10-K
falsehttp://fasb.org/us-gaap/2021-01-31#LicenseMember0001745999P2Y--12-31http://fasb.org/us-gaap/2021-01-31#LicenseMemberhttp://fasb.org/us-gaap/2021-01-31#LicenseMemberFY0001745999beam:OfficeAndLaboratorySpaceMemberbeam:CommencementOfFirstPhaseOfLeaseInOctoberTwentyTwentyMember2020-10-310001745999beam:VerveMember2021-12-310001745999beam:AlexandriaRealEstateEquitiesIncMemberus-gaap:ManufacturingFacilityMember2021-01-012021-12-310001745999beam:BroadLicenseAgreementMember2021-05-310001745999us-gaap:FairValueInputsLevel3Memberbeam:BroadLicenseAgreementMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:HarvardLicenseAgreementMember2021-01-012021-12-310001745999beam:ContingentConsiderationLiabilitiesMember2021-01-012021-12-310001745999us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999us-gaap:LeaseholdImprovementsMember2021-12-310001745999beam:VerveMember2019-04-012019-04-300001745999beam:ContingentConsiderationLiabilitiesMemberbeam:ContingentConsiderationOfTechnologyLiabilitiesMember2020-12-310001745999us-gaap:RestrictedStockMember2019-01-012019-12-310001745999beam:AlexandriaRealEstateEquitiesIncMemberus-gaap:ManufacturingFacilityMember2020-08-310001745999beam:AtTheMarketMembersrt:MaximumMemberbeam:JeffriesLlcSalesAgreementMember2021-04-012021-04-300001745999beam:GuideTherapeuticsIncorporatedMembersrt:MaximumMemberbeam:FormerStockholdersAndOptionholdersMemberbeam:MergerAgreementMemberbeam:ContingentConsiderationOfTechnologyLiabilitiesMember2021-02-230001745999beam:LaboratorySpaceMember2020-03-012020-03-310001745999beam:OfficeAndLaboratorySpaceMember2021-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:HarvardLicenseAgreementMemberbeam:MeasurementInputFairValueOfCommonStockMember2021-12-310001745999us-gaap:OtherNoncurrentAssetsMember2020-12-310001745999us-gaap:ConstructionInProgressMember2021-12-310001745999beam:OtherPaymentsMemberbeam:HarvardLicenseAgreementMember2021-01-012021-12-310001745999beam:ContingentConsiderationLiabilitiesMember2021-12-310001745999beam:GuideTherapeuticsIncorporatedMemberbeam:MergerAgreementMember2021-02-012021-02-280001745999beam:ContingentConsiderationLiabilitiesMembersrt:MaximumMemberbeam:ContingentConsiderationOfTechnologyLiabilitiesMember2021-01-012021-12-310001745999srt:MaximumMemberbeam:PfizerMember2021-12-310001745999beam:ReimbursedCostsMemberbeam:InterestAndOtherIncomeExpenseMemberbeam:PrimeMedicineIncMemberbeam:PrimeAgreementMember2021-01-012021-12-310001745999beam:AssignedToCompanyMemberbeam:PfizerMemberbeam:UponParticipationElectionMember2021-12-310001745999beam:ContingentConsiderationOfTechnologyLiabilitiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:OfficeAndLaboratorySpaceMember2019-04-012019-04-300001745999beam:AtTheMarketMemberbeam:JeffriesLlcAmendedSalesAgreementMember2021-07-070001745999beam:HarvardInstituteMember2021-05-100001745999us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:CommercialPaperMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999us-gaap:CommonStockMemberbeam:VerveTherapeuticsIncMember2020-02-012020-02-290001745999us-gaap:CorporateDebtSecuritiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:EquipmentMember2021-12-310001745999beam:SeriesBRedeemableConvertiblePreferredStockMember2019-01-012019-12-310001745999beam:EditasLicenseAgreementMember2019-01-012019-12-310001745999beam:LaboratorySpaceMember2020-04-300001745999us-gaap:CommonStockMember2021-01-012021-12-310001745999beam:AssignedToPfizerMemberbeam:PfizerMemberbeam:UponParticipationElectionMember2021-12-310001745999us-gaap:EmployeeStockOptionMember2021-01-012021-12-3100017459992021-06-300001745999beam:ContingentConsiderationLiabilitiesMember2020-12-310001745999us-gaap:AdditionalPaidInCapitalMemberus-gaap:PrivatePlacementMember2021-01-012021-12-310001745999beam:TwoThousandNineteenEquityIncentivePlanMember2019-01-012019-12-310001745999us-gaap:StateAndLocalJurisdictionMember2021-01-012021-12-310001745999us-gaap:CommercialPaperMember2020-12-310001745999us-gaap:ComputerEquipmentMember2020-12-310001745999us-gaap:RedeemableConvertiblePreferredStockMember2018-12-310001745999beam:BioPaletteLicenseAgreementMember2021-01-012021-12-310001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberbeam:HarvardLicenseAgreementMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999srt:MaximumMemberbeam:HarvardLicenseAgreementMember2021-01-012021-12-310001745999beam:LabEquipmentMember2021-12-310001745999us-gaap:CommonStockMemberus-gaap:IPOMember2020-02-290001745999beam:OfficeAndLaboratorySpaceMemberbeam:CommencementOfFirstPhaseOfLeaseInOctoberTwentyTwentyMember2019-04-012019-04-300001745999us-gaap:RetainedEarningsMember2021-12-310001745999us-gaap:AdditionalPaidInCapitalMemberbeam:OctoberTwoThousandTwentyPublicOfferingMember2020-01-012020-12-310001745999us-gaap:PrivatePlacementMemberus-gaap:CommonStockMember2021-01-162021-01-1600017459992019-12-310001745999beam:EditasLicenseAgreementMember2021-01-012021-12-310001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberbeam:ContingentConsiderationOfTechnologyLiabilitiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:BroadLicenseAgreementMemberus-gaap:MeasurementInputPriceVolatilityMember2021-12-310001745999beam:BioPaletteLicenseAgreementMemberbeam:BioPalettePatentMemberus-gaap:CommonStockMember2020-07-012020-07-310001745999us-gaap:LeaseholdImprovementsMember2020-12-310001745999beam:NonStatutoryOptionsMemberbeam:TwoThousandSeventeenStockOptionAndGrantPlanMemberbeam:EmployeesOfficersBoardOfDirectorsAndConsultantsMember2019-05-012019-05-310001745999us-gaap:EquipmentMember2019-10-012019-10-310001745999us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-12-310001745999beam:ContingentConsiderationLiabilitiesMemberbeam:ContingentConsiderationOfProductLiabilitiesMember2021-01-012021-12-310001745999us-gaap:RetainedEarningsMember2019-12-310001745999srt:MaximumMemberbeam:BroadLicenseAgreementMember2021-01-012021-12-310001745999srt:MaximumMemberbeam:HarvardLicenseAgreementMember2021-05-310001745999beam:TwoThousandNineteenEquityIncentivePlanMember2021-12-310001745999beam:OfficeAndLaboratorySpaceMemberus-gaap:LetterOfCreditMember2020-12-310001745999beam:JeffriesLlcAmendedSalesAgreementMemberus-gaap:CommonStockMember2021-01-012021-12-310001745999beam:BroadLicenseAgreementMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999beam:LabEquipmentMember2020-12-310001745999us-gaap:CommonStockMember2020-01-012020-12-310001745999us-gaap:RestrictedStockMemberbeam:ScientificFoundersMember2018-12-012018-12-310001745999stpr:MA2021-01-012021-12-310001745999us-gaap:ComputerEquipmentMember2021-12-310001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberbeam:ContingentConsiderationOfProductLiabilitiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-12-310001745999us-gaap:EarliestTaxYearMember2021-01-012021-12-310001745999beam:MeasurementInputProbabilityOfAchievementMemberbeam:ContingentConsiderationLiabilitiesMembersrt:MinimumMemberbeam:ContingentConsiderationOfTechnologyLiabilitiesMember2021-12-310001745999us-gaap:CommonStockMember2018-12-310001745999us-gaap:EquipmentMember2020-02-290001745999beam:AlexandriaRealEstateEquitiesIncMembersrt:MaximumMemberus-gaap:ManufacturingFacilityMember2020-08-012020-08-310001745999us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001745999beam:PfizerMember2021-12-310001745999beam:SuccessPaymentLiabilitiesMember2020-01-012020-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:BroadLicenseAgreementMember2021-01-012021-12-310001745999beam:CommencementOfSecondPhaseOfLeaseInJanuaryTwoThousandTwentyOneMemberbeam:OfficeAndLaboratorySpaceMember2021-01-310001745999beam:ReimbursedCostsMemberbeam:InterestAndOtherIncomeExpenseMemberbeam:PrimeMedicineIncMemberbeam:PrimeAgreementMember2020-10-012020-10-310001745999beam:GuideTherapeuticsIncorporatedMemberbeam:MergerAgreementMember2021-01-012021-12-310001745999us-gaap:IPOMember2020-01-012020-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:BroadLicenseAgreementMember2020-01-012020-12-310001745999us-gaap:CommonStockMember2020-12-310001745999beam:JeffriesLlcSalesAgreementMember2021-12-310001745999beam:AccountingStandardUpdate201701Member2018-12-310001745999us-gaap:CommonStockMember2019-01-012019-12-310001745999us-gaap:USTreasurySecuritiesMember2020-12-310001745999beam:BroadLicenseAgreementMember2020-12-310001745999beam:VerveMemberus-gaap:CommonStockMember2019-04-012019-04-300001745999beam:CommonStockReceivedMemberbeam:PrimeMedicineIncMember2020-01-012020-12-310001745999us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001745999us-gaap:PrivatePlacementMemberus-gaap:CommonStockMember2021-01-012021-12-310001745999us-gaap:OverAllotmentOptionMemberus-gaap:CommonStockMember2020-02-012020-02-290001745999us-gaap:RestrictedStockMember2021-01-012021-12-310001745999us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:PrivatePlacementMemberus-gaap:CommonStockMember2021-01-160001745999beam:SuccessPaymentLiabilitiesMemberbeam:HarvardLicenseAgreementMember2021-12-310001745999us-gaap:CommonStockMemberbeam:PrimeMedicineIncMember2020-10-012020-10-310001745999us-gaap:EquipmentMember2020-12-012020-12-310001745999beam:BroadInstituteMember2021-06-012021-06-300001745999beam:CorporateEquitySecuritiesMember2021-12-310001745999us-gaap:CommonStockMember2020-02-012020-02-290001745999beam:SuccessPaymentLiabilitiesMemberbeam:BroadLicenseAgreementMemberus-gaap:MeasurementInputPriceVolatilityMember2020-12-310001745999us-gaap:SeriesAPreferredStockMemberbeam:VerveTherapeuticsIncMember2020-01-012020-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:BroadLicenseAgreementMemberbeam:MeasurementInputFairValueOfCommonStockMember2021-12-310001745999beam:CorporateEquitySecuritiesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999us-gaap:CommonStockMember2021-12-310001745999beam:GuideTherapeuticsIncorporatedMemberbeam:MergerAgreementMemberus-gaap:CommonStockMember2021-02-232021-02-230001745999us-gaap:FairValueInputsLevel3Memberbeam:BroadLicenseAgreementMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999srt:MaximumMemberbeam:BroadLicenseAgreementMemberus-gaap:SeriesAPreferredStockMember2021-01-012021-12-310001745999beam:ContingentConsiderationLiabilitiesMembersrt:MinimumMemberbeam:ContingentConsiderationOfTechnologyLiabilitiesMember2021-01-012021-12-310001745999beam:TwoThousandNineteenEquityIncentivePlanMember2019-10-310001745999us-gaap:RestrictedStockMember2020-01-012020-12-310001745999us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310001745999beam:HarvardLicenseAgreementMember2021-01-012021-12-310001745999us-gaap:DomesticCountryMember2021-12-310001745999us-gaap:EmployeeStockOptionMember2019-01-012019-12-310001745999beam:BioPaletteLicenseAgreementMember2019-01-012019-12-310001745999beam:CorporateEquitySecuritiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:GuideTherapeuticsIncorporatedMemberbeam:MergerAgreementMember2021-02-230001745999us-gaap:CommercialPaperMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999us-gaap:ResearchAndDevelopmentExpenseMember2019-01-012019-12-310001745999beam:GuideTherapeuticsIncorporatedMemberus-gaap:InProcessResearchAndDevelopmentMemberbeam:MergerAgreementMember2021-02-230001745999beam:SuccessPaymentLiabilitiesMembersrt:MaximumMemberus-gaap:MeasurementInputExpectedTermMemberbeam:BroadLicenseAgreementMember2021-01-012021-12-310001745999beam:BroadInstituteMember2021-05-100001745999us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-12-310001745999beam:ApellisPharmaceuticalsIncMember2021-12-310001745999beam:MeasurementInputProbabilityOfAchievementMemberbeam:ContingentConsiderationLiabilitiesMembersrt:MinimumMemberbeam:ContingentConsiderationOfProductLiabilitiesMember2021-12-310001745999beam:TwoThousandNineteenEquityIncentivePlanMember2021-01-012021-12-310001745999beam:LaboratorySpaceMember2021-10-310001745999beam:InterestAndOtherIncomeExpenseMemberbeam:VerveTherapeuticsIncMember2020-01-012020-12-310001745999beam:BioPaletteLicenseAgreementMemberus-gaap:CommonStockMember2019-01-012019-12-310001745999beam:SuccessPaymentsMemberbeam:HarvardLicenseAgreementMember2021-01-012021-12-310001745999beam:PfizerIncMemberus-gaap:SubsequentEventMember2022-01-012022-01-3100017459992020-10-012020-10-310001745999beam:VerveMember2021-06-012021-06-300001745999us-gaap:FairValueInputsLevel3Memberbeam:ContingentConsiderationOfTechnologyLiabilitiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999srt:MaximumMemberbeam:SanaBiotechnologyMember2021-10-310001745999beam:ContingentConsiderationOfProductLiabilitiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:OfficeAndLaboratorySpaceMemberus-gaap:LetterOfCreditMember2021-12-310001745999us-gaap:AccountingStandardsUpdate201602Member2019-12-310001745999beam:TwoThousandSeventeenStockOptionAndGrantPlanMember2019-05-012019-05-3100017459992020-01-012020-12-310001745999beam:SuccessPaymentLiabilitiesMember2020-12-310001745999beam:GuideTherapeuticsIncorporatedMemberbeam:MergerAgreementMember2021-02-232021-02-230001745999us-gaap:FairValueInputsLevel3Memberbeam:ContingentConsiderationOfProductLiabilitiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:SanaBiotechnologyMemberus-gaap:LicenseAgreementTermsMember2021-01-012021-12-310001745999beam:ReimbursedCostsMemberbeam:InterestAndOtherIncomeExpenseMemberbeam:PrimeMedicineIncMemberbeam:PrimeAgreementMember2020-01-012020-12-310001745999beam:TwoThousandNineteenEquityIncentivePlanMember2020-01-012020-12-310001745999us-gaap:CorporateDebtSecuritiesMember2021-12-310001745999beam:OctoberTwoThousandTwentyPublicOfferingMember2020-01-012020-12-3100017459992019-01-012019-12-310001745999beam:JeffriesLlcAmendedSalesAgreementMember2021-01-012021-12-310001745999us-gaap:RestrictedStockMember2020-12-310001745999beam:ContingentConsiderationLiabilitiesMembersrt:MinimumMemberbeam:ContingentConsiderationOfProductLiabilitiesMember2021-01-012021-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:HarvardLicenseAgreementMember2020-01-012020-12-310001745999us-gaap:CommercialPaperMember2021-12-310001745999us-gaap:LeaseholdImprovementsMember2021-01-012021-12-310001745999us-gaap:EmployeeStockOptionMember2021-12-310001745999us-gaap:EquipmentMember2021-01-012021-12-310001745999beam:PerformanceBasedStockOptionsMember2019-01-012019-12-310001745999beam:PfizerMemberus-gaap:SubsequentEventMember2022-01-012022-01-310001745999beam:LaboratorySpaceMember2018-10-012018-10-310001745999beam:SuccessPaymentLiabilitiesMember2021-12-310001745999beam:OfficeAndLaboratorySpaceMember2021-04-012021-06-300001745999beam:VerveTherapeuticsIncMember2021-12-310001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberbeam:BroadLicenseAgreementMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999beam:HarvardLicenseAgreementMember2021-06-102021-06-100001745999beam:ContingentConsiderationLiabilitiesMemberbeam:ContingentConsiderationOfProductLiabilitiesMember2021-12-310001745999beam:TwoThousandNineteenEmployeeStockPurchasePlanMember2020-02-012020-02-290001745999us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:MoneyMarketFundsMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999srt:MaximumMemberbeam:HarvardLicenseAgreementMemberus-gaap:SeriesAPreferredStockMember2021-01-012021-12-310001745999beam:OfficeAndLaboratorySpaceMember2021-06-300001745999us-gaap:CommonStockMemberbeam:VerveTherapeuticsIncMember2021-01-012021-12-310001745999us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:SuccessPaymentLiabilitiesMembersrt:MaximumMemberus-gaap:MeasurementInputExpectedTermMemberbeam:BroadLicenseAgreementMember2020-01-012020-12-310001745999us-gaap:RestrictedStockMember2020-01-012020-12-310001745999us-gaap:RestrictedStockMember2021-12-310001745999beam:HarvardLicenseAgreementMember2021-12-310001745999beam:JeffriesLlcSalesAgreementAndAmendedSalesAgreementMember2021-01-012021-12-310001745999us-gaap:OverAllotmentOptionMemberus-gaap:CommonStockMember2020-10-012020-10-310001745999beam:StockOptionsAndRestrictedStockMemberbeam:EmployeesOfficersFoundersAndConsultantsMemberbeam:TwoThousandSeventeenStockOptionAndGrantPlanMember2019-05-012019-05-310001745999beam:VerveMember2019-01-012019-12-310001745999beam:BroadLicenseAgreementMember2019-01-012019-12-310001745999beam:BroadLicenseAgreementMember2020-01-012020-12-310001745999us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:CommonStockMemberbeam:PrimeMedicineIncMember2020-10-012020-10-310001745999us-gaap:AdditionalPaidInCapitalMemberus-gaap:IPOMember2020-01-012020-12-310001745999us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:ApellisPharmaceuticalsIncMember2021-01-012021-12-310001745999beam:ContingentConsiderationLiabilitiesMemberbeam:ContingentConsiderationOfTechnologyLiabilitiesMember2021-12-310001745999beam:ApellisPharmaceuticalsIncMembersrt:ScenarioForecastMember2022-06-300001745999beam:MeasurementInputProbabilityOfAchievementMembersrt:MaximumMemberbeam:ContingentConsiderationLiabilitiesMemberbeam:ContingentConsiderationOfProductLiabilitiesMember2021-12-310001745999us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-12-310001745999beam:OtherPaymentsMemberbeam:BroadLicenseAgreementMember2021-01-012021-12-310001745999us-gaap:FurnitureAndFixturesMember2021-12-310001745999us-gaap:CommonStockMember2020-10-310001745999beam:HarvardLicenseAgreementMember2019-01-012019-12-310001745999us-gaap:CommonStockMember2020-10-012020-10-310001745999beam:SanaBiotechnologyMember2021-10-310001745999us-gaap:EmployeeStockMember2021-01-012021-12-310001745999beam:VerveTherapeuticsIncMember2020-01-012020-12-310001745999us-gaap:AdditionalPaidInCapitalMember2020-12-310001745999us-gaap:EmployeeStockOptionMemberbeam:TwoThousandSeventeenStockOptionAndGrantPlanMember2019-05-012019-05-310001745999us-gaap:EquipmentMember2020-02-012020-02-290001745999us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999beam:HarvardLicenseAgreementMember2020-12-310001745999us-gaap:EquipmentMember2019-01-012019-12-310001745999beam:LaboratorySpaceMember2021-10-012021-10-310001745999beam:HarvardLicenseAgreementMemberbeam:RegulatoryMember2021-01-012021-12-310001745999us-gaap:RestrictedStockMembersrt:MinimumMember2021-01-012021-12-310001745999us-gaap:FairValueInputsLevel3Memberbeam:HarvardLicenseAgreementMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:TwoThousandNineteenEmployeeStockPurchasePlanMembersrt:ScenarioForecastMember2021-10-012022-03-310001745999us-gaap:RestrictedStockMember2019-01-012019-12-310001745999us-gaap:CorporateDebtSecuritiesMember2020-12-310001745999us-gaap:EquipmentMember2020-12-310001745999beam:GuideTherapeuticsIncorporatedMemberbeam:AssembledWorkforceMemberbeam:MergerAgreementMember2021-02-230001745999us-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001745999beam:AtTheMarketMember2021-01-012021-12-310001745999beam:LaboratoryEquipmentAndOfficeFurnitureMember2021-01-012021-12-310001745999beam:StockOptionsAndRestrictedStockMemberus-gaap:CommonStockMemberbeam:TwoThousandSeventeenStockOptionAndGrantPlanMember2019-05-310001745999beam:LaboratorySpaceMember2021-01-3100017459992020-12-310001745999beam:PfizerMember2021-01-012021-01-310001745999us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:RestrictedStockMembersrt:MaximumMember2021-01-012021-12-310001745999beam:ContingentConsiderationLiabilitiesMemberbeam:ContingentConsiderationOfTechnologyLiabilitiesMember2021-01-012021-12-310001745999beam:ContingentConsiderationLiabilitiesMemberus-gaap:MeasurementInputDiscountRateMemberbeam:ContingentConsiderationOfTechnologyLiabilitiesMember2021-12-310001745999beam:LaboratorySpaceMember2020-03-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:BroadLicenseAgreementMember2020-12-310001745999beam:JeffriesLlcSalesAgreementMember2021-04-012021-07-310001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:AtTheMarketMemberus-gaap:CommonStockMember2021-01-012021-12-310001745999beam:HarvardLicenseAgreementMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:JeffriesLlcAmendedSalesAgreementMemberus-gaap:CommonStockMember2021-12-310001745999us-gaap:RestrictedStockMember2021-01-012021-12-310001745999beam:GuideTherapeuticsIncorporatedMembersrt:MaximumMemberbeam:FormerStockholdersAndOptionholdersMemberbeam:ContingentConsiderationOfProductLiabilitiesMemberbeam:MergerAgreementMember2021-02-230001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberbeam:BroadLicenseAgreementMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999srt:MaximumMemberus-gaap:CommonStockMemberbeam:TwoThousandNineteenEquityIncentivePlanMember2021-01-012021-12-310001745999beam:ScientificConsultingAndOtherExpensesMemberbeam:FounderShareholdersMember2019-01-012019-12-310001745999us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310001745999us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-12-310001745999us-gaap:AdditionalPaidInCapitalMember2019-12-310001745999us-gaap:CorporateDebtSecuritiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:BroadLicenseAgreementMemberbeam:MeasurementInputFairValueOfCommonStockMember2020-12-310001745999beam:IncludingTwoThousandSeventeenPlanSharesMembersrt:MaximumMemberbeam:TwoThousandNineteenEquityIncentivePlanMember2019-10-310001745999beam:EditasLicenseAgreementMemberbeam:RegulatoryMember2021-01-012021-12-310001745999us-gaap:EquipmentMember2020-01-012020-12-310001745999us-gaap:AdditionalPaidInCapitalMember2021-12-310001745999us-gaap:CommonStockMemberus-gaap:IPOMember2020-01-012020-12-3100017459992021-01-012021-12-3100017459992022-02-220001745999beam:BroadLicenseAgreementMember2021-01-012021-12-310001745999beam:OfficeAndLaboratorySpaceMemberbeam:CommencementOfSecondPhaseOfLeaseInJanuaryTwoThousandTwentyOneMember2019-04-012019-04-300001745999beam:SanaBiotechnologyMember2021-01-012021-12-310001745999us-gaap:ResearchAndDevelopmentExpenseMemberbeam:VerveTherapeuticsIncMember2021-01-012021-12-310001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:CommercialPaperMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:PrivatePlacementMember2021-01-012021-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:HarvardLicenseAgreementMemberbeam:MeasurementInputFairValueOfCommonStockMember2020-12-310001745999us-gaap:EmployeeStockOptionMember2021-01-012021-12-310001745999beam:SuccessPaymentLiabilitiesMembersrt:MinimumMemberus-gaap:MeasurementInputExpectedTermMemberbeam:HarvardLicenseAgreementMember2020-01-012020-12-310001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999beam:HarvardLicenseAgreementMember2021-05-310001745999beam:BioPaletteLicenseAgreementMemberbeam:BioPalettePatentMember2020-06-012020-06-300001745999beam:CorporateEquitySecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999beam:MeasurementInputProbabilityOfAchievementMemberbeam:ContingentConsiderationLiabilitiesMembersrt:MaximumMemberbeam:ContingentConsiderationOfTechnologyLiabilitiesMember2021-12-310001745999beam:VerveMember2020-01-012020-12-310001745999beam:HarvardLicenseAgreementMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:PrivatePlacementMember2021-01-162021-01-160001745999srt:MaximumMemberbeam:HarvardLicenseAgreementMemberbeam:ProductDevelopmentAndRegulatoryApprovalMember2021-12-310001745999beam:OfficeAndLaboratorySpaceMember2019-04-300001745999beam:BroadLicenseAgreementMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:ApellisPharmaceuticalsIncMemberus-gaap:AccountingStandardsUpdate201409Member2021-06-300001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999beam:SuccessPaymentsMemberbeam:BroadLicenseAgreementMember2021-01-012021-12-310001745999us-gaap:USTreasurySecuritiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999beam:ContingentConsiderationLiabilitiesMemberbeam:ContingentConsiderationOfProductLiabilitiesMemberus-gaap:MeasurementInputDiscountRateMember2021-12-310001745999srt:MaximumMemberbeam:ContingentConsiderationLiabilitiesMemberbeam:ContingentConsiderationOfProductLiabilitiesMember2021-01-012021-12-310001745999beam:OfficeAndLaboratorySpaceMemberbeam:VerveTherapeuticsIncMember2021-10-310001745999us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:DomesticCountryMember2021-01-012021-12-310001745999us-gaap:OtherNoncurrentAssetsMember2021-12-310001745999us-gaap:RetainedEarningsMember2020-12-310001745999beam:SuccessPaymentLiabilitiesMembersrt:MinimumMemberus-gaap:MeasurementInputExpectedTermMemberbeam:HarvardLicenseAgreementMember2021-01-012021-12-310001745999beam:LaboratorySpaceMember2021-01-012021-01-310001745999us-gaap:ConstructionInProgressMember2020-12-310001745999beam:ApellisPharmaceuticalsIncMember2021-07-012021-07-310001745999srt:MinimumMemberbeam:BroadLicenseAgreementMemberus-gaap:SeriesAPreferredStockMember2021-01-012021-12-310001745999us-gaap:EmployeeStockOptionMember2020-01-012020-12-310001745999srt:MinimumMemberbeam:HarvardLicenseAgreementMemberus-gaap:SeriesAPreferredStockMember2021-01-012021-12-310001745999us-gaap:ResearchAndDevelopmentExpenseMemberbeam:VerveTherapeuticsIncMember2020-01-012020-12-310001745999us-gaap:SeriesAPreferredStockMemberbeam:VerveTherapeuticsIncMember2019-01-012019-12-310001745999beam:OfficeAndLaboratorySpaceMemberbeam:VerveTherapeuticsIncMember2021-10-012021-10-310001745999beam:TwoThousandNineteenEmployeeStockPurchasePlanMember2021-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:BroadLicenseAgreementMember2021-12-310001745999beam:SuccessPaymentLiabilitiesMembersrt:MinimumMemberus-gaap:MeasurementInputExpectedTermMemberbeam:BroadLicenseAgreementMember2021-01-012021-12-310001745999beam:ComputerEquipmentAndSoftwareMember2021-01-012021-12-310001745999us-gaap:AdditionalPaidInCapitalMember2018-12-310001745999srt:MaximumMemberbeam:BroadLicenseAgreementMemberbeam:ProductDevelopmentAndRegulatoryApprovalMember2021-12-310001745999beam:OfficeAndLaboratorySpaceMemberbeam:VerveTherapeuticsIncMember2021-01-012021-12-310001745999us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:HarvardLicenseAgreementMember2020-01-012020-12-310001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999beam:HarvardInstituteMember2021-06-012021-06-300001745999beam:ScientificConsultingAndOtherExpensesMemberbeam:FounderShareholdersMember2020-01-012020-12-310001745999beam:SuccessPaymentLiabilitiesMembersrt:MinimumMemberus-gaap:MeasurementInputExpectedTermMemberbeam:BroadLicenseAgreementMember2020-01-012020-12-310001745999us-gaap:RetainedEarningsMember2020-01-012020-12-310001745999beam:OfficeAndLaboratorySpaceMemberus-gaap:SubsequentEventMember2022-02-280001745999us-gaap:FurnitureAndFixturesMember2020-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:HarvardLicenseAgreementMember2020-12-310001745999us-gaap:AdditionalPaidInCapitalMemberbeam:AtTheMarketMember2021-01-012021-12-310001745999beam:SuccessPaymentLiabilitiesMember2021-01-012021-12-310001745999us-gaap:EquipmentMember2019-07-3100017459992020-01-310001745999beam:VerveMember2021-01-012021-12-310001745999beam:AtTheMarketMembersrt:MaximumMemberbeam:JeffriesLlcSalesAgreementMember2021-04-300001745999beam:SuccessPaymentLiabilitiesMemberbeam:HarvardLicenseAgreementMemberus-gaap:MeasurementInputPriceVolatilityMember2021-12-3100017459992021-12-310001745999beam:BroadLicenseAgreementMember2021-06-102021-06-100001745999beam:ApellisPharmaceuticalsIncMembersrt:MaximumMember2021-01-012021-12-310001745999us-gaap:EquipmentMember2019-07-012019-07-310001745999us-gaap:RedeemableConvertiblePreferredStockMember2019-12-310001745999us-gaap:MoneyMarketFundsMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:VerveTherapeuticsIncMember2021-01-012021-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:BroadLicenseAgreementMember2019-12-310001745999srt:MinimumMemberbeam:BroadLicenseAgreementMember2021-01-012021-12-310001745999beam:SuccessPaymentLiabilitiesMembersrt:MaximumMemberus-gaap:MeasurementInputExpectedTermMemberbeam:HarvardLicenseAgreementMember2021-01-012021-12-310001745999beam:OfficeAndLaboratorySpaceMember2018-02-012018-02-280001745999beam:SuccessPaymentLiabilitiesMemberbeam:HarvardLicenseAgreementMember2019-12-310001745999beam:PrimeMedicineIncMember2019-09-300001745999beam:OfficeAndLaboratorySpaceMemberus-gaap:SubsequentEventMember2022-02-012022-02-280001745999beam:ContingentConsiderationLiabilitiesMemberbeam:ContingentConsiderationOfProductLiabilitiesMember2020-12-310001745999beam:OfficeAndLaboratorySpaceMember2018-02-280001745999us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-12-310001745999beam:SuccessPaymentLiabilitiesMemberbeam:HarvardLicenseAgreementMemberus-gaap:MeasurementInputPriceVolatilityMember2020-12-310001745999beam:SanaBiotechnologyMember2021-10-012021-10-310001745999beam:SuccessPaymentLiabilitiesMember2019-12-310001745999us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001745999beam:ScientificConsultingAndOtherExpensesMemberbeam:FounderShareholdersMember2021-01-012021-12-310001745999us-gaap:EquipmentMember2019-10-310001745999us-gaap:FairValueInputsLevel3Memberbeam:HarvardLicenseAgreementMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999beam:EditasLicenseAgreementMember2020-01-012020-12-310001745999us-gaap:RetainedEarningsMember2021-01-012021-12-310001745999us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:CommonStockMemberus-gaap:IPOMember2020-02-012020-02-290001745999beam:LaboratorySpaceMember2020-04-012020-04-300001745999us-gaap:RetainedEarningsMember2019-01-012019-12-310001745999beam:OfficeAndLaboratorySpaceMember2019-06-012019-06-300001745999us-gaap:StateAndLocalJurisdictionMember2021-12-310001745999beam:JeffriesLlcSalesAgreementMember2021-01-012021-12-310001745999us-gaap:RedeemableConvertiblePreferredStockMember2019-01-012019-12-310001745999srt:MaximumMemberbeam:BroadLicenseAgreementMember2021-05-310001745999us-gaap:GeneralAndAdministrativeExpenseMember2019-01-012019-12-310001745999beam:OfficeAndLaboratorySpaceMember2019-07-012019-07-310001745999beam:PrimeMedicineIncMember2021-01-012021-12-310001745999beam:ApellisPharmaceuticalsIncMember2021-06-300001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001745999us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310001745999beam:OfficeAndLaboratorySpaceMember2021-08-310001745999beam:BroadLicenseAgreementMember2021-12-310001745999us-gaap:CommonStockMemberbeam:OctoberTwoThousandTwentyPublicOfferingMember2020-01-012020-12-310001745999us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberbeam:HarvardLicenseAgreementMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-3100017459992018-12-310001745999us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999us-gaap:CommercialPaperMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999beam:SuccessPaymentLiabilitiesMembersrt:MaximumMemberus-gaap:MeasurementInputExpectedTermMemberbeam:HarvardLicenseAgreementMember2020-01-012020-12-310001745999beam:PrimeMedicineIncMemberbeam:CommonStockIssuedMember2020-01-012020-12-310001745999us-gaap:CommonStockMember2019-12-310001745999beam:AlexandriaRealEstateEquitiesIncMemberus-gaap:ManufacturingFacilityMember2020-08-012020-08-310001745999us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001745999srt:MinimumMemberbeam:HarvardLicenseAgreementMember2021-01-012021-12-310001745999beam:TwoThousandNineteenEmployeeStockPurchasePlanMember2021-01-012021-12-310001745999us-gaap:RedeemableConvertiblePreferredStockMember2020-01-012020-12-310001745999us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310001745999us-gaap:RetainedEarningsMember2018-12-31beam:Optionxbrli:purebeam:Segmentutr:sqftxbrli:sharesbeam:Founderiso4217:USDxbrli:sharesiso4217:USD

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

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

 

For the fiscal year ended December 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.)

 

 

238 Main Street

Cambridge, MA

02142

(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

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No

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, 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant was $6.45 billion, based on the closing price of the registrant’s common stock on Nasdaq on June 30, 2021, the last business day of the registrant’s most recently completed second quarter.

The number of shares of registrant’s common stock outstanding as of February 22, 2022 was 68,730,340.

 

DOCUMENTS INCORPORATED BY REFERENCE

Registrant incorporates by reference into Part III (Items 10, 11, 12, 13 and 14) of this Annual Report on Form 10-K portions of the Registrant’s definitive Proxy Statement for the 2022 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

 

 

 


 

Table of Contents

 

 

 

Page

FORWARD-LOOKING STATEMENTS

1

RISK FACTORS SUMMARY

2

 

 

 

PART I

 

 

Item 1.

Business

4

Item 1A.

Risk Factors

50

Item 1B.

Unresolved Staff Comments

108

Item 2.

Properties

108

Item 3.

Legal Proceedings

108

Item 4.

Mine Safety Disclosures

108

 

 

 

PART II

 

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

109

Item 6.

[Reserved]

111

Item 7.

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

112

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

126

Item 8.

Financial Statements and Supplementary Data

126

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

126

Item 9A.

Controls and Procedures

126

Item 9B.

Other Information

128

Item 9C

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

128

 

 

 

PART III

 

 

Item 10.

Directors, Executive Officers and Corporate Governance

129

Item 11.

Executive Compensation

129

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

129

Item 13.

Certain Relationships and Related Transactions, and Director Independence

129

Item 14.

Principal Accounting Fees and Services

129

 

 

 

PART IV

 

 

Item 15.

Exhibits, Financial Statement Schedules

130

Item 16.

Form 10-K Summary

133

 

 


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K 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, our current expectations and anticipated results of operations, all of which 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 important risks, uncertainties and assumptions, including those described in “Risk Factors Summary” and in “Risk Factors” in Part I, 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. These 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 studies, including our expectations that we will submit an Investigational New Drug application, or IND, for BEAM-102 for the treatment of sickle cell disease and BEAM-201 for the treatment of relapsed/refractory T-cell acute lymphoblastic leukemia, that we will initiate IND-enabling studies for BEAM-301 for the treatment Glycogen Storage Disease Type IA (R83C mutation) and that we will nominate a CAR-T development candidate and an additional in vivo liver development candidate during 2022;
our expectations regarding the initiation, timing, progress and results of our clinical trials, including 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-101 trial;
our ability to develop and maintain a sustainable portfolio of product candidates;
our ability to develop life-long, curative, precision genetic medicines for patients through base editing;
our ability to create a hub for partnering with other companies;
our plans for preclinical studies for product candidates in our pipeline;
our ability to advance any product candidates that we may develop and successfully complete any clinical trials or preclinical 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 lipid nanoparticles that we believe could accelerate novel nonviral delivery of gene editing or other nucleic acid payloads to tissues beyond the liver and our ability to expand the reach of our programs, including as a result of our acquisition of Guide Therapeutics, Inc., or Guide;
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, including any future payments we may receive under our collaboration and license agreements, 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 delivery modalities 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 our expectations that this facility will be operational in the first quarter of 2023;
regulatory developments in the United States and foreign countries;
our ability to attract and retain key scientific and management personnel;

1


 

our expectations regarding the strategic and other potential benefits of our acquisition of Guide; and
the impact of the coronavirus disease of 2019, or COVID-19, pandemic on our business.

When we use the terms “Beam,” the “Company,” “we,” “us” or “our” in this Annual Report on Form 10-K, we mean Beam Therapeutics Inc. and its subsidiaries on a consolidated basis, unless the context indicates otherwise.

TRADEMARKS

We use BEAM, REPAIR and RESCUE and other marks as trademarks in the United States and/or in other countries. This Annual Report on Form 10-K contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this report, including logos, artwork and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entity.

MARKET AND INDUSTRY DATA

Unless otherwise indicated, information contained in this Annual Report on Form 10-K concerning our industry and the markets in which we operate, including our general expectations, market position and market opportunity, is based on our management’s estimates and research, as well as industry and general publications and research, surveys and studies conducted by third parties. We believe that the information from these third-party publications, research, surveys and studies included in this report is reliable. Management’s estimates are derived from publicly available information, their knowledge of our industry and their assumptions based on such information and knowledge, which we believe to be reasonable. This data involves a number of assumptions and limitations which are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors Summary” and “Risk Factors” in Part I, Item 1A of this report. These and other factors could cause our future performance to differ materially from our assumptions and estimates.

RISK FACTORS SUMMARY

 

An investment in our common stock involves risks. You should consider carefully the following risks, which are discussed more fully in “Item 1.A. Risk Factors”, and all of the other information contained in this Annual Report on Form 10-K before investing in our common stock. These risks include, but are not limited to, the following:

Base editing is a novel technology that is not yet clinically validated for human therapeutic use. The approaches we are taking to discover and develop novel therapeutics are unproven and may never lead to marketable products.
We have incurred significant losses since inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.
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.
Our short operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
We may not be successful in our efforts to identify and develop potential product candidates. If these efforts are unsuccessful, we may never become a commercial stage company or generate any revenues.
We are very early in our development efforts. Nearly all of our product candidates are still in preclinical development or earlier stages and it will be many years before we or our collaborators commercialize a product candidate, if ever. If we are unable to advance our product candidates to and through clinical development, obtain regulatory approval and ultimately commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed.
If any of the product candidates we may develop or the delivery modalities we rely on cause serious adverse events, undesirable side effects or unexpected characteristics, such events, side effects or characteristics could delay or prevent regulatory approval of the product candidates, limit the commercial potential, or result in significant negative consequences following any potential marketing approval.
We face significant competition in an environment of rapid technological change, and there is a possibility that our competitors may achieve regulatory approval before us or develop therapies that are safer or more advanced or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize any product candidates we may develop.

2


 

The continuing effects and impacts of the COVID-19 pandemic could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
We have not tested any of our proposed delivery modalities and product candidates in clinical trials and any favorable preclinical results are not predictive of results that may be observed in clinical trials.
Adverse public perception of genetic medicines, and gene editing and base editing in particular, may negatively impact regulatory approval of, and/or demand for, our potential products.
The gene editing field is relatively new and is evolving rapidly. We are focusing our research and development efforts on gene editing using base editing technology, but other gene editing technologies may be discovered that provide significant advantages over base editing, which could materially harm our business.
Regulatory requirements governing genetic medicines, and in particular any novel genetic medicines we may develop, have changed frequently and may continue to change in the future.
Genetic medicines are novel, and any product candidates we develop may be complex and difficult to manufacture. We could experience delays in satisfying regulatory authorities or production problems that result in delays in our development or commercialization programs, limit the supply of our product candidates we may develop, or otherwise harm our business.
We contract with third parties for the manufacture of materials for our research programs, preclinical studies and clinical trial and expect to continue to do so for at least a portion of the manufacturing process for our research programs, preclinical studies, 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.
Because we are developing product candidates in the field of genetics medicines, a field that includes gene therapy and gene editing, in which there is little clinical experience, there is increased risk that the U.S. Food and Drug Administration, the European Medicines Agency or other regulatory authorities may not consider the endpoints of our clinical trials to provide clinically meaningful results and that these results may be difficult to analyze.
If we are unable to obtain and maintain patent protection for any product candidates we develop and for our technology, or if the scope of the patent protection obtained is not sufficiently broad, or if we or our licensors are unable to successfully defend our or our licensors’ patents against third-party challenges or enforce our or our licensors’ patents against third parties our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize any product candidates we may develop, and our technology may be adversely affected.
Our rights to develop and commercialize technology and product candidates are subject, in part, to the terms and conditions of licenses granted to us by others.
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.
Our activities rely on information technology in our own systems and those of our business partners. These systems are subject to a wide and growing variety of cybersecurity risks that may adversely impact our business activities or our ability to engage in various transactions to support our business activities.
Our clinical research activities depend on the use and disclosure of personal data related to individuals participating in our clinical trials. The rules addressing this data are changing across the world, and these rules may adversely impact our ability to identify individuals for clinical trials or conduct our trials.
Our owned and in-licensed patents and other intellectual property may be subject to priority disputes or inventorship disputes or we may be subject to claims that we have infringed, misappropriated or otherwise violated the intellectual property of a third party and similar proceedings. If we or our licensors are unsuccessful in any of these proceedings, we may be required to obtain licenses from third parties, which may not be available on commercially reasonable terms or at all, or to cease the development, manufacture, and commercialization of one or more of the product candidates we may develop, which could have a material adverse impact on our business.

3


 

PART I

Item 1. Business.

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 in the process of developing 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. This approach uses a chemical reaction designed to create precise, predictable and efficient genetic outcomes at the targeted sequence. Our proprietary base editors have two principal components: (i) a clustered regularly interspaced short palindromic repeats, or CRISPR, protein, bound to a guide RNA, that leverages the established DNA-targeting ability of CRISPR, but is modified to not cause a double-stranded break, and (ii) a base editing enzyme, such as a deaminase, which carries out the desired chemical modification of the target DNA base. We believe this design contributes to a more precise and efficient edit compared to traditional gene editing methods, which operate by creating targeted double-stranded breaks in the DNA that can result in unwanted DNA modifications. We believe that the precision of our editors will dramatically increase the impact of gene editing for a broad range of therapeutic applications.

To unlock the full potential of our base editing technology across a wide range of therapeutic applications, we are pursuing a broad suite of both clinically validated and novel delivery modalities, depending on tissue type, including: (1) electroporation for efficient delivery to blood cells and immune cells ex vivo; (2) lipid nanoparticles, or LNPs, for non-viral in vivo delivery to the liver and potentially other organs in the future; and (3) adeno-associated viral vectors, or AAV, for in vivo viral delivery to the eye and potentially other organs.

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.

We continue to make meaningful advancements across our programs. We have identified four development candidates to date: three from our ex vivo platform, with two candidates targeting hemoglobinopathies and one candidate targeting T-cell leukemia, and one from our in vivo platform targeting glycogen storage disease:

BEAM-101, our patient-specific, autologous hematopoietic investigational cell therapy, is designed to reproduce single base changes seen in individuals with Hereditary Persistence of Fetal Hemoglobin, or HPFH, to potentially protect them from the effects of mutations causing sickle cell disease or beta thalassemia by increasing their levels of fetal hemoglobin. We have achieved proof-of-concept in vivo with long-term engraftment of base edited human CD34 cells in mice administered BEAM-101. Persistence of engraftment and high levels of editing have been confirmed in several other preclinical studies, including in studies using material generated at a clinically relevant scale. In November 2021, we announced that our Investigational New Drug application, or IND, for BEAM-101 for the treatment of sickle cell disease was cleared by the U.S. Food and Drug Administration, or FDA. We are currently preparing to initiate our BEACON-101 trial, a Phase 1/2 clinical trial designed to assess the safety and efficacy of BEAM-101 for the treatment of sickle cell disease. We have begun site selection and the institutional review board approval processes for this trial and plan to enroll the first subject in the second half of 2022.
BEAM-102, our second investigational base editing approach for sickle cell disease, is designed to directly correct the causative mutation in sickle cell disease by recreating a naturally-occurring normal human hemoglobin variant, HbG-Makassar. In preclinical studies of BEAM-102, we have demonstrated that our adenine base editors, or ABEs, can efficiently convert the causative Hemoglobin S, or HbS, point mutation, to HbG-Makassar, with high editing efficiency (more than 80%). In these studies, the Makassar variant did not cause hemoglobin to polymerize and red blood cells to sickle under hypoxic conditions and, therefore, edited cells behaved similarly to normal red blood cells with elimination of the disease-causing HbS. The results from these studies support the conclusion that the Makassar variant is able to protect cells from sickling, even in the context of mono-allelic editing (with one sickle allele and one corrected allele). We initiated IND-enabling studies for BEAM-102 during 2021 and expect to submit an IND to the FDA for the treatment of sickle cell disease during the second half of 2022.

4


 

BEAM-201 is a potent and specific anti-CD7, multiplex-edited, allogeneic chimeric antigen receptor T cell, or CAR-T, development candidate for the treatment of relapsed/refractory T-cell acute lymphoblastic leukemia/T cell lymphoblastic lymphoma, or T-ALL/T-LL, a severe disease affecting children and adults with a five-year overall survival rate of less than 25%. BEAM-201 is produced using a Good Manufacturing Practice, or GMP, compliant, clinical-scale process in which T-cells derived from healthy donors are simultaneously base edited at four genomic loci, then transduced with a lentivirus coding for an anti-CD7 CAR. The resulting cells are designed to be universally-compatible, allogeneic (“off the shelf”) CD7-targeting CAR-T cells, resistant to both fratricide and immunosuppression. We initiated IND-enabling studies for BEAM-201 during 2021 and expect to submit an IND to the FDA for the treatment of relapsed, refractory T-ALL/T-LL during the second half of 2022.
BEAM-301, our first liver-targeted development candidate, is designed to apply base editing via LNP delivery to repair the R83C mutation of the G6PC gene, one of the most prevalent causes of Glycogen Storage Disease Type Ia, or GSDIa. In October 2021, we presented preclinical data demonstrating that administration of our LNP-delivered ABEs in a newborn humanized GSDIa R83C mouse model resulted in normal growth to the end of the study at three weeks of age and normalization of these subjects' metabolic profile (glucose and lipids). In contrast, homozygous animals died shortly after birth in the absence of glucose supplementation. In addition, we observed editing efficiencies up to approximately 60% by next generation sequencing of DNA isolated from the whole liver. Published third party studies suggest that normal G6Pase activity of approximately 11% in the liver is sufficient to mitigate fasting hypoglycemia in animal models of GSDIa. In December 2021, we nominated BEAM-301 as our first development candidate for in vivo base editing in the liver using LNP delivery for the treatment of patients with GSDIa (R83C mutation), and anticipate initiating IND-enabling studies for BEAM-301 in 2022.

We also continue to advance numerous other programs in a range of therapeutic areas. We have shown the ability to directly correct the mutation causing alpha-1 antitrypsin deficiency, providing both in vitro and in vivo preclinical proof-of-concept for base editing to address this disease. We have also achieved editing levels in vivo, in preclinical models, for the correction of the Q347X mutation, which is the other most prevalent mutation causing GSDIa, that could be clinically relevant if reproduced in humans. We anticipate nominating a second liver-targeted development candidate in 2022. In addition, in preclinical studies in our multiplex-edited allogeneic CAR-T research program, we have demonstrated knockout of CD5 expression to be a general mechanism to enhance potency and potentially improve durability of highly multiplexed CAR-T cells. We plan to nominate a second CAR-T development candidate, in addition to BEAM-201, in 2022.

The modularity of our platform means that establishing preclinical proof-of-concept of base editing using a particular delivery modality will potentially reduce risk and accelerate the timeline for the development of additional product candidates targeting the same tissue. In some cases, a new product candidate may only require changing the guide RNA. Subsequent programs using the same delivery modality can also take advantage of shared capabilities and resources of earlier programs.

Background on current methods in genetic medicines

The human genome has four types of bases found in DNA: adenine (A), cytosine (C), guanine (G), and thymine (T). Adenine pairs with thymine, and cytosine pairs with guanine. The genome is comprised of over three billion of these base pairs in two intertwining strands of DNA; the sequence of these bases encodes genes. In a living cell, these DNA sequences are continuously copied into short ribonucleic acid transcripts, called messenger RNA, or mRNA, which are then translated into proteins that perform the functions of life. By precisely modulating the DNA sequence, it is possible to develop different therapeutic approaches. One of these approaches involves correcting misspellings in genes, known as mutations, which can yield proteins that are dysfunctional or missing altogether, causing disease. An additional example, involves modulating genes in immune cells that can improve the ability of these cells to kill certain cancers as, for example, in the case of CAR-T cells.

We believe we are well-positioned to accelerate progression of our base editing programs to clinical trials and through potential approval by leveraging the clinical, regulatory, and manufacturing advancements made to date in the field of genetic medicine as well as the significant internal development capabilities we have established. In addition, we believe the combination of our base editing technology and our proprietary delivery technologies has the potential to provide life-long cures after a single treatment by overcoming challenges associated with current methods in gene editing.

Current challenges in gene editing

Gene editing works by disrupting, inserting, or modifying genes in the natural context of the genome. The vast majority of established gene editing methods rely on a class of enzymes, called nucleases, to make a double-stranded break in the DNA at a targeted location. These enzymes include CRISPR, Zinc Fingers, Arcuses, and TAL Nucleases, and, while these approaches have distinct technical features relative to each other, they each make the same type of edit and, therefore, share several similar limitations.

5


 

First, there is a lack of predictability in genetic outcomes when altering gene sequences with nucleases. The dominant, naturally-occurring DNA repair system that corrects double-stranded breaks within cells is called Non-Homologous End Joining, or NHEJ. This system can patch the broken ends of the chromosomes back together but will simultaneously insert or delete sequences at random near the location where the break occurs. While this NHEJ approach can be effective if the desired outcome is to knock out or switch off the whole gene, it does not allow for precise control of the specific genetic outcome at the target site and its effects may vary from individual to individual.

Second, there are potential toxicities associated with double-stranded breaks, such as activating the cell death response and/or genomic instability. In addition, if the double-stranded break occurs in the wrong place, the break can also lead to unwanted gene disruptions. Multiple edits using NHEJ, and thus multiple double-stranded breaks, can compound this issue and lead to large-scale genomic translocations and rearrangements, potentially limiting the applicability of nuclease-based approaches in multiplex editing.

Third, while gene disruption with nucleases is efficient, making specific sequence changes to correct or modify genes remains largely inefficient. To change a gene sequence, gene editing using nucleases relies on a DNA repair pathway called Homology Directed Repair, or HDR. HDR is a low-efficiency DNA repair pathway, typically yielding single digit percentage editing. This pathway also requires the simultaneous delivery of an additional DNA template containing the desired, corrected gene sequence, which needs to be positioned at the precise location where the double-stranded break has occurred. The requirement of an additional DNA template significantly increases the complexity of delivery. More recently, approaches have been developed to insert sequences into certain highly expressed genes, such as the albumin locus in liver cells. These editing approaches currently can only be used to address diseases that are associated with circulating proteins, and the efficiency of these approaches remains low.

Finally, gene editing through HDR does not allow for the correction of genes in non-dividing cells, since this DNA repair machinery is only expressed in dividing cells, further limiting their applications, given that the majority of cells in the adult body are non-dividing.

Base editors: A potential differentiated class of medicines that perform precision chemistry on genes

Errors of a single base, known as point mutations, are the most common class of genetic mutations, representing approximately 58% of all the known genetic errors associated with disease. Other natural genetic variations of a single base among human populations, revealed by population-level genomic studies, are known to protect against certain diseases. Established gene editing technologies, including CRISPR, Zinc Fingers, Arcuses and TAL Nucleases, typically do not edit at the single base level, due to the low efficiency of HDR. Instead, these technologies operate by creating a targeted double-stranded break in the DNA, and then rely on cellular mechanisms to complete the editing process. Such approaches can be effective in the disruption of gene expression; however, they have limited control of the editing outcome and low efficiency of precise gene correction, and can result in unwanted DNA modifications.

Our base editing technology is a differentiated therapeutic approach, potentially capable of altering the human genome at the foundational level of genetic information – a single base – without making a double-stranded break in the DNA. Base editing involves the enzymatic modification of a single type of base, at a targeted location directly on the gene, specifically C-to-T or A-to-G. The elegance and simplicity of this approach can be thought of as a “pencil,” where the error is erased and the correct letter is written. This approach is designed to create precise, predictable and efficient genetic outcomes at a targeted sequence, which can be used in a variety of editing strategies, including the correction of single mutations or the engineering of advanced cell therapies, aimed at providing a compelling therapeutic benefit. We believe, therefore, that base editors may have broad therapeutic applicability and transformational potential for the field of precision genetic medicines.

Advantages of base editing

We believe our base editing platform offers meaningful advantages over established approaches in gene editing, including:

Highly precise and predictable gene editing, designed to make only one type of base edit at the desired target location;
Highly efficient and therapeutically relevant levels of gene correction, which are generally unachievable by nuclease-based editing methods;
Broad applicability in a wide range of cell types, including both dividing and non-dividing cells;
Direct chemical modification of DNA with no requirement for delivery of the corrected DNA sequence;
Avoidance of unwanted DNA modifications associated with double-stranded breaks, including gene disruptions and chromosomal rearrangements, such as translocations or deletions;
The potential for permanent editing of genes, creating the opportunity for a life-long therapeutic outcome, including the ability to treat infants or young children since the edit will be passed on by dividing cells as the child grows;

6


 

Preservation of natural regulation and a normal number of copies of the gene in the cell by modification of genes in their native genomic setting; and
A versatile and modular product engine that can target a different gene sequence with the same base editor and a different guide RNA.

Our base editing platform

Our proprietary DNA base editors have two principal components that may be fused together or incorporated into one another to form a single protein: (i) a CRISPR protein, bound to a guide RNA, that leverages the established DNA-targeting ability of CRISPR, but modified to not cause a double-stranded break, and (ii) a base editing enzyme, such as a deaminase, which carries out the desired chemical modification of the target DNA base. This proprietary combination enables the precise and targeted editing of a single base pair of DNA, which has not been previously possible with established gene editing technologies.

CRISPR proteins enable precise targeting of genomic DNA sequences. These proteins have been adapted and engineered over the years to target specific genomic locations with high specificity in human cells. CRISPR proteins incorporate a programmable component called a guide RNA. The guide RNA includes a region of approximately 20 bases, which allows the CRISPR protein to recognize any DNA sequence that is complementary to the guide RNA. This complementary sequence on DNA, also approximately 20 bases, is known as a protospacer. The short sequence of about three bases immediately following the protospacer on the genomic DNA is referred to as the protospacer adjacent motif, or PAM. The presence of the PAM is necessary for RNA-DNA pairing to occur when a matching protospacer sequence is present.

In our base editors, the first component is the CRISPR protein. We currently use a CRISPR associated protein 9, or Cas9, protein for our DNA base editors. We also have ongoing efforts to create base editors with other CRISPR associated, or Cas, proteins, including Cas protein 12b, or Cas12b, a nuclease that is proprietary to Beam. The targeting ability of the CRISPR protein has been preserved, but the cutting ability has been modified such that the CRISPR protein does not make a double-stranded break in the DNA. Our base editors benefit from an additional feature of the CRISPR protein, which, upon binding to its double-stranded DNA target, opens a four to five base single-stranded segment, known as the editing window.

The second component of our base editors is a deaminase, a class of naturally occurring enzymes. For our Cytosine Base Editors, or CBEs, we use a deaminase that is designed to act only on single-stranded DNA. This helps to minimize edits in other parts of the genome, where DNA is predominantly double-stranded. Similarly, for our Adenine Base Editors, or ABEs, we use a different, engineered deaminase that is also designed to act only on single-stranded DNA.

The deaminase makes a predictable chemical modification, called deamination, of the amine group on either adenine or cytosine. The deaminase in a CBE will convert an amine group of C, resulting in the formation of uracil, which is read by the DNA polymerase as a T. Once this strand has been edited, the intermediate DNA consists of an edited strand, containing a U at the target locus, and an unedited strand with a G. The U:G is a mismatch, which the cell will normally attempt to repair in a process that can potentially lose the edit. In order to preserve the editing, we modify the CRISPR in our base editors to cleave the unedited single strand of the DNA, referred to as nicking, rather than creating double-stranded breaks. Nicking is intended to increase the efficiency of editing by inducing the cell to use the newly edited strand, and not the unedited strand, as the template for repair, resulting in a U:A pair without any translocations. Upon DNA repair or replication, the U is read as a T, resulting in a T:A pair, thereby completing the permanent conversion of a C:G base pair to a T:A base pair.

Analogously, when an ABE is used instead of a CBE, the conversion of an amine group of A results in the formation of inosine, which is read by the DNA polymerase as a G, which subsequently leads to an A-to-G change. As a result, an A:T pair is converted to a G:C pair. Because the DNA is double-stranded, by targeting the non-coding strand, we can also convert a T:A pair to a C:G and a G:C pair to a A:T pair in the coding strand. For example, using ABE to install an A-to-G edit on the non-coding strand of the DNA will cause a T-to-C change in the coding sequence of the gene once the base pair has been fully modified.

The modular and individual components of our base editors have the potential to be rapidly customized for specific diseases, potentially allowing us to create new programs with significant efficiencies in development. By changing the guide RNA portions of the CRISPR protein, we believe we can quickly and precisely retarget base editors to different genomic locations based on their gene sequences. By changing the deaminase, for example, we can quickly and precisely retarget which base is edited (e.g., C or A). As a result, we believe our base editing platform is highly versatile, efficient, and scalable for the discovery of drug candidates.

7


 

Diverse therapeutic applications of base editing

We believe the unique advantages of our base editing platform – single base editing precision, predictable editing outcome, high editing efficiency, and the avoidance of double-stranded breaks – make base editing a compelling approach for a wide range of therapeutic applications. This includes gene correction, gene modification, gene silencing and gene activation, as well as multiplex editing of several genes simultaneously.

Gene Correction - Errors of a single base, known as point mutations, are the most common form of genetic mutations, representing approximately 58% of all the known genetic errors associated with disease. For example, sickle cell disease is caused by a single point mutation at position 6 in the adult hemoglobin gene, while alpha-1 antitrypsin deficiency is caused by a single point mutation at position 342 in the SERPINA1 gene. We believe base editors may be an ideal tool for repairing point mutations.
Gene Modification - In addition to repairing point mutations, base editors are also capable of making other kinds of precise modifications to genes that could be used to treat disease. Natural genetic variations of a single base among human populations, revealed by population-level genomic studies, are now known to protect against or modify risk for many diseases, including Alzheimer’s disease, cardiovascular disease and liver disease. We believe base editors could potentially prevent or modify risk of disease by making these kinds of precise single-base modifications to genes, informed by human clinical genetics.
Gene Silencing or Activation - Upregulation or downregulation, including silencing and activation, of gene expression is a desirable therapeutic approach to cure many diseases. The high level of precision of base editors is ideally suited to alter regulatory regions of genes, ensuring that only a few bases at precise locations are altered to achieve the desired effect without causing broader disruptions to adjacent regions that may still have important regulatory functions. For example, we have demonstrated in preclinical studies re-activation of expression of fetal hemoglobin by precisely changing the regulatory region of the relevant genes, thus preventing one or more repressor proteins, including B-cell lymphoma/leukemia 11A, from binding. Both our CBEs and ABEs can also be used to silence the expression of genes, with editing rates that are highly comparable to those achieved with nuclease-based editors but without requiring a double-stranded break. Gene silencing, such as targeting surface proteins in a CAR-T cell, can be achieved either by the conversion of certain short gene sequences, called codons, into STOP codons or by the disruption of splice donor-acceptor sites, in each case with a single base conversion.
Multiplex base editing - By avoiding the creation of double-stranded breaks, base editors are particularly advantageous in situations where multiple sequences in the genome must be simultaneously edited. This could include targeting duplicated or repetitive sequences in the genome, as is the case with the identical regulatory regions of the two neighboring genes for fetal hemoglobin, or targeting several genes at once, such as in the creation of advanced cell therapies like CAR-T cells with a combination of features that could dramatically enhance their therapeutic potential. Base editors are designed to not create double-stranded breaks, and we have demonstrated in preclinical cell line studies that they can edit multiple locations simultaneously without causing any detectable chromosomal rearrangements. Additionally, there are manufacturing benefits as cells that have three or more nuclease edits appear to have a significant growth deficit compared to cells that have been edited the same number of times with a base editor. We believe that our base editors can provide a significant and meaningful advancement in therapies where more complex gene editing is required, such as targeting multiple sequences across the genome or creating highly engineered cellular therapies.

Delivery of genetic medicines

To complement our next-generation gene editing technologies, we are also making significant investments in a broad suite of delivery technologies designed to deliver gene editing or other nucleic acid payloads to the right cells and enable potentially curative therapy. These delivery technologies include ex vivo electroporation, nonviral vectors such as LNPs, and viral vectors such as AAVs. In our pipeline, we have initially focused on applications of these technologies where their delivery capabilities have already been clinically-validated by third parties, such as ex vivo editing of blood stem cells and LNP delivery to the liver. Longer term, we are also investing in more innovative delivery options, such as LNPs that could target other organs beyond the liver, or novel viral vectors beyond AAV. We have also developed critical enabling capabilities such as mRNA manufacturing and cell processing for autologous and allogeneic cell therapy.

Consistent with this approach, our acquisition of Guide Therapeutics, Inc., or Guide, expanded our ability to explore new tissues and disease indications with our editing technologies. With Guide’s proprietary screening technology, which utilizes DNA barcodes to enable high throughput in vivo LNP screening, we have a broad library of lipids and lipid formulations, and we have generated additional novel LNPs that we believe can accelerate novel nonviral delivery of gene editing or other nucleic acid payloads to tissues beyond the liver. For example, we have used our DNA barcoding technology to identify a family of LNPs for delivery of base editors to hematopoietic stem and progenitor cells, or HSPCs, in mice, and we have screened more than 1,000 LNPs to identify LNPs that achieve durable, dose-dependent mRNA transfection in HSPCs in mice and non-human primates, or NHPs, in preclinical studies.

8


 

Manufacturing of genetic medicines

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 taken steps toward establishing our own manufacturing facility, which will provide 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.

In August 2020, we entered into a lease agreement with Alexandria Real Estate Equities, Inc. to build a 100,000 square foot current cGMP compliant manufacturing facility in Research Triangle Park, North Carolina intended to support a broad range of clinical programs. We anticipate that the facility will be operational in the first quarter of 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 flexibility to support manufacturing of our viral delivery programs, and ultimately, 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.

Our platform

In summary, we believe that building an integrated platform combining our gene editing capabilities with advanced delivery and manufacturing capabilities will give us the flexibility to develop a sustainable portfolio, featuring rapid development of new programs and lifecycle improvements in our core programs. For example, for the treatment of sickle cell disease, we are pursuing both an ex vivo, autologous transplant-based approach with BEAM-101 and BEAM-102, but also are investing in a potential in vivo, LNP-based treatment to reach even more patients – all because we have consolidated both cell-based and novel HSC-targeting LNP technologies internally.

In addition to our internal pipeline, the breadth and depth of our integrated technology platform gives us the opportunity to create a hub for partnering with other companies, which is an important part of our business model. We believe this model will help us to unlock the full potential of precision genetic medicine across a wider array of possible applications.

In some cases, we have established collaborations that advance new programs in “whitespace” areas by giving a collaborator broad access to our various editing and delivery technologies, such as in our Verve collaboration in cardiovascular disease, our Apellis collaboration in complement-mediated disorders, and our Pfizer collaboration in rare diseases of the liver, muscle and central nervous system. In other cases, we have leveraged our team, capabilities and technologies to access other emerging technologies or capabilities, such as in our relationship with Prime Medicine. Our overall goal with these platform activities is to continue expanding our access to the technologies and teams in genetic medicine that will maximize our long-term value creation and impact on patients.

 

 

https://cdn.kscope.io/2d2a6a40548feaf134c8caa9b6da3225-img41212698_0.jpg 

9


 

Our base editing portfolio

We believe building a diversified portfolio leveraging the full breadth of our editing and delivery technologies in parallel will maximize our ability to provide life-long curative therapies to patients over the broadest possible range of diseases. We plan to advance multiple programs through clinical development in parallel, with each one potentially capable of delivering proof-of-concept in Phase 1 clinical trials in genetically defined patient populations and potentially reaching approval on an accelerated pathway. Our portfolio is purposefully built around a mix of strategic and technical profiles, creating significant optionality and risk diversification. We prioritize and advance programs based on a number of criteria, including significant unmet medical need, editing feasibility, clinically validated delivery modalities, favorable clinical and regulatory development pathways, and evidence that base editing offers potentially compelling advantages for patients over available standards-of-care and novel therapeutic modalities in development.

Our programs are organized by delivery modality: ex vivo hematopoietic stem cells, or HSCs, ex vivo T cells and in vivo using both LNP and AAV delivery technologies. The following table summarizes the status of certain of our programs:

https://cdn.kscope.io/2d2a6a40548feaf134c8caa9b6da3225-img41212698_1.jpg 

 

 

Ex Vivo HSCs: Sickle cell disease and beta-thalassemia

We are advancing ex vivo base editing programs in which 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 BEAM-102 (sickle cell disease) base editing programs.

Sickle cell disease, a severe inherited blood disease, is caused by a single point mutation, E6V, in the beta globin gene. This mutation causes the mutated form of HbS to aggregate into long, rigid molecules that bend red blood cells into a sickle shape under conditions of low oxygen. Sickled cells obstruct blood vessels and die prematurely, ultimately resulting in anemia, severe pain (crises), infections, stroke, organ failure, and early death. Sickle cell disease is the most common inherited blood disorder in the United States, affecting an estimated 100,000 individuals, of which a significant proportion are of African-American descent (1:365 births). Beta-thalassemia is another inherited blood disorder characterized by severe anemia caused by reduced production of functional hemoglobin due to insufficient expression of the beta globin protein. Transfusion-dependent beta-thalassemia, or TDBT, is the most severe form of this disease, often requiring multiple transfusions per year. Patients with TDBT suffer from failure to thrive, persistent infections, and life-threatening anemia. The incidence of symptomatic beta-thalassemia is estimated to be 1:100,000 worldwide, including 1:10,000 in Europe. In the United States, based on affected birth incidence of 0.7 in 100,000 births, and increasing survival rates, we expect the population of individuals affected by this disease to be more than 1,400 and rising. The only potentially curative therapy currently available for patients with sickle cell disease or beta-thalassemia is allogeneic HSC transplantation, or HSCT; however, this procedure holds a high level of risk, particularly Graft-versus-Host Disease resulting in a low number of patients opting for this treatment.

10


 

We are pursuing a long-term, staged development strategy for our base editing approach to treat sickle cell disease that consists of advancing our ex vivo programs, BEAM-101 and BEAM-102, in Wave 1, improving patient conditioning regimens in Wave 2, and enabling in vivo base editing with delivery directly into HSCs of patients via 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 and BEAM-102

We are using base editing to pursue the development of two complementary approaches to treating sickle cell disease (BEAM-101 and BEAM-102), and one approach to treat beta-thalassemia (BEAM-101).

BEAM-101: Recreating naturally-occurring protective mutations to activate fetal hemoglobin

BEAM-101 is an investigational, patient-specific, autologous hematopoietic investigational cell therapy which is designed to incorporate ex vivo base edits that mimic single nucleotide polymorphisms seen in individuals with HPFH to potentially alleviate the effects of mutations causing sickle cell disease or beta thalassemia. In November 2021, we announced that our IND for BEAM-101 for the treatment of sickle cell disease was cleared by the FDA. We are preparing to initiate our BEACON-101 trial, a Phase 1/2 clinical trial designed to assess the safety and efficacy of BEAM-101 for the treatment of sickle cell disease. The BEACON-101 trial is expected to include an initial “sentinel” cohort of three patients, treated one at a time to confirm successful engraftment, followed by dosing in up to a total of 45 patients. The clinical trial is designed to initially include patients between ages 18 and 35 with sickle cell disease who have received prior treatment with at least one disease-modifying agent with inadequate response or intolerance. Following mobilization, conditioning and HSC transplant with BEAM-101, patients will be assessed for safety, with safety endpoints including the proportion of patients with successful neutrophil engraftment by day 42 and safety and tolerability assessments, as well as for efficacy, with efficacy endpoints including the change from baseline in severe vaso-occlusive events, transfusion requirements, hemoglobin F levels, and quality of life and ability to function. We have begun site selection and the institutional review board approval processes for the BEACON-101 trial and plan to enroll the first subject in the second half of 2022.

The beneficial effects of the fetal form of hemoglobin, or HbF, to compensate for mutations in adult hemoglobin were first identified in individuals with HPFH. Individuals who carry mutations that would have typically caused them to be beta-thalassemia or sickle cell disease patients, but who also have HPFH, are asymptomatic or experience a much milder form of their disease. HPFH is caused by single base changes in the regulatory region of the genes, HBG1 and HBG2, which prevents binding of one or more repressor proteins and increases the expression of gamma globin, which forms part of the HbF tetramer.

Using base editing, we are attempting to reproduce these specific, naturally occurring base changes in the regulatory elements of the gamma globin genes, preventing binding of repressor proteins and leading to re-activation of gamma globin expression, and thus the increase in gamma globin levels. Our preclinical in vitro and in vivo characterization of BEAM-101 using ex vivo delivery achieved precise and efficient editing of human CD34+ HSPCs, resulting in long-term engraftment and therapeutically-relevant increases in target gene expression in mice. Additionally, there have been no observed guide-dependent or guide-independent off-target events for this program.

Preclinical in vitro characterization of BEAM-101:

We demonstrated greater than 90% editing in healthy donor CD34 cells in vitro.
We demonstrated gamma globin upregulation following erythroid differentiation is highly correlated (R2=0.993) with editing rates, where, at greater than 90% editing, we achieved a greater than 60% increase in gamma globin in healthy donor CD34+ cells.
We observed successful editing of CD34+ cells from a homozygous sickle cell disease patient, demonstrating a greater than 60% increase in gamma globin levels with a concomitant decrease to less than 40% sickle beta globin levels in vitro after in vitro differentiation.

Preclinical in vivo performance of BEAM-101:

We demonstrated that edited CD34+ cells from a healthy human donor engraft with high chimerism and maintain greater than 90% editing after 16 weeks in immunocompromised mice.
We demonstrated after 16-week engraftment that base edited cells lead to successful multilineage reconstitution with greater than 90% base editing achieved in sorted human HSPCs, myeloid, lymphoid and erythroid cells.
We replicated these findings with cells from a second donor at 18 weeks post-engraftment.

11


 

BEAM-102: Direct correction of the sickle cell mutation

Our second base editing approach for sickle cell disease, BEAM-102, is designed to directly correct the causative sickle mutation at position 6 of the beta globin gene. By making a single A-to-G edit, we have demonstrated in primary human CD34+ cells isolated from sickle cell disease patients the ability to create the naturally occurring HbG or “Makassar” variant of hemoglobin. This variant, which was identified in humans and first published in 1970, has the same function as the wild-type variant and does not cause sickle cell disease. Distinct from other approaches, cells that are successfully edited in this way are fully corrected, no longer containing the sickle protein. We have initiated IND-enabling studies for BEAM-102 and expect to submit an IND to the FDA for the treatment of sickle cell disease during the second half of 2022.

BEAM-102 uses ex vivo delivery of our ABEs to edit CD34+ HSPCs. In cells isolated from donors with sickle cell disease, we achieved greater than 80% correction of the sickle point mutation to the HbG-Makassar variant, following in vitro erythroid differentiation. Importantly, we observed a simultaneous reduction of HbS to less than 20% of control levels, a level that is lower than that typically observed in sickle trait individuals, who are asymptomatic. More than 70% of erythroid colonies derived from edited patient cells showed biallelic editing (yielding cells that are potentially cured, no longer producing any sickle protein at all), and another 20% of cells had monoallelic editing (with one sickle allele and one corrected allele, conferring a level of protection expected to be similar to patients with “sickle cell trait” who do not show significant symptoms of disease). On a combined basis, we observed up to 93% of cells with potential elimination of sickle cell disease. Further, the correction of the HbS protein to the HbG-Makassar variant was shown to significantly reduce the propensity of in vitro differentiated erythroid cells to sickle when subjected to hypoxia. These findings represent therapeutic levels of correction if translated into clinic trials and support advancement of this program to potentially address the underlying genetic cause of sickle cell disease.

Long-term in vivo data generated using an early version of the Makassar base editor yielded approximately 50% conversion of the sickle allele to a Makassar allele. At 16 weeks post-transplant of CD34+ cells containing the sickle trait, we observed equivalent human chimerism between unedited and edited cells and evidence of multi-lineage reconstitution in mouse models. Levels of editing were sustained after long-term hematopoietic engraftment. Further, editing of the sickle allele led to the expression of the Makassar globin protein in vivo.

In December 2021, we presented data from preclinical studies further characterizing the Makassar hemoglobin created by BEAM-102 and demonstrating biophysical and biochemical properties consistent with normal hemoglobin. In these preclinical studies:

BEAM-102 Makassar globin did not polymerize in vitro;
Cells co-expressing BEAM-102 Makassar globin and sickle globin had properties similar to sickle trait cells, which are cells with one normal globin gene and one sickle globin gene and which do not sickle;
Oxygen binding of BEAM-102 Makassar globin was comparable to the most abundant normal adult hemoglobin (HbA); and
The crystal structures of BEAM-102 Makassar globin and of HbA were superimposable, suggesting no meaningful structural differences.

Published third party modeling studies suggest that at least 20% of cells no longer having the propensity to sickle, either by expressing HbF or because of the elimination of HbS, may be sufficient to cure sickle cell disease. With upregulation levels of more than 60% of gamma globin in the case of BEAM-101 or by generating more than 90% of cells having at least one HbS allele corrected in the case of BEAM-102, we have shown, in preclinical models, correction levels significantly above those expected to be disease modifying.

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 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. Today’s conditioning regimens rely on nonspecific chemotherapy or radiation, which are associated with significant toxicities. We are collaborating with Magenta Therapeutics, Inc., or Magenta, to evaluate the potential utility of MGTA-117, Magenta’s novel antibody drug conjugate, in combination with BEAM-101 and BEAM-102, as well as other base editing programs in hematology. MGTA-117 is designed to spare immune cells and precisely target HSPCs, and has demonstrated high selectivity, potent efficacy, wide safety margins and broad tolerability in NHP models. We are also conducting our own research into novel conditioning strategies. Improved conditioning regimens could potentially be paired with BEAM-101 and BEAM-102, as well as other base editing programs in hematology.

12


 

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. Building on our acquisition of Guide, we are using our proprietary DNA-barcoded LNP screening technology to enable high-throughput in vivo identification of LNPs with novel biodistribution and selectivity for target organs beyond the liver. In December 2021, we announced we had screened more than 1,000 LNPs using this technology for potential to deliver to HSCs and had identified LNP-HSC1 as the most potent, with efficient transfection in both mice and NHPs. In preclinical studies, we demonstrated that:

LNP-HSC1 was validated in vivo, leading to durable, dose-dependent mRNA transfection in HSCs and resulting in fluorescent reporter expression in more than 40% of cells, maintained out to 16 weeks post-delivery;
LNP-HSC1 efficiently transfected human CD34+ cells in vitro; and
LNP-HSC1 efficiently transfected nearly 20% of CD34+ HSCs in humanized mice and NHPs at a dose of 1.0 mg/kg.

 

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, allogenic 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-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. Our proof-of-concept preclinical studies have demonstrated the ability of base editors to efficiently modify up to eight genomic loci simultaneously in primary human T cells with efficiencies ranging from 85-95% as measured by flow cytometry of target protein knockdown. Importantly, these results have been achieved without the generation of observed chromosomal rearrangements, as evaluated by sensitive methods such as UDiTaSTM or G-banded Karyotyping and with no observed loss of cell viability from editing. The proof-of-concept preclinical studies have also demonstrated robust T cell killing of target tumor cells both in vitro and in vivo. We plan to nominate a second CAR-T development candidate, in addition to BEAM-201, in 2022.

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 CAR that is designed to create allogenic CD7 targeting CAR-T cells, resistant to both fratricide and immunosuppression. To our knowledge, BEAM-201 is the first investigational cell therapy featuring four simultaneous edits. We have initiated IND-enabling studies for BEAM-201 and expect to submit an IND to the FDA for the treatment of relapsed, refractory T-ALL/T-LL and potentially other CD7+ malignancies during the second half of 2022.

In our BEAM-201 program, we edit cells using our CBEs with the aim of conferring the following benefits:

TRAC: Prevent graft-vs-host disease via the elimination of the existing TCR to ensure that the CAR-T cell only attacks the CAR antigen on the tumor and not the patient’s healthy cells.
CD52: Enable an allogeneic cell source by masking BEAM-201 cells to anti-CD52 lymphodepleting agents to reduce host rejection of BEAM-201 cells.
PDCD1: Minimize immunosuppression of BEAM-201 cells by the tumor microenvironment and prolong efficacy for attacking the tumor.
CD7: Prevent fratricide by eliminating antigens that are shared between malignant cells and CAR-T cells.

13


 

Preclinical in vitro characterization of BEAM-201 and comparison to nuclease editing:

Simultaneous base editing at four target loci in primary human T cells using a clinical-scale process demonstrated 96-99% on-target editing of each of the four genes as measured by next-generation sequencing.
Simultaneous quad base editing of T cells resulted in no detected genomic rearrangements; Cas9 nuclease editing with the same four guide RNAs produced chromosomal aberrations in 22 of 100 cells evaluated in G-banded karyotyping.
Multiplex base editing did not demonstrate negative effects on cell expansion during manufacturing, while nuclease editing was observed to induce significant loss of cell expansion.
CBE-edited cells demonstrated decreased expression of the four target genes with minimal effect on other genes, including key members of the p53 pathway that are upregulated in response to DNA double-stranded breaks produced by multiplex editing with nucleases.

Further preclinical characterization of BEAM-201 in vitro and in a tumor mouse model:

The GMP-compliant, clinical-scale process resulted in final BEAM-201 CAR-T cell populations with on-target editing efficiencies between 96-99.9% at each of the four target loci, and 85% CAR-expressing cells. As a result, we estimate that 91% of cells are bi-allelically quad base edited and 77% of cells have all five genetic modifications. We believe this is the highest level and uniformity of CAR expression and simultaneous editing across four target sites reported at clinical scale to date.
BEAM-201 cells demonstrated robust in vitro CD7-dependent cytokine production, and rapid in vitro cytotoxicity.
BEAM-201 cells also demonstrated dose-dependent clearance or control, across a 25-fold dose range, of an aggressive disseminated CCRF-CEM T-ALL tumor mouse model.

CD5-targeting CAR-T cells

In October 2021, we announced preclinical data from our multiplex edited allogeneic CAR-T research program targeting CD5-positive hematologic malignancies. These data demonstrated knockout of CD5 expression to be a general mechanism to enhance potency and potentially improve durability of highly multiplexed CAR-T cells.

In vivo LNP

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 have developed several proprietary LNP formulations. In May 2021, we announced initial data from our evaluation of various LNP formulations and mRNA production processes using an mRNA-encoding ABE and guide RNA to target the ALAS1 gene, a surrogate payload for genetic liver diseases. These data showed improved in vivo editing in the livers of NHPs from less than 10% initially to 52% at a total RNA dose of 1.5 mg/kg. Continued optimization of our LNP formulations has demonstrated further increases in liver editing potency in NHPs. In September 2021, we presented data demonstrating up to 60% editing in NHPs at a total RNA dose of 1.0 mg/kg. Data from our preclinical studies demonstrated that these formulations were well tolerated by NHPs treated with doses up to 1.5 mg/kg. Minimal to mild and transient liver enzyme elevations were observed and resolved by day 15 post-treatment. Additionally, the formulations showed promising interim stability, maintaining potency after three months at -20⁰C and -80⁰C.

We are currently using LNP formulations to advance our programs for genetic liver diseases, including GSDIa, also known as Von Gierke disease, and Alpha-1 Antitrypsin Deficiency, or Alpha-1. In December 2021, we nominated BEAM-301, a liver-targeting LNP formulation of base editing reagents designed to correct the R83C mutation, the most common disease-causing mutation of GSDIa, as our first in vivo development candidate. We anticipate initiating IND-enabling studies for BEAM-301 and nominating a second liver-targeted development candidate in 2022.

Liver diseases: glycogen storage disorder 1a, alpha-1 antitrypsin deficiency and chronic hepatitis B infection

GSDIa

GSDIa is an inborn disorder of glucose metabolism caused by mutations in the G6PC gene, which results in low blood glucose levels that can be fatal if patients do not adhere to a strict regimen of slow-release forms of glucose, administered every one to four hours (including overnight). There are no disease-modifying therapies available for patients with GSDIa.

14


 

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. Third party animal studies have shown that as little as 11% of normal G6Pase activity in liver cells is sufficient to restore fasting glucose; however, this level must be maintained in order to preserve glucose control and alleviate other serious, and potentially fatal, GSDIa sequelae.

In October 2021, we reported data from preclinical studies that support the potential of base editing to durably correct disease-causing mutations of GSDIa. We created a novel, humanized R83C knockout mouse model (huR83C), mimicking the abnormal metabolic phenotype of human GSDIa, and collaborated with the National Institutes of Health, or NIH, to characterize the phenotype of these animals. The results demonstrated that newborn huR83C mice treated with our LNP-delivered ABE exhibited normal growth to the end of the study at three weeks of age without any hypoglycemia-induced seizures. In contrast, homozygous animals were unable to survive soon after birth in the absence of glucose supplementation. In addition, we observed editing efficiencies up to approximately 60% by next-generation sequencing of DNA isolated from the whole liver. Of note, we believe even narrow gains in base editing efficiency have the potential to provide significant restoration of G6Pase activity and normal metabolic function.

The findings presented in October 2021 were consistent with the results from prior preclinical models, which have shown up to 80% correction of the alleles in cells harboring the Q347X point mutation and approximately 60% of the alleles in cells harboring the R83C mutation. Significant, potentially disease-modifying levels of in vivo correction of both mutations by ABEs was observed in the livers of two strains of transgenic mice, each carrying one of the two relevant G6PC mutations. Next-generation sequencing data from whole liver extracts revealed approximately 40% and 70% A-to-G correction of R83C and Q347X, respectively. These significant levels of mutation correction observed greatly surpass those expected to restore glucose homeostasis, and functional preclinical studies are ongoing to correlate pathophysiology to the extent of mutation correction by base editing. Further, these levels of in vivo correction for GSDIa by base editing were achieved without the creation of double-stranded breaks. In total, these data support base editing technology as a promising approach for precise correction of two of the most prevalent causative mutations in GSDIa.

Alpha-1

Alpha-1 is a severe inherited genetic disorder that can cause progressive lung and liver disease. The most severe form of Alpha-1 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 Alpha-1.

With the high efficiency and precision of our base editors, we aim to utilize our ABEs to precisely correct the E342K point mutation back to the wild type sequence.

In a preclinical study, we engineered novel ABEs and guide RNAs capable of correcting the PiZ mutation, and then used a proprietary non-viral LNP formulation to deliver the optimized reagents to the livers of a PiZ transgenic mouse model. This direct editing approach resulted in an average of 16.9% correction of beneficial alleles at seven days and 28.8% at three months. This significant increase over the period suggests that corrected hepatocytes may have a survival advantage relative to uncorrected cells. In addition, treated mice demonstrate decreased Alpha-1-antitrypsin-mediated globule burden within the liver and a durable, significant increase in serum AAT active protein at three months, approximately 4.9-fold higher than in controls at the end of the study, levels which we believe would be clinically relevant if achieved in clinical trials. These data indicate the potential for base editing as a one-time therapy to treat both lung and liver manifestations of Alpha-1.

Hepatitis B Virus

Hepatitis B virus, or 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 2021, we presented preclinical data that demonstrated the potential of our CBEs to reduce viral markers, including HBsAg expression, and prevent viral rebound of HBV in in vitro models.

15


 

In vivo AAV

AAV is a clinically validated technology that has been extensively used for gene delivery to a variety of tissues. AAV is a small, non-pathogenic virus that can be repurposed to carry a therapeutic payload, making it a suitable vector for delivery of gene editing therapies. Several clinical trials have been conducted or are in progress with different AAV variants for multiple diseases, including diseases of the eye, liver, muscle, lung and central nervous system. We have an option to in-license a variety of AAV variants that could be selected for optimal distribution to multiple organs. Because our DNA base editors are larger than the approximate 4.5kb packaging limit of AAV vectors, we use a novel split intein technology that is designed to deliver the base editor and guide RNA by co-infection with two viruses, where each virus contains approximately one half of the editor.

Ocular disorders: Stargardt disease

We are currently evaluating this technology to correct one of the most prevalent mutations in the ABCA4 gene causing Stargardt disease, a progressive macular degeneration disease. This mutation is known as the G1961E point mutation and approximately 5,500 individuals in the United States are affected. Disease modeling using tiny light stimuli through holes that are equivalent in size to a single photoreceptor cell suggests that only 12%-20% of these cells are necessary to preserve vision. We anticipate, therefore, that editing percentages in the range of 12%-20% of these cells would be disease-modifying, since each edited cell will be fully corrected and protected from the biochemical defect associated with Stargardt disease.

In a human retinal pigment epithelial cell line (ARPE-19 cells) in which we have knocked in the ABCA4 G1961E point mutation, we have demonstrated the precise correction of approximately 75% of the disease alleles at five weeks after dual infection with the split AAV system. In November 2021, we announced that we have initiated preclinical studies in NHPs for our Stargardt program.

Our portfolio of precision gene editing technologies

Building on the expertise of our academic founders and our innovative research culture, we plan to explore new and complementary technologies in base editing, gene editing, and genetic medicine over the long term to advance a broad portfolio across multiple delivery pipelines. As part of this strategy, we have licensed a portfolio of three additional complementary technologies – RNA base editing, Cas12b nuclease editing, and prime editing for certain fields. Combined with base editing, we have assembled a broad and versatile portfolio of next generation gene editing technologies for the potential treatment of many severe diseases.

Our license agreement with The Broad Institute, Inc., or Broad Institute, gives us access to RNA base editing technology, a two-part modular system using an RNA-directed CRISPR protein for targeting RNA strands and a deaminase for editing. This CRISPR protein, known as Cas13, is modified so that it cannot break the RNA strand, and is fused to a deaminase capable of making a single base edit at a specific target location within the RNA strand. This enables us to change protein expression, potentially correcting or altering the function of the resulting protein and correcting disease. Our RNA base editing technologies include the REPAIR™ system for A-to-I editing, as well as the RESCUE™ system for C-to-U editing. When delivered through a long-lasting viral vector, RNA base editing may provide a complementary approach to DNA base editing for permanent correction of gene expression. Additionally, RNA editing could potentially be beneficial in situations where a transient change is desirable, such as in regenerative medicine.

Our Broad Institute license also gives us access to the Cas12b nuclease family, which provides several potential strategic advantages for our portfolio. First, the distinct PAM sequence and conformation of Cas12b allows us to create DNA base editors that can bind to different target sites in the genome, further expanding the range of sites that we can edit. Second, having a nuclease allows us to make “cut” edits, which may be appropriate for some applications that require a double stranded break, or to use the general gene targeting ability of Cas12b for other gene editing applications.

We also have a license to technology referred to as “prime editing,” that is controlled by Prime Medicine, Inc. Prime editing may be able to achieve the “rewriting” of short sequences of DNA at a target location. Prime editing utilizes a CRISPR protein to target a mutation site in DNA and to nick a single strand of the target DNA. The guide RNA allows the CRISPR protein to recognize a DNA sequence that is complementary to the guide RNA and also carries a primer for reverse transcription and a replacement template. The reverse transcriptase copies the template sequence in the nicked site, installing the edit. As with base editing, prime editing does not cause double-stranded breaks in the target DNA, resulting in lower insertion and deletion rates than gene editing technologies that rely on double stranded breaks.

We have the exclusive right to develop prime editing technology for the creation or modification of any single base transition mutations, as well as any edits made for the treatment of sickle cell disease. Transition mutations (i.e., A-to-G, G-to-A, C-to-T, or T-to-C) are the largest single class of disease-associated genetic mutations and include all of our current targets for base editing programs.

Leveraging our deep scientific expertise and significant ongoing investment in our platform, we also expect to develop insights into other innovative gene editing and delivery modalities. We believe that our delivery, manufacturing, and development capabilities could position us to effectively evaluate and rapidly develop such novel technologies and further extend our leadership in the field of genetic medicine.

16


 

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 will continue to seek out innovative collaborations, licenses, and strategic alliances with pioneering companies and with leading academic and research institutions. Additionally, we have and will continue to pursue relationships that potentially allow us to accelerate our preclinical research and development efforts. 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.

In vivo collaborations

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 with Apellis Pharmaceuticals, Inc., or Apellis, focused on the use of certain of our base editing technology to discover new treatments for complement system-driven diseases. Under the terms of the agreement, we will conduct preclinical research on up to 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. This collaboration allows us to more fully realize the potential of base editing in treating cardiovascular disease, a disease area outside of our core focus and where Verve has significant expertise. Under the terms of the Verve Agreement, Verve received exclusive worldwide licenses to use our base editing technology and certain gene editing and delivery technologies for human therapeutic applications against certain cardiovascular targets. In exchange, we received shares of Verve common stock. Additionally, we are eligible to receive milestone payments for certain clinical and regulatory events for licensed products, and we retain the option, after the completion of Phase 1 clinical trials, to participate in future development and commercialization, and share 50 percent of U.S. profits and losses, for any licensed product directed against these targets.

In January 2021, Verve announced it had selected VERVE-101 as its lead product to be developed initially for the treatment of heterozygous familial hypercholesterolemia, or HeFH, a potentially fatal genetic heart disease. Individuals with HeFH have a genetic mutation causing high LDL-C levels in the blood. Over time, high LDL-C builds up in the heart’s arteries, resulting in reduced blood flow or blockage, and ultimately heart attack or stroke. Inactivation of the proprotein convertase subtilisin/kexin type 9, or PCSK9, gene has been shown to up-regulate LDL receptor expression, which leads to lower LDL-C levels. By making a single A-to-G change in the DNA genetic sequence of PCSK9, VERVE-101 aims to inactivate the target gene. In January 2021, Verve also reported preclinical proof-of-concept data in NHPs that demonstrated the successful use of ABEs to turn off PCSK9, and in January 2022, Verve announced it expects to submit an IND application for VERVE-101 in the second half of 2022.

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.

Additionally, researchers at IOB have developed living models of the retina, known as organoids, which can be used to test novel therapies. Under the terms of the agreement with IOB, the parties will leverage IOB’s unique expertise in the field of ophthalmology along with our novel base editing technology to advance programs directed to the treatment of certain ocular diseases, including Stargardt disease.

17


 

Ex vivo collaborations

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.

Boston Children’s Hospital

In July 2020, we entered into an alliance agreement, or the BCH Agreement, with Boston Children’s Hospital, or Boston Children’s. Under the terms of the BCH Agreement, we will identify and sponsor research programs to be performed at Boston Children’s either solely by Boston Children’s or by both Boston Children’s and us, to facilitate the development of certain disease-specific therapies using our proprietary base editing technology. Boston Children’s will also serve as a clinical site to advance bench-to-bedside translation of our pipeline across certain therapeutic areas of interest, including programs in sickle cell disease and pediatric leukemias and exploration of new programs targeting other diseases.

Magenta Therapeutics

In June 2020, we announced a non-exclusive research and clinical trial collaboration agreement with Magenta Therapeutics Inc., or Magenta, to evaluate the potential utility of MGTA-117, Magenta’s novel targeted antibody-drug conjugate, for conditioning of patients with sickle cell disease and beta-thalassemia receiving our base editing therapies. Conditioning is a critical component necessary to prepare a patient’s body to receive the edited cells, which carry the corrected gene and must engraft in the patient’s bone marrow in order to be effective. Today’s conditioning regimens rely on nonspecific chemotherapy or radiation, which are associated with significant toxicities. MGTA-117 is designed to precisely target only hematopoietic stem and progenitor cells, to spare immune cells, and has shown high selectivity, potent efficacy, wide safety margins and broad tolerability in non-human primate models. MGTA-117 may be capable of clearing space in bone marrow to support long-term engraftment and rapid recovery in patients. Combining the precision of our base editing technology with the more targeted conditioning regimen enabled by MGTA-117 has the potential to further improve therapeutic outcomes for patients suffering from these severe diseases.

Competition

The pharmaceutical and biotechnology industries, including the gene editing field, are characterized by rapidly advancing technologies, intense competition, and a strong emphasis on intellectual property. While we believe that our differentiated technology, scientific expertise, and intellectual property position provide us with competitive advantages, we face potential competition from a variety of companies in these fields. Within these industries, we will compete with existing large pharmaceutical companies, specialty pharmaceutical companies, and biotechnology companies.

There are several other companies utilizing CRISPR/Cas9 nuclease technology, including Caribou Biosciences, Editas Medicine, CRISPR Therapeutics, Intellia Therapeutics, Arbor Biotechnologies, Metagenomi, and Mammoth Biosciences. Several additional companies utilize other nuclease-based gene editing technologies, including Zinc Fingers, Arcuses, and TAL Nucleases, including Sangamo Biosciences, Precision BioSciences, bluebird bio, Allogene Therapeutics and Cellectis. Additionally, newer gene editing modalities are emerging, including from Prime Medicine, Tessera Therapeutics, Shape Therapeutics, Scribe Therapeutics, Korro Bio, PerkinElmer (formerly Horizon Discovery) and Intellia Therapeutics. PerkinElmer and Intellia Therapeutics are developing base editing technology and Tessera Therapeutics is utilizing mobile genetic elements for gene editing. In addition, we face competition from companies utilizing various gene therapy, oligonucleotides, and CAR-T therapeutic approaches.

We are also aware of companies with products in development in our disease areas where we will compete with approved therapies, those in development today, and those emerging in the future. For hemoglobinopathies, these companies include Global Blood Therapeutics, CRISPR Therapeutics, Novartis Pharmaceuticals, Sangamo Therapeutics, Editas Medicine, Homology Medicines, Graphite Bio and Vera Therapeutics (formerly Trucode Gene Repair). For T-cell malignancies, these include Gracell Bio, iCell Gene Therapeutics, PersonGen and Wugen. More broadly in the immuno-oncology cell therapy space, these include Allogene Therapeutics, Cellectis, 2seventy bio, Bristol Myers Squibb, Fate Therapeutics, Gilead Sciences, Novartis Pharmaceuticals, Poseida Therapeutics, Precision Bio, Legend Biotech and Autolus Therapeutics. For our liver targeted therapies, these include Intellia Therapeutics, Editas Medicines, CRISPR Therapeutics, Ultragenyx, Apic Bio, Arrowhead Pharmaceuticals, LogicBio Therapeutics, Generation Bio and Vertex.

Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future that are approved to treat the same diseases for which we may obtain approval for our product candidates. This may include other types of therapies, such as small molecule, antibody, and/or protein therapies.

18


 

In addition, many of our current or potential competitors, either alone or with their collaboration partners, have significantly greater financial resources and expertise in research and development, manufacturing, conducting preclinical studies and clinical trials and seeking approval for products than we do today. Mergers and acquisitions in the pharmaceutical, biotechnology and gene therapy industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. We also compete with these companies in recruiting, hiring and retaining qualified scientific and management talent, establishing clinical trial sites and patient registration for clinical trials, obtaining manufacturing slots at CMOs, and in acquiring technologies complementary to, or necessary for, our programs. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, particularly if they represent cures, have fewer or less severe side effects, are more convenient, or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. The key competitive factors affecting the success of all of our programs are likely to be their efficacy, safety, convenience, and availability of reimbursement.

Intellectual property

Our success depends in part on our ability to obtain and maintain proprietary protection for our platform technology, our programs, and know-how related to our business, defend and enforce our intellectual property rights, in particular, our patent rights, preserve the confidentiality of our trade secrets, and operate without infringing, misappropriating or otherwise violating any valid and enforceable intellectual property rights of others. We seek to protect our proprietary position by, among other things, exclusively licensing and filing U.S. and certain foreign patent applications related to our platform technology, existing and planned programs, and improvements that are important to the development of our business, where patent protection is available. Notwithstanding these efforts, we cannot be sure that patents will be granted with respect to any patent applications we have licensed or filed or may license or file in the future, and we cannot be sure that any patents we have licensed or patents that may be licensed or granted to us in the future will not be challenged, invalidated, or circumvented or that such patents will be commercially useful in protecting our technology. For more information regarding the risks related to our intellectual property, please see Item 1A., Risk factors—Risks related to our intellectual property, in this Annual Report on Form 10-K.

Our wholly owned and our in-licensed patents and patent applications cover various aspects of our base editing platform and our programs, including:

C-to-T DNA base editors
A-to-G DNA base editors
A-to-I RNA base editors, or REPAIR
C-to-U RNA base editors, or RESCUE
CRISPR/Cas12b systems for nuclease editing
Novel guide RNA sequences
Systems and methods for increasing the specificity of base editing
Multiplex base editing in immune cells ex vivo
Methods for evaluating base editing specificity
Therapeutic methods
Delivery modality

We also have an option to license patents and patent applications relating to CRISPR/Cas9 systems. We intend to continue to pursue, when possible, additional patent protection, including composition of matter, method of use, and process claims, directed to each component of our platform technology and the programs in our portfolio. We also intend to obtain rights to delivery modalities through one or more licenses from third parties and to protect our own intellectual property to delivery modalities.

19


 

As of December 31, 2021, we owned approximately two U.S. patents, 42 pending U.S. provisional patent applications, 24 pending U.S. patent applications, 14 pending international patent applications, or PCT applications, and 128 pending ex-U.S. patent applications. The patent applications outside of the United States were filed in Australia, Brazil, Canada, China, Europe, Hong Kong, India, Japan, Korea, Singapore and South Africa. Our owned patent applications are related to our DNA base editing technology, as further described below, including claims to base editor variants with enhanced activities (e.g., nucleobase deaminating activity) or novel properties (e.g., PAM recognition), methods of using such base editors, methods of using such base editors for therapeutic indications, multiplex base editing in immune cells ex vivo, guide RNAs that target base editors to therapeutically relevant DNA sequences, and methods for evaluating base editing specificity. Some aspects of our owned patent applications are related to viral and non-viral delivery technologies, as further detailed below. One of the PCT applications is co-owned with Broad Institute and President and Fellows of Harvard College, or Harvard. If issued as U.S. patents, and if the appropriate maintenance fees are paid, the U.S. patents would be expected to expire between 2039 and 2043, excluding any additional term for patent term adjustments or patent term extensions.

DNA base editing

Beam’s owned portfolio includes approximately two U.S. patents, 21 pending U.S. patent applications, 13 pending U.S. provisional patent applications, 116 pending ex-U.S. patent applications and five pending PCT applications directed to DNA base editing. As of December 31, 2021, we in-licensed approximately 11 U.S. patents, 16 pending U.S. patent applications, 30 ex-U.S. patents, and 96 pending ex-U.S. patent applications, related to DNA base editing from Broad Institute, Harvard, Editas Medicine Inc., or Editas, and Bio Palette Co., Ltd., or Bio Palette. The patents and patent applications outside of the United States were filed in jurisdictions including Australia, Canada, China, Europe, Hong Kong, India, Israel, Japan and Korea. The patents and applications from our in-licensed portfolio for DNA base editing include claims to novel base editors, claims to engineered deaminase enzymes (e.g., evolved TadA) used in the base editors, compositions including the base editor or engineered deaminase as a component, methods of using such base editors, including methods of using such base editors for therapeutic indications, guide RNAs that target base editors to therapeutically relevant DNA sequences. The in-licensed patents and applications also cover various aspects related to the platform technology, including base editing systems that employ S. pyogenes Cas9, S. aureus Cas9, Cas9 PAM variants, inactive forms of Cas9, and/or Cas9 nickases, and systems for delivery of base editors. Our current in-licensed patents and patent applications on DNA base editing, if the appropriate maintenance fees are paid, are expected to expire between 2034 and 2038, excluding any additional term for patent term adjustments or patent term extensions (or the corresponding foreign equivalent).

RNA Base Editing

As of December 31, 2021, we in-licensed approximately one U.S. patent, 17 pending U.S. patent applications, five ex-U.S. patents, and 66 pending ex-U.S. patent applications, related to RNA base editing from Broad Institute. The patents and patent applications outside of the United States were filed in jurisdictions including Australia, Canada, China, Europe, Hong Kong, India, Israel, Japan, Korea and Russia. The patents and applications from our in-licensed portfolio for RNA base editing include claims to novel base editors, compositions including the base editor as a component, guide RNAs that target base editors to therapeutically relevant RNA sequences, and methods of using such base editors, including methods of using such base editors for therapeutic indications. Our current in-licensed patents and patent applications on RNA base editing, if the appropriate maintenance fees are paid, are expected to expire between 2036 and 2038, excluding any additional term for patent term adjustments or patent term extensions (or the corresponding foreign equivalent).

CRISPR/Cas12b

As of December 31, 2021, we in-licensed approximately one U.S. patent, six pending U.S. patent applications, and 15 pending ex-U.S. patent applications, related to editing using Cas12b from Broad Institute. The patents and patent applications outside of the United States were filed in jurisdictions including Australia, Canada, China, Europe, Hong Kong, Japan, Korea and Russia. The patents and applications from our in-licensed portfolio for Cas12b editing include claims to methods of using Cas12b to modify DNA (e.g., nuclease cleavage of DNA) and engineered and/or non-naturally occurring compositions including Cas12b as a component. Our current in-licensed patents and patent applications on Cas12b base editing, if the appropriate maintenance fees are paid, are expected to expire between 2036 and 2039, excluding any additional term for patent term adjustments or patent term extensions (or the corresponding foreign equivalent).

20


 

Delivery technologies

Beam’s owned portfolio includes approximately four pending U.S. patent applications, 18 pending U.S. provisional patent applications, 11 pending ex-U.S. patent applications and five pending PCT applications directed to delivery technologies. As of December 31, 2021, we in-licensed approximately six U.S. patents, five pending U.S. patent applications, 11 ex-U.S. patents, 31 pending ex-U.S. patent applications and three pending PCT applications related to viral and non-viral based delivery technologies. The patents and patent applications outside of the United States were filed in jurisdictions including Australia, Canada, China, Europe, Hong Kong, India, Israel, Japan, Korea, New Zealand and Singapore. The patents and applications from our in-licensed portfolio for delivery technologies include claims to novel lipid-based delivery systems and compositions, viral-based delivery systems and compositions, and methods of using such systems and compositions to deliver base editors. Our current in-licensed patents and patent applications on delivery technologies, if the appropriate maintenance fees are paid, are expected to expire between 2034 and 2040, excluding any additional term for patent term adjustments or patent term extensions (or the corresponding foreign equivalent).

Rest of platform

As of December 31, 2021, we in-licensed approximately 12 U.S. patents, eight pending U.S. patent applications, 22 ex-U.S. patents, and 26 pending ex-U.S. patent applications, related to the balance of our platform from universities and institutions. The patents and patent applications outside of the United States were filed in jurisdictions including Australia, Canada, China, Europe, Hong Kong, Japan, Korea and New Zealand. The patents and applications from our in-licensed portfolio for the balance of our platform include claims to compositions and methods for delivery of charged base editor proteins into cells, modification and improvements to the base editing systems including improvements to the nucleotide binding protein component, guide RNA component and base editing enzyme component of the base editing complex, methods for evaluating gene targeting and base editing efficiency and compositions and methods for prime editing. Our current in-licensed patents and patent applications on the balance of our platform, if the appropriate maintenance fees are paid, are expected to expire between 2034 and 2039, excluding any additional term for patent term adjustments or patent term extensions (or the corresponding foreign equivalent).

CRISPR/Cas9 and CRISPR/Cas12a

We have a nonexclusive license to conduct research activities and 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. In the case of Cas9, a number of the U.S. patents are subject to an interference declared by the Patent and Trademark office, and a number of the European patents are the subject of one or more oppositions. For more information regarding the risks related to our intellectual property, please see Item 1., Business—Intellectual property—Intellectual property licenses and Item 1A., Risk factors—Risks related to our intellectual property, in this Annual Report on Form 10-K.

The term of individual patents depends upon the legal term for patents in the countries in which they are granted. In most countries, including the United States, the patent term is 20 years from the earliest claimed filing date of a non-provisional patent application in the applicable country. However, the actual protection afforded by a patent varies from country to country, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent. In the United States, a patent’s term may, in certain cases, be lengthened by patent term adjustment, or PTA, which compensates a patentee for administrative delays by the USPTO in examining and granting a patent, or may be shortened (e.g., if a patent is terminally disclaimed over a commonly owned patent having an earlier expiration date). In some instances, such a PTA may result in a U.S. patent term extending beyond 20 years from the earliest date of filing a non-provisional patent application related to the U.S. patent. Patent term extensions, or PTE, under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, are also possible for patents that cover an FDA-approved drug as compensation for the patent term lost during the FDA regulatory review process. The Hatch-Waxman Act permits a PTE of up to five years beyond the expiration of the patent. The length of the PTE is related to the length of time the drug is under regulatory review. PTE cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only one patent applicable to an approved drug, a method for using it, or a method of manufacturing it, may be extended. Similar provisions are available in Europe and certain other jurisdictions to extend the term of a patent that covers an approved drug. In the future, if our products receive regulatory approval, we may be eligible to apply for PTEs on patents covering such products, however there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether such PTE should be granted, and if granted, the length of such PTE. For more information regarding the risks related to our intellectual property, please see Item 1A., Risk factors—Risks related to our Intellectual property, in this Annual Report on Form 10-K.

21


 

We also rely on trade secrets, know-how, continuing technological innovation, and confidential information to develop and maintain our proprietary position and protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. We seek to protect our proprietary technology and processes, in part, by confidentiality agreements with our employees, consultants, scientific advisors, and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have implemented measures to protect and preserve our trade secrets, such measures can be breached, and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. For more information regarding the risks related to our intellectual property, please see Item 1A., Risk factors—Risks related to our intellectual property, in this Annual Report on Form 10-K.

Trademarks

As of December 31, 2021, we owned approximately two pending U.S. trademarks applications with the Patent and Trademark Office for BEAM THERAPEUTICS and BEAM THERAPEUTICS and design, twelve ex-U.S. registered trademarks for BEAM THERAPEUTICS and BEAM THERAPEUTICS and design, and five ex-U.S. pending trademark applications for BEAM THERAPEUTICS and BEAM THERAPEUTICS and design.

As of December 31, 2021, we in-licensed approximately two pending U.S. trademarks, ten allowed/registered ex-U.S. trademarks, and seven pending ex-U.S. trademark applications, for the use of REPAIR and RESCUE from Broad Institute.

Intellectual property licenses

We are a party to a number of license agreements under which we license patents, patent applications, and other intellectual property from third parties. The licensed intellectual property covers, in part, CRISPR-related compositions of matter and their use for base editing. These licenses impose various diligence and financial payment obligations on us. We expect to continue to enter into these types of license agreements in the future. We consider the following license agreements to be material to our business.

License Agreement with The President and Fellows of Harvard College

In June 2017, we entered into a license agreement with Harvard, as amended, or the Harvard License Agreement, pursuant to which we received an exclusive, worldwide, royalty-bearing, sublicensable license under certain patent rights owned or controlled by Harvard to make, have made, offer for sale, sell, have sold and import licensed products in the field of the prevention or treatment of any and all human diseases and conditions, excluding human germline modification and products for non-human animal and plant applications. We also received a non-exclusive, worldwide, royalty-bearing, sublicensable license to research, have researched, develop and have developed “enabled” products related to the Harvard patent rights which are not licensed products.

The licensed patents are directed, among other things, to C-to-T, A-to-G, and C-to-G base editors, for the treatment of certain diseases and conditions and to base editing, more generally.

Under the Harvard License Agreement, we are required to use commercially reasonable efforts to develop products incorporating the base editing technology covered in the licensed patents, in accordance with a development plan that we prepared and submitted to Harvard. The development plan includes certain development milestones that we are required to meet, as well as the timelines for the completion thereof, and we may update the development plan from time to time as we believe necessary, in our good faith judgment, for us to meet such milestones. If we are successfully able to gain regulatory approval in any country to introduce a licensed product into the commercial market in such country, then we are also required to use commercially reasonable efforts to commercialize such licensed product and make such licensed product reasonably available to the public. If we fail to meet any of the deadlines for the development milestones, then Harvard may, depending on the nature of the failure and the impacted milestones, either terminate the Harvard License Agreement or our licenses with respect to the applicable licensed product(s), subject to certain exceptions and opportunities for us to cure such failure. Additionally, we are required to initiate a discovery program in accordance with the development plan and development milestones for the development of a licensed product covered by certain sub-categories of licensed patents. Failure to achieve milestones with respect to such sub-categories gives Harvard the right to grant third parties non-exclusive licenses under such failed sub-categories.

22


 

The licenses granted to us under the Harvard License Agreement are expressly subject to certain preexisting rights held by Harvard and certain third parties. For example, certain of the licensed patents were developed by employees of the Howard Hughes Medical Institute and were subsequently assigned to Harvard but remain subject to a non-exclusive license between Harvard and Howard Hughes, pursuant to which Howard Hughes received a license from Harvard under certain of the licensed patents for research purposes with the right to sublicense to non-profit and governmental entities. In addition, certain of the licensed patents claim or cover inventions resulting from research that was sponsored by the U.S. government, and the U.S. government retains certain rights with respect to such licensed patents under applicable U.S. law. Harvard additionally retains limited rights for itself and for other non-profit research organizations to practice the licensed patents for research, educational, and scholarly purposes. Furthermore, Harvard retains the right, beginning a certain period of time after regulatory approval of any licensed product in the U.S. or certain European countries, to grant third parties the non-exclusive right to develop, manufacture, have manufactured, import, have imported, offer for sale, sell, have sold or otherwise distribute or have distributed such licensed product or an equivalent thereof solely for sale on a locally-affordable basis in certain specified developing countries in which we do not have plans to seek regulatory approval.

Although the licenses granted to us under the Harvard License Agreement are exclusive, Harvard may grant a license to a third party under the licensed patents to research, develop, and commercialize a product directed to one or more particular targets, or a proposed product, in the field under limited circumstances. If a third party that is not a specified competitor of ours inquires with Harvard for such a license, and then attempts to enter into a sublicense agreement with us after being referred to us by Harvard and fails to do so after a certain period of time and presents to Harvard a proposal including certain information describing the proposed development and commercialization of such product, then Harvard may notify us of such proposal. If we are not researching, developing or commercializing such a proposed product, then we can notify Harvard as to whether we are interested in developing such proposed product, entering into a sublicense agreement with such third party to develop such proposed product, or entering into a sublicense with another third party to develop the same proposed product. If we inform Harvard that we are interested in developing such proposed product, then we will prepare a development plan, similar in scope to the development plan under the Harvard License Agreement, to develop such proposed product. If we inform Harvard that we are interested in entering into a sublicense agreement pursuant to which a third party would receive a sublicense from us under the licensed patents to develop such proposed product, then we will have a specified period of time to enter into such a sublicense agreement and provide reasonable evidence thereof. If we are not researching, developing, or commercializing such a proposed product, fail to provide a development plan, or fail to enter into a sublicense agreement with respect to such proposed product, in each case, within specified time periods, then Harvard may grant a license to the applicable third party under the licensed patents to research, develop, and commercialize such proposed product.

We are permitted to further sublicense our rights under the Harvard License Agreement to third parties, provided that any such sublicense agreement with a third party must remain in compliance with and be consistent with the terms of the Harvard License Agreement, and certain rights granted to us under the Harvard License Agreement can only be sublicensed to bona fide collaboration partners who are working with us to develop one or more licensed products. In addition, any such sublicense agreement must include certain provisions to ensure our ability to comply with the Harvard License Agreement. We are also responsible for any breaches of a sublicense agreement by the applicable sublicensee, if such breach results in a material breach of the Harvard License Agreement, provided that if we cure the breach or diligently enforce our rights to terminate the sublicense, we will not be subject to termination by Harvard for the sublicensee’s breach, even if it resulted in a material breach of the Harvard Agreement.

In exchange for the licenses granted to us under the Harvard License Agreement, we initially issued to Harvard 101,363 shares of our common stock and subsequently issued 765,549 shares of our common stock pursuant to anti-dilution rights in the Harvard License Agreement. We are also required to pay to Harvard an annual license maintenance fee ranging from low-to-mid five figures to low six figures, depending on the particular calendar year. Harvard is also entitled to receive potential clinical and regulatory milestones in the mid-to-high eight figure range. If we undergo a change of control during the term of the Harvard License Agreement, then certain of the milestone payments would be increased. We paid Harvard a total of $9.0 million upon the completion of our Series A and Series B financings.

In May 2021, the first success payment measurement occurred and amounts due to Harvard were calculated to be $15.0 million. We elected to make the payment in shares of our common stock and issued 174,825 shares of our common stock to settle this liability on June 10, 2021. We may additionally owe Harvard success payments of up to an additional $90.0 million.

23


 

With respect to the sale of licensed products by us, our affiliates or our sublicensees, Harvard is entitled to receive low single digit royalties on net sales of licensed products until, on a country-by-country basis, the latest of the expiration of (i) the last to expire valid claim of a licensed patent covering the applicable licensed product, (ii) the period of exclusivity associated with such licensed product in such country or (iii) a certain number of years after the first commercial sale of such licensed product in such country. We are entitled to certain reductions and offsets on these royalties with respect to a licensed product in a given country and certain increases in the event we, our affiliates or sublicensees bring patent challenges relating to any licensed patents (subject to an ability to delay and/or avoid such increases by diligently seeking to terminate and/or terminating the sublicense that has taken the applicable action). If we sublicense our rights to develop or commercialize a licensed product under the Harvard License Agreement to a third party and we receive non-royalty sublicense income, then Harvard is entitled to a percentage of such consideration, ranging from the high single digits to an amount in the first decile depending on the date in which such sublicense agreement is executed and the stage of development our licensed products at such time.

Harvard is responsible for the prosecution and maintenance of all licensed patents, provided that we have customary consultation, comment, and review rights with respect to such prosecution and maintenance activities. We are responsible for Harvard’s documented out-of-pocket expenses with respect to such prosecution and maintenance, but if Harvard enters into a license agreement with a third party pursuant to which it grants such third party a license under the licensed patents outside of our field, then Harvard must use reasonable efforts to include a provision in such agreement that provides for an apportionment of prosecution and maintenance costs between us and such third party with respect to such licensed patents. If we choose to no longer pay for the prosecution and maintenance costs of a given licensed patent, then we will be relieved of such payment obligation, but our license with respect to such licensed patent will also terminate.

Unless earlier terminated, the Harvard License Agreement will remain in effect until the later of the last-to-expire valid claim of the licensed patents or the end of the last to expire royalty term. We may terminate the Harvard License Agreement at our convenience following written notice to Harvard. Either party may terminate the Harvard License Agreement for a material breach of the other party, subject to a notice and cure period. Harvard may also terminate the Harvard License Agreement in the event of our bankruptcy or insolvency or if we fail to procure and maintain insurance. Upon expiration or termination of the Harvard License Agreement, the licenses granted to us will terminate and all rights under the licensed patent rights will revert to Harvard.

License Agreement with Editas Medicine, Inc.

In May 2018, we entered into a license agreement, or the Editas License Agreement, with Editas pursuant to which we received an exclusive (even as to Editas), royalty-bearing, sublicensable, worldwide license under certain patent rights owned or controlled by Editas related to certain base editing technologies and CRISPR technology to develop, commercialize, make, have made, use, offer for sale, sell and import certain base editing products for the treatment of human diseases or conditions. The license we received is non-exclusive with respect to certain specified targets. Our licensed field excludes the treatment of certain diseases and certain fields of use that have already been licensed to other partners of Editas, provided that our licensed field may expand if the fields licensed to other Editas partners are reduced or are otherwise modified as a result of any termination, expiration, or amendment to Editas’ agreements with such partners. In addition, we received a royalty-free, non-sublicensable, non-exclusive license under a separate set of patent rights owned or controlled by Editas to conduct research activities in our licensed field and for which we have an option to obtain an exclusive license from Editas.

Certain of the patents licensed to us under the Editas License Agreement were licensed to Editas from Broad Institute and Harvard and certain of the patents for which we have an option to obtain a license were licensed to Editas from the Massachusetts General Hospital, or MGH. Accordingly, the licenses granted to us under the Editas License Agreement are subject to the terms and conditions set forth in each of the license agreements concerning the licensed patents between Broad Institute, Harvard and Editas, or the Broad/Harvard Head Licenses, and each of the license agreements concerning the patents for which we have an option to obtain a license between MGH and Editas, or the MGH Head Licenses.

As described above, Editas granted us an exclusive option to obtain an exclusive license under certain patents on a patent family-by-patent family basis. If we so exercise the option with respect to a patent family of such optioned patents, then we would receive an exclusive license to such patent family of the same scope as the other patents exclusively licensed to us under the Editas License Agreement. In order to exercise an option with respect to a patent family of these optioned patents we would pay an eight-figure option exercise fee, depending on the date in which particular option is exercised.

Under the Editas License Agreement, we are required to use commercially reasonable efforts to develop a licensed product in our licensed field in each of the United States, Japan, the United Kingdom, or U.K., Germany, France, Italy and Spain, including filing the first IND for a licensed product within a certain period of time following the execution of the Editas License Agreement. If we are successfully able to gain regulatory approval in any country for a licensed product, then we are also required to use commercially reasonable efforts to commercialize such licensed product in such country. We also have sole control and responsibility over all regulatory activities with respect to the development of licensed products.

24


 

We are permitted to further sublicense certain of our rights under the Editas License Agreement to third parties, provided that any such sublicense agreement with a third party must remain in compliance with and be consistent with the terms of the Editas License Agreement and the Broad/Harvard Head Licenses and MGH Head Licenses, as applicable. We are also responsible for any breaches of a sublicense agreement by the applicable sublicensee and are responsible for all payments due under the Editas License Agreement by operation of any such sublicense. Following the signing of the Editas License Agreement, we obtained the right to further sublicense our rights the licensed patents from Broad Institute and Harvard to third parties, provided that we comply with certain sublicensing requirements under each of the Broad/Harvard Head Licenses as if we were Editas, as well as certain other customary conditions. We have not obtained any such right from MGH allowing us to further sublicense our rights under the licensed patents from MGH to third parties and will require written consent in the event we wish to further sublicense such rights to a third party.

Upon the execution of the Editas License Agreement, we paid Editas an upfront fee of $180,000. We also issued to Editas 1,833,333 shares of our Series A-1 Preferred Stock and 1,222,222 shares of our Series A-2 Preferred Stock. In addition, if any of our commercial, regulatory, development or sales activities with respect to the licensed products triggers a milestone payment or sublicense income that Editas owes under the Broad/Harvard Head Licenses or the MGH Head Licenses, then we are required to pay Editas the full amount of such milestone payment or sublicense income, as applicable; provided that we will not pay Editas for any sublicense income due as a result of the upfront fee we paid to Editas, our issuance of Series A-1 Preferred Stock and Series A-2 Preferred Stock to Editas, or our payment of any option exercise fee to Editas. Aggregate milestone amounts under the Editas License Agreement could equal up to $68.8 million for each product developed and commercialized using rights related to certain base editing technologies and CRISPR technology; in the event we develop and commercialize products covered by claims from the additional patent families licensed or optioned to us under the Editas License Agreement, aggregate milestone payments could equal up to $74.0 million per product. The percentage of sublicense income we would owe under the Editas License Agreement ranges from none to amounts between 10% and 20%. In addition, we agreed to pay for a portion of the annual license maintenance fees and prosecution and maintenance costs that Editas incurs itself or owes under the Broad /Harvard Head Licenses and the MGH Head Licenses with respect to the licensed patents. The upfront fee, equity issuance, and option exercise payments we make to Editas under the Editas License Agreement constitute both consideration for the licenses granted to us under the Editas License Agreement and reimbursement for prosecution and maintenance costs for the licensed patents.

With respect to the sale of licensed products by us, our affiliates or our sublicensees, we are required to pay to Editas an amount equal to the royalty rates that it owes to Broad Institute, Harvard, or MGH under its applicable in-licenses, plus an additional low- to mid-single digit royalty on net sales of licensed products, depending on whether such licensed product is covered by an Editas-owned patent and based on the aggregate worldwide net sales of licensed products in a given calendar year. We are entitled to certain reductions and offsets on these royalties with respect to a licensed product in a given country and if Editas is entitled to receive any reductions or offsets in respect to its royalty payment obligations under the relevant Broad/Harvard Head Licenses or MGH Head Licenses, then Editas will use reasonable efforts to avail itself of such reductions, which in turn would reduce our royalty payment obligations under the Editas License Agreement. The royalty term expires on licensed product-by-licensed product and country-by-country basis upon the later of (i) the last-to-expire royalty term in such country under any applicable Broad/Harvard Head License or MGH Head License, and, if such product is covered by a licensed Editas-owned patent, (ii) the date at which such product is no longer covered by a valid claim of a licensed Editas-owned patent in such country.

As between the parties, Editas is responsible for the prosecution and maintenance of all licensed patents, provided that we have certain information, comment, and review rights for certain of the licensed patents.

Unless earlier terminated, the Editas License Agreement will expire on a licensed product-by-licensed product and country-by-country basis on the expiration of the applicable royalty term with respect to such licensed product in such country. We may terminate the Editas License Agreement on written notice to Editas subject to a specified notice period. Either party may terminate the Editas License Agreement for a material breach of the other party, subject to a notice and cure period. Editas may also terminate the Editas License Agreement if we challenge the validity of any of the licensed patents, subject to customary carveouts. Upon expiration or termination of the Editas License Agreement in its entirety or with respect to a family of patents, the licenses granted to us will immediately terminate in its entirety or solely with respect to the expired or terminated patent family, as the case may be; however, if we have the right to terminate the Editas License Agreement due to Editas’ material breach of the Editas License Agreement, then in lieu of so terminating the Editas License Agreement, we can elect to reduce our royalty payment obligations under the Editas License Agreement by certain specified percentages.

License Agreement with The Broad Institute, Inc.

In May 2018, our affiliate, Blink Therapeutics Inc., or Blink, entered into a license agreement, as amended, or the Broad License Agreement, with Broad Institute. In September 2021, Blink merged with and into Beam, such that Blink’s separate corporate existence ceased and Beam continued as the surviving corporation and the successor by merger to the Broad License Agreement with respect to Blink. Under the Broad License Agreement, and as further detailed below, we received certain rights to RNA base editing technology, including the RNA editor platforms RESCUE and REPAIR, which use Cas13 linked to a deaminase to deliver single base A-to-I or C-to-U editing of RNA transcripts, respectively, as well as the Cas12b nuclease family of gene editing enzymes.

25


 

More specifically, under the Broad License Agreement, Broad Institute granted us an exclusive, worldwide, royalty-bearing and sublicensable license under certain patent rights to the extent owned or controlled by Broad Institute (including via an interinstitutional agreement with the Massachusetts Institute of Technology, or MIT, and Harvard) comprising (i) certain patent rights claiming or disclosing novel CRISPR enzymes and systems (including those related to DNA cleaving) or systems, methods and compositions for targeted nucleic acid editing, in each case to exploit products covered by such patents, (ii) certain product-specific patent rights claiming or disclosing novel CRISPR enzymes and systems, methods and compositions for targeted nucleic acid editing, in each case to exploit base editor products covered by such patents and (iii) certain patent rights generally related to gene targeting to exploit base editor products covered by such patents, in each case to make, have made, offer for sale, sell, have sold and import certain licensed products.

Under the Broad License Agreement, we have also been granted (i) a non-exclusive, royalty-bearing and sublicensable license under all patents exclusively licensed to us under the Broad License Agreement to make, have made, offer for sale, sell, have sold and import certain products in our field that were made, discovered, developed or determined to have utility through the use of such patents in a research or discovery program commencing before May 2021 or through the use of transferred materials from Broad Institute but that are not covered by the licensed patents and (ii) a non-exclusive, worldwide, royalty-bearing and sublicensable internal research license under all patents exclusively licensed to us. All licenses granted to us by Broad Institute exclude human germline modification, the stimulation of biased inheritance of particular genes or, with certain exceptions, traits within a plant or animal population and certain modifications of the tobacco plant and are subject to certain retained rights of Broad Institute, Harvard and MIT and the U.S. federal government. Broad Institute additionally retains limited rights for itself, Harvard and MIT and for other non-profit research organizations to practice the licensed patents for research, educational, and scholarly purposes.

Under the Broad License Agreement, we are required to use commercially reasonable efforts to develop licensed products in accordance with a development plan that Blink prepared and submitted to Broad Institute. The development plan includes certain development milestones that we are required to meet, as well as the timelines for the completion thereof, and we may update the development plan from time to time if we believe, in our good faith judgment, that such update is needed in order to improve our ability to meet such development milestones. We will not be able to delay such development milestone timelines without providing a reasonable explanation and plan to Broad Institute and provided further that Broad Institute’s approval of the explanation and plan in its reasonable discretion is required for any milestone timeline extension of more than a specified number of years. If we are successfully able to gain regulatory approval in any country to introduce a licensed product into the commercial market in such country, then we are also required to use commercially reasonable efforts to commercialize such licensed product and make such licensed product reasonably available to the public.

Additionally, we are required to use commercially reasonable efforts to pursue the viability of the technology covered, claimed or disclosed in certain sub-categories of licensed patents and must initiate a discovery program for the development of a licensed product covered by a valid claim, or otherwise generally enabled, by the use of such sub-category of the licensed patents during a certain period of time following the execution of the Broad License Agreement and submit an updated development plan and development milestones reasonably acceptable to Broad Institute for such sub-category of the licensed patents within such period of time. If we fail to use commercially reasonable efforts to pursue the viability of such technology or to initiate a discovery program or to submit an updated development plan in the specified time period then the license under such sub-category of the licensed patents will terminate and, if such sub-category of the licensed patents consists of base editor patent rights, our rights with respect to gene targeting licensed patents shall convert to non-exclusive so that such rights may be licensed for use to such terminated base editor licensed patents.

26


 

Broad Institute, MIT, and Harvard also retain the right to grant further licenses under specified circumstances to third parties, other than specified entities, that wish to research, develop, and commercialize a product that would otherwise fall within the scope of our exclusive license grant from Broad Institute and Harvard pursuant to Broad Institute, Harvard and MIT’s inclusive innovation model. If, after a specified period of time, such a third party inquires with Broad Institute for such a license and presents to Broad Institute a proposal including information describing the proposed development and commercialization of such a proposed product, then Broad Institute may notify us of the request and the requester’s identity, and the nature of the specific proposed product, including the applicable gene to which the proposed product is directed. Broad Institute is not required to share any other information provided by the requester to us in connection with the inclusive innovation model. If we are not researching, developing or commercializing such a proposed product, then we can notify Broad Institute as to whether in good faith we are interested in developing such proposed product, entering into a sublicense agreement with such requesting third party to develop such proposed product, entering into a sublicense with another third party to develop such proposed product, or that we are not interested in any of the foregoing. If we inform Broad Institute that we are interested in developing such proposed product, then we will prepare a development plan, similar in scope to the development plan under the Broad License Agreement, to develop such proposed product and must commence the development program for such proposed product within a specified period. If we inform Broad Institute that we are interested in entering into a sublicense agreement pursuant to which the inquiring third party or another third party would receive a sublicense from us under the licensed patents to develop such proposed product, then we may enter into such a sublicense agreement and provide reasonable evidence thereof during the period. If we decline to conduct the foregoing activities or do not complete such activities within the specified period, which period is reduced by the period of time the requesting third party has previously negotiated with us, then Broad Institute may grant a license to the applicable third party under the licensed patents to research, develop, and commercialize such proposed product, and our license to such the applicable patent rights will, at Broad Institute’s election, terminate with respect to the gene that is the subject of the proposed third party product.

We are permitted to sublicense the licensed patents to affiliates and third parties, provided that any such sublicense agreement must remain in compliance with and be consistent with the terms of the Broad License Agreement. In addition, any such sublicense agreement must include certain customary provisions to ensure our ability to comply with the Broad License Agreement. We are also responsible for any breaches of a sublicense agreement by the applicable sublicensee and are responsible for all payments due under the Broad License Agreement by operation of any such sublicense.

As partial consideration for the rights granted under the Broad License Agreement, Broad Institute received 1,940,000 shares of Blink’s common stock. The shares issued to Broad Institute were exchanged into 865,240 shares of our common stock in connection with our acquisition of Blink on September 25, 2018.

Under the Broad License Agreement, we are also required to pay Broad Institute an annual license maintenance fee ranging from the low- to mid-five figures to the low-six figures, depending on the particular calendar year. Broad Institute is also entitled to receive clinical and regulatory milestones totaling in the mid-to-high eight figure range. We paid Broad Institute a total of $9.0 million upon the completion of our Series A and Series B financings.

In May 2021, the first success payment measurement occurred and amounts due to Broad Institute were calculated to be $15.0 million. We elected to make the payment in shares of our common stock and issued 174,825 shares of our common stock to settle this liability on June 10, 2021. We may additionally owe Broad Institute success payments of up to an additional $90.0 million.

We are also required to pay royalties in the low single digits for products covered by the licensed patents with such royalty reduced by a certain percentage for products enabled by the licensed patents or transferred materials, but not covered by the licensed patents. The royalty rate payable by us is subject to customary reductions and offsets on these royalties with respect to a product in a given country. The royalty term for a product in a country will terminate on the later of the expiration of (i) the last to expire licensed patent covering the applicable product, (ii) the period of exclusivity associated with such product in such country or (iii) a certain period of time after the first commercial sale of such product in such country. If we sublicense our rights to develop or commercialize a licensed product under the Broad License Agreement to a third party and receive non-royalty sublicense income, then Broad Institute is entitled to a percentage of such consideration, ranging from the high single digits to an amount in the low first decile, dependent on the development stage of products under the Broad License Agreement at the time of sublicense execution.

Broad Institute is responsible for the prosecution and maintenance of all licensed patents, provided that we have certain consultation, comment, and review rights with respect to such prosecution and maintenance activities of exclusively licensed patent rights.

Unless earlier terminated, the Broad License Agreement will remain in effect until the later of the last-to-expire valid claim of a licensed patent covering our licensed products or the end of the last to expire royalty term. We may terminate the Broad License Agreement for its convenience following written notice to Broad Institute subject to a specified notice period. Either party may terminate the Broad License Agreement for a material breach of the other party, subject to a notice and cure period. Broad Institute may also terminate the Broad License Agreement in the event of our bankruptcy or insolvency, if we fail to procure and maintain insurance or if we, our affiliates or sublicensees bringing patent challenges relating to any licensed patents (subject to a cure period for us to terminate the sublicensee that has taken the applicable action).

27


 

License Agreement with Bio Palette Co., Ltd.

On March 27, 2019, we entered into a license agreement, or the Bio Palette License Agreement, with Bio Palette Co., Ltd., or Bio Palette, pursuant to which we received an exclusive (even as to Bio Palette and its affiliates), sublicensable license under certain patent rights related to base editing owned or controlled by Bio Palette to research, make, have made, import, export, distribute, use, have used, sell, have sold or offer for sale, and otherwise exploit products for the treatment of human disease throughout the world, but excluding products in the microbiome field in Asia. In addition, we granted Bio Palette an exclusive (even as to us and our affiliates) license under certain patent rights related to base editing and gene editing owned or controlled by us to research, make, have made, import, export, distribute, use, have used, sell, have sold or offer for sale, and otherwise exploit products in the microbiome field in Asia, subject to our right, in its sole discretion, to expand Bio Palette’s license (and the applicable royalty obligations) to the entire territory. Each party to the Bio Palette Agreement retains non-exclusive rights to develop and manufacture products in the microbiome field worldwide for the sole purpose of exploiting those products in its own territory. Each party agrees to certain coordination obligations in the microbiome field in the event that either party determines not to exploit their rights in such field.

If Bio Palette comes into the control of any other patent right that is useful for the treatment, diagnosis or prevention of any human diseases or conditions and intends to grant a license under that patent right in certain defined fields and in certain defined territories, we have the exclusive right of first negotiation for an exclusive license under that patent right in those fields and territories. If we come into the control of any other patent right that is useful in certain defined fields and intend to grant a license under that patent right in those fields in certain defined territories, Bio Palette has the exclusive right of first negotiation for an exclusive license under that patent right in those fields and territories.

As part of the Bio Palette License Agreement, if we form a Scientific Advisory Board, then Bio Palette will have the right to appoint two representatives to such board until the conclusion of the period ending five years after the effective date of the Bio Palette License Agreement. Additionally, we and Bio Palette agree to communicate with each other regarding potential base editing collaborations in Japan.

We are required to use commercially reasonable efforts to develop a licensed product in the United States, Japan, the U.K., France, Germany, Italy and Spain. For any licensed product in our licensed field and territory that receives regulatory approval, we are required to use commercially reasonable efforts to commercialize that licensed product in the relevant country. Bio Palette is required to use commercially reasonable efforts to develop a licensed product in Japan. For any licensed product that receives regulatory approval, Bio Palette is required to use commercially reasonable efforts to commercialize such licensed product in the relevant country.

Certain of the patents licensed to us under the Bio Palette License Agreement were licensed to Bio Palette from Kobe University under a license agreement we refer to as the Kobe Head License. Accordingly, the licenses granted to us under the Bio Palette License Agreement are subject to the terms and conditions set forth in the Kobe Head License, which include provisions providing for certain rights to be retained by third parties including governmental authorities.

We and Bio Palette are both permitted to sublicense the licensed patents to affiliates and third parties, provided that the applicable terms of the Bio Palette License Agreement and the Kobe Head License would apply to such affiliates and third parties. The sublicensing party is also responsible for any breaches of such terms by the applicable sublicensee and is responsible for all payments due under the Bio Palette License Agreement by operation of any such sublicense.

Upon the execution of the Bio Palette License Agreement, we paid Bio Palette an upfront fee of $0.5 million. In connection with the execution of the Bio Palette License Agreement, we issued to Bio Palette 16,725 shares of our common stock, with an agreement to issue additional shares of our common stock in the low six figures in the event that the referenced Bio Palette patent issues in the United States. Upon the issuance of a certain Bio Palette patent in the United States in June 2020, we made a milestone payment to Bio Palette of $2.0 million and, in July 2020, issued to Bio Palette 175,000 shares of our common stock valued at $0.3 million. We also agreed to pay a royalty at a fraction of a percent on net sales of products that are covered by the patents licensed by Bio Palette to us, and Bio Palette agreed to pay a royalty at a fraction of a percent on net sales of products that are covered by the patents licensed by us to Bio Palette. The royalty term for a product in a country will terminate on the later of the expiration of (i) patent-based exclusivity with respect to such licensed product in such country or (ii) regulatory exclusivity with respect to such licensed product in such country.

Any intellectual property arising out of activities under the Bio Palette License Agreement will be owned by the party inventing such intellectual property. Bio Palette is responsible for the prosecution and maintenance of all patents licensed by Bio Palette to us, provided that we have customary consultation, comment and review rights with respect to such prosecution and maintenance activities solely with respect to national entries of a certain specified PCT application. We have the sole right to prosecute and maintain patents licensed by us to Bio Palette.

28


 

Unless earlier terminated, the Bio Palette License Agreement will expire on a licensed product-by-licensed product and country-by-country basis upon the expiration of the applicable royalty term for each such licensed product and country. Each party has the right to terminate the Bio Palette License Agreement for convenience with respect to the license granted to such party subject to a specified notice period. Either party may terminate the Bio Palette License Agreement with respect to the license granted to the other party for a material breach by the other party, subject to a specified notice and cure period. Additionally, either party may also terminate the Bio Palette License Agreement in the event of the other party’s bankruptcy or insolvency or if the other party, its affiliates or sublicensees brings a patent challenge relating to any licensed patents (but, in the case of such a patent challenge by a sublicensee, subject to a cure period for such party to terminate its agreement with the sublicensee that has taken the applicable action).

Government regulation

Government authorities in the United States, at the federal, state and local level, and in other countries and jurisdictions, including the EU, extensively regulate, among other things, the research, development, testing, manufacturing, packaging, labeling, storage, record keeping, reimbursement, advertising, promotion, distribution, post-approval monitoring and reporting and import and export, pricing and reimbursement of pharmaceutical products, including biological products. Failure to comply with the applicable regulatory requirements at any time during the product development process or post-approval may subject an applicant for marketing approval to delays in development or approval, as well as administrative and judicial sanctions.

The processes for obtaining marketing approvals in the United States and in foreign countries and jurisdictions and compliance with applicable statutes and regulatory requirements, both pre- and post-approval, and obtaining reimbursement status will continue to require the expenditure of substantial time and financial resources. The regulatory requirements applicable to drug and biological product development, approval, and marketing are subject to change, and regulations and administrative guidance often are revised or reinterpreted by the agencies in ways that may have a significant impact on our business. Ethical, social and legal concerns about gene therapy, genetic testing and genetic research could result in additional regulations restricting or prohibiting the processes we may use.

Licensure and regulation of biologics in the United States

In the United States, our candidate products are regulated as biological products, or biologics, under the Public Health Service Act, or the PHSA, and the Federal Food, Drug and Cosmetic Act, or the FDCA, the implementing regulations of the FDA and other federal, state and local statutes and regulations.

The FDA must approve a product candidate for a therapeutic indication before it may be marketed in the United States. An applicant seeking approval to market and distribute a new biologic in the United States generally must satisfactorily complete each of the following steps:

preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the FDA’s Good Laboratory Practice, or GLP, regulations;
completion of the manufacture, under cGMP conditions, of the drug substance and drug product that the sponsor intends to use in human clinical trials along with required analytical and stability testing;
design of a clinical protocol and submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials may begin;
approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated;
performance of adequate and well-controlled human clinical trials to establish the safety, potency, and purity of the product candidate for each proposed indication, in accordance with current Good Clinical Practices, or GCP;
preparation and submission to the FDA of a Biologics License Application, or BLA, requesting marketing of the biological product for one or more proposed indications, including submission of detailed information on the manufacture and composition of the product and proposed labelling;
review of the BLA by an FDA advisory committee, where applicable;
satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities, including those of third parties, at which the product, or components thereof, are produced to assess compliance with current Good Manufacturing Practices, or cGMP, requirements; to assure that the facilities, methods, and controls are adequate to preserve the product’s identity, strength, quality, and purity; and, if applicable, the FDA’s current good tissue practice, or cGTP, requirements for the use of human cellular and tissue products;
satisfactory completion of any FDA audits of the non-clinical and clinical trial sites to assure compliance with GLPs and GCPs and the integrity of clinical data in support of the BLA;

29


 

payment of the application fee under the Prescription Drug User Free Act, or PDUFA, unless exempted; and
FDA review and approval of the BLA, which may be subject to additional post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and any post-approval studies required by the FDA.

Preclinical studies and investigational new drug application

Before testing any investigational biological product in humans, including a gene editing product candidate, the product candidate must undergo preclinical testing. Preclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate the potential for efficacy and toxicity in animal studies. The conduct of the preclinical tests and formulation of the compounds for testing must comply with federal regulations and requirements, including GLP regulations and standards and the United States Department of Agriculture’s Animal Welfare Act, if applicable. The results of the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND application.

An IND is an exemption from the FDCA that allows an unapproved drug or biological product to be shipped in interstate commerce for use in an investigational clinical trial. Such authorization must be secured prior to interstate shipment and administration of any product candidate that is not the subject of an approved new drug application, or NDA. In support of a request for an IND, applicants must submit a protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions about the product or conduct of the proposed clinical trial, including concerns that human research subjects will be exposed to unreasonable health risks. In that case, the IND sponsor and the FDA must resolve any outstanding FDA concerns before the clinical trials can begin. Preclinical or nonclinical testing typically continues even after the IND is submitted.

Following commencement of a clinical trial under an IND, the FDA may also place a clinical hold or partial clinical hold on that trial. A clinical hold is an order issued by the FDA to the sponsor to delay a proposed clinical investigation or to suspend an ongoing investigation. A partial clinical hold is a delay or suspension of only part of the clinical work requested under the IND. For example, a partial clinical hold might state that a specific protocol or part of a protocol may not proceed, while other parts of a protocol or other protocols may do so. No more than 30 days after the imposition of a clinical hold or partial clinical hold, the FDA will provide the sponsor a written explanation of the basis for the hold. Following the issuance of a clinical hold or partial clinical hold, a clinical investigation may only resume once the FDA has notified the sponsor that the investigation may proceed. The FDA will base that determination on information provided by the sponsor correcting the deficiencies previously cited or otherwise satisfying the FDA that the investigation can proceed or recommence. Occasionally, clinical holds are imposed due to manufacturing issues that may present safety issues for the clinical study subjects.

Additionally, genetic medicine clinical trials conducted at institutions that receive funding for recombinant DNA research from the NIH also are potentially subject to review by a committee within the U.S. National Institutes of Health’s, or NIH’s, Office of Science Policy called the Novel and Exceptional Technology and Research Advisory, or the NExTRAC. As of 2019, the charter of this review group has evolved to focus public review on clinical trials that cannot be evaluated by standard oversight bodies and pose unusual risks. With certain genetic medicine protocols, FDA review of or clearance to allow the IND to proceed could be delayed if the NExTRAC decides that full public review of the protocol is warranted.

Expanded access to an investigational drug for treatment use

Expanded access, sometimes called “compassionate use,” is the use of investigational products outside of clinical trials to treat patients with serious or immediately life-threatening diseases or conditions when there are no comparable or satisfactory alternative treatment options. FDA regulations allow access to investigational products under an IND by the company or the treating physician for treatment purposes on a case-by-case basis for: individual patients (single-patient IND applications for treatment in emergency settings and non-emergency settings); intermediate-size patient populations; and larger populations for use of the investigational product under a treatment protocol or treatment IND application.

There is no requirement for a manufacturer to provide expanded access to an investigational product. However, if a manufacturer decides to make its investigational product available for expanded access, FDA reviews requests for expanded access and determines if treatment may proceed. Expanded access may be appropriate when all of the following criteria apply: patient(s) have a serious or immediately life-threatening disease or condition, and there is no comparable or satisfactory alternative therapy to diagnose, monitor, or treat the disease or condition; the potential patient benefit justifies the potential risks of the treatment and the potential risks are not unreasonable in the context or condition to be treated; and the expanded use of the investigational drug for the requested treatment will not interfere with initiation, conduct, or completion of clinical investigations that could support marketing approval of the product or otherwise compromise the potential development of the product.

30


 

Under the FDCA, sponsors of one or more investigational products for the treatment of a serious disease(s) or condition(s) must make publicly available their policy for evaluating and responding to requests for expanded access for individual patients. Sponsors are required to make such policies publicly available upon the earlier of initiation of a Phase 2 or Phase 3 study; or 15 days after the investigational drug or biologic receives designation as a breakthrough therapy, fast track product, or regenerative medicine advanced therapy.

In addition, on May 30, 2018, the Right to Try Act was signed into law. The law, among other things, provides an additional mechanism for patients with a life-threatening condition who have exhausted approved treatments and are unable to participate in clinical trials to access certain investigational products that have completed a Phase I clinical trial, are the subject of an active IND, and are undergoing investigation for FDA approval. Unlike the expanded access framework described above, the Right to Try Pathway does not require FDA to review or approve requests for use of the investigational product. There is no obligation for a manufacturer to make its investigational products available to eligible patients under the Right to Try Act.

Human clinical trials in support of a BLA

Clinical trials involve the administration of the investigational product candidate to healthy volunteers or patients with the disease to be treated under the supervision of qualified principal investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent for their participation. Clinical trials are conducted under study protocols detailing, among other things, the objectives of the study, inclusion and exclusion criteria, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND.

A sponsor who wishes to conduct a clinical trial outside the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND. When a foreign clinical trial is conducted under an IND, all FDA IND requirements must be met unless waived. When a foreign clinical trial is not conducted under an IND, the sponsor must ensure that the trial complies with certain FDA regulatory requirements in order to use the trial as support for an IND or application for marketing approval in the U.S. Specifically, the FDA requires that such trials be conducted in accordance with GCP requirements intended to ensure the protection of human subjects and the quality and integrity of the study data, including requirements for review and approval by an independent ethics committee and obtaining subjects’ informed consent.

For clinical trials conducted in the United States, an IND is required, and each clinical trial must be reviewed and approved by an IRB either centrally or individually at each institution at which the clinical trial will be conducted. The IRB will consider, among other things, clinical trial design, patient informed consent, ethical factors, the safety of human subjects, and the possible liability of the institution. An IRB must operate in compliance with FDA regulations. Clinical trials must also comply with extensive GCP rules and the requirements for obtaining subjects’ informed consent. The FDA, IRB, or the clinical trial sponsor may suspend or discontinue a clinical trial at any time for various reasons, including a finding that the clinical trial is not being conducted in accordance with FDA requirements, including GCP, or the subjects or patients are being exposed to an unacceptable health risk.

Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group may recommend continuation of the study as planned, changes in study conduct, or cessation of the study at designated checkpoints based on access to certain data from the study. Finally, research activities involving infectious agents, hazardous chemicals, recombinant DNA, and genetically altered organisms and agents may be subject to review and approval of an Institutional Biosafety Committee, or IBC, in accordance with NIH Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules.

Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. Additional studies may be required after approval.

Phase 1 clinical trials are initially conducted in a limited population to test the product candidate for safety, including adverse effects, dose tolerance, absorption, metabolism, distribution, excretion, and pharmacodynamics in healthy humans or, on occasion, in the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, in patients, such as cancer patients.
Phase 2 clinical trials are generally conducted in a limited patient population to identify possible adverse effects and safety risks, evaluate the efficacy of the product candidate for specific targeted indications and determine dose tolerance and optimal dosage. Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more costly Phase 3 clinical trials.

31


 

Phase 3 clinical trials proceed if the Phase 2 clinical trials demonstrate that a dose range of the product candidate is potentially effective and has an acceptable safety profile. Clinical trials are undertaken within an expanded patient population at multiple geographically dispersed clinical study sites to further evaluate dosage, provide substantial evidence of clinical efficacy, and further test for safety. A well-controlled, statistically robust Phase 3 trial may be designed to deliver the data that regulatory authorities will use to decide whether or not to approve, and, if approved, how to appropriately label a biologic; such Phase 3 studies are referred to as “pivotal.”
A clinical trial may combine the elements of more than one phase and the FDA often requires more than one Phase 3 trial to support marketing approval of a product candidate. A company’s designation of a clinical trial as being of a particular phase is not necessarily indicative that the study will be sufficient to satisfy the FDA requirements of that phase because this determination cannot be made until the protocol and data have been submitted to and reviewed by the FDA. Moreover, as noted above, a pivotal trial is a clinical trial that is believed to satisfy FDA requirements for the evaluation of a product candidate’s safety and efficacy such that it can be used, alone or with other pivotal or non-pivotal trials, to support regulatory approval. Generally, pivotal trials are Phase 3 trials, but they may be Phase 2 trials if the design provides a well-controlled and reliable assessment of clinical benefit, particularly in an area of unmet medical need.

In some cases, the FDA may approve a BLA for a product candidate but require the sponsor to conduct additional clinical trials to further assess the product candidate’s safety or effectiveness after approval. Such post-approval trials are typically referred to as Phase 4 clinical trials. These studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of biologics approved under accelerated approval regulations. Failure to exhibit due diligence with regard to conducting Phase 4 clinical trials could result in withdrawal of approval for products. The FDA generally recommends that sponsors observe subjects for potential gene-therapy related delayed adverse events in a long-term follow-up study of fifteen years for integrating vectors, up to fifteen years for herpes virus vectors capable of establishing latency, up to fifteen years for microbial vectors known to establish persistent infection, up to fifteen years for gene editing products, and up to five years for AAV vectors. FDA recommends that these long-term follow-up studies include, at a minimum, five years of annual physical examinations followed by annual queries, either in-person or by phone or written questionnaire, for the remaining observation period.

Progress reports detailing the results of clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur. In addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse reactions; findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the product; and any clinically important increase in the occurrence of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, or at all. The FDA will typically inspect one or more clinical sites to assure compliance with GCP and the integrity of the clinical data submitted.

In response to the COVID-19 pandemic, the FDA issued guidance on March 18, 2020, and has updated it periodically since that time to address the conduct of clinical trials during the pandemic. The guidance sets out a number of considerations for sponsors of clinical trials impacted by the pandemic, including the requirement to include in the clinical study report (or as a separate document) contingency measures implemented to manage the study, and any disruption of the study as a result of COVID-19; a list of all study participants affected by COVID-19-related study disruptions by a unique subject identifier and by investigational site, and a description of how the individual’s participation was altered; and analyses and corresponding discussions that address the impact of implemented contingency measures (e.g., participant discontinuation from investigational product and/or study, alternative procedures used to collect critical safety and/or efficacy data) on the safety and efficacy results reported for the study, among other things. The FDA has indicated that it will continue to provide any necessary guidance to sponsors, clinical investigators, and research institutions as the public health emergency evolves.

During the development of a new product candidate, sponsors are given opportunities to meet with the FDA at certain points; specifically, prior to the submission of an IND, at the end of Phase 2 and before an application is submitted. Meetings at other times may be requested. These meetings can provide an opportunity for the sponsor to share information about the data gathered to date and for the FDA to provide advice on the next phase of development. Sponsors typically use the meeting at the end of Phase 2 to discuss their Phase 2 clinical results and present their plans for the pivotal Phase 3 clinical trial that they believe will support the approval of the new product.

Sponsors of clinical trials of certain FDA-regulated products, including prescription drugs, are required to register and disclose certain clinical trial information on a public registry maintained by the NIH. In particular, information related to the product, patient population, phase of investigation, study sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial. Although sponsors are also obligated to disclose the results of their clinical trials after completion, disclosure of the results can be delayed in some cases for up to two years after the date of completion of the trial. Failure to timely register a covered clinical study or to submit study results as provided for in the law can give rise to civil monetary penalties and also prevent the non-compliant party from receiving future grant funds from the federal government. The NIH’s Final Rule on ClinicalTrials.gov registration and reporting requirements became effective in 2017, and both the NIH and the FDA have recently signaled the government’s willingness to begin enforcing those requirements against non-compliant clinical trial sponsors.

32


 

Pediatric Studies

Under the Pediatric Research Equity Act of 2003, or PREA, a BLA or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. Sponsors must submit a pediatric study plan, or PSP, within 60 days of an end-of-Phase 2 meeting or as may be agreed between the sponsor and the FDA. The PSP outlines the proposed pediatric study or studies they plan to conduct, including study objectives and design, any deferral or waiver requests, and other information required by regulation. The FDA must then review the information submitted, consult with the sponsor, and agree upon a final plan. The FDA or the applicant may request an amendment to the plan at any time.

For investigational products intended to treat a serious or life-threatening disease or condition, the FDA must, upon the request of an applicant, meet to discuss preparation of the initial pediatric study plan or to discuss deferral or waiver of pediatric assessments. In addition, FDA will meet early in the development process to discuss pediatric study plans with sponsors and FDA must meet with sponsors by no later than the end-of-phase 1 meeting for serious or life-threatening diseases and by no later than 90 days after FDA’s receipt of the study plan. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements, under specified circumstances. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation.

The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements. A deferral may be granted for several reasons, including a finding that the product or therapeutic candidate is ready for approval for use in adults before pediatric trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric trials begin. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation, although FDA has recently taken steps to limit what it considers abuse of this statutory exemption in PREA by announcing that it does not intend to grant any additional orphan drug designations for rare pediatric subpopulations of what is otherwise a common disease. The FDA also maintains a list of diseases that are exempt from PREA requirements due to low prevalence of disease in the pediatric population.

Special regulations and guidance governing gene therapy products

It is possible that the procedures and standards applied to gene therapy products and cell therapy products may be applied to any CRISPR/Cas9 product candidates we may develop, but that remains uncertain at this point. The FDA has defined a gene therapy product as one that mediates its effects by transcription and/or translation of transferred genetic material and/or by integrating into the host genome and which are administered as nucleic acids, viruses, or genetically engineered microorganisms. The products may be used to modify cells in vivo or be transferred to cells ex vivo prior to administration to the recipient. The Center for Biologics Evaluation and Research, or CBER, at FDA regulates gene therapy products. Within CBER, the review of gene therapy and related products is consolidated in the Office of Tissues and Advanced Therapies, and the FDA has established the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its reviews. CBER works closely with the NIH, and the FDA and the NIH have published a number of guidance documents with respect to the development of gene therapy products.

Although the FDA’s guidance documents are not legally binding, we believe that our compliance with certain aspects of them is likely necessary to gain approval for any product candidate we may develop. The guidance documents provide recommendations and additional clarity as to factors that the FDA will consider at each stage of gene therapy development and relate to, among other things, the proper preclinical assessment of gene therapies; the chemistry, manufacturing, and controls, or CMC, information that should be included in an IND application; the proper design of tests to measure product potency in support of an IND or BLA application; measures to observe delayed adverse effects in subjects who have been exposed to investigational gene therapies; and gene therapy products for the treatment of rare diseases. Further, the FDA usually recommends that sponsors observe subjects for potential gene therapy-related delayed adverse events for a 15-year period, including a minimum of five years of annual examinations followed by ten years of annual queries, either in person or by questionnaire.

If a gene therapy trial is conducted at, or sponsored by, institutions receiving any NIH funding for research involving recombinant or synthetic nucleic acid molecules, the trial must be conducted in accordance with the NIH Guidelines for Research Involving Recombinant DNA Molecules. Research conducted at such institutions that involves the transfer of recombinant or synthetic nucleic acid molecules, or DNA or RNA derived from recombinant or synthetic nucleic acid molecules, into human subjects must undergo review and approval by an IBC before it commences. Many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily follow them.

33


 

Compliance with cGMP and cGTP requirements

The FDA’s regulations require that pharmaceutical products be manufactured in specific approved facilities and in accordance with cGMPs. The cGMP regulations include requirements relating to organization of personnel, buildings and facilities, equipment, control of components and drug product containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports and returned or salvaged products. Manufacturers and other entities involved in the manufacture and distribution of approved pharmaceuticals are required to register their establishments with the FDA and some state agencies and are subject to periodic unannounced inspections by the FDA for compliance with cGMPs and other requirements. Inspections must follow a “risk-based schedule” that may result in certain establishments being inspected more frequently.

Manufacturers may also have to provide, on request, electronic or physical records regarding their establishments. Delaying, denying, limiting, or refusing inspection by the FDA may lead to a product being deemed to be adulterated. Changes to the manufacturing process, specifications or container closure system for an approved product are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require, among other things, the investigation and correction of any deviations from cGMP and the imposition of reporting and documentation requirements upon the NDA sponsor and any third-party manufacturers involved in producing the approved product.

Before approving a BLA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in full compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. The PHSA emphasizes the importance of manufacturing control for products like biologics whose attributes cannot be precisely defined. Material changes in manufacturing equipment, location, or process post-approval, may result in additional regulatory review and approval.

For a gene therapy product, the FDA also will not approve the product if the manufacturer is not in compliance with cGTP. These standards are found in FDA regulations and guidance documents that govern the methods used in, and the facilities and controls used for, the manufacture of human cells, tissues, and cellular and tissue based products, or HCT/Ps, which are human cells or tissue intended for implantation, transplant, infusion, or transfer into a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue-based products are manufactured in a manner designed to prevent the introduction, transmission, and spread of communicable disease. FDA regulations also require tissue establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing.

Manufacturers and others involved in the manufacture and distribution of products must also register their establishments with the FDA and certain state agencies. Both domestic and foreign manufacturing establishments must register and provide additional information to the FDA upon their initial participation in the manufacturing process. Any product manufactured by or imported from a facility that has not registered, whether foreign or domestic, is deemed misbranded under the FDCA. The manufacturing facilities may be subject to periodic unannounced inspections by government authorities to ensure compliance with cGMPs and other laws. If a manufacturing facility is not in substantial compliance with the applicable regulations and requirements imposed when the product was approved, regulatory enforcement action may be taken, which may include a warning letter or an injunction against shipment of products from the facility and/or recall of products previously shipped.

Review and approval of a BLA

Assuming successful completion of the required clinical testing, the results of the preclinical studies and clinical trials, along with information relating to the product’s chemistry, manufacturing, controls and proposed labeling, are submitted to the FDA as part of an application requesting approval to market the product candidate for one or more indications. Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a product’s use or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety, potency and purity of the investigational product to the satisfaction of the FDA. The fee required for the submission of a BLA under the Prescription Drug User Fee Act, or PDUFA, is substantial (for example, for FY2022 this application fee is approximately $3.1 million), and the sponsor of an approved NDA is also subject to an annual program fee, currently more than $369,000 per eligible prescription drug product. These fees are typically adjusted annually, and exemptions and waivers may be available under certain circumstances, such as where a waiver is necessary to protect the public health, where the fee would present a significant barrier to innovation, or where the applicant is a small business submitting its first human therapeutic application for review.

The FDA conducts a preliminary review of the BLA within 60 days of receipt and must inform the sponsor by that time whether the application is sufficiently complete to permit substantive review. In pertinent part, the FDA’s regulations for applications state that an application “shall not be considered as filed until all pertinent information and data have been received” by the FDA. In the event that the FDA determines that an application does not satisfy this standard, it will issue a Refuse to File, or RTF, determination to the applicant. Typically, an RTF will be based on administrative incompleteness, such as clear omission of information or sections of required information; scientific incompleteness, such as omission of critical data, information or analyses needed to evaluate safety, purity and potency or provide adequate directions for use; or inadequate content, presentation, or organization of information such that substantive and meaningful review is precluded. The FDA may request additional information rather than accept a BLA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing.

34


 

After the submission is accepted for filing, the FDA begins an in-depth substantive review of the application. The FDA may inform the applicant of certain requirements for information when it accepts the BLA or by the 74th day of the receipt of the BLA. Thereafter, the FDA may submit “information requests” to the applicant in the course of the agency’s review of the BLA. The FDA reviews the BLA to determine, among other things, whether the proposed product is safe and effective for its intended use, whether it has an acceptable purity profile and whether the product is being manufactured in accordance with cGMP. Under the goals and policies agreed to by the FDA under PDUFA, the FDA has ten months from the filing date in which to complete its initial review of a standard application for an investigational product that is a new molecular entity, and six months from the filing date for an application with “priority review.” The review process may be extended by the FDA for three additional months to consider new information or in the case of a clarification provided by the applicant to address an outstanding deficiency identified by the FDA following the original submission. Despite these review goals, it is not uncommon for FDA review of a BLA to extend beyond the PDUFA goal date.

Before approving a BLA, the FDA may inspect the sponsor and one or more clinical trial sites to assure compliance with IND and GCP requirements and the integrity of the clinical data submitted to the FDA. Additionally, the FDA may refer the BLA, including applications for novel product candidates which present difficult questions of safety or efficacy, to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it considers such recommendations when making final decisions on approval. Data from clinical trials are not always conclusive, and the FDA or its advisory committee may interpret data differently than the NDA sponsor interprets the same data. The FDA may also re-analyze the clinical trial data, which could result in extensive discussions between the FDA and the applicant during the review process.

The FDA reviews a BLA to determine, among other things, whether the product is safe and whether it is effective for its intended use(s), with the latter determination being made on the basis of substantial evidence. The term “substantial evidence” is defined under the FDCA as “evidence consisting of adequate and well-controlled investigations, including clinical investigations, by experts qualified by scientific training and experience to evaluate the effectiveness of the drug involved, on the basis of which it could fairly and responsibly be concluded by such experts that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the labeling or proposed labeling thereof.”

The FDA has interpreted this evidentiary standard to require at least two adequate and well-controlled clinical investigations to establish effectiveness of a product. Under certain circumstances, however, the FDA has indicated that a single trial with certain characteristics and additional information may satisfy this standard. This approach was subsequently endorsed by Congress in 1998 with legislation providing, in pertinent part, that “If [the FDA] determines, based on relevant science, that data from one adequate and well-controlled clinical investigation and confirmatory evidence (obtained prior to or after such investigation) are sufficient to establish effectiveness, FDA may consider such data and evidence to constitute substantial evidence.” This modification to the law recognized the potential for the FDA to find that one adequate and well controlled clinical investigation with confirmatory evidence, including supportive data outside of a controlled trial, is sufficient to establish effectiveness. In December 2019, the FDA issued draft guidance further explaining the studies that are needed to establish substantial evidence of effectiveness. It has not yet finalized that guidance.

In addition, before approving an application, the FDA will determine whether the facility in which the product is manufactured, processed, packed or held meets standards designed to assure the product’s continued safety. The approval process is lengthy and often difficult, and the FDA may refuse to approve a BLA if the applicable regulatory criteria are not satisfied or may require additional clinical or other data and information. After evaluating the application and all related information, including the advisory committee recommendations, if any, and inspection reports of manufacturing facilities and clinical trial sites, the FDA may issue either an approval letter or a Complete Response Letter, or CRL.

An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A CRL indicates that the review cycle of the application is complete, and the application will not be approved in its present form. A CRL generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application. The CRL may require additional clinical or other data, additional pivotal Phase 3 clinical trial(s) and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. If a CRL is issued, the applicant may either resubmit the NDA addressing all of the deficiencies identified in the letter or withdraw the application. If and when those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the BLA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in response to an issued CRL in either two or six months depending on the type of information included. Even with the submission of this additional information, however, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

35


 

If the FDA approves a new product, it may limit the approved indications for use of the product. It may also require that contraindications, warnings or precautions be included in the product labeling. In addition, the FDA may require post-approval studies, including Phase 4 clinical trials, to further assess the product’s safety or efficacy after approval. The agency may also require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms, including REMS, to help ensure that the benefits of the product outweigh the potential risks. REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patent registries. The FDA may prevent or limit further marketing of a product based on the results of post-market studies or surveillance programs. After approval, many types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Fast track, breakthrough therapy, priority review and regenerative advanced therapy designations

The FDA has several programs designed to expedite the development and approval of drugs and biological products intended to treat serious or life-threatening diseases or conditions. These programs include fast track designation, breakthrough therapy designation, priority review designation, and regenerative medicine advanced therapy (RMAT) designation. These designations are not mutually exclusive, and a product candidate may qualify for one or more of these programs. While these programs are intended to expedite product development and approval, they do not alter the standards for FDA approval.

The FDA may grant a product fast track designation if it is intended for the treatment of a serious or life-threatening disease or condition, and nonclinical or clinical data demonstrate the potential to address an unmet medical need for such disease or condition. For fast track products, sponsors may have greater interactions with the FDA, and the FDA may initiate review of sections of a fast track product’s marketing application before the application is complete in some circumstances. Fast track designation may be rescinded if FDA believes that the product no longer meets the qualifying criteria.

A product may be designated as a breakthrough therapy if it is intended to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. The FDA may take certain actions with respect to breakthrough therapies, including holding meetings with the sponsor throughout the development process; providing timely advice to the product sponsor regarding development and approval; involving more senior staff in the review process; assigning a cross-disciplinary project lead for the review team; and taking other steps to aid sponsors in designing the clinical trials in an efficient manner. Breakthrough designation may be rescinded if a product no longer meets the qualifying criteria.

With passage of the 21st Century Cures Act in December 2016, Congress authorized an additional expedited program for regenerative medicine advanced therapies. A product is eligible for RMAT designation if it is a regenerative medicine therapy that is intended to treat, modify, reverse or cure a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product has the potential to address unmet medical needs for such disease or condition. The benefits of RMAT designation include the benefits available to breakthrough therapies, including potential eligibility for priority review and accelerated approval based on surrogate or intermediate endpoints. RMAT designation may be rescinded if a product no longer meets the qualifying criteria.

FDA may designate a product for priority review if it is a product that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness of the treatment, prevention, or diagnosis of such condition. A priority designation is intended to direct overall attention and resources to the evaluation of such applications, and it shortens the FDA’s goal for taking action on a marketing application from ten months to six months.

Accelerated approval pathway

The FDA may grant accelerated approval to a product for a serious or life-threatening condition that provides meaningful therapeutic advantage to patients over existing treatments based upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant accelerated approval for such a condition when the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality, or IMM, and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

The accelerated approval pathway is most often used in settings in which the course of a disease is long, and an extended period of time is required to measure the intended clinical benefit of a product, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly. Thus, accelerated approval has been used extensively in the development and approval of products for treatment of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large trials to demonstrate a clinical or survival benefit.

36


 

For drugs granted accelerated approval, FDA generally requires sponsors to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the product’s clinical benefit. Failure to conduct required post-approval studies with due diligence, failure to confirm a clinical benefit during the post-approval studies, or dissemination of false or misleading promotional materials would allow the FDA to withdraw the product approval on an expedited basis. All promotional materials for product candidates approved under accelerated approval are subject to prior review by the FDA unless FDA informs the applicant otherwise.

Post-approval regulation

If regulatory approval for marketing of a product or new indication for an existing product is obtained, the sponsor will be required to comply with all regular post-approval regulatory requirements as well as any post-approval requirements that the FDA has imposed as part of the approval process. The sponsor will be required to report certain adverse reactions and production problems to the FDA, provide updated safety and efficacy information and comply with requirements concerning advertising and promotional labeling requirements. Manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory requirements, including cGMP regulations, which impose certain procedural and documentation requirements upon manufacturers. Accordingly, the sponsor and its third-party manufacturers must continue to expend time, money and effort in the areas of production and quality control to maintain compliance with cGMP regulations and other regulatory requirements.

A product may also be subject to official lot release, meaning that the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official lot release, the manufacturer must submit samples of each lot, together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot, to the FDA. The FDA may in addition perform certain confirmatory tests on lots of some products before releasing the lots for distribution. Finally, the FDA will conduct laboratory research related to the safety, purity, potency and effectiveness of pharmaceutical products.

Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;
safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about a product;
mandated modification of promotional materials and labeling and issuance of corrective information;
fines, warning letters or holds on post-approval clinical trials;
refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license approvals;
product recall, seizure or detention, or refusal to permit the import or export of products;
injunctions or the imposition of civil or criminal penalties; and
consent decrees, corporate integrity agreements, debarment, or exclusion from federal health care programs.

The FDA strictly regulates the advertising and labeling of prescription drug products, including biological products. This regulation includes, among other things, standards and regulations for direct-to-consumer advertising, communications regarding unapproved uses, industry-sponsored scientific and educational activities and promotional activities involving the Internet and social media. Promotional claims about a drug’s safety or effectiveness are prohibited before the drug is approved. In addition, the sponsor of an approved drug in the United States may not promote that drug for unapproved, or off-label, uses, although a physician may prescribe a drug for an off-label use in accordance with the practice of medicine. If a company is found to have promoted off-label uses, it may become subject to administrative and judicial enforcement by the FDA, the DOJ, or the Office of the Inspector General of the Department of Health and Human Services, as well as state authorities. This could subject a company to a range of penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially restrict the manner in which a company promotes or distributes drug products. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.

37


 

After approval, some types of changes to the approved product, such as adding new indications or dosing regimens, manufacturing changes, or additional labeling claims, are subject to further FDA review and approval. In addition, the FDA may require testing and surveillance programs to monitor the effect of approved products that have been commercialized, and the FDA has the power to prevent or limit further marketing of a product based on the results of these post-marketing programs.

The FDA may withdraw product approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency or issues with manufacturing processes, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety signals; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

restrictions on the marketing or manufacturing of the product;
fines, warning letters or holds on post-approval clinical trials;
refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license approvals;
product recall, seizure, or detention, or refusal to permit the import or export of products; or
injunctions or the imposition of civil or criminal penalties.

Finally, if there are any modifications to the product, including changes in indications, labeling or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new BLA or a BLA supplement, which may require the applicant to develop additional data or conduct additional preclinical studies and clinical trials. Securing FDA approval for new indications is similar to the process for approval of the original indication and requires, among other things, submitting data from adequate and well-controlled clinical trials to demonstrate the product’s safety and efficacy in the new indication. Even if such trials are conducted, the FDA may not approve any expansion of the labeled indications for use in a timely fashion, or at all. There also are continuing, annual user fee requirements that are now assessed as program fees for certain approved drugs.

Orphan drug designation and exclusivity

Orphan drug designation in the United States is designed to encourage sponsors to develop products intended for the treatment of rare diseases or conditions. In the United States, a rare disease or condition is statutorily defined as a condition that affects fewer than 200,000 individuals in the United States or that affects more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making the product available for the disease or condition will be recovered from sales of the product in the United States.

Orphan drug designation qualifies a company for certain tax credits. In addition, if a drug candidate that has orphan drug designation subsequently receives the first FDA approval for that drug for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same indication for seven years following product approval unless the subsequent product candidate is demonstrated to be clinically superior. Absent a showing of clinical superiority, FDA cannot approve the same product made by another manufacturer for the same indication during the market exclusivity period unless it has the consent of the sponsor or the sponsor is unable to provide sufficient quantities.

A sponsor may request orphan drug designation of a previously unapproved product or new orphan indication for an already marketed product. In addition, a sponsor of a product that is otherwise the same product as an already approved orphan drug may seek and obtain orphan drug designation for the subsequent product for the same rare disease or condition if it can present a plausible hypothesis that its product may be clinically superior to the first drug. More than one sponsor may receive orphan drug designation for the same product for the same rare disease or condition, but each sponsor seeking orphan drug designation must file a complete request for designation. To qualify for orphan exclusivity, however, the drug must be clinically superior to the previously approved product that is the same drug for the same condition.

Gene therapy products present novel issues for assessing when two products are the “same” for orphan exclusivity purposes. In September 2021, the FDA issued a final guidance document describing its current thinking on when a gene therapy product is the “same” as another product for the purpose of orphan exclusivity. Under the guidance, if either the transgene or vector differs between two gene therapy products in a manner that does not reflect “minor” differences, the two products would be considered different drugs for orphan drug exclusivity purposes. FDA will determine whether two vectors from the same viral class are the same on a case-by-case basis and may consider additional key features in assessing sameness. While the guidance provides some additional clarity on FDA’s approach to assessing “sameness,” significant ambiguity and uncertainty remain as to how FDA will assess viral vectors in the same class, what differences in vector or transgene are considered minor, and what additional features may be considered.

38


 

The period of exclusivity begins on the date that the marketing application is approved by the FDA and applies only to the indication for which the product has been designated. The FDA may approve a second application for the same product for a different use or a second application for a clinically superior version of the product for the same use. Orphan drug exclusivity will not bar approval of another product under certain circumstances, including if the company with orphan drug exclusivity is not able to meet market demand or the subsequent product with the same drug for the same condition is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or provide a major contribution to patient care. This is the case despite an earlier court opinion holding that the Orphan Drug Act unambiguously required the FDA to recognize orphan drug exclusivity regardless of a showing of clinical superiority. Under Omnibus legislation signed in December 2020, the requirement for a product to show clinical superiority applies to drugs and biologics that received orphan drug designation before enactment of the FDA Reauthorization Act of 2017, or FDARA, in 2017, but have not yet been approved or licensed by the FDA.

In September 2021, the Court of Appeals for the 11th Circuit held that, for the purpose of determining the scope of exclusivity, the term “same disease or condition” in the statute means the designated “rare disease or condition” and could not be interpreted by the agency to mean the “indication or use.” Thus, the court concluded, orphan drug exclusivity applies to the entire designated disease or condition rather than the “indication or use.” It is unclear how this court decision will be implemented by the FDA.

Pediatric exclusivity

Pediatric exclusivity is another type of non-patent regulatory exclusivity in the United States. Specifically, the Best Pharmaceuticals for Children Act provides for the attachment of an additional six months of exclusivity, which is added on to the term of any remaining regulatory exclusivity at the time the pediatric exclusivity is granted. This six-month exclusivity may be granted if a BLA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data, even if the data do not show the product to be effective in the pediatric population studied.

Biosimilars and exclusivity

The 2010 Patient Protection and Affordable Care Act, or PPACA, which was signed into law in March 2010, included a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA. The BPCIA established a regulatory scheme authorizing the FDA to approve biosimilars and interchangeable biosimilars.

Under the BPCIA, a manufacturer may submit an application for licensure of a biological product that is “biosimilar to” or “interchangeable with” a previously approved biological product or “reference product.” In order for the FDA to approve a biosimilar product, it must find that there are no clinically meaningful differences between the reference product and proposed biosimilar product in terms of safety, purity, and potency. For the FDA to approve a biosimilar product as interchangeable with a reference product, the agency must find that the biosimilar product can be expected to produce the same clinical results as the reference product, and (for products administered multiple times) that the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.

Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date of approval of the reference product. The FDA may not approve a biosimilar product until 12 years from the date on which the reference product was first licensed. This 12-year exclusivity period is referred to as the reference product exclusivity period and bars approval of a biosimilar but notably does not prevent approval of a competing product pursuant to a full BLA (i.e., containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity, and potency of the product). The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. The law also includes an extensive process for the innovator biologic and biosimilar manufacturer to litigate patent infringement, validity, and enforceability prior to the approval of the biosimilar.

Since the passage of the BPCIA, many states have passed laws or amendments to laws, including laws governing pharmacy practices, which are state-regulated, to regulate the use of biosimilars.

Patent term restoration and extension

A patent claiming a new biological product may be eligible for a limited patent term extension under the Hatch-Waxman Act, which permits a patent restoration of up to five years for a single patent for an approved product as compensation for patent term lost during product development and FDA regulatory review. The restoration period granted on a patent covering a product is typically one-half the time between the effective date a clinical investigation involving human beings is begun and the submission date of a marketing application less any dime during which the applicant failed to exercise due diligence, plus the time between the submission date of an application and the ultimate approval date less any dime during which the applicant failed to exercise due diligence. Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval date. Only one patent applicable to an approved product is eligible for the extension, only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended and the application for the extension must be submitted prior to the expiration of the patent in question. A patent that covers multiple products for which approval is sought can only be extended in connection with one of the approvals. The USPTO reviews and approves the application for any patent term extension or restoration in consultation with the FDA.

39


 

FDA approval of companion diagnostics

In August 2014, the FDA issued final guidance clarifying the requirements that will apply to approval of therapeutic products and in vitro companion diagnostics. According to the guidance, for novel drugs, a companion diagnostic device and its corresponding therapeutic should be approved or cleared contemporaneously by the FDA for the use indicated in the therapeutic product’s labeling. Approval or clearance of the companion diagnostic device will ensure that the device has been adequately evaluated and has adequate performance characteristics in the intended population. In July 2016, the FDA issued a draft guidance intended to assist sponsors of the drug therapeutic and in vitro companion diagnostic device on issues related to co-development of the products.

Further, in April 2020, the FDA issued additional guidance which describes considerations for the development and labeling of companion diagnostic devices to support the indicated uses of multiple drug or biological oncology products, when appropriate. This guidance builds upon existing policy regarding the labeling of companion diagnostics. In its 2014 guidance, the FDA stated that if evidence is sufficient to conclude that the companion diagnostic is appropriate for use with a specific group of therapeutic products, the companion diagnostic’s intended use/indications for use should name the specific group of therapeutic products, rather than specific products. The 2020 guidance expands on the policy statement in the 2014 guidance by recommending that companion diagnostic developers consider a number of factors when determining whether their test could be developed, or the labeling for approved companion diagnostics could be revised through a supplement, to support a broader labeling claim such as use with a specific group of oncology therapeutic products (rather than listing an individual therapeutic product(s)).

Under the FDCA, in vitro diagnostics, including companion diagnostics, are regulated as medical devices. In the United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance. Unless an exemption applies, diagnostic tests require marketing clearance or approval from the FDA prior to commercial distribution.

The FDA previously has required in vitro companion diagnostics intended to select the patients who will respond to the product candidate to obtain pre-market approval, or PMA, simultaneously with approval of the therapeutic product candidate. The PMA process, including the gathering of clinical and preclinical data and the submission to and review by the FDA, can take several years or longer. It involves a rigorous premarket review during which the applicant must prepare and provide the FDA with reasonable assurance of the device’s safety and effectiveness and information about the device and its components regarding, among other things, device design, manufacturing and labeling. PMA applications are subject to an application fee, which exceeds $250,000 for most PMAs; for federal fiscal year 2022, the standard fee for review of a PMA is $374,858 and the small business fee is $93,714.

A clinical trial is typically required for a PMA application and, in a small percentage of cases, the FDA may require a clinical study in support of a 510(k) submission. A manufacturer that wishes to conduct a clinical study involving the device is subject to the FDA’s IDE regulation. The IDE regulation distinguishes between significant and non-significant risk device studies and the procedures for obtaining approval to begin the study differ accordingly. Also, some types of studies are exempt from the IDE regulations. A significant risk device presents a potential for serious risk to the health, safety, or welfare of a subject. Significant risk devices are devices that are substantially important in diagnosing, curing, mitigating, or treating disease or in preventing impairment to human health. Studies of devices that pose a significant risk require both FDA and an IRB approval prior to initiation of a clinical study. Many companion diagnostics are considered significant risk devices due to their role in diagnosing a disease or condition. Non-significant risk devices are devices that do not pose a significant risk to the human subjects. A non-significant risk device study requires only IRB approval prior to initiation of a clinical study.

After a device is placed on the market, it remains subject to significant regulatory requirements. Medical devices may be marketed only for the uses and indications for which they are cleared or approved. Device manufacturers must also establish registration and device listings with the FDA. A medical device manufacturer’s manufacturing processes and those of its suppliers are required to comply with the applicable portions of the Quality System Regulation, which covers the methods and documentation of the design, testing, production, processes, controls, quality assurance, labeling, packaging and shipping of medical devices. Domestic facility records and manufacturing processes are subject to periodic unscheduled inspections by the FDA. The FDA also may inspect foreign facilities that export products to the United States.

40


 

Federal and state data privacy and security laws

There are multiple privacy and data security laws that may impact our business activities in the United States and in other countries where we conduct trials or where we may do business in the future. These laws are evolving and may increase both our obligations and our regulatory risks in the future. In the health care industry generally, under the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, the U.S. Department of Health and Human Services, or HHS, has issued regulations to protect the privacy and security of protected health information, or PHI, used or disclosed by covered entities including certain healthcare providers, health plans and healthcare clearinghouses. HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their regulations, including the omnibus final rule published on January 25, 2013, also imposes certain obligations on the business associates of covered entities that obtain protected health information in providing services to or on behalf of covered entities. HIPAA may apply to us in certain circumstances and may also apply to our business partners in ways that may impact our relationships with them. Any clinical trials we conduct will be regulated by Subpart A of 45 CFR 46, also known as the Common Rule, which also includes specific privacy-related provisions. In addition to federal privacy regulations, there are a number of state laws governing confidentiality and security of health information that may be applicable to our business. In addition to possible federal civil and criminal penalties for HIPAA violations, state attorneys general are authorized to file civil actions for damages or injunctions in federal courts to enforce HIPAA and seek attorney’s fees and costs associated with pursuing federal civil actions. In addition, state attorneys general (along with private plaintiffs) have brought civil actions seeking injunctions and damages resulting from alleged violations of HIPAA’s privacy and security rules. State attorneys general also have authority to enforce state privacy and security laws. Moreover, new laws and regulations governing privacy and security may be adopted in the future as well.

At the state level, in 2018, California passed into law the California Consumer Privacy Act, or the CCPA, which took effect on January 1, 2020 and imposed many requirements on businesses that process the personal information of California residents, including requiring businesses to provide notice to data subjects regarding the information collected about them and how such information is used and shared, and providing data subjects the right to request access to such personal information and, in certain cases, request the erasure of such personal information. The CCPA also affords California residents the right to opt-out of “sales” of their personal information. The CCPA contains significant penalties for companies that violate its requirements. It also provides California residents a private right of action, including the ability to seek statutory damages, in the event of a breach involving their personal information. Compliance with the CCPA is a rigorous and time-intensive process that may increase the cost of doing business or require companies to change their business practices to ensure full compliance. On November 3, 2020, California voters passed a ballot initiative for the California Privacy Rights Act, or the CPRA, which will expand the CCPA to incorporate additional provisions, including requiring that the use, retention, and sharing of personal information of California residents be reasonably necessary and proportionate to the purposes of collection or processing, granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents regarding retention of information. The CPRA will also expand personal information rights of California residents, including creating a right to opt out of sharing of personal information with third parties for advertising, expanding the lookback period for the right to know about personal information held by businesses, and expanding the right to erasure for information held by third parties. Most CPRA provisions will take effect on January 1, 2023, though the obligations will apply to any personal information collected after January 1, 2022. These provisions may apply to some of our business activities. In addition, other states, including Virginia and Colorado, already have passed state privacy laws. Other states will be considering these laws in the future. These laws may impact our business activities, including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of any products for which we or our collaborators obtain regulatory and marketing approval.

Regulation and procedures governing approval of medicinal products in the EU and the U.K.

In order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of products. Whether or not it obtains FDA approval for a product, an applicant will need to obtain the necessary approvals by the comparable foreign regulatory authorities before it can commence clinical trials or marketing of the product in those countries or jurisdictions. Specifically, the process governing approval of medicinal products in the EU generally follows the same lines as in the United States. It entails satisfactory completion of preclinical studies and adequate and well-controlled clinical trials to establish the safety and efficacy of the product for each proposed indication. It also requires the submission to the relevant competent authorities of a marketing authorization application, or MAA, and granting of a marketing authorization by these authorities before the product can be marketed and sold in the EU.

Clinical trial approval

Pursuant to the currently applicable Clinical Trials Directive 2001/20/EC and the Directive 2005/28/EC on GCP, a system for the approval of clinical trials in the EU has been implemented through national legislation of the member states. Under this system, an applicant must obtain approval from the competent national authority of an EU member state in which the clinical trial is to be conducted, or in multiple member states if the clinical trial is to be conducted in a number of member states. Furthermore, the applicant may only start a clinical trial at a specific site after the competent ethics committee has issued a favorable opinion. The clinical trial application must be accompanied by an investigational medicinal product dossier with supporting information prescribed by Directive 2001/20/EC and Directive 2005/28/EC and corresponding national laws of the member states and further detailed in applicable guidance documents.

41


 

In April 2014, the EU adopted a new Clinical Trials Regulation (EU) No 536/2014, but it has not yet become effective. The Clinical Trials Regulation aims to simplify and streamline the approval of clinical trials in the EU. The main characteristics of the regulation include: a streamlined application procedure via a single entry point, the “EU portal”; a single set of documents to be prepared and submitted for the application as well as simplified reporting procedures for clinical trial sponsors; and a harmonized procedure for the assessment of applications for clinical trials, which is divided in two parts. Part I is assessed by the competent authorities of all EU Member States in which an application for authorization of a clinical trial has been submitted (Member States concerned). Part II is assessed separately by each Member State concerned. Strict deadlines have been established for the assessment of clinical trial applications. The role of the relevant ethics committees in the assessment procedure will continue to be governed by the national law of the concerned EU Member State. However, overall related timelines will be defined by the Clinical Trials Regulation.

The conduct of all clinical trials performed in the EU will continue to be bound by currently applicable provisions until the new Clinical Trials Regulation becomes applicable. The extent to which ongoing clinical trials will be governed by the Clinical Trials Regulation will depend on when the Clinical Trials Regulation becomes applicable and on the duration of the individual clinical trial. If a clinical trial continues for more than three years from the day on which the Clinical Trials Regulation becomes applicable, the Clinical Trials Regulation will at that time begin to apply to the clinical trial.

On January 1, 2020, the website of the European Commission reported that the implementation of the new Clinical Trials Regulation was dependent on the development of a fully functional clinical trials portal and database, which would be confirmed by an independent audit, and that the new legislation would come into effect six months after the European Commission publishes a notice of this confirmation. In late 2020, the EMA indicated that it plans to focus on the findings of a system audit; improving the usability, quality and stability of the clinical trial information system; and knowledge transfer to prepare users and their organizations for the new clinical trial system. The EMA has indicated that the system will go live in January 2022.

Parties conducting certain clinical trials must, as in the United States, post clinical trial information in the EU at the EudraCT website: https://eudract.ema.europa.eu.

Marketing authorization

To obtain a marketing authorization for a gene therapy product under the EU regulatory system, an applicant must submit an application via the centralized procedure administered by the European Medicines Agency (EMA). Specifically, the grant of marketing authorization in the EU for products containing viable human tissues or cells such as gene therapy medicinal products is governed by Regulation 1394/2007/EC on advanced therapy medicinal products, read in combination with Directive 2001/83/EC of the European Parliament and of the Council, commonly known as the Community code on medicinal products. Regulation 1394/2007/EC lays down specific rules concerning the authorization, supervision, and pharmacovigilance of gene therapy medicinal products, somatic cell therapy medicinal products, and tissue engineered products. Manufacturers of advanced therapy medicinal products must demonstrate the quality, safety, and efficacy of their products to the EMA’s Committee for Advance Therapies which provides a draft opinion regarding the application for marketing authorization and which is subject to final approval by the EMA’s Committee for Medicinal Products for Human Use. The European Commission grants or refuses marketing authorization in light of that final approval.

Under the centralized procedure in the EU, the maximum timeframe for the evaluation of an MAA is 210 days, excluding clock stops when additional information or written or oral explanation is to be provided by the applicant in response to questions of the Committee for Medicinal Products for Human Use, or CHMP. Accelerated evaluation may be granted by the CHMP in exceptional cases, when a medicinal product is of major interest from the point of view of public health and, in particular, from the viewpoint of therapeutic innovation. If the CHMP accepts such a request, the time limit of 210 days will be reduced to 150 days, but it is possible that the CHMP may revert to the standard time limit for the centralized procedure if it determines that it is no longer appropriate to conduct an accelerated assessment.

42


 

Conditional approval

In specific circumstances, E.U. legislation (Article 14–a Regulation (EC) No 726/2004 (as amended by Regulation (EU) 2019/5 and Regulation (EC) No 507/2006 on Conditional Marketing Authorizations for Medicinal Products for Human Use) enables applicants to obtain a conditional marketing authorization prior to obtaining the comprehensive clinical data required for an application for a full marketing authorization. Such conditional approvals may be granted for product candidates (including medicines designated as orphan medicinal products) if (1) the product candidate is intended for the treatment, prevention or medical diagnosis of seriously debilitating or life-threatening diseases; (2) the product candidate is intended to meet unmet medical needs of patients; (3) a marketing authorization may be granted prior to submission of comprehensive clinical data provided that the benefit of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still required; (4) the risk-benefit balance of the product candidate is positive; and (5) it is likely that the applicant will be in a position to provide the required comprehensive clinical trial data. A conditional marketing authorization may contain specific obligations to be fulfilled by the marketing authorization holder, including obligations with respect to the completion of ongoing or new studies and with respect to the collection of pharmacovigilance data. Conditional marketing authorizations are valid for one year, and may be renewed annually, if the risk-benefit balance remains positive, and after an assessment of the need for additional or modified conditions or specific obligations. The timelines for the centralized procedure described above also apply with respect to the review by the CHMP of applications for a conditional marketing authorization.

Regulatory data exclusivity in the EU

In the EU, new chemical entities approved on the basis of a complete independent data package qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity pursuant to Regulation (EC) No 726/2004, as amended, and Directive 2001/83/EC, as amended. Data exclusivity prevents regulatory authorities in the EU from referencing the innovator’s data to assess a generic (abbreviated) application for a period of eight years. This also applies to biosimilars. During the additional two-year period of market exclusivity, a generic marketing authorization application can be submitted, and the innovator’s data may be referenced, but no generic medicinal product can be marketed until the expiration of the market exclusivity. The overall ten-year period will be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to authorization, is held to bring a significant clinical benefit in comparison with existing therapies. In addition, if a pediatric investigation plan is accepted, then a further year of market exclusivity might be obtained (or in the alternative a patent extension (SPC) of a further 6 months). For orphan medicinal products, the periods are separate and different in that there is a total of 10-year data exclusivity and if they have a PIP, there is a further two-year extension to that 10-year period. Even if a compound is considered to be a new chemical or biological entity so that the innovator gains the prescribed period of data exclusivity, another company may market another version of the product if such company obtained marketing authorization based on an MAA with a complete independent data package of pharmaceutical tests, preclinical tests and clinical trials.

Periods of authorization and renewals

A marketing authorization is valid for five years, in principle, and it may be renewed after five years on the basis of a reevaluation of the risk-benefit balance by the EMA or by the competent authority of the authorizing member state. To that end, the marketing authorization holder must provide the EMA or the competent authority with a consolidated version of the file in respect of quality, safety and efficacy, including all variations introduced since the marketing authorization was granted, at least six months before the marketing authorization ceases to be valid. Once renewed, the marketing authorization is valid for an unlimited period, unless the European Commission or the competent authority decides, on justified grounds relating to pharmacovigilance, to proceed with one additional five-year renewal period. Any authorization that is not followed by the placement of the drug on the EU market (in the case of the centralized procedure) or on the market of the authorizing member state within three years after authorization ceases to be valid.

Regulatory requirements after marketing authorization

Following approval, the holder of the marketing authorization is required to comply with a range of requirements applicable to the manufacturing, marketing, promotion and sale of the medicinal product. These include compliance with the EU’s stringent pharmacovigilance or safety reporting rules, pursuant to which post-authorization studies and additional monitoring obligations can be imposed. In addition, the manufacturing of authorized products, must also be conducted in strict compliance with the EMA’s GMP requirements and comparable requirements of other regulatory bodies in the EU, which mandate the methods, facilities, and controls used in manufacturing, processing and packing of drugs to assure their safety and identity. The marketing and promotion of authorized products, including industry-sponsored continuing medical education and advertising directed toward the prescribers of drugs and/or the general public, are strictly regulated in the EU under Directive 2001/83EC, as amended.

43


 

PRIME designation in the EU

The EU has a Priority Medicines, or PRIME, scheme that is intended to encourage drug development in areas of unmet medical need and provides accelerated assessment of products representing substantial innovation reviewed under the centralized procedure. Products from small- and medium-sized enterprises may qualify for earlier entry into the PRIME scheme than larger companies. Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and accelerated marketing authorization application assessment once a dossier has been submitted.

Pediatric studies

Prior to obtaining a marketing authorization in the EU, applicants must demonstrate compliance with all measures included in an EMA-approved PIP covering all subsets of the pediatric population, unless the EMA has granted a product-specific waiver, a class waiver, or a deferral for one or more of the measures included in the PIP. The respective requirements for all marketing authorization procedures are provided in Regulation (EC) No 1901/2006, the so-called Paediatric Regulation. This requirement also applies when a company wants to add a new indication, pharmaceutical form or route of administration for a medicine that is already authorized. The Paediatric Committee of the EMA, or PDCO, may grant deferrals for some medicines, allowing a company to delay development of the medicine for children until there is enough information to demonstrate its effectiveness and safety in adults. The PDCO may also grant waivers when development of a medicine for children is not needed or is not appropriate, such as for diseases that only affect the elderly population. Before an MAA can be filed, or an existing marketing authorization can be amended, the EMA determines that companies actually comply with the agreed studies and measures listed in each relevant PIP.

Orphan drug designation and exclusivity

Regulation (EC) No 141/2000 and Regulation (EC) No. 847/2000 provide that a product can be designated as an orphan drug by the European Commission if its sponsor can establish: that the product is intended for the diagnosis, prevention or treatment of (1) a life-threatening or chronically debilitating condition affecting not more than five in ten thousand persons in the EU when the application is made, or (2) a life-threatening, seriously debilitating or serious and chronic condition in the EU and that without incentives it is unlikely that the marketing of the drug in the EU would generate sufficient return to justify the necessary investment. For either of these conditions, the applicant must demonstrate that there exists no satisfactory method of diagnosis, prevention, or treatment of the condition in question that has been authorized in the EU or, if such method exists, the drug will be of significant benefit to those affected by that condition.

Pediatric Exclusivity

If an applicant obtains a marketing authorization in all EU member states, or a marketing authorization granted in the centralized procedure by the European Commission, and the study results for the pediatric population are included in the product information, even when negative, the medicine is then eligible for an additional six-month period of qualifying patent protection through extension of the term of the Supplementary Protection Certificate, or SPC.

Patent term extensions in the EU and other jurisdictions

The EU also provides for patent term extension through SPCs. The rules and requirements for obtaining an SPC are similar to those in the United States. An SPC may extend the term of a patent for up to five years after its originally scheduled expiration date and can provide up to a maximum of fifteen years of marketing exclusivity for a drug. In certain circumstances, these periods may be extended for six additional months if pediatric exclusivity is obtained, which is described in detail below. Although SPCs are available throughout the EU, sponsors must apply on a country-by-country basis. Similar patent term extension rights exist in certain other foreign jurisdictions outside the EU.

44


 

General data protection regulation

Similar to the laws in the United States, there are significant privacy and data security laws that apply in Europe and other countries. The collection, use, disclosure, transfer, or other processing of personal data, including personal health data, regarding individuals who are located in the European Economic Area, or the EEA, and the processing of personal data that takes place in the EEA, is subject to the EU’s General Data Protection Regulation, or GDPR, which became effective on May 25, 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, and it imposes heightened requirements on companies that process health and other sensitive data, such as requiring in many situations that a company obtain the consent of the individuals to whom the sensitive personal data relate before processing such data. Examples of obligations imposed by the GDPR on companies processing personal data that fall within the scope of the GDPR include providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, appointing a data protection officer, providing notification of data breaches, and taking certain measures when engaging third-party processors. The GDPR also imposes strict rules on the transfer of personal data to countries outside the EEA, including the U.S., and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. Compliance with the GDPR is a rigorous and time-intensive process that may increase the cost of doing business or require companies to change their business practices to ensure full compliance.

There are ongoing concerns about the ability of companies to transfer personal data from the EU to other countries. In July 2020, the Court of Justice of the European Union, or the CJEU, invalidated the EU-U.S. Privacy Shield framework, or Privacy Shield, one of the mechanisms used to legitimize the transfer of personal data from the EEA to the U.S. The CJEU decision also drew into question the long-term viability of an alternative means of data transfer, the standard contractual clauses, for transfers of personal data from the EEA to the U.S. While we were not self-certified under the Privacy Shield, this CJEU decision may lead to increased scrutiny on data transfers from the EU to the U.S. generally and increase our costs of compliance with data privacy legislation as well as our costs of negotiating appropriate privacy and security agreements with our vendors and business partners.

On June 23, 2016, the electorate in the U.K. voted in favor of leaving the EU, commonly referred to as Brexit. As with other issues related to Brexit, there are open questions about how personal data will be protected in the U.K. and whether personal information can transfer from the EU to the U.K. Following the withdrawal of the U.K. from the EU, the U.K. Data Protection Act 2018 applies to the processing of personal data that takes place in the U.K. and includes parallel obligations to those set forth by GDPR. While the Data Protection Act of 2018 in the U.K. that “implements” and complements the GDPR has achieved Royal Assent on May 23, 2018 and is now effective in the U.K., it is unclear whether transfer of data from the EEA to the U.K. will remain lawful under the GDPR. The U.K. government has already determined that it considers all European Union 27 and EEA member states to be adequate for the purposes of data protection, ensuring that data flows from the U.K. to the EU/EEA remain unaffected. In addition, a recent decision from the European Commission appears to deem the U.K. as being “essentially adequate” for purposes of data transfer from the EU to the U.K., although this decision may be re-evaluated in the future.

Beyond the GDPR, there are privacy and data security laws in a growing number of countries around the world. While many loosely follow the GDPR as a model, other laws contain different or conflicting provisions. These laws will impact our ability to conduct our business activities, including both our clinical trials and any eventual sale and distribution of commercial products.

Brexit and the regulatory framework in the U.K.

Following protracted negotiations, the U.K. left the EU on January 31, 2020. Under the withdrawal agreement, there was a transitional period until December 31, 2020 (extendable by up to two years). On December 24, 2020, the United Kingdom and the EU entered into a Trade and Cooperation Agreement. The agreement sets out certain procedures for approval and recognition of medical products in each jurisdiction. Since the regulatory framework for pharmaceutical products in the United Kingdom covering quality, safety and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales and distribution of pharmaceutical products is derived from EU directives and regulations, Brexit could materially impact the future regulatory regime which applies to products and the approval of product candidates in the U.K., as the U.K. legislation now has the potential to diverge from EU legislation. It remains to be seen how Brexit will impact regulatory requirements for product candidates and products in the U.K. in the long term. The Medicines and Healthcare Regulatory Agency published detailed guidance for industry and organizations to follow from January 1, 2021 at the completion of the transition period, which the Agency will update as the U.K.’s regulatory position on medicinal products evolves over time.

Coverage, pricing, and reimbursement

Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we may seek regulatory approval by the FDA or other government authorities. In the United States and markets in other countries, patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use any product candidates we may develop unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of such product candidates. Sales of our products will depend, in significant part, on the availability of coverage and the adequacy of reimbursement from third-party payors.

45


 

Within the United States, third-party payors include government authorities or government healthcare programs, such as Medicare and Medicaid, and private entities, such as managed care organizations, private health insurers and other organizations. The process for determining whether a third-party payor will provide coverage for a product may be separate from the process for setting the reimbursement rate that the payor will pay for the drug product. Third-party payors may limit coverage to specific products on an approved list, or formulary, which might not include all of the FDA-approved products for a particular indication. Some third-party payors may manage utilization of a particular product by requiring pre-approval (known as “prior authorization”) for coverage of particular prescriptions (to allow the payor to assess medical necessity). Moreover, a third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable us to maintain net price levels sufficient to realize an appropriate return on our investment in product development. Additionally, coverage and reimbursement for drug products can differ significantly from payor to payor. One third-party payor’s decision to cover a particular drug product or service does not ensure that other payors will also provide coverage for the drug product or will provide coverage at an adequate reimbursement rate.

Third-party payors are increasingly challenging the price and examining the cost-effectiveness of new products and services in addition to their safety and efficacy. To obtain or maintain coverage and reimbursement for any current or future product, we may need to conduct expensive pharmacoeconomic studies to demonstrate the medical necessity and cost-effectiveness of our product. These studies will be in addition to the studies required to obtain regulatory approvals. If third-party payors do not consider a product to be cost-effective compared to other available therapies, they may not cover the product after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow a company to sell its products at a profit. Thus, obtaining and maintaining reimbursement status is time-consuming and costly.

As noted above, the marketability of any product candidates for which we receive regulatory approval for commercial sale may suffer if the government and other third-party payors fail to provide coverage and adequate reimbursement. There is an emphasis on cost containment measures in the United States and we expect the pressure on pharmaceutical pricing will increase. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more product candidates for which we receive regulatory approval from one or more third party payors, less favorable coverage policies and reimbursement rates may be implemented in the future.

If we obtain appropriate approval in the future to market any of our current product candidates in the United States, we may be required to provide discounts or rebates under government healthcare programs or to certain government and private purchasers in order to obtain coverage under federal healthcare programs such as Medicaid. Participation in such programs may require us to track and report certain drug prices. We may be subject to fines and other penalties if we fail to report such prices accurately.

Outside the United States, ensuring adequate coverage and payment for any product candidates we may develop will face challenges. Pricing of prescription pharmaceuticals is subject to governmental control in many countries. Pricing negotiations with governmental authorities can extend well beyond the receipt of regulatory marketing approval for a product and may require us to conduct a clinical trial that compares the cost effectiveness of any product candidates we may develop to other available therapies. The conduct of such a clinical trial could be expensive and result in delays in our commercialization efforts.

In the EU, pricing and reimbursement schemes vary widely from country to country because this is not yet the subject of harmonized EU law. Many countries provide that products may be marketed only after a reimbursement price has been agreed. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular product candidate to currently available therapies (so called health technology assessments) in order to obtain reimbursement or pricing approval and others with “peg” their pricing to a basket of other countries. EU member states may approve a specific price for a product, or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the product on the market. Some member states, in addition to controlling pricing will monitor and control prescription volumes and issue guidance to physicians to limit prescriptions. Recently, many countries in the EU have increased the amount of discounts required on pharmaceuticals and these efforts could continue as countries attempt to manage healthcare expenditures, especially in light of the severe fiscal and debt crises experienced by many countries in the EU. The downward pressure on health care costs in general, particularly prescription products, has become intense. As a result, increasingly high barriers are being erected to the entry of new products. Political, economic, and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various EU member states, and parallel trade (arbitrage between low-priced and high-priced member states), can further reduce prices. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products, if approved in those countries.

46


 

Healthcare law and regulation

Healthcare providers and third-party payors play a primary role in the recommendation and prescription of pharmaceutical products that are granted marketing approval. Arrangements with providers, consultants, third-party payors, and customers are subject to broadly applicable fraud and abuse, anti-kickback, false claims laws, reporting of payments to healthcare providers and patient privacy laws and regulations and other healthcare laws and regulations that may constrain our business and/or financial arrangements. Restrictions under applicable federal and state healthcare laws and regulations, including certain laws and regulations applicable only if we have marketed products, include the following:

federal false claims, false statements and civil monetary penalties laws prohibiting, among other things, any person from knowingly presenting, or causing to be presented, a false claim for payment of government funds or knowingly making, or causing to be made, a false statement to get a false claim paid;
federal healthcare program anti-kickback law, which prohibits, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;
the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which, in addition to privacy protections applicable to healthcare providers and other entities, prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
the federal Food, Drug, and Cosmetic Act, or the FDCA, which among other things, strictly regulates drug marketing, prohibits manufacturers from marketing such products for off-label use and regulates the distribution of samples;
federal laws that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs;
the so-called “federal sunshine” law, which requires pharmaceutical and medical device companies to monitor and report certain financial interactions with certain healthcare providers and teaching hospitals to the Center for Medicare & Medicaid Services within the U.S. Department of Health and Human Services for re-disclosure to the public, as well as ownership and investment interests held by physicians, other healthcare providers and their immediate family members;
state laws requiring pharmaceutical companies to comply with specific compliance standards, restrict financial interactions between pharmaceutical companies and healthcare providers or require pharmaceutical companies to report information related to payments to health care providers or marketing expenditures; and
analogous state and foreign laws and regulations, such as state anti-bribery, anti-kickback and false claims laws, which may apply to healthcare items or services that are reimbursed by non-governmental third-party payors, including private insurers.

Health care and other reform

A primary trend in the U.S. healthcare industry and elsewhere is cost containment. There have been a number of federal and state proposals during the last few years regarding the pricing of pharmaceutical and biopharmaceutical products, limiting coverage and reimbursement for drugs and other medical products, government control and other changes to the healthcare system in the United States.

In March 2010, the United States Congress enacted the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the PPACA, which, among other things, includes changes to the coverage and payment for drug products under government healthcare programs. Other legislative changes have been proposed and adopted since the PPACA was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2031, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless Congressional action is taken. Under current legislation the actual reduction in Medicare payments will vary from 1% in 2022 to up to 3% in the final fiscal year of this sequester. The American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These laws may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.

47


 

Since enactment of the PPACA, there have been, and continue to be, numerous legal challenges and Congressional actions to repeal and replace provisions of the law. For example, with enactment of the Tax Cuts and Jobs Act of 2017, or the Tax Act, , Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019. Further, on December 14, 2018, a U.S. District Court judge in the Northern District of Texas ruled that the individual mandate portion of the PPACA is an essential and inseverable feature of the PPACA, and therefore because the mandate was repealed as part of the Tax Act, the remaining provisions of the PPACA are invalid as well. The U.S. Supreme Court heard this case on November 10, 2020 and, on June 17, 2021, dismissed this action after finding that the plaintiffs do not have standing to challenge the constitutionality of the PPACA. Litigation and legislation over the PPACA are likely to continue, with unpredictable and uncertain results.

In January 2021, a new executive order directed federal agencies to reconsider rules and other policies that limit Americans’ access to healthcare and consider actions that will protect and strengthen that access. Under this order, federal agencies are directed to re-examine: policies that undermine protections for people with pre-existing conditions, including complications related to COVID‑19; demonstrations and waivers under Medicaid and the PPACA that may reduce coverage or undermine the programs, including work requirements; policies that undermine the Health Insurance Marketplace or other markets for health insurance; policies that make it more difficult to enroll in Medicaid and under the PPACA; and policies that reduce affordability of coverage or financial assistance, including for dependents.

The costs of prescription pharmaceuticals have also been the subject of considerable discussion in the United States. To date, there have been several recent U.S. congressional inquiries, as well as proposed and enacted state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products. In prior presidential administrations, several executive orders intended to lower the costs of prescription drug products were issued. Certain of these orders are reflected in recently promulgated regulations, including an interim final rule implementing a most favored nation model, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries effective January 1, 2021, but such final rule is subject to a nationwide preliminary injunction for its failure to comply with notice and comment rulemaking requirements. The current administration has frozen certain of the previous administration’s measures to reform drug prices, pending further review. Further, Executive Order 14063, signed on July 9, 2021, focuses on, among other things, the price of pharmaceuticals. To address these costs, the Order directs the Department of Health and Human Services, or HHS, to create a plan within 45 days to combat “excessive pricing of prescription drugs and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the federal government for such drugs, and to address the recurrent problem of price gouging.”

On September 9, 2021, HHS released its plan to reduce drug prices. The key features of that plan are to: (a) make drug prices more affordable and equitable for all consumers and throughout the health care system by supporting drug price negotiations with manufacturers; (b) improve and promote competition throughout the prescription drug industry by supporting market changes that strengthen supply chains, promote biosimilars and generic drugs, and increase transparency; and (c) foster scientific innovation to promote better healthcare and improve health by supporting public and private research and making sure that market incentives promote discovery of valuable and accessible new treatments. Further, on August 21, 2021, in response to the litigation challenging the most favored nation model, CMS issued a proposed rule to rescind the interim final rule, following public notice and comment. With issuance of this proposal, CMS stated that it will carefully consider the comments it received on the November 2020 interim final rule as it explores all options to incorporate value into payments for Medicare Part B drugs and improve beneficiaries' access to evidence-based care.

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional healthcare organizations and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

Human Capital Resources

Team members

As of December 31, 2021, we had 341 team members employed with us full-time, of which 107 had a M.D. or Ph.D. degree. Of these team members, 234 were engaged in research and development activities, 13 were engaged in clinical activities, 32 were in technical operations and 62 were in general and administrative roles. None of our team members are represented by a labor union or covered by a collective bargaining agreement.

48


 

Human capital strategy

Our human capital strategy starts with our values:

A community of fearless innovators
Rigorous and honest in our research
Listening with open minds
Committed to each other

These values have helped us build a team that is focused on achieving our vision of providing life-long cures for patients suffering from serious diseases.

We believe the following priorities are key to realizing this vision:

Engagement

We have a highly engaged team, and we regularly collect feedback to ensure their voices are heard. We do this through a combination of engagement surveys, weekly team meetings, one-on-one interactions, and open forums. In 2021, 98% of our team members participated in the Boston Globe’s Top Places to Work survey. We have received this industry recognition for each of the last three years.

Total rewards (compensation and benefits)

We are committed to rewarding our team members in order to continue to attract and retain talent. We do this by regularly conducting market assessments to ensure our compensation program is competitively positioned. We also engage our team members on a regular basis to understand what benefits they value. This feedback has allowed us to evolve our total rewards to respond proactively to the needs of our team.

Wellness

In order to execute on our human capital strategy, the wellbeing of our team members comes first. To that end, we provide several benefits focused on the various physical, mental, and financial aspects of wellness. For example, in response to the COVID-19 pandemic, we implemented changes in our business to protect our team members and their families. These changes include flexible working schedules, weekly on-site testing, technology support and mandatory vaccination for all team members. As of December 31, 2021, all of our team members were in compliance with our COVID-19 vaccination policy.

Inclusion, diversity & belonging

We continue to build an inclusive and diverse culture that allows for unique perspectives, creates an opportunity for all to grow and develop, and reflects the needs of relevant patient communities​. Our Inclusion, Diversity and Belonging team develops monthly programs for our team members to engage with, hosts external speakers and panels, supports diverse local businesses, and creates communications for events that we honor throughout the year. In addition to our monthly programming, we are undertaking initiatives to accomplish the following goals, which were established with direct input from a company-wide listening tour and are linked to our values:

Inclusion, Diversity and Belonging at Beam is a cultural priority with a clear vision, intentional commitment, and transparent accountability.​
We incorporate an Inclusion, Diversity and Belonging lens into our programs, policies, and processes, ensuring Beam team members understand how inclusion, diversity and belonging can have a positive effect on the employee experience.​
We take meaningful action to increase and support underrepresented talent, with specific emphasis on Black and Latinx team members.
We honor and acknowledge various groups throughout the year, observing National Hispanic Heritage Month, Black History Month, International Women’s Day, Global Diversity Awareness Month, and Indigenous People’s Day.

Available Information

Our website address is www.beamtx.com, and our investor relations website is located at investors.beamtx.com. Information on our website is not incorporated by reference herein. We will make available on our website, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains an Internet site (http://www.sec.gov) containing reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

49


 

Investors and others should note that we announce material information to our investors using one or more of the following: SEC filings, press releases and our corporate website, including without limitation the “Investors Center” section of our website. We use these channels, as well as social media channels such as Twitter and LinkedIn, in order to achieve broad, non-exclusionary distribution of information to the public and for complying with our disclosure obligations under Regulation FD. It is possible that the information we post on our corporate website or other social media could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the “Investor Center” section of our corporate website and on our social media channels. The contents of our corporate website and social media channels are not, however, a part of this Annual Report on Form 10-K.

Item 1A. Risk Factors.

You should carefully consider the risks and uncertainties described below together with all of the other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes appearing at the end of this Annual Report on Form 10-K, in evaluating our company. If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common stock could decline. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

Risks related to our financial position and need for additional capital

We have incurred significant losses since inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.

Since inception, we have incurred significant operating losses. Our net loss was $370.6 million, $194.6 million and $78.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, we had an accumulated deficit of $768.3 million. We have financed our operations primarily through private placements of our preferred stock and proceeds from sales of our common stock. We have devoted all of our efforts to research and development. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase substantially if and as we:

initiate clinical trials, including our BEACON-101 trial;
continue our research programs and our preclinical development of other product candidates from our research programs;
seek to identify additional research programs and additional product candidates;
initiate preclinical testing and clinical trials for any other product candidates we identify and develop;
maintain, expand, enforce, defend and protect our intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio;
seek marketing approvals for any of our product candidates that successfully complete clinical trials;
establish a sales, marketing, and distribution infrastructure to commercialize any medicines for which we may obtain marketing approval;
further develop our platform;
hire additional personnel, including research and development, clinical, and commercial personnel;
add operational, financial, and management information systems and personnel, including personnel to support our product development;
acquire or in-license products, intellectual property, medicines, and technologies;
continue building and then maintain a commercial-scale cGMP manufacturing facility; and
continue to operate as a public company.

50


 

We have not completed any clinical trials of any product candidates and expect that it will be many years, if ever, before we have a product candidate approved for commercialization. To become and remain profitable, we must develop and, either directly or through collaborators, eventually commercialize a medicine or medicines with significant market potential. This will require us to be successful in a range of challenging activities, including identifying product candidates, completing preclinical studies and clinical trials of product candidates, obtaining marketing approval for these product candidates, manufacturing, marketing, and selling those medicines for which we may obtain marketing approval, and satisfying any post-marketing requirements. We may never succeed in these activities and, even if we do, may never generate revenues that are significant or large enough to achieve profitability. Because of the numerous risks and uncertainties associated with developing base editing product candidates, we are unable to predict the extent of any future losses or when we will become profitable, if at all. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business, or continue our operations.

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.

We expect our expenses to increase in connection with our ongoing activities, particularly as we identify, continue the research and development of, initiate and continue 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. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our research and product development programs or future commercialization efforts.

At December 31, 2021, our cash, cash equivalents, and marketable securities were $965.6 million. 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:

the cost of continuing to build our platform;
the costs of acquiring licenses for the delivery modalities that will be used with our product candidates;
the scope, progress, results, and costs of discovery, preclinical development, laboratory testing, manufacturing, and clinical trials for the product candidates we may develop;
the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights, and defending intellectual property-related claims;
the costs, timing, and outcome of regulatory review of the product candidates we may develop;
the costs of future activities, including product sales, medical affairs, marketing, manufacturing, distribution, coverage and reimbursement for any product candidates for which we receive regulatory approval to commercialize;
the success of our license agreements and our collaborations;
our ability to establish and maintain additional license agreements and collaborations on favorable terms, if at all;
the achievement of milestones or occurrence of other developments that trigger payments under any additional license agreements or collaboration agreements we obtain;
the extent to which we acquire or in-license products, intellectual property and technologies;
the costs of operating as a public company; and
the costs of obtaining, building and expanding our internal manufacturing capacity.

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.

51


 

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.

Raising additional capital may cause dilution to our stockholders restrict our operations or require us to relinquish rights to our technologies or product candidates we may develop.

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. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted. The terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. 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, declaring dividends, and possibly other restrictions.

If we raise funds 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 we may develop, or we may have to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. In addition, we have and may in the future enter collaboration and acquisition agreements, pursuant to which we are required to issue additional shares of our common stock in connection with future milestone payment obligations. These and other future issuances to our partners and collaborators may cause substantial dilution to our stockholders.

Our short operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

We are an early-stage company. We were founded in January 2017 and began operations in July 2017. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, acquiring and developing our platform and technology, identifying potential product candidates, undertaking preclinical studies and preparing for the initiation of clinical trials. Nearly all of our product development programs are still in the preclinical or research stage of development, and their risk of failure is high. We have not yet demonstrated an ability to initiate or successfully complete any clinical trials, including large-scale, pivotal clinical trials, obtain marketing approvals, manufacture a commercial-scale medicine, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful commercialization. Typically, it takes about 10 to 15 years to develop a new medicine from the time it is discovered to when it is available for treating patients. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history.

Our limited operating history, particularly in light of the rapidly evolving base editing and gene editing field, may make it difficult to evaluate our technology and industry and predict our future performance. Our short history as an operating company makes any assessment of our future success or viability subject to significant uncertainty. We will encounter risks and difficulties frequently experienced by early stage companies in rapidly evolving fields. If we do not address these risks successfully, our business will suffer.

In addition, as a new business, we may encounter other unforeseen expenses, difficulties, complications, delays, and other known and unknown factors. We will eventually need to transition from a company with a research focus to a company capable of supporting commercial activities. We may not be successful in such a transition.

52


 

We have never generated revenue from product sales and may never become profitable.

Our ability to generate revenue from product sales and achieve profitability depends on our ability, alone or with collaborative partners, to successfully complete the development of, and obtain the regulatory approvals necessary to commercialize, product candidates we may identify for development. We do not anticipate generating revenues from product sales for the next several years, if ever. Our ability to generate future revenues from product sales depends heavily on our, or our collaborators’, ability to successfully:

identify product candidates and complete research and preclinical and clinical development of the product candidates we or our collaborators may identify;
seek and obtain regulatory and marketing approvals for any of our product candidates for which we or our collaborators successfully complete clinical trials;
launch and commercialize any of our product candidates for which we obtain regulatory and marketing approval by establishing a sales force, marketing, and distribution infrastructure or, alternatively, collaborating with a commercialization partner;
qualify for adequate coverage and reimbursement by government and third-party payors for our product candidates for which we or our collaborators obtain regulatory and marketing approval;
develop, maintain, and enhance a sustainable, scalable, reproducible, and transferable manufacturing process for the product candidates we or our collaborators may develop;
manufacture materials in compliance with cGMP and establish the infrastructure necessary to support and develop large-scale manufacturing capabilities;
establish and maintain supply and manufacturing relationships with third parties that can provide adequate, in both amount and quality, products, and services to support clinical development and the market demand for our product candidates for which we or our collaborators obtain regulatory and marketing approval;
obtain market acceptance of any product candidates we or our collaborators may develop as viable treatment options;
address competing technological and market developments;
implement internal systems and infrastructure, as needed;
negotiate favorable terms in any collaboration, licensing, or other arrangements into which we may enter and performing our obligations in such collaborations, licensing or other arrangements;
maintain, protect, enforce, defend, and expand our portfolio of intellectual property rights, including patents, trade secrets, and know-how;
avoid and defend against third-party interference, infringement, and other intellectual property claims; and
attract, hire, and retain qualified personnel.

Even if one or more of the product candidates we or our collaborators may develop are approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate. Our expenses could increase beyond expectations if we are required by the FDA, the EMA, or other regulatory authorities to perform clinical and other studies in addition to those that we currently anticipate. Even if we are able to generate revenues from the sale of any approved products, we may not become profitable and may need to obtain additional funding to continue operations.

Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations.

53


 

Our future ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.

We have incurred substantial losses during our history, and we may never achieve profitability. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset a portion of future taxable income, if any, subject to expiration of such carryforwards in the case of carryforwards generated prior to 2018. Additionally, we continue to generate business tax credits, including research and development tax credits, which generally may be carried forward to offset a portion of future taxable income, if any, subject to expiration of such credit carryforwards. In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change,” generally defined as one or more shareholders or groups of shareholders who own at least 5% of the corporation’s equity increasing their ownership in the aggregate by a greater than 50 percentage point change (by value) in their equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards, or NOLs, and other pre-change tax attributes (such as research and development tax credits) to offset its post-change income or taxes may be limited. The amount of the annual limitation is determined based on the value of the corporation immediately prior to the ownership change. Our prior equity offerings and other changes in our stock ownership may have resulted in such ownership changes. In addition, we may experience ownership changes in the future as a result of shifts in our stock ownership, some of which are outside of our control. As a result, if we earn net taxable income, our ability to use our pre-change NOLs or other pre-change tax attributes to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. Additional limitations on our ability to utilize our NOLs to offset future taxable income may arise as a result of our corporate structure, whereby NOLs generated by certain of our subsidiaries or controlled entities may not be available to offset taxable income earned by our subsidiaries or other controlled entities. In addition, under legislation commonly referred to as the Tax Cuts and Jobs Act of 2017, or the Tax Act, as amended by the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, the amount of post-2017 NOLs that we are permitted to deduct in any taxable year is limited to 80% of our taxable income in such year. The Tax Act generally eliminates the ability to carry back any NOLs to prior taxable years, while allowing post-2017 unused NOLs to be carried forward indefinitely. There is a risk that due to changes under the Tax Act, regulatory changes, or other unforeseen reasons, our existing NOLs or business tax credits could expire or otherwise be unavailable to offset future income tax liabilities. At the state level, there may also be periods during which the use of NOLs or business tax credits is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. For these reasons, we may not be able to realize a tax benefit from the use of our NOLs or tax credits, even if we attain profitability.

Risks related to discovery, development, and commercialization

Base editing is a novel technology that is not yet clinically validated for human therapeutic use. The approaches we are taking to discover and develop novel therapeutics are unproven and may never lead to marketable products.

We are focused on developing potentially curative medicines utilizing base editing technology. Although there have been significant advances in the field of gene therapy, which typically involves introducing a copy of a gene into a patient’s cell, and gene editing in recent years, base editing technologies are new and largely unproven. The technologies that we have licensed and that we intend to develop and intend to license have not yet completed any clinical trials, nor are we aware of any clinical trials for safety or efficacy having been completed by third parties using our base editing or similar technologies. The scientific evidence to support the feasibility of developing product candidates based on these technologies is both preliminary and limited, and base editing and delivery modalities for it are novel. Successful development of product candidates by us will require solving a number of issues, including safely delivering a therapeutic into target cells within the human body or in an ex vivo setting, optimizing the efficiency and specificity of such product candidates, and ensuring the therapeutic selectivity of such product candidates. Several biological steps are required for delivery of base editing medicines to translate into therapeutically active medicines. These processing steps may differ between individuals and differ based on the targeted tissue. These differences could lead to variable levels of therapeutic protein, variable activity, immunogenicity, or variable distribution to tissues further increasing the risk inherent in the development of base editing medicines. There can be no assurance we will be successful in solving any or all of these issues, or that we will be able to progress our preclinical studies or clinical trials in accordance with anticipated timelines.

We have concentrated our research efforts to date on preclinical work to bring therapeutics to the clinic for our initial indications, and our future success is highly dependent on the successful development of base editing technologies, cellular delivery methods and therapeutic applications of that technology. While some of the existing gene editing technologies have progressed to clinical trials, they continue to suffer from various limitations, and such limitations may affect our future success. We may decide to alter or abandon our initial programs as new data become available and we gain experience in developing base editing therapeutics. We cannot be sure that our technologies will yield satisfactory products that are safe and effective, scalable or profitable in our initial indications or any other indication we pursue.

Development activities in the field of base editing are currently subject to a number of risks related to the ownership and use of certain intellectual property rights that are subject to patent interference proceedings in the United States and opposition proceedings in Europe. For additional information regarding the risks that may apply to our and our licensors’ intellectual property rights, see the section entitled “—Risks related to our intellectual property”.

54


 

We may not be successful in our efforts to identify and develop potential product candidates. If these efforts are unsuccessful, we may never become a commercial stage company or generate any revenues.

The success of our business depends primarily upon our ability to identify, develop, and commercialize product candidates based on our gene editing platform. Nearly all of our product development programs are still in the research or preclinical stage of development. Our research programs may fail to identify potential product candidates for clinical development for a number of reasons. Our research methodology may be unsuccessful in identifying potential product candidates, our potential product candidates may be shown to have harmful side effects in preclinical in vitro experiments or animal model studies, they may not show promising signals of therapeutic effect in such experiments or studies or they may have other characteristics that may make the product candidates impractical to manufacture, unmarketable, or unlikely to receive marketing approval.

In addition, although we believe base editing will position us to rapidly expand our portfolio of product candidates beyond our current product candidates we may develop after only minimal changes to the product candidate construct, we have not yet successfully developed any product candidate and our ability to expand our portfolio may never materialize.

If any of these events occur, we may be forced to abandon our research or development efforts for a program or programs, which would have a material adverse effect on our business, financial condition, results of operations, and prospects. Research programs to identify new product candidates require substantial technical, financial, and human resources. We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful, which would be costly and time-consuming.

The gene editing field is relatively new and is evolving rapidly. We are focusing our research and development efforts primarily on gene editing using base editing technology, but other gene editing technologies may be discovered that provide significant advantages over base editing, which could materially harm our business.

We focus our research and development efforts primarily on gene editing technologies using base editing. Other companies have previously undertaken research and development of gene editing technologies using zinc finger nucleases, engineered meganucleases, and transcription activator-like effector nucleases, or TALENs, but to date no company has obtained marketing approval for a product candidate developed using those technologies. There can be no certainty that base editing technology will lead to the development of genetic medicines or that other gene editing technologies will not be considered better or more attractive for the development of medicines. For example, Feng Zhang’s group at MIT and Broad Institute, and, separately, Samuel Sternberg’s group at Columbia University announced the discovery of the use of transposons, or jumping genes, in June 2019. Transposons can insert themselves into different places in the genome and can be programmed to carry specific DNA sequences to specific sites, without the need for making double-stranded breaks in DNA. In addition, one of our founders, David Liu, and his group at Broad Institute developed a novel gene editing technology. We have secured an exclusive license from Prime Medicine, a company founded by David Liu, to pursue this new technology in certain fields and for certain applications similar to those we are already pursuing with base editing. Our license does not cover all fields and applications of this new technology for gene editing and Prime Medicine retains broad rights to use this technology outside of the fields licensed to us. It is possible that this gene editing technology developed by David Liu’s group is competitive with our business, and it is also possible that such gene editing technology may potentially be considered more attractive than base editing. Therefore, Prime Medicine may pursue this technology in other fields and for other applications and may develop competing products using such technology. David Liu has reported results from his lab related to base editing in mitochondria; this is accomplished by splitting the deaminase into two halves, which are reassembled at the desired regions of the mitochondrial DNA. This new technology could be used to treat mitochondrial diseases. Our current technology cannot edit within the mitochondria. In addition, Geoffrey von Maltzahn and others have launched a company called Tessera Therapeutics, Inc., which is focused on a technology they call “Gene Writing.” This technology, which utilizes mobile genetic elements, can alter the genome by inserting genes and exons, introducing small insertions and deletions, or by changing single or multiple DNA base pairs. Similarly, another new gene editing technology that has not been discovered yet may be determined to be more attractive than base editing. Moreover, if we decide to focus primarily on gene editing technologies other than those involving base editing, we cannot be certain we will be able to obtain rights to such technologies. Although all of our founders who currently provide consulting and advisory services to us in the area of base editing technologies have assignment of inventions obligations to us with respect to the services they perform for us, these assignment of inventions obligations are subject to limitations and do not extend to their work in other fields or to the intellectual property arising from their employment with their respective academic and research institutions. To obtain intellectual property rights assigned by these founders to such institutions, we would need to enter into license agreements with such institutions, which may not be available on commercially reasonable terms or at all. Further, while our three founders have non-competition clauses in their respective consulting agreements, the non-competition obligation is limited to the field of base editing for human therapeutics, and our founders have developed and may in the future develop new technologies that are outside of the field of their non-competition obligations but may be competitive to our business. For example, as discussed above, David Liu and his group at Broad Institute have developed novel gene editing technology outside of the field of his non-competition obligations that may be used to develop products that compete with our business. Any of these factors could reduce or eliminate our commercial opportunity, and could have a material adverse effect on our business, financial condition, results of operations, and prospects.

55


 

We are very early in our development efforts. Nearly all of our product candidates are still in preclinical development or earlier stages and it will be many years before we or our collaborators commercialize a product candidate, if ever. If we are unable to advance our product candidates to and through clinical development, obtain regulatory approval and ultimately commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed.

We are very early in our development efforts and have focused our research and development efforts to date on base editing and delivery technology, identifying our initial targeted disease indications and product candidates in these indications. Our future success depends heavily on the successful development of our base editing product candidates. With the exception of our BEACON-101 clinical trial to evaluate the safety and efficacy of BEAM-101 for the treatment of sickle cell disease, all of our product candidates are in preclinical development or in discovery. We have invested substantially all of our efforts and financial resources in building our base editing and delivery technologies, and the identification and preclinical development of our current product candidates. Our ability to generate product revenue, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and, if approved, eventual commercialization of our product candidates, which may never occur. We currently generate no revenue from sales of any product, and we may never be able to develop or commercialize a marketable product.

Commencing clinical trials in the United States is subject to acceptance by the FDA of our INDs and finalizing the trial design based on discussions with the FDA and other regulatory authorities. In the event that the FDA requires us to complete additional preclinical studies or we are required to satisfy other FDA requests for our BEACON-101 trial or other clinical trials we may seek to conduct, the start or progress of such trials may be delayed. Even after we receive and incorporate guidance from these regulatory authorities, the FDA or other regulatory authorities could disagree that we have satisfied their requirements to commence our clinical trial or change their position on the acceptability of our data, trial design or the clinical endpoints selected, which may require us to complete additional preclinical studies or clinical trials or impose stricter requirements for approval than we currently expect. There are equivalent processes and risks applicable to clinical trial applications in other countries, including in Europe.

Commercialization of our product candidates we may develop will require additional preclinical and clinical development; regulatory and marketing approval in multiple jurisdictions, including by the FDA and the EMA; obtaining manufacturing supply, capacity and expertise; building of a commercial organization; and significant marketing efforts. The success of product candidates we identify and develop will depend on many factors, including the following:

sufficiency of our financial and other resources to complete the necessary preclinical studies, IND-enabling studies, and clinical trials;
regulatory clearance of IND applications or comparable foreign applications that allow commencement of our planned clinical trials or future clinical trials for our product candidates;
successful enrollment in, and completion of, clinical trials;
receipt of marketing approvals from applicable regulatory authorities;
establishment of arrangements with third-party manufacturers for clinical supply and commercial manufacturing and, where applicable, commercial manufacturing capabilities;
successful development of our internal manufacturing processes and transfer to larger-scale facilities operated by either a CMO, or by us;
obtaining and maintaining patent, trade secret, and other intellectual property protection and non-patent exclusivity for our medicines;
launching commercial sales of the medicines, if and when approved, whether alone or in collaboration with others;
acceptance of the products, if and when approved, by patients, the medical community, and third-party payors;
effectively competing with other therapies and treatment options;
a continued acceptable safety profile of the medicines following approval;
enforcing and defending intellectual property and proprietary rights and claims; and
supplying the product at a price that is acceptable to the pricing or reimbursement authorities in different countries.

If we do not successfully achieve one or more of these activities in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize any product candidates we may develop, which would materially harm our business. If we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations.

56


 

If any of the product candidates we may develop, or the delivery modalities we rely on to administer them, cause serious adverse events, undesirable side effects, or unexpected characteristics, such events, side effects or characteristics could delay or prevent regulatory approval of the product candidates, limit the commercial potential, or result in significant negative consequences following any potential marketing approval.

We have not evaluated any product candidates in human clinical trials. Moreover, there have been only a limited number of clinical trials involving the use of gene editing technologies and none involving base editing technology similar to our technology. It is impossible to predict when or if any product candidates we develop will prove safe in humans. In the genetic medicine field, there have been several significant adverse events from gene therapy treatments in the past, including reported cases of leukemia, serious blood disorders and death. There can be no assurance that base editing technologies, or components of our product candidates or methods of delivery, will not cause undesirable side effects, as improper editing of a patient’s DNA and other effects could lead to lymphoma, leukemia, or other cancers, other serious conditions or syndromes or other aberrantly functioning cells.

A significant risk in any base editing product candidate is that “off-target” edits may occur, which could cause serious adverse events, undesirable side effects or unexpected characteristics. For example, Erwei Zuo et al. reported that cytosine base editors generated substantial off-target edits, that is, edits in unintended locations on the DNA, when tested in mouse embryos. Such unintended edits are referred to as “spurious deamination.” We cannot be certain that off-target editing will not occur in any of our planned or future clinical studies, and the lack of observed side effects in preclinical studies does not guarantee that such side effects will not occur in human clinical studies. We have developed assays that can detect off-target edits, even when such edits occur at very low frequencies. Using these assays, we have observed off-target edits in our base editing product candidates. As the sensitivity of these assays increases, it is possible that we will continue to detect more such off-target edits. While we do not believe that the off-target edits we have observed to date have had a material adverse impact on the safety or benefit of our product candidates, if, in the future, we detect off-target edits for a product candidate that negatively impact safety or efficacy, our ability to develop the product candidate as a therapeutic could be adversely affected. There is also the potential risk of delayed adverse events following exposure to base editing therapy due to the permanence of edits to DNA or due to other components of product candidates used to carry the genetic material. Further, because base editing makes a permanent change, the therapy cannot be withdrawn, even after a side effect is observed. In addition, Rees et al. and Grunewald et al. have reported that the deaminases we currently use in our C base editors and our A base editors for use in DNA base editing also cause unintended mutations in RNA for as long as the editor is present in the cell.

Although we and others have demonstrated the ability to engineer base editors to improve the specificity of their edits in a laboratory setting, we cannot be sure that our engineering efforts will be effective in any product candidates that we may develop. For example, we might not be able to engineer an editor to make the desired change or a by-stander edit could diminish the effectiveness of an edit that we make.

In certain rare DNA sequence contexts, where more than one edit occurs on a contiguous piece of DNA, the repair of two or more nicks may lead to a deletion. For example, in our BEAM-101 program, where we are simultaneously editing two positions in the promoters of the HBG2 and HBG1 genes, which share >99% sequence identity and are contiguous due to a gene duplication event, we observed a 5 kb deletion in HBG2 at single digit percentages in animal studies. We do not believe that such a deletion represents a safety or efficacy concern because healthy individuals, including those with hereditary persistence of fetal hemoglobin, with naturally-occurring deletions at this locus, including some as large as 13 kb, have been documented. However, if we were to observe deletions that have a negative effect on HbF upregulation or on other important cellular attributes, our ability to develop BEAM-101 as a therapeutic could be adversely affected.

In certain of our programs, we plan to use LNPs to deliver our base editors. LNPs have been shown to induce oxidative stress in the liver at certain doses, as well as initiate systemic inflammatory responses that can be fatal in some cases. While we aim to continue to optimize our LNPs, there can be no assurance that our LNPs will not have undesired effects. Our LNPs could contribute, in whole or in part, to one or more of the following: immune reactions; infusion reactions; complement reactions; opsonization reactions; antibody reactions including IgA, IgM, IgE or IgG or some combination thereof; or reactions to the PEG from some lipids or PEG otherwise associated with the LNP. Certain aspects of our investigational medicines may induce immune reactions from either the mRNA or the lipid as well as adverse reactions within liver pathways or degradation of the mRNA or the LNP, any of which could lead to significant adverse events in one or more of our future clinical trials. Many of these types of side effects have been seen for legacy LNPs. There may be uncertainty as to the underlying cause of any such adverse event, which would make it difficult to accurately predict side effects in future clinical trials and would result in significant delays in our programs.

57


 

Our viral vectors that we plan to use in certain of our base editing programs, including AAV or lentiviruses, which are relatively new approaches used for disease treatment, also have known side effects, and for which additional risks could develop in the future. In past clinical trials that were conducted by others with non-AAV viral vectors, several significant side effects were caused by gene therapy treatments, including reported cases of leukemia and death. For example, in February 2021, bluebird bio reported a suspected unexpected serious adverse reaction, or SUSAR, of acute myeloid leukemia, and a SUSAR of myelodysplastic syndrome in its Phase 1/2 clinical trial of LentiGlobin, a gene therapy using a lentiviral vector for the treatment of sickle cell disease, which resulted in the FDA placing a clinical hold on the trial and the suspension of the conditional marketing authorization by the EMA of ZYNTEGLO (beti-cel), which also uses a lentiviral vector, for patients 12 years and older with transfusion-dependent beta thalassemia who do not have a β0/β0 genotype, for whom HSC transplantation is appropriate, but HLA related HSC donor is not available. Other potential side effects of viral vectors could include an immunologic reaction and insertional oncogenesis, which is the process whereby the insertion of a functional gene near a gene that is important in cell growth or division results in uncontrolled cell division, which could potentially enhance the risk of malignant transformation. If the vectors we use demonstrate a similar side effect, or other adverse events, we may be required to halt or delay further clinical development of any potential product candidates using such technology. Furthermore, the FDA has stated that lentiviral vectors possess characteristics that may pose high risks of delayed adverse events. Such delayed adverse events may occur in other viral vectors, including AAV vectors, at a lower rate.

In addition to side effects and adverse events caused by our product candidates, the conditioning administration process or related procedures which may be used in our electroporation pipeline also can cause adverse side effects and adverse events. Additionally, we have and may continue to collaborate with third parties to develop alternative conditioning regimes, including, for example, our collaboration with Magenta, and we are conducting our own research into novel conditioning strategies. We cannot predict if alternative conditioning regimes will be compatible with our product candidates. If in the future we are unable to demonstrate that such adverse events were not caused by the conditioning regimens used, or administration process or related procedure, the FDA, the European Commission, EMA or other regulatory authorities could order us to cease further development of, or deny or limit approval of, our product candidates using such regimens, processes or procedures for any or all target indications. Even if we are able to demonstrate that adverse events are not related to the product candidate or the administration of such product candidate, such occurrences could affect patient recruitment, the ability of enrolled patients to complete the clinical trial, or the commercial viability of any product candidates that obtain regulatory approval.

If any product candidates we develop are associated with serious adverse events, undesirable side effects, or unexpected characteristics, we may need to abandon their development or limit development to certain uses or subpopulations in which the serious adverse events, undesirable side effects or other characteristics are less prevalent, less severe, or more acceptable from a risk-benefit perspective, any of which would have a