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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

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

For the quarterly period ended March 31, 2024

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

 

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

 

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

 

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

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

The number of shares of registrant’s common stock outstanding as of April 30, 2024 was 82,311,067.

 


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such forward-looking statements reflect, among other things:

our current expectations and anticipated results of operations;
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 trial, our Phase 1/2 clinical trial designed to assess the safety and efficacy of BEAM-201 for the treatment of relapsed, refractory T-cell acute lymphoblastic leukemia/T cell lymphoblastic lymphoma, and our anticipated trial to assess the safety and efficacy of BEAM-302 for the treatment of Alpha-1 Antitrypsin Deficiency;
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 a regulatory application for BEAM-301 in the first half of 2024;
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;
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;
regulatory developments in the United States and foreign countries;
our ability to attract and retain key scientific and management personnel;
our expectations regarding the strategic and other potential benefits of our acquisition of any additional technologies;
our ability to achieve the expected benefits of our portfolio prioritization and strategic restructuring and our estimates related to the costs and timing of implementing such initiatives;
our estimates regarding the period over which we believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements; and
the impact on our business of macro-economic conditions, as well as the prevailing level of macro-economic, business, and operational uncertainty, including as a result of geopolitical events or other global or regional events.

 


 

All of these statements are subject to known and unknown important risks, uncertainties and other factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or implied by such forward-looking statements. Therefore, any statements contained herein that are not statements of historical fact may be forward-looking statements and should be evaluated as such. Without limiting the foregoing, the words “anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “targets,” “projections,” “should,” “could,” “would,” “may,” “might,” “will,” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and “Risk Factors Summary” and “Risk Factors” in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, or the 2023 Form 10-K. Unless legally required, we assume no obligation to update any such forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information.

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

 


 

Table of Contents

Page

PART I

Financial Information

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Other Comprehensive Loss

2

 

Condensed Consolidated Statements of Stockholders’ Equity

3

 

Condensed Consolidated Statements of Cash Flows

5

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

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

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32

Item 4.

Controls and Procedures

33

 

 

 

PART II

Other Information

34

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

34

Item 6.

Exhibits

35

Signatures

 

36

 

 

 

 


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Beam Therapeutics Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)

 

 

 

March 31,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

287,848

 

 

$

435,895

 

Marketable securities

 

 

806,706

 

 

 

753,981

 

Prepaid expenses and other current assets

 

 

27,156

 

 

 

21,167

 

Total current assets

 

 

1,121,710

 

 

 

1,211,043

 

Property and equipment, net

 

 

120,922

 

 

 

124,960

 

Restricted cash

 

 

6,452

 

 

 

8,719

 

Operating lease right-of-use assets

 

 

109,023

 

 

 

112,846

 

Other assets

 

 

1,689

 

 

 

2,146

 

Total assets

 

$

1,359,796

 

 

$

1,459,714

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,790

 

 

$

1,617

 

Accrued expenses and other current liabilities

 

 

86,437

 

 

 

111,664

 

Derivative liabilities

 

 

13,700

 

 

 

10,800

 

Current portion of deferred revenue

 

 

72,111

 

 

 

68,706

 

Current portion of lease liability

 

 

12,181

 

 

 

12,778

 

Total current liabilities

 

 

187,219

 

 

 

205,565

 

Long-term lease liability

 

 

155,939

 

 

 

159,911

 

Contingent consideration liabilities

 

 

2,856

 

 

 

2,723

 

Long-term portion of deferred revenue

 

 

99,573

 

 

 

109,888

 

Other liabilities

 

 

719

 

 

 

298

 

Total liabilities

 

 

446,306

 

 

 

478,385

 

Commitments and contingencies (See Note 7, License agreements and Note 8, Collaboration and license agreements)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value; 25,000,000 shares authorized, and no shares issued or outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

 

 

 

 

Common stock, $0.01 par value; 250,000,000 shares authorized, 82,280,827 and 81,632,496 issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

823

 

 

 

816

 

Additional paid-in capital

 

 

2,202,146

 

 

 

2,169,798

 

Accumulated other comprehensive (loss) income

 

 

(921

)

 

 

604

 

Accumulated deficit

 

 

(1,288,558

)

 

 

(1,189,889

)

Total stockholders’ equity

 

 

913,490

 

 

 

981,329

 

Total liabilities and stockholders’ equity

 

$

1,359,796

 

 

$

1,459,714

 

 

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

1


 

Beam Therapeutics Inc.

Condensed Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

License and collaboration revenue

 

$

7,410

 

 

$

24,208

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

84,818

 

 

 

99,646

 

General and administrative

 

 

26,724

 

 

 

23,490

 

Total operating expenses

 

 

111,542

 

 

 

123,136

 

Loss from operations

 

 

(104,132

)

 

 

(98,928

)

Other income (expense):

 

 

 

 

 

 

Change in fair value of derivative liabilities

 

 

(2,900

)

 

 

5,600

 

Change in fair value of non-controlling equity investments

 

 

(3,353

)

 

 

(12,797

)

Change in fair value of contingent consideration liabilities

 

 

(133

)

 

 

(296

)

Interest and other income (expense), net

 

 

11,849

 

 

 

9,961

 

Total other income (expense)

 

 

5,463

 

 

 

2,468

 

Net loss

 

$

(98,669

)

 

$

(96,460

)

Unrealized gain (loss) on marketable securities

 

 

(1,525

)

 

 

1,665

 

Comprehensive loss

 

$

(100,194

)

 

$

(94,795

)

Net loss per common share, basic and diluted

 

$

(1.21

)

 

$

(1.33

)

Weighted-average common shares outstanding, basic and diluted

 

 

81,698,633

 

 

 

72,273,829

 

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

2


 

Beam Therapeutics Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2022

 

 

71,277,339

 

 

$

712

 

 

$

1,792,554

 

 

$

(2,430

)

 

$

(1,057,362

)

 

$

733,474

 

Purchase of common stock under ESPP

 

 

65,620

 

 

 

1

 

 

 

1,707

 

 

 

 

 

 

 

 

 

1,708

 

Issuance of common stock from At-the-Market offering, net of issuance costs of $0.2 million

 

 

2,431,770

 

 

 

24

 

 

 

93,786

 

 

 

 

 

 

 

 

 

93,810

 

Vesting of restricted common stock

 

 

284,858

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

23,917

 

 

 

 

 

 

 

 

 

23,917

 

Exercise of common stock options

 

 

375,805

 

 

 

4

 

 

 

3,388

 

 

 

 

 

 

 

 

 

3,392

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

1,665

 

 

 

 

 

 

1,665

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(96,460

)

 

 

(96,460

)

Balance at March 31, 2023

 

 

74,435,392

 

 

$

744

 

 

$

1,915,349

 

 

$

(765

)

 

$

(1,153,822

)

 

$

761,506

 

 

3


 

Beam Therapeutics Inc.

Condensed Consolidated Statements of Stockholders’ Equity - Continued

(Unaudited)

(in thousands, except share amounts)

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2023

 

 

81,632,496

 

 

$

816

 

 

$

2,169,798

 

 

$

604

 

 

$

(1,189,889

)

 

$

981,329

 

Purchase of common stock under ESPP

 

 

76,461

 

 

 

1

 

 

 

1,397

 

 

 

 

 

 

 

 

 

1,398

 

Vesting of restricted common stock

 

 

420,579

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

29,281

 

 

 

 

 

 

 

 

 

29,281

 

Exercise of common stock options

 

 

151,291

 

 

 

2

 

 

 

1,674

 

 

 

 

 

 

 

 

 

1,676

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

(1,525

)

 

 

 

 

 

(1,525

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(98,669

)

 

 

(98,669

)

Balance at March 31, 2024

 

 

82,280,827

 

 

$

823

 

 

$

2,202,146

 

 

$

(921

)

 

$

(1,288,558

)

 

$

913,490

 

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

4


 

Beam Therapeutics Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(98,669

)

 

$

(96,460

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

5,431

 

 

 

4,647

 

Amortization of investment discount (premiums)

 

 

(6,576

)

 

 

(6,932

)

Stock-based compensation expense

 

 

29,281

 

 

 

23,917

 

Change in operating lease right-of-use assets

 

 

2,361

 

 

 

2,354

 

Change in fair value of derivative liabilities

 

 

2,900

 

 

 

(5,600

)

Change in fair value of contingent consideration liabilities

 

 

133

 

 

 

296

 

Change in fair value of non-controlling equity investments

 

 

3,353

 

 

 

12,797

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(5,532

)

 

 

(8,405

)

Accounts payable

 

 

1,285

 

 

 

(231

)

Accrued expenses and other liabilities

 

 

(24,275

)

 

 

(9,888

)

Operating lease liabilities

 

 

(3,108

)

 

 

(2,550

)

Deferred revenue

 

 

(6,910

)

 

 

(23,708

)

Other long-term liabilities

 

 

579

 

 

 

(52

)

Net cash provided by (used in) operating activities

 

 

(99,747

)

 

 

(109,815

)

Investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,438

)

 

 

(6,017

)

Purchases of marketable securities

 

 

(195,241

)

 

 

(266,532

)

Maturities of marketable securities

 

 

144,215

 

 

 

298,000

 

Net cash provided by (used in) investing activities

 

 

(53,464

)

 

 

25,451

 

Financing activities

 

 

 

 

 

 

Proceeds from issuance of common shares, net of commissions

 

 

 

 

 

93,981

 

Proceeds from issuances of stock under ESPP

 

 

1,398

 

 

 

1,708

 

Payment of equity offering costs

 

 

 

 

 

(62

)

Repayment of equipment financings

 

 

(177

)

 

 

(603

)

Proceeds from exercise of stock options

 

 

1,676

 

 

 

3,392

 

Net cash provided by (used in) financing activities

 

 

2,897

 

 

 

98,416

 

 

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

 

(150,314

)

 

 

14,052

 

Cash, cash equivalents and restricted cash—beginning of period

 

 

444,614

 

 

 

245,521

 

Cash, cash equivalents and restricted cash—end of period

 

$

294,300

 

 

$

259,573

 

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

 

 

5


 

Beam Therapeutics Inc.

Condensed Consolidated Statements of Cash Flows - Continued

(Unaudited)

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

14

 

 

$

62

 

 

 

 

 

 

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

Property and equipment additions in accounts payable and accrued expenses

 

$

358

 

 

$

10,675

 

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

 

$

(1,523

)

 

$

 

Equity issuance costs in accounts payable and accrued expenses

 

$

 

 

$

109

 

 

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

6


 

Beam Therapeutics Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Nature of the business and basis of presentation

Organization

Beam Therapeutics Inc., which we refer to herein as the “Company” or “Beam,” is a biotechnology company committed to establishing the leading, fully integrated platform for precision genetic medicines. Beam’s vision is to provide life-long cures to patients suffering from genetic diseases. The Company was incorporated on January 25, 2017 as a Delaware corporation and began operations in July 2017. Its principal offices are in Cambridge, Massachusetts.

Liquidity and capital resources

Since its inception, the Company has devoted substantially all of its resources to building its base editing platform and advancing development of its portfolio of programs, establishing and protecting its intellectual property, conducting research and development activities, making arrangements to conduct manufacturing activities with contract manufacturing organizations, organizing and staffing the Company, establishing and maintaining internal manufacturing capabilities, conducting clinical trials, maintaining its facilities and new facility build-outs, business planning, raising capital and providing general and administrative support for these operations. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

In April 2021, the Company entered into an at the market, or ATM, sales agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, pursuant to which the Company was entitled to offer and sell, from time to time at prevailing market prices, shares of the Company’s common stock having aggregate gross proceeds of up to $300.0 million. The Company agreed to pay Jefferies a commission of up to 3.0% of the aggregate gross sale proceeds of any shares sold by Jefferies under the Sales Agreement. Between April 2021 and July 2021, the Company sold 2,908,009 shares of its common stock under the Sales Agreement at an average price of $103.16 per share for aggregate gross proceeds of $300.0 million, before deducting commissions and offering expenses payable by the Company.

In July 2021 and May 2023, the Company and Jefferies entered into amendments to the Sales Agreement to provide for increases in the aggregate offering amount under the Sales Agreement, such that as of May 10, 2023, the Company may offer and sell shares of common stock having an aggregate offering price of up to an additional $800.0 million. As of March 31, 2024, the Company has sold 10,860,992 additional shares of its common stock under the amended Sales Agreement at an average price of $51.93 per share for aggregate gross proceeds of $564.0 million, before deducting commissions and offering expenses payable by the Company.

Since its inception, the Company has incurred substantial losses and had an accumulated deficit of $1.3 billion as of March 31, 2024. The Company expects to generate operating losses and negative operating cash flows for the foreseeable future.

The Company expects that its cash, cash equivalents, and marketable securities as of March 31, 2024 of $1.1 billion will be sufficient to fund its operations for at least the next 12 months from the date of issuance of these financial statements. The Company will need additional financing to support its continuing operations and pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed would have a negative impact on the Company’s financial condition and its ability to pursue its business strategy. The Company will need to generate significant revenue to achieve profitability, and it may never do so.

7


 

2. Summary of significant accounting policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2023, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission, or the SEC, on February 27, 2024, or the 2023 Form 10-K. Since the date of those financial statements, there have been no material changes to the Company's significant accounting policies.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB.

Principles of consolidation

The accompanying condensed consolidated financial statements include the results of operations of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities as of and during the reporting period. The Company bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, incremental borrowing rate used in the calculation of lease liabilities, research and development expenses, stock-based compensation, contingent consideration liabilities, success payments and certain judgments regarding revenue recognition. Actual results could differ from these estimates.

Recently announced accounting pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). The amendments in this update expand income tax disclosure requirements, including additional information pertaining to the rate reconciliation, income taxes paid, and other disclosures. This update is effective for annual periods beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

Cash, cash equivalents, and restricted cash

Cash and cash equivalents consist of standard checking accounts, money market accounts, and all highly liquid investments with a remaining maturity of three months or less at the date of purchase. Restricted cash represents collateral provided for letters of credit issued as security deposits in connection with the Company’s leases of its corporate and manufacturing facilities.

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

 

 

March 31,
2024

 

 

March 31,
2023

 

Cash and cash equivalents

 

$

287,848

 

 

$

249,771

 

Restricted cash

 

 

6,452

 

 

 

9,802

 

Total cash, cash equivalents, and restricted cash

 

$

294,300

 

 

$

259,573

 

 

8


 

3. Property and equipment, net

Property and equipment consist of the following (in thousands):

 

 

March 31,
2024

 

 

December 31,
2023

 

Leasehold improvements

 

$

100,582

 

 

$

100,186

 

Lab equipment

 

 

67,133

 

 

 

61,674

 

Furniture and fixtures

 

 

4,836

 

 

 

4,836

 

Computer equipment

 

 

3,163

 

 

 

3,163

 

Construction in process

 

 

821

 

 

 

5,283

 

Total property and equipment

 

 

176,535

 

 

 

175,142

 

Less accumulated depreciation

 

 

(55,613

)

 

 

(50,182

)

Property and equipment, net

 

$

120,922

 

 

$

124,960

 

 

The following table summarizes depreciation expense incurred (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Depreciation expense

 

$

5,431

 

 

$

4,647

 

 

4. fair value of financial instruments

The Company’s financial instruments that are measured at fair value on a recurring basis consist of cash equivalents, marketable securities, corporate equity securities of Verve Therapeutics, Inc., or Verve, and Prime Medicine, Inc., or Prime, contingent consideration liabilities related to the Agreement and Plan of Merger, dated February 23, 2021, between Guide Therapeutics, Inc., or Guide, and the Company, or the Guide Merger Agreement, and success payment derivative liabilities pursuant to the license agreement, or the Harvard License Agreement, between President and Fellows of Harvard University, or Harvard, and the Company, and the license agreement, or the Broad License Agreement, between The Broad Institute, Inc., or Broad Institute, and the Company.

The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at March 31, 2024 (in thousands):

 

 

 

Carrying
amount

 

 

Fair
value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

287,666

 

 

 

287,666

 

 

$

287,666

 

 

$

 

 

$

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

 

248,766

 

 

 

248,766

 

 

 

 

 

 

248,766

 

 

 

 

Corporate notes

 

 

57,114

 

 

 

57,114

 

 

 

 

 

 

57,114

 

 

 

 

U.S. Treasury securities

 

 

237,119

 

 

 

237,119

 

 

 

 

 

 

237,119

 

 

 

 

U.S. Government securities

 

 

245,185

 

 

 

245,185

 

 

 

 

 

 

245,185

 

 

 

 

Corporate equity securities

 

 

18,522

 

 

 

18,522

 

 

 

18,522

 

 

 

 

 

 

 

Total assets

 

$

1,094,372

 

 

$

1,094,372

 

 

$

306,188

 

 

$

788,184

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Success payment liability – Harvard

 

$

6,700

 

 

$

6,700

 

 

$

 

 

$

 

 

$

6,700

 

Success payment liability – Broad Institute

 

 

7,000

 

 

 

7,000

 

 

 

 

 

 

 

 

 

7,000

 

Contingent consideration liability – Technology

 

 

1,438

 

 

 

1,438

 

 

 

 

 

 

 

 

 

1,438

 

Contingent consideration liability – Product

 

 

1,418

 

 

 

1,418

 

 

 

 

 

 

 

 

 

1,418

 

Total liabilities

 

$

16,556

 

 

$

16,556

 

 

$

 

 

$

 

 

$

16,556

 

 

 

9


 

The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at December 31, 2023 (in thousands):

 

 

Carrying
amount

 

 

Fair
value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

435,689

 

 

 

435,689

 

 

$

435,689

 

 

$

 

 

$

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

 

285,289

 

 

 

285,289

 

 

 

 

 

 

285,289

 

 

 

 

Corporate notes

 

 

23,525

 

 

 

23,525

 

 

 

 

 

 

23,525

 

 

 

 

U.S. Treasury securities

 

 

152,147

 

 

 

152,147

 

 

 

 

 

 

152,147

 

 

 

 

U.S. Government securities

 

 

271,145

 

 

 

271,145

 

 

 

 

 

 

271,145

 

 

 

 

Corporate equity securities

 

 

21,875

 

 

 

21,875

 

 

 

21,875

 

 

 

 

 

 

 

Total assets

 

$

1,189,670

 

 

$

1,189,670

 

 

$

457,564

 

 

$

732,106

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Success payment liability – Harvard

 

$

5,200

 

 

$

5,200

 

 

$

 

 

$

 

 

$

5,200

 

Success payment liability – Broad Institute

 

 

5,600

 

 

 

5,600

 

 

 

 

 

 

 

 

 

5,600

 

Contingent consideration liability – Technology

 

 

1,371

 

 

 

1,371

 

 

 

 

 

 

 

 

 

1,371

 

Contingent consideration liability – Product

 

 

1,352

 

 

 

1,352

 

 

 

 

 

 

 

 

 

1,352

 

Total liabilities

 

$

13,523

 

 

$

13,523

 

 

$

 

 

$

 

 

$

13,523

 

Cash equivalents – Money market funds included within cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. Commercial paper and corporate notes are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.

Marketable securities – Marketable securities, excluding corporate equity securities (held in Verve and Prime), are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined using models or other valuation methodologies.

The Company holds an investment in Verve consisting of shares of Verve’s common stock. As of March 31, 2024, the Company owned 546,970 shares of Verve's common stock valued at $7.3 million, which is included in marketable securities in the condensed consolidated balance sheet.

The Company also holds an investment in Prime consisting of 1,608,337 shares of Prime's common stock. As of March 31, 2024, the Company's investment in Prime's common stock was valued at $11.3 million, which is included in marketable securities in the condensed consolidated balance sheet.

Pursuant to ASC 825, Financial instruments, the Company records changes in the fair value of its investments in equity securities to other income (expense), in the Company’s condensed consolidated statements of operations.

The following table summarizes other income (expense) recorded due to changes in the fair value of corporate equity securities held (in thousands):

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Other income (expense)

 

$

(3,353

)

 

$

(12,797

)

Success payment liabilities – As discussed further in Note 7, License agreements, the Company is required to make payments to Harvard and Broad Institute based upon the achievement of specified multiples of the market value of the Company's common stock, at specified valuation dates. The Company’s liability for the share-based success payments under the Harvard License Agreement and the Broad License Agreement is carried at fair value. To determine the estimated fair value of the success payment liability, the Company uses a Monte Carlo simulation methodology, which models the future movement of stock prices based on several key variables.

10


 

The following variables were incorporated in the calculation of the estimated fair value of the Harvard and Broad Institute success payment liabilities:

 

 

 

Harvard

 

 

Broad Institute

 

 

 

March 31,
2024

 

 

December 31,
2023

 

 

March 31,
2024

 

 

December 31,
2023

 

Fair value of common stock (per share)

 

$

33.04

 

 

$

27.22

 

 

$

33.04

 

 

$

27.22

 

Expected volatility

 

 

82

%

 

 

80

%

 

 

81

%

 

 

79

%

Expected term (years)

 

0.05-5.24

 

 

0.06-5.49

 

 

0.05-6.11

 

 

0.06-6.36

 

 

The computation of expected volatility was estimated using available information about the historical volatility of stocks of similar publicly traded companies in addition to the Company's own data for a period matching the expected term assumption. In addition, the Company incorporated the estimated number, timing, and probability of valuation measurement dates in the calculation of the success payment liability.

The following table reconciles the change in the fair value of success payment liabilities based on Level 3 inputs (in thousands):

 

 

 

Three Months Ended March 31, 2024

 

 

 

Harvard

 

 

Broad Institute

 

 

Total

 

Balance at December 31, 2023

 

$

5,200

 

 

$

5,600

 

 

$

10,800

 

Change in fair value

 

 

1,500

 

 

 

1,400

 

 

 

2,900

 

Balance at March 31, 2024

 

$

6,700

 

 

$

7,000

 

 

$

13,700

 

 

Contingent consideration liabilities – Under the Guide Merger Agreement, Guide’s former stockholders and optionholders are eligible to receive up to an additional $100.0 million in technology milestone payments and $220.0 million in product milestone payments, payable in the Company’s common stock valued using the volume-weighted average price of the Company’s stock over the ten-day trading period ending two trading days prior to the date on which the applicable milestone is achieved. As these milestones are payable with a variable number of shares of the Company’s common stock, the milestone payments result in liability classification under ASC 480, Distinguishing Liabilities from Equity. These contingent consideration liabilities are carried at fair value which was estimated by applying a probability-based model, which utilized inputs based on timing of achievement that were unobservable in the market. These contingent consideration liabilities are classified within Level 3 of the fair value hierarchy.

The following table reconciles the change in fair value of the contingent consideration liabilities based on level 3 inputs (in thousands):