to CRISPR and Cas make it difficult for us to assess the full extent of relevant patents and pending applications that may cover our base editing platform technology and product candidates and their use or manufacture. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our base editing platform technology and product candidates. For example, we are aware of a patent portfolio that is co-owned by the University of California, University of Vienna and Emmanuelle Charpentier, or the University of California Portfolio, which contains multiple patents and pending applications directed to gene editing. The University of California portfolio includes, for example, U.S. Patent Nos. 10,266,850; 10,227,611; 10,000,772; 10,113,167; 10,301,651; 10,308,961; 10,337,029; 10,351,878; 10,407,697; 10,358,659; 10,358,658; 10,385,360; 10,400,253; 10,421,980; 10,415,061; 10,428,352; 10,443,076; 10,487,341; 10,513,712; 10,519,467; 10,526,619; 10,533,190; 10,550,407; 10,563,227; 10,570,419; 10,577,631; 10,597,680; 10,612,045; 10,626,419; 10,640,791; 10,669,560; 10,676,759; 10,752,920; 10,774,344; 10,793,878; 10,900,054; 10,982,230; 10,982,231; 10,988,780; 10,988,782; 11,001,863; 11,008,589; 11,008,590; 11,028,412; 11,186,849; 11,242,543; 11,274,318; 11,293,034; 11,332,761; 11,401,532,;11,473,108; 11,479,794; 11,549,127; 11,634,730; 11,674,159, which are expected to expire around March 2033, excluding any additional term for patent term adjustment, or PTA, or patent term extension, or PTE, and any disclaimed term for terminal disclaimers. The University of California portfolio also includes numerous additional pending patent applications. If these patent applications issue as patents, they are expected to expire around March 2033, excluding any PTA, PTE, and any disclaimed term for terminal disclaimers. As discussed above, certain applications in the University of California Portfolio are currently subject to U.S. Interference No. 106,115 with certain U.S. patents and one U.S. patent application that are co-owned by the Boston Licensing Parties to which we have an option under the Editas License Agreement. Although we have an option to exclusively license certain patents and patent applications directed to Cas9 and Cas12a from Editas, who in turn has licensed such patents from various academic institutions including Broad Institute, we do not currently have a license to such patents and patent applications. Certain members of the University of California Portfolio are being opposed in Europe by multiple parties. For example, the EPO Opposition Division has initiated opposition proceedings against European Patent Nos. EP2,800,811 B1, and EP3,241,902 B1and EP3,401,400 B1, which are estimated to expire in March 2033 (excluding any patent term adjustments or extensions).
The opposition procedure before the EPO allows one or more third parties to challenge the validity of a granted European patent within nine months after grant date of the European patent. Opposition proceedings may involve issues including, but not limited to, priority, patentability of the claims involved, and procedural formalities related to the filing of the patent application. As a result of the opposition proceedings, the Opposition Division can revoke a patent, maintain the patent as granted, or maintain the patent in an amended form. Most of the claims of European patent EP-2,800,811 B1 were maintained without amendment by the Opposition Division, but this decision is being appealed. In April 2021, the claims of European patent EP3,241,902 B1 were revoked in their entirety, and that decision is not being appealed. In February 2022, the claims of European patent EP3,401,400 B1 were maintained in amended form by the Opposition Division, and this decision is being appealed. If these patents are maintained by the Opposition Division with claims similar to those that are currently opposed, our ability to commercialize our product candidates may be adversely affected if we do not obtain a license to these patents. We may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be nonexclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, we may be unable to commercialize our base editing platform technology or product candidates or such commercialization efforts may be significantly delayed, which could in turn significantly harm our business.
Numerous other patents and patent applications have been filed by other third parties directed to gene editing, guide nucleic acids, PAM sequence variants, split inteins, Cas12b or gene editing in the context of immune therapy or chimeric antigen receptors.
Because of the large number of patents issued and patent applications filed in our field, third parties may allege they have patent rights encompassing our product candidates, technologies or methods. Third parties may assert that we are employing their proprietary technology without authorization and may file patent infringement claims or lawsuit against us, and if we are found to infringe such third-party patents, we may be required to pay damages, cease commercialization of the infringing technology, or obtain a license from such third parties, which may not be available on commercially reasonable terms or at all.
40
Our ability to commercialize our product candidates in the United States and abroad may be adversely affected if we cannot obtain a license on commercially reasonable terms to relevant third-party patents that cover our product candidates, delivery platform technology or base editing platform technology. Even if we believe third-party intellectual property claims are without merit, there is no assurance that a court would find in our favor on questions of infringement, validity, enforceability, or priority. A court of competent jurisdiction could hold that these third-party patents are valid, enforceable, and infringed, which could materially and adversely affect our ability to commercialize any product candidates we may develop and any other product candidates or technologies covered by the asserted third-party patents. In order to successfully challenge the validity of any such U.S. patent in federal court, we would need to overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. If we are found to infringe a third party’s intellectual property rights, and we are unsuccessful in demonstrating that such patents are invalid or unenforceable, we could be required to obtain a license from such third party to continue developing, manufacturing, and marketing any product candidates we may develop and our technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, we may be unable to commercialize our base editing platform technology, delivery platform technology or product candidates or such commercialization efforts may be significantly delayed, which could in turn significantly harm our business. We also could be forced, including by court order, to cease developing, manufacturing, and commercializing the infringing technology or product candidates. In addition, we could be found liable for significant monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar material adverse effect on our business, financial condition, results of operations, and prospects.
Defense of third-party claims of infringement of misappropriation, or violation of intellectual property rights involves substantial litigation expense and would be a substantial diversion of management and employee time and resources from our business. Some third parties may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations or could otherwise have a material adverse effect on our business, financial condition, results of operations and prospects. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Any of the foregoing events could have a material adverse effect on our business, financial condition, results of operations and prospects.
We contract with third parties for the manufacture and supply of materials for our research programs, preclinical studies and clinical trial and expect to continue to do so for at least a portion of our future research programs, preclinical studies and clinical trials and for commercialization of any product candidates that we may develop. This reliance on third parties increases the risk that we will not have sufficient quantities of such materials, product candidates, or any medicines that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts.
We currently rely on third-parties for the manufacture and supply of materials for preclinical studies and clinical trials, and may continue to do so for at least a portion of our future research programs, preclinical studies, clinical testing and for commercial supply of any product candidates that we may develop and for which we or our collaborators obtain marketing approval. We do not have a long-term supply agreement with any of the third-party suppliers, and we purchase our required supply on an order-by-order basis.
While we have built a manufacturing facility designed to support manufacturing for our ex vivo cell therapy programs in hematology and oncology and in vivo non-viral delivery programs for liver diseases in Research Triangle Park, North Carolina, we cannot be certain that we will be able to maintain cGMP compliance, expand our internal manufacturing capacity, or meet the planned manufacturing needs of our programs.
We may be unable to establish long-term supply agreements with third-party suppliers or to do so on acceptable terms. Even if we are able to establish long-term supply agreements with third-parties, reliance on third-parties entails additional risks, including:
41
Third-party suppliers may not be able to comply with cGMP regulations or other regulatory requirements outside the United States. Our failure, or the failure of third-party suppliers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocations, seizures or recalls of product candidates or medicines, operating restrictions, and criminal prosecutions, any of which could significantly and adversely affect supplies of our medicines and harm our business, financial condition, results of operations, and prospects.
For example, we rely on various CROs to obtain non-human primates, or NHPs, for use in preclinical development work, including for BEAM-301 and BEAM-302. In February 2023, Charles River Laboratories, or Charles River, one of our primary suppliers of NHPs, announced it received a subpoena from the United States Department of Justice with respect to its importation of NHPs from Cambodia. Charles River further announced that it has voluntarily suspended NHP shipments from Cambodia at this time. While we believe we currently have access to a supply of NHPs adequate for conducting our IND-enabling studies for BEAM-301 and BEAM-302, such supply may nevertheless be adversely affected by supply chain limitations. If we are unable to secure adequate supply of NHPs from Charles River or other CROs, or the shortage of NHPs causes the price of NHPs to rise substantially, certain of our preclinical development efforts will be delayed, and the cost of conducting discovery projects and preclinical development activities may substantially increase. Such delays or cost increases could materially adversely affect our discovery and preclinical development activities and our business.
Any medicines that we develop may compete with other product candidates and products for access to manufacturing facilities or supplies. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing drug components and drug product necessary for gene editing. Any performance failure on the part of our existing or future suppliers could delay preclinical or clinical development or marketing approval. We do not currently have arrangements in place for redundant supply of all drug components and drug products necessary for our gene editing product candidates. If any one of our current contract manufacturers or suppliers cannot perform as agreed, we may be required to replace that manufacturer or supplier. Although we believe that there are several potential alternative suppliers to support any product candidates we may develop, we may incur added costs and delays in identifying and qualifying any such replacement.
Our current and anticipated future dependence upon others for the manufacture of any product candidates we may develop may adversely affect our future profit margins and our ability to commercialize any medicines that receive marketing approval on a timely and competitive basis.
If we experience delays or difficulties in the enrollment or treatment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.
We or our collaborators may not be able to initiate or continue clinical trials for any product candidates we identify or develop if we are unable to locate, enroll, and treat a sufficient number of eligible patients in these trials as required by the FDA, the EMA or other analogous regulatory authorities outside the United States, or as needed to provide appropriate statistical power for a given trial. Enrollment may be particularly challenging for some of the rare genetically defined diseases we are targeting in our most advanced programs, as well as for some of our product candidates for pediatric populations, due to a number of factors, including small patient populations as well as screening and testing requirements that limit patient eligibility. In addition, if patients are unwilling to participate in our base editing trials because of negative publicity from adverse events related to the biotechnology, gene therapy, or gene editing fields, competitive clinical trials for similar patient populations, clinical trials in competing products, or for other reasons, the timeline for recruiting patients, conducting studies, and obtaining regulatory approval of any product candidates we may develop may be delayed. Moreover, some of our competitors currently and may in the future have ongoing clinical trials for product candidates that treat the same indications as product candidates we are developing and may develop in the future, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates. Treatment of enrolled patients may also be delayed or prevented due to a number of factors, including the complexity of our trials. For example, our BEACON clinical trial requires patients to undergo mobilization procedures to harvest stem cells for editing and transplant. Patients have in the past and may in the future require multiple rounds of mobilization, which would delay treatment. Furthermore, due to the requirement to include sentinel cohorts and staggered treatment protocols in certain of our trials, such as our BEACON trial, any delay in treating one patient may cause delays in treating others.
Clinical trial patient enrollment and treatment is also affected by other factors, including:
42
Our ability to successfully initiate, enroll, and complete a clinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including:
Enrollment or treatment delays in our clinical trials may result in increased development costs for any product candidates we may develop, which would cause the value of our company to decline and limit our ability to obtain additional financing. If we or our collaborators have difficulty enrolling or treating a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit, or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business, financial condition, results of operations, and prospects.
We will need substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay, reduce, or eliminate our research and product development programs or future commercialization efforts.
While we have recently taken steps to decrease our operating expenses, particularly with respect to research and development activities, these expenses have increased substantially in the past and may increase again as we expand clinical trials of, and seek marketing approval for, product candidates. In addition, if we obtain marketing approval for any product candidates we may develop, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution to the extent that such sales, marketing, manufacturing, and distribution are not the responsibility of a collaborator. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. We have recently delayed, reduced and eliminated certain research and product development programs to support potential near-term value drivers and long-term growth. If in the future we are unable to raise capital when needed or on attractive terms, we may again be forced to delay, reduce, or eliminate programs or curtail commercialization efforts.
As of September 30, 2023 our cash, cash equivalents, and marketable securities were $1.0 billion. We believe that our existing cash, cash equivalents, and marketable securities will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months. However, our operating plan may change as a result of factors currently unknown to us, and we may need to seek additional funding sooner than planned. Our future capital requirements will depend on many factors, including:
43
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive, and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, even if we successfully identify and develop product candidates and those product candidates are approved, we may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of medicines that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.
Any additional fundraising efforts may divert the attention of our management from their day-to-day activities, which may adversely affect our ability to develop and, if approved, commercialize our product candidates. We cannot be certain that additional funding will be available to us on acceptable terms, or at all. We have no committed source of additional capital and, if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us on a timely basis, we may have to significantly delay, scale back or discontinue the development or, if approved, commercialization of our product candidates or other research and development initiatives. Our current and any future license agreements and collaboration agreements may also be terminated if we are unable to meet the payment or other obligations under the agreements. We could be required to seek collaborators for product candidates we may develop at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to product candidates we may develop in markets where we otherwise would seek to pursue development or commercialization ourselves.
If we are unable to obtain funding on a timely basis, we may also be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations. Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline.
We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
Because we have limited financial, scientific and managerial resources, we focus on research programs and product candidates that we identify for specific indications among many potential options. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable medicines. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing, or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. For example, in October 2023, we implemented a strategic restructuring to prioritize development of our ex vivo and in vivo sickle cell disease programs, including BEAM-101, our ESCAPE conditioning strategy, and in vivo delivery to hematopoietic stem cells program, as well as our in vivo base editor BEAM-302 in development for the treatment of alpha-1 antitrypsin deficiency. We also announced plans to explore partnership opportunities for continued development of select programs, including BEAM-201 and other potential ex vivo CAR-T therapies. While we may identify new collaboration partners who can progress some of these programs, we may not be successful in doing so in a timely manner, on acceptable terms or at all. We may otherwise fail to raise sufficient additional capital in order to progress these programs ourselves or we may determine, for internal resource allocation purposes or for other reasons, to abandon development of these programs. As a result, we could miss valuable opportunities to capitalize on the potential of the programs. We may also allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a collaboration or that does not prove to have viable commercial opportunities. Any failure to use our financial and human resources efficiently could harm our business and operations.
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If we fail to achieve the cost savings and benefits expected of our portfolio prioritization and strategic restructuring, our business prospects and our financial condition may be adversely affected. Further, the prioritization and restructuring could result in disruptions to our business.
In October 2023, we announced a portfolio prioritization and strategic restructuring intended to support potential near-term value drivers and long-term growth. The actual savings or benefits from the prioritization and restructuring may be less than expected or substantially less than expected. The restructuring activities may also result in a loss of continuity, accumulated knowledge and inefficiency. In addition, internal prioritization and restructuring can require a significant amount of time and focus from management and other employees, which may divert attention from operations. Further, the prioritization and restructuring may result in unexpected expenses or liabilities and/or write-offs. If the prioritization and restructuring fails to achieve some or all of the expected cost-savings and benefits, our cash resources may not last as long as estimated and our business, results of operations and financial condition could be materially and adversely affected.
Our future success depends on our ability to retain our Chief Executive Officer, President and other key executives and to attract, retain, and motivate qualified personnel.
We are highly dependent on John Evans, our Chief Executive Officer, and Dr. Giuseppe Ciaramella, our President, as well as the other principal members of our management and scientific teams. Mr. Evans, Dr. Ciaramella and such other principal members are employed “at will,” meaning we or they may terminate their employment at any time. We do not maintain “key person” insurance for any of our executives or other employees. The loss of the services of any of these persons could impede the achievement of our research, development, and commercialization objectives.
Recruiting and retaining qualified scientific, clinical, manufacturing, and sales and marketing personnel will also be critical to our success. Our recently announced portfolio prioritization and strategic restructuring will result in the loss of personnel with deep institutional or technical knowledge. Further, the transition could potentially disrupt our operations and relationships with employees, suppliers and partners due to added costs, operational inefficiencies, decreased employee morale and productivity and increased turnover. Furthermore, these personnel changes may increase our dependency on the other members of our leadership team and other employees that remain with us, who are not contractually obligated to remain employed with us and may leave at any time. Any such departure could be particularly disruptive and, to the extent we experience additional turnover, competition for top talent is high such that we may be delayed in identifying and hiring candidates that meet our requirements. Our competitors may seek to use these transitions and the related potential disruptions to gain a competitive advantage over us. There is currently a shortage of highly qualified personnel in our industry, which is likely to continue. Additionally, this shortage of highly qualified personnel is particularly acute in the area where we are located.
We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors, including our scientific co-founders, may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. The inability to recruit, or loss of services of certain executives, key employees, consultants, or advisors, may impede the progress of our research, development, and commercialization objectives and have a material adverse effect on our business, financial condition, results of operations, and prospects.
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Item 6. Exhibits.
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Incorporated by Reference |
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Exhibit Number |
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Description of Exhibit |
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Form |
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File Number |
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Date of Filing |
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Exhibit Number |
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Filed Herewith |
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3.1 |
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Fourth Amended Certificate of Incorporation of Beam Therapeutics Inc. |
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8-K |
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001-39208 |
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02/11/2020 |
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3.1 |
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3.2 |
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Second Amended and Restated Bylaws of Beam Therapeutics Inc. |
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10-K |
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001-39208 |
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02/28/2023 |
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3.2 |
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31.1 |
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X |
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31.2 |
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X |
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32.1 |
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X |
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32.2 |
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X |
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101.INS |
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XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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X |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document |
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X |
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101.CAL |
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Inline XBRL Taxonomy Calculation Linkbase Document |
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X |
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
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X |
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101.LAB |
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Inline XBRL Taxonomy Label Linkbase Document |
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X |
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101.PRE |
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Inline XBRL Taxonomy Presentation Linkbase Document |
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X |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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X |
46
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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BEAM THERAPEUTICS INC. |
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Date: November 8, 2023 |
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By: |
/s/ John Evans |
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John Evans |
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Chief Executive Officer |
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(Principal executive officer) |
Date: November 8, 2023 |
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By: |
/s/ Terry-Ann Burrell |
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Terry-Ann Burrell |
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Chief Financial Officer and Treasurer |
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(Principal financial and accounting officer) |
47