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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

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 001-39208

 

Beam Therapeutics Inc.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

81-5238376

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

26 Landsdowne Street

Cambridge, MA

02139

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (857) 327-8775

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, par value $0.01 per share

BEAM

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES      NO  

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    YES      NO  

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

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 May 4, 2021 was 62,578,078.

 

 

 


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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements reflect, among other things:

 

our current expectations and anticipated results of operations;

 

our expectations regarding the initiation, timing, progress and results of our research and development programs and preclinical and clinical studies, including our intention to file an Investigational New Drug, or IND, application for BEAM-101 during the second half of 2021, our plans to initiate IND-enabling studies for BEAM-102 and BEAM-201 during 2021, and our belief that we are on track to nominate our first development candidate from our liver portfolio in the second half of 2021;

 

our ability to develop a sustainable portfolio;

 

our ability to create a hub for partnering with other companies;

 

our plans for pre-clinical studies for product candidates in our pipeline;

 

our ability to advance any product candidates that we may develop and successfully complete any clinical studies, including the manufacture of any such product candidates;

 

our ability to pursue a broad suite of clinically validated delivery modalities;

 

our expectations regarding our ability to generate additional novel LNPs that we believe could accelerate novel nonviral delivery of gene editing payloads to tissues beyond the liver and our ability to expand the reach of gene editing, including as a result of our acquisition of Guide Therapeutics;

 

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

 

developments related to our competitors and our industry;

 

the expected timing, progress and success of our collaborations with third parties and our ability to identify and enter into future license agreements and collaborations;

 

developments related to base editing technologies;

 

our ability to successfully develop our three distinct pipelines and obtain and maintain approval for our product candidates;

 

our ability to successfully establish and maintain a commercial-scale current Good Manufacturing Practice, or cGMP, manufacturing facility and that this facility will be operational in 2023;

 

regulatory developments in the United States and foreign countries;

 

our ability to attract and retain key scientific and management personnel;

 

our expectations regarding the strategic and other potential benefits of our acquisition of Guide Therapeutics, and

 

the impact of the coronavirus disease of 2019, or COVID-19, pandemic on our business.

All of these statements are subject to known and unknown 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 report. 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

 

 

 

Page

PART I

Financial Information

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Other Comprehensive Loss

2

 

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

3

 

Condensed Consolidated Statements of Cash Flows

5

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

33

 

 

 

PART II

Other Information

 

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

34

Item 2.

Unregistered Sales of Equity Security and Uses of Proceeds

38

Item 6.

Exhibits

39

 

 

 


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)

 

 

 

March 31,

2021

 

 

December 31,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

97,241

 

 

$

162,171

 

Marketable securities

 

 

406,238

 

 

 

137,500

 

Prepaid expenses and other current assets

 

 

11,101

 

 

 

8,650

 

Total current assets

 

 

514,580

 

 

 

308,321

 

Property and equipment, net

 

 

51,994

 

 

 

38,513

 

Restricted cash

 

 

14,840

 

 

 

14,840

 

Operating lease right-of-use assets

 

 

106,794

 

 

 

86,859

 

Other assets

 

 

5,033

 

 

 

3,144

 

Total assets

 

$

693,241

 

 

$

451,677

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,983

 

 

$

6,314

 

Accrued expenses and other current liabilities

 

 

14,976

 

 

 

18,487

 

Derivative liabilities

 

 

73,100

 

 

 

71,200

 

Current portion of lease liability

 

 

3,885

 

 

 

4,218

 

Current portion of equipment financing liability

 

 

2,142

 

 

 

2,118

 

Total current liabilities

 

 

102,086

 

 

 

102,337

 

Long-term lease liability

 

 

125,825

 

 

 

96,014

 

Long-term equipment financing liability

 

 

4,741

 

 

 

5,294

 

Contingent consideration liabilities

 

 

36,818

 

 

 

 

Other liabilities

 

 

1,342

 

 

 

2,471

 

Total liabilities

 

 

270,812

 

 

 

206,116

 

Commitments and contingencies (See Note 7, Leases, Note 9, License agreements and Note 10, Collaboration and license agreements)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 25,000,000 shares authorized, and no shares issued or outstanding at March 31, 2021 and December 31, 2020, respectively

 

 

 

 

 

 

Common stock, $0.01 par value; 250,000,000 shares authorized, 62,528,153 and 58,446,016 issued, and 61,735,119 and 57,254,178 outstanding at March 31, 2021 and December 31, 2020, respectively

 

 

617

 

 

 

573

 

Additional paid-in capital

 

 

1,021,032

 

 

 

642,633

 

Accumulated other comprehensive loss

 

 

(24

)

 

 

(9

)

Accumulated deficit

 

 

(599,196

)

 

 

(397,636

)

Total stockholders’ equity

 

 

422,429

 

 

 

245,561

 

Total liabilities, redeemable convertible preferred stock, and stockholders’ equity

 

$

693,241

 

 

$

451,677

 

 

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)

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

License revenue

 

$

6

 

 

$

6

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

190,106

 

 

 

21,549

 

General and administrative

 

 

10,273

 

 

 

6,812

 

Total operating expenses

 

 

200,379

 

 

 

28,361

 

Loss from operations

 

 

(200,373

)

 

 

(28,355

)

Other income (expense):

 

 

 

 

 

 

 

 

Change in fair value of derivative liabilities

 

 

(1,900

)

 

 

(2,700

)

Change in fair value of contingent consideration liabilities

 

 

(305

)

 

 

 

Interest and other income, net

 

 

1,018

 

 

 

597

 

Total other income (expense)

 

 

(1,187

)

 

 

(2,103

)

Net loss

 

$

(201,560

)

 

$

(30,458

)

Unrealized loss on marketable securities

 

 

(15

)

 

 

(360

)

Comprehensive loss

 

$

(201,575

)

 

$

(30,818

)

Reconciliation of net loss to net loss attributable to common stockholders:

 

 

 

 

 

 

 

 

Net loss

 

$

(201,560

)

 

$

(30,458

)

Accretion of redeemable convertible preferred stock to redemption value, including dividends on preferred stock

 

 

 

 

 

(1,277

)

Net loss attributable to common stockholders

 

$

(201,560

)

 

$

(31,735

)

Net loss per common share attributable to common stockholders, basic and diluted

 

$

(3.35

)

 

$

(1.03

)

Weighted-average common shares used in net loss per share attributable to common stockholders, basic and diluted

 

 

60,210,120

 

 

 

30,725,077

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2


Beam Therapeutics Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity

(Unaudited)

(in thousands, except share amounts)

 

 

Redeemable Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

(Deficit)

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2019

 

 

130,616,784

 

 

$

302,049

 

 

 

 

7,326,185

 

 

$

73

 

 

$

1,851

 

 

$

16

 

 

$

(203,044

)

 

$

(201,104

)

Accretion of redeemable convertible preferred stock to redemption value

 

 

 

 

 

1,277

 

 

 

 

 

 

 

 

 

 

(1,277

)

 

 

 

 

 

 

 

 

(1,277

)

Conversion of redeemable convertible preferred stock to common stock upon closing of initial public offering

 

 

(130,616,784

)

 

 

(303,326

)

 

 

 

29,127,523

 

 

 

291

 

 

 

303,035

 

 

 

 

 

 

 

 

 

303,326

 

Issuance of common stock from initial public offering, net of issuance costs of $18.7 million

 

 

 

 

 

 

 

 

 

12,176,471

 

 

 

122

 

 

 

188,201

 

 

 

 

 

 

 

 

 

188,323

 

Vesting of restricted common stock

 

 

 

 

 

 

 

 

 

387,866

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,792

 

 

 

 

 

 

 

 

 

2,792

 

Exercise of common stock options

 

 

 

 

 

 

 

 

 

59,305

 

 

 

1

 

 

 

151

 

 

 

 

 

 

 

 

 

152

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(360

)

 

 

 

 

 

(360

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,458

)

 

 

(30,458

)

Balance at March 31, 2020

 

 

 

 

$

 

 

 

 

49,077,350

 

 

$

491

 

 

$

494,749

 

 

$

(344

)

 

$

(233,502

)

 

$

261,394

 

3


Beam Therapeutics Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity - Continued

(Unaudited)

(in thousands, except share amounts)

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

57,254,178

 

 

$

573

 

 

$

642,633

 

 

$

(9

)

 

$

(397,636

)

 

$

245,561

 

Issuance of common stock from private placement, net of issuance costs of $8.0 million

 

 

2,795,700

 

 

 

28

 

 

 

251,977

 

 

 

 

 

 

 

 

 

252,005

 

Issuance of common stock to acquire Guide

 

 

1,087,153

 

 

 

10

 

 

 

120,022

 

 

 

 

 

 

 

 

 

120,032

 

Vesting of restricted common stock

 

 

398,804

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,648

 

 

 

 

 

 

 

 

 

4,648

 

Exercise of common stock options

 

 

199,284

 

 

 

2

 

 

 

1,756

 

 

 

 

 

 

 

 

 

1,758

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

(15

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(201,560

)

 

 

(201,560

)

Balance at March 31, 2021

 

 

61,735,119

 

 

$

617

 

 

$

1,021,032

 

 

$

(24

)

 

$

(599,196

)

 

$

422,429

 

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)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(201,560

)

 

$

(30,458

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,398

 

 

 

1,100

 

Amortization of investment discount (premiums)

 

 

15

 

 

 

(129

)

In-process research and development charge

 

 

154,953

 

 

 

 

Stock-based compensation expense

 

 

4,648

 

 

 

2,792

 

Change in operating lease right-of-use assets

 

 

2,359

 

 

 

952

 

Non-cash research and development license expense, net

 

 

 

 

 

264

 

Change in fair value of derivative liabilities

 

 

1,900

 

 

 

2,700

 

Change in fair value of contingent consideration liabilities

 

 

305

 

 

 

 

Other

 

 

(976

)

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(2,365

)

 

 

(3,559

)

Other long-term assets

 

 

(185

)

 

 

(77

)

Accounts payable

 

 

(666

)

 

 

(471

)

Accrued expenses and other liabilities

 

 

(4,458

)

 

 

378

 

Operating lease liabilities

 

 

6,111

 

 

 

(879

)

Other long-term liabilities

 

 

(57

)

 

 

(6

)

Net cash used in operating activities

 

 

(38,578

)

 

 

(27,393

)

Investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(11,478

)

 

 

(3,046

)

Purchases of marketable securities

 

 

(289,218

)

 

 

(117,719

)

Maturities of marketable securities

 

 

20,450

 

 

 

44,723

 

Net cash acquired from Guide

 

 

620

 

 

 

 

Purchase of long-term investment

 

 

 

 

 

(750

)

Net cash used in investing activities

 

 

(279,626

)

 

 

(76,792

)

Financing activities

 

 

 

 

 

 

 

 

Proceeds from initial public offering, net of underwriting discount

 

 

 

 

 

192,510

 

Proceeds from offering of common stock

 

 

260,000

 

 

 

 

Payment of equity offering costs

 

 

(7,955

)

 

 

(958

)

Proceeds from equipment financings

 

 

 

 

 

1,625

 

Repayment of equipment financings

 

 

(529

)

 

 

(315

)

Proceeds from exercise of stock options

 

 

1,758

 

 

 

152

 

Net cash provided by financing activities

 

 

253,274

 

 

 

193,014

 

 

 

 

 

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

 

(64,930

)

 

 

88,829

 

Cash, cash equivalents and restricted cash—beginning of period

 

 

177,011

 

 

 

50,553

 

Cash, cash equivalents and restricted cash—end of period

 

$

112,081

 

 

$

139,382

 

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)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

159

 

 

$

134

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

 

 

Conversion of redeemable convertible preferred stock to common stock upon closing of the initial public offering

 

$

 

 

$

303,326

 

Property and equipment additions in accounts payable and accrued expenses

 

$

6,671

 

 

$

1,032

 

Operating lease liabilities arising from obtaining right-of-use assets

 

$

23,366

 

 

$

4,032

 

Equity issuance costs in accounts payable and accrued expenses

 

$

250

 

 

$

707

 

Contingent consideration liabilities assumed in asset acquisition

 

$

36,513

 

 

$

 

Fair value of equity instruments issued in connection with asset acquisition

 

$

120,032

 

 

$

 

Accretion of redeemable convertible preferred stock to redemption value, including dividends on preferred stock

 

$

 

 

$

1,277

 

 

 

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. (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 (Inception) as a Delaware corporation and began operations in July 2017. Its principal offices are in Cambridge, Massachusetts.

In February 2021, the Company entered into an Agreement and Plan of Merger (“the Guide Merger Agreement”) to acquire Guide Therapeutics, or Guide. Pursuant to the Guide Merger Agreement, the Company paid Guide’s former stockholders and optionholders upfront consideration in an aggregate amount of $120.0 million, excluding customary purchase price adjustments, in shares of its 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 optionholders will be eligible to receive up to an additional $100.0 million in technology and $220.0 million in product milestone payments, payable in the Company’s common stock.

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, organizing and staffing the Company, business planning, raising capital and providing general and administrative support for these operations. 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 drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

In February 2020, the Company completed its initial public offering, or IPO, in which the Company issued and sold 12,176,471 shares of its common stock, including 1,588,235 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $17.00 per share, for aggregate gross proceeds of $207.0 million. The Company received approximately $188.3 million in net proceeds after deducting underwriting discounts and offering expenses payable by the Company. In connection with the IPO, all outstanding shares of the Company’s redeemable convertible preferred stock converted into 29,127,523 shares of its common stock.

In October 2020, the Company issued and sold 5,750,000 shares of its common stock, including 750,000 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $23.50 per share, for aggregate gross proceeds of $135.1 million. The Company received approximately $126.6 million in net proceeds after deducting underwriting discounts and offering expenses payable by the Company.

On January 16, 2021, the Company entered into a Securities Purchase Agreement with certain purchasers, pursuant to which the Company agreed to sell and issue to the purchasers, in a private placement, shares of common stock of the Company. The closing of the private placement occurred on January 21, 2021. The Company issued and sold 2,795,700 shares of its common stock at a purchase price of $93.00 per share for aggregate gross proceeds of $260.0 million, before deducting fees to the placement agents and other offering expenses payable by the Company (See Note 11, Preferred stock and common stock). The Company received approximately $252.0 million in net proceeds after deducting fees to the placement agents and offering expenses payable by the Company.

Since its inception, the Company has incurred substantial losses and had an accumulated deficit of $599.2 million as of March 31, 2021. The Company expects to generate operating losses and negative operating cash flows for the foreseeable future.

The Company expects that its cash, cash equivalents, and marketable securities as of March 31, 2021 of $503.5 million will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these financial statements. The Company will need additional financing to support its continuing operations and pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed would have a negative impact on the Company’s financial condition and its ability to pursue its business strategy. The Company will need to generate significant revenue to achieve profitability, and it may never do so.

7


COVID-19-related significant risks and uncertainties

With the ongoing concern related to the COVID-19 pandemic during 2020 and in the first three months of 2021, the Company has maintained and expanded its business continuity plans to address and mitigate the impact of the COVID-19 pandemic on its business. In March 2020, to protect the health of its employees, and their families and communities, the Company restricted access to its offices to personnel who performed critical activities that must be completed on-site, limited the number of such personnel that could be present at its facilities at any one time, and requested that most of its employees work remotely. In May 2020, as certain states eased restrictions, the Company established new protocols to better allow its full laboratory staff access to the Company’s facilities. These protocols included several shifts working over a seven-day-week protocol. The Company expects to continue incurring additional costs to ensure it adheres to the guidelines instituted by the Centers for Disease Control and Prevention, or CDC, and to provide a safe working environment to its onsite employees.

The extent to which the COVID-19 pandemic impacts the Company’s business, its corporate development objectives, results of operations and financial condition, and the value of and market for its common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements, and the effectiveness of actions taken globally to contain and treat the disease. Disruptions to the global economy, disruption of global healthcare systems, and other significant impacts of the COVID-19 pandemic could have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects.

While the COVID-19 pandemic did not significantly impact the Company’s business or results of operations during the three months ended March 31, 2021, the length and extent of the pandemic, its consequences, and containment efforts will determine the future impact on the Company’s operations and financial condition.

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, 2020, 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 on March 15, 2021. Since the date of those financial statements, there have been no material changes to Beam’s significant accounting policies except as noted below.

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, or FASB.

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 and expenses, the determination of the fair value equity instruments and intangible assets acquired in an asset acquisition, 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. The Company evaluates its estimates and assumptions on an ongoing basis. 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.

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The following table reconciles cash, cash equivalents, and restricted cash reported within the Company’s condensed consolidated balance sheets to the total of the amounts shown in the condensed consolidated statements of cash flows (in thousands):

 

 

March 31,

2021

 

 

March 31,

2020

 

Cash and cash equivalents

 

$

97,241

 

 

$

126,050

 

Restricted cash

 

 

14,840

 

 

 

13,332

 

Total cash, cash equivalents, and restricted cash

 

$

112,081