Beam Therapeutics Inc. 10-Q

Item 1. Financial Statements (Unaudited) Beam Therapeutics Inc. Condensed Consolidated Balance Sheets ( Unaudited ) (in thousands, except share and per share amounts) September 30, 2020 December 31, 2019 Assets Current assets: Cash and cash equivalents $ 137,903 $ 37,221 Marketable securities 64,317 54,627 Prepaid expenses and other current assets 6,487 2,696 Total current assets 208,707 94,544 Property and equipment, net 29,404 24,290 Restricted cash 14,840 13,332 Operating lease right-of-use assets 21,776 18,957 Other assets 3,546 4,976 Total assets $ 278,273 $ 156,099 Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) Current liabilities: Accounts payable $ 6,569 $ 7,846 Accrued expenses and other current liabilities 18,309 7,852 Derivative liabilities 16,500 7,800 Current portion of lease liability 4,340 4,337 Current portion of equipment financing liability 1,733 1,303 Total current liabilities 47,451 29,138 Long-term lease liability 23,810 21,187 Long-term equipment financing liability 4,448 4,411 Other liabilities 2,493 418 Total liabilities 78,202 55,154 Commitments and contingencies (See Note 7, Leases , and Note 8, License agreements ) Redeemable convertible preferred stock — 302,049 Stockholders’ equity (deficit): Preferred stock, $0.01 par value; 25,000,000 and no shares authorized, and no shares issued or outstanding at September 30, 2020 and December 31, 2019, respectively — — Common stock, $0.01 par value; 250,000,000 and 205,000,000 shares authorized, 51,930,943 and 9,981,991 issued, and 50,438,740 and 7,326,185 outstanding at September 30, 2020 and December 31, 2019, respectively 504 73 Additional paid-in capital 501,698 1,851 Accumulated other comprehensive income 41 16 Accumulated deficit (302,172 ) (203,044 ) Total stockholders’ equity (deficit) 200,071 (201,104 ) Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) $ 278,273 $ 156,099 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 September 30, Nine Months Ended September 30, 2020 2019 2020 2019 License revenue $ 6 $ 6 $ 18 $ 12 Operating expenses: Research and development 29,825 12,543 70,728 34,402 General and administrative 7,502 5,487 21,251 14,393 Total operating expenses 37,327 18,030 91,979 48,795 Loss from operations (37,321 ) (18,024 ) (91,961 ) (48,783 ) Other income (expense): Change in fair value of derivative liabilities 2,700 (1,600 ) (8,700 ) (3,600 ) Interest and other income (expense), net 169 619 1,533 1,907 Total other income (expense) 2,869 (981 ) (7,167 ) (1,693 ) Net loss $ (34,452 ) $ (19,005 ) $ (99,128 ) $ (50,476 ) Unrealized (loss) gain on marketable securities (132 ) (35 ) 25 48 Comprehensive loss $ (34,584 ) $ (19,040 ) $ (99,103 ) $ (50,428 ) Reconciliation of net loss to net loss attributable to common stockholders: Net loss $ (34,452 ) $ (19,005 ) $ (99,128 ) $ (50,476 ) Accretion of redeemable convertible preferred stock to redemption value, including dividends on preferred stock — (3,262 ) (1,277 ) (9,451 ) Net loss attributable to common stockholders $ (34,452 ) $ (22,267 ) $ (100,405 ) $ (59,927 ) Net loss per common share attributable to common stockholders, basic and diluted $ (0.69 ) $ (3.31 ) $ (2.31 ) $ (9.58 ) Weighted-average common shares used in net loss per share attributable to common stockholders, basic and diluted 50,087,747 6,717,792 43,438,919 6,254,069 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 Beam Therapeutics Inc. Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) ( Unaudited ) (in thousands, except share amounts) Redeemable Convertible Preferred Stock Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Shares Amount Capital (Loss) Income Deficit Deficit Balance at December 31, 2018 119,308,387 $ 251,434 5,565,368 $ 56 $ 7,256 — $ (124,718 ) $ (117,406 ) Issuance of Series B redeemable convertible preferred stock, net of issuance costs of $0.1 million 11,308,397 37,901 — — — — — — Accretion of redeemable convertible preferred stock to redemption value — 2,963 — — (2,963 ) — — (2,963 ) Vesting of restricted common stock — — 388,562 4 (4 ) — — — Issuance of common stock related to license agreement — — 16,725 — 113 — — 113 Stock-based compensation — — — — 869 — — 869 Exercise of common stock options — — 12,502 — 7 — — 7 Net loss — — — — — — (13,610 ) (13,610 ) Balance at March 31, 2019 130,616,784 $ 292,298 5,983,157 $ 60 $ 5,278 $ — $ (138,328 ) $ (132,990 ) Accretion of redeemable convertible preferred stock to redemption value — 3,226 — — (3,226 ) — — (3,226 ) Vesting of restricted common stock — — 393,440 4 (4 ) — — — Stock-based compensation — — — — 2,073 — — 2,073 Exercise of common stock options — — 57,496 1 47 — — 48 Other comprehensive income — — — — — 83 — 83 Net loss — — — — — — (17,861 ) (17,861 ) Balance at June 30, 2019 130,616,784 $ 295,524 6,434,093 $ 65 $ 4,168 $ 83 $ (156,189 ) $ (151,873 ) Accretion of redeemable convertible preferred stock to redemption value — 3,226 — — (3,262 ) — — (3,262 ) Vesting of restricted common stock — — 389,261 4 (4 ) — — — Stock-based compensation — — — — 2,029 — — 2,029 Exercise of common stock options — — 80,300 — 81 — — 81 Other comprehensive loss — — — — — (35 ) — (35 ) Net loss — — — — — — (19,005 ) (19,005 ) Balance at September 30, 2019 130,616,784 $ 298,750 6,903,654 $ 69 $ 3,012 $ 48 $ (175,194 ) $ (172,065 ) 3 Beam Therapeutics Inc. Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) - Continued ( Unaudited ) (in thousands, except share amounts) Redeemable Convertible Preferred Stock Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders’ (Deficit) Shares Amount Shares Amount Capital (Loss) Income Deficit Equity Balance at December 31, 2019 130,616,784 $ 302,049 7,326,185 $ 73 $ 1,851 $ 16 $ (203,044 ) $ (201,104 ) Accretion of redeemable convertible preferred stock to redemption value — 1,277 — — (1,277 ) — — (1,277 ) Conversion of redeemable convertible preferred stock to common stock upon closing of initial public offering (130,616,784 ) (303,326 ) 29,127,523 291 303,035 — — 303,326 Issuance of common stock from initial public offering, net of issuance costs of $18.7 million — — 12,176,471 122 188,201 — — 188,323 Vesting of restricted common stock — — 387,866 4 (4 ) — — — Stock-based compensation — — — — 2,792 — — 2,792 Exercise of common stock options — — 59,305 1 151 — — 152 Other comprehensive loss — — — — — (360 ) — (360 ) Net loss — — — — — — (30,458 ) (30,458 ) Balance at March 31, 2020 — $ — 49,077,350 $ 491 $ 494,749 $ (344 ) $ (233,502 ) $ 261,394 Vesting of restricted common stock — — 387,870 4 (4 ) — — — Stock-based compensation — — — — 2,769 — — 2,769 Exercise of common stock options — — 180,517 1 359 — — 360 Other comprehensive income — — — — — 517 — 517 Net loss — — — — — — (34,218 ) (34,218 ) Balance at June 30, 2020 — $ — 49,645,737 $ 496 $ 497,873 $ 173 $ (267,720 ) $ 230,822 Vesting of restricted common stock — — 387,867 4 (4 ) — — — Issuance of common stock related to license agreement — — 175,000 2 262 264 Stock-based compensation — — — — 3,012 — — 3,012 Exercise of common stock options — — 230,136 2 555 — — 557 Other comprehensive loss — — — — — (132 ) — (132 ) Net loss — — — — — — (34,452 ) (34,452 ) Balance at September 30, 2020 — $ — 50,438,740 $ 504 $ 501,698 $ 41 $ (302,172 ) $ 200,071 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Beam Therapeutics Inc. Condensed Consolidated Statements of Cash Flows ( Unaudited ) (in thousands) Nine Months Ended September 30, 2020 2019 Operating activities Net loss $ (99,128 ) $ (50,476 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 3,463 2,501 Amortization of investment discount (premiums) 49 (670 ) Stock-based compensation expense 8,573 4,971 Change in operating lease right-of-use assets 3,065 1,019 Non-cash research and development license expense, net 5,164 113 Change in fair value of derivative liabilities 8,700 3,600 Other (517 ) — Changes in operating assets and liabilities: Prepaid expenses and other current assets (3,667 ) (2,055 ) Other long-term assets (56 ) (522 ) Accounts payable (134 ) 1,321 Accrued expenses and other liabilities 4,219 1,371 Operating lease liabilities (3,249 ) (1,441 ) Financing milestone liabilities — (13,750 ) Other long-term liabilities 2,075 (185 ) Net cash used in operating activities (71,443 ) (54,203 ) Investing activities Purchases of property and equipment (8,232 ) (10,358 ) Purchases of marketable securities (167,094 ) (111,374 ) Maturities of marketable securities 157,380 38,964 Purchase of long-term investment (750 ) (450 ) Net cash used in investing activities (18,696 ) (83,218 ) Financing activities Proceeds from issuance of Series B Preferred Stock, net — 37,901 Proceeds from initial public offering, net of underwriting discount 192,510 — Payment of initial and follow-on public offering costs (1,717 ) (1,088 ) Proceeds from equipment financings 1,625 3,801 Repayment of equipment financings (1,158 ) (170 ) Proceeds from exercise of stock options 1,069 136 Net cash provided by financing activities 192,329 40,580 Net change in cash, cash equivalents and restricted cash 102,190 (96,841 ) Cash, cash equivalents and restricted cash—beginning of period 50,553 147,936 Cash, cash equivalents and restricted cash—end of period $ 152,743 $ 51,095 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Beam Therapeutics Inc. Condensed Consolidated Statements of Cash Flows - Continued ( Unaudited ) (in thousands) Nine Months Ended September 30, 2020 2019 Supplemental disclosure of cash flow information: Cash paid for interest $ 422 $ 68 Supplemental disclosure of noncash investing and financing activities: Conversion of redeemable convertible preferred stock to common stock upon closing of the initial public offering $ 303,326 $ — Property and equipment additions in accounts payable and accrued expenses $ 2,809 $ 1,049 Operating lease liabilities arising from obtaining right-of-use assets $ 5,795 $ — Receipt of common stock in exchange for technology license $ — $ 460 Issuance of common stock for research and development license $ 264 $ 113 Equity issuance costs in accounts payable and accrued expenses $ 342 $ 1,666 Accretion of redeemable convertible preferred stock to redemption value, including dividends on preferred stock $ 1,277 $ 9,451 The accompanying notes are an integral part of these condensed consolidated financial statements 6 Beam Therapeutics Inc. Notes to Condensed Consolidated Financial Statements ( Unaudited ) 1. Nature of the business and basis of presentation Organization Beam Therapeutics Inc. (the “Company” or “Beam”) is a research stage biotechnology company committed to creating a new class of precision genetic medicines, based on the Company’s proprietary base editing technology, with a vision of providing life-long cures to patients suffering from serious diseases. The Company was incorporated in January 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, organizing and staffing the Company, business planning, raising capital and providing general and administrative support for these operations. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. In connection with the Company’s initial public offering, or IPO, the Company’s board of directors approved a one-for-4.4843 reverse stock split of its issued and outstanding common stock and stock options and a proportional adjustment to the existing conversion ratios for the Company’s redeemable convertible preferred stock effective as of January 24, 2020. Accordingly, all common stock shares, per share amounts, and additional paid in capital amounts for all periods presented in the accompanying financial statements have been retroactively adjusted, where applicable, to reflect the reverse stock split and adjustment to the preferred stock conversion ratios. In February 2020, the Company completed its IPO in which the Company issued and sold 12,176,471 shares of its common stock, including 1,588,235 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $17.00 per share, for aggregate gross proceeds of $207.0 million. The Company received approximately $188.3 million in net proceeds after deducting underwriting discounts and estimated offering expenses payable by the Company. In connection with the IPO, all outstanding shares of redeemable convertible preferred stock converted into 29,127,523 shares of the Company’s common stock. In October 2020, the Company issued and sold 5,750,000 shares of its common stock, including 750,000 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $23.50 per share, for aggregate gross proceeds of $135.1 million. The Company received approximately $126.6 million in net proceeds after deducting underwriting discounts and estimated offering expenses payable by the Company. Since its inception, the Company has incurred substantial losses and had an accumulated deficit of $302.2 million as of September 30, 2020. 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 September 30, 2020 of $202.2 million, along with the proceeds from its common stock offering in October 2020, will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these financial statements. The Company will need additional financing to support its continuing operations and pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed would have a negative impact on the Company’s financial condition and its ability to pursue its business strategy. The Company will need to generate significant revenue to achieve profitability, and it may never do so. Basis of presentation The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, and pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Any reference in these notes to applicable guidance is meant to 7 refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and Accou nting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of September 30, 2020, the results of its operations and other comprehensive loss, and redeemable convertible preferred stock and stockholders’ equity (deficit), for the three and nine months ended September 30, 2020 and 2019, and cash flows for the nine months ended September 30, 2020 and 2019. Such adjustments are of a normal and recurring nature. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results for the year ending December 31, 2020, or for any future period. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2019, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 30, 2020. Consolidation The accompanying condensed consolidated financial statements include the accounts of Beam Therapeutics Inc. and its wholly owned subsidiaries, Blink Therapeutics Inc., or Blink, which is a Delaware subsidiary that holds certain intellectual property related to RNA base editing, and Beam Therapeutics Securities Corporation, which is a Massachusetts subsidiary created to buy, sell and hold securities. All intercompany transactions and balances have been eliminated in consolidation. COVID-19-related significant risks and uncertainties With the ongoing concern related to the COVID-19 pandemic in the first nine months of 2020, the Company has maintained and expanded its business continuity plans to address and mitigate the impact of the COVID-19 pandemic on its business. In March 2020, to protect the health of its employees, and their families and communities, the Company restricted access to its offices to personnel who performed critical activities that must be completed on-site, limited the number of such personnel that could be present at its facilities at any one time, and requested that most of its employees work remotely. In May 2020, as certain states eased restrictions, the Company established new protocols to better allow its full laboratory staff access to the Company’s facilities. These protocols included several shifts working over a seven-day-week protocol. The Company expects to continue incurring additional costs to ensure it adheres to the guidelines instituted by the Centers for Disease Control and Prevention, or CDC, and to provide a safe working environment to its onsite employees. The extent to which the COVID-19 pandemic impacts the Company’s business, its corporate development objectives, results of operations and financial condition, and the value of and market for its common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements, and the effectiveness of actions taken globally to contain and treat the disease. Disruptions to the global economy, disruption of global healthcare systems, and other significant impacts of the COVID-19 pandemic could have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects. While the COVID-19 pandemic did not significantly impact the Company’s business or results of operations during the nine months ended September 30, 2020, the length and extent of the pandemic, its consequences, and containment efforts will determine the future impact on the Company’s operations and financial condition. 2. S ummary of significant accounting policies The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2019, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 30, 2020. Since the date of those financial statements, there have been no material changes to Beam’s significant accounting policies. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses, and the disclosure of contingent assets and liabilities as of and during the reporting period. The Company bases its estimates and assumptions on historical experience, when available, and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. Actual results could differ from these estimates. The COVID-19 pandemic may have an impact on the development timelines of the Company’s pre-clinical programs. Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the consolidated financial 8 statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s financial state ments. Cash, cash equivalents, and restricted cash Cash and cash equivalents consist of standard checking accounts, money market accounts, and all highly liquid investments with an original 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): September 30, 2020 September 30, 2019 Cash and cash equivalents $ 137,903 $ 37,764 Restricted cash 14,840 13,331 Total cash, cash equivalents, and restricted cash $ 152,743 $ 51,095 Recent accounting pronouncements In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements , or ASC 808, which clarifies certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. ASC 808 will be effective for the Company in the first quarter of fiscal 2021, with early adoption permitted. A retrospective adoption to the date the Company adopted ASC 606, Revenue from Contracts with Customers , is required by recognizing a cumulative-effect adjustment to the opening balance or retained earnings of the earliest period presented. The Company is currently evaluating the impact of the adoption of this standard on its financial statements. 3. P roperty and equipment, net Property and equipment consist of the following (in thousands): September 30, 2020 December 31, 2019 Lab equipment $ 16,268 $ 12,029 Leasehold improvements 12,706 12,653 Furniture and fixtures 1,040 1,040 Computer equipment 557 547 Construction in process 6,460 2,185 Total property and equipment 37,031 28,454 Less accumulated depreciation (7,627 ) (4,164 ) Property and equipment, net $ 29,404 $ 24,290 The following table summarizes depreciation expense incurred (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Depreciation expense $ 1,218 $ 908 $ 3,463 $ 2,501 4. f air 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, and success payment derivative liabilities pursuant to the license agreement between Harvard University, or Harvard, and the Company, or the Harvard License Agreement, and the license agreement between Broad Institute of MIT and Harvard, or Broad Institute, and Blink, or the Broad License Agreement. The Company also holds investments in privately issued corporate equity securities, which are accounted for investments in equity securities. These investments do not have readily determinable fair values and the Company values such investments based on the cost of the equity securities adjusted for observable market transactions or impairments, if any. As of September 30, 2020, the Company held $2.5 million of investments in privately issued corporate equity securities. During the nine months ended September 30, 2020, as a result of an observable market transaction (Level 2), the Company adjusted the value of its investment and recorded an unrealized gain of $0.5 million in interest and other income (expense), net in the Company’s consolidated statements of operations and other comprehensive loss. 9 ASC 820, Fair Value Measurements and Disclosures , establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels: • Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, directly or indirectly, for substantially the full term of the asset or liability. • Level 3 – Unobservable inputs that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. The following table sets forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at September 30, 2020 (in thousands): Carrying amount Fair value Level 1 Level 2 Level 3 Assets Cash equivalents: Money market funds $ 68,891 $ 68,891 $ 68,891 $ — $ — Commercial paper 60,987 60,987 — 60,987 — Corporate notes 9,036 9,036 — 9,036 — Marketable securities: Commercial paper 3,997 3,997 — 3,997 — Corporate notes 29,223 29,223 — 29,223 — U.S. Treasury securities 26,035 26,035 — 26,035 — Government securities 5,062 5,062 — 5,062 — Total assets $ 203,231 $ 203,231 $ 68,891 $ 134,340 $ — Liabilities Success payment liability – Harvard $ 8,200 $ 8,200 $ — $ — $ 8,200 Success payment liability – Broad Institute 8,300 8,300 — — 8,300 Total liabilities $ 16,500 $ 16,500 $ — $ — $ 16,500 The following table sets forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at December 31, 2019 (in thousands): Carrying amount Fair value Level 1 Level 2 Level 3 Assets Cash equivalents: Money market funds $ 6,172 $ 6,172 $ 6,172 $ — $ — Commercial paper 3,986 3,986 — 3,986 — Marketable securities: Commercial paper 36,889 36,889 — 36,889 — Corporate notes 17,738 17,738 — 17,738 — Total assets $ 64,785 $ 64,785 $ 6,172 $ 58,613 $ — Liabilities Success payment liability – Harvard $ 3,900 $ 3,900 $ — $ — $ 3,900 Success payment liability – Broad Institute 3,900 3,900 — — 3,900 Total liabilities $ 7,800 $ 7,800 $ — $ — $ 7,800 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 – The Company measures its marketable securities at fair value on a recurring basis and classify those instruments within Level 2 of the fair value hierarchy. Marketable securities are classified within Level 2 of the fair value hierarchy 10 because pricing inputs are other than quoted prices in active markets, whi ch are either directly or indirectly observable as of the reporting date, and fair value is determined using models or other valuation methodologies. Success Payment Liabilities – As discussed further in Note 8, License agreements , the Company is required to make success payments determined based upon the achievement of specified multiples of the initial weighted average value of the Company’s Series A Preferred at specified valuation dates. The Company’s liability for success payments under the Harvard License Agreement and Broad License Agreement are 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. The following variables were incorporated in the calculation of the estimated fair value of the Harvard and Broad Institute success payment liabilities: Harvard Broad Institute September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019 Fair value of Series A Preferred (per share) (1) $ — $ 3.60 $ — $ 3.60 Fair value of common stock (per share) 24.62 — 24.62 — Expected volatility 73 % 72 % 73 % 72 % Expected term (years) 0.60-8.75 0.10-8.01 0.60-9.61 0.10-8.01 (1) The effect of the Company’s one-for-4.4843 reverse stock split in January 2020 only applied to its common stock and did not impact its redeemable convertible preferred stock. As such, the Series A Preferred fair value per share as of December 31, 2019 does not show the effect of the reverse stock split. If adjusted for the effect of the reverse stock split, the fair value per share of Series A Preferred would be $16.14 on December 31, 2019. Upon completion of the Company’s IPO, all outstanding shares of redeemable convertible preferred stock converted into shares of the Company’s common stock. At December 31, 2019, the fair value of the Series A Preferred was determined by management with the assistance of an independent third-party specialist. At September 30, 2020, the fair value of the common stock was the market value of the Company’s common stock. The computation of expected volatility was estimated using available information about the historical volatility of stocks of similar publicly traded companies for a period matching the expected term assumption. In addition, the Company incorporated the estimated number, timing, and probability of valuation measurement dates in the calculation of the success payment liability. The following table reconciles the change in the fair value of success payment liabilities based on Level 3 inputs (in thousands): Nine Months Ended September 30, 2020 Harvard Broad Institute Total Balance at December 31, 2019 $ 3,900 $ 3,900 $ 7,800 Changes in fair value 4,300 4,400 8,700 Balance at September 30, 2020 $ 8,200 $ 8,300 $ 16,500 5. Marketable securities The following table summarizes the Company’s marketable securities held at September 30, 2020 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Commercial paper $ 3,984 $ 13 $ — $ 3,997 Corporate notes 29,196 27 — 29,223 U.S. Treasury securities 26,034 1 — 26,035 Government securities 5,062 — — 5,062 Total $ 64,276 $ 41 $ — $ 64,317 The following table summarizes the Company’s marketable securities held at December 31, 2019 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Commercial paper $ 36,875 $ 14 $ — $ 36,889 Corporate notes 17,736 2 — 17,738 Total $ 54,611 $ 16 $ — $ 54,627 11 The amortized cost of marketable securities is adjusted for amortization of premiums and accretion of discounts to maturity. At September 30, 2020 , the balance in accumulated other comprehensive income was comprised solely of activity related to marketable securities. There were no realized gains or losses recognized on the sale or maturity of marketable securities for the nine months ended September 30, 2020 and 20 19 and, as a result, the Company did not reclassify any amounts out of accumulated other comprehensive income for the same period. The Company holds debt securities of companies with high credit quality and has determined that there was no material change in the credit risk of any of its debt securities. The contractual maturity dates of all the investments are less than one year. 6. Accrued expenses and other current liabilities Accrued expenses and other current liabilities consist of the following (in thousands): September 30, 2020 December 31, 2019 Prime license costs (1) 5,000 — Process development and manufacturing costs 4,138 593 Employee compensation and related benefits 3,207 3,531 Professional fees 2,776 1,541 Other research costs 1,914 955 Other 1,274 1,232 Total $ 18,309 $ 7,852 (1) In September 2020, the Company elected to continue its collaboration with Prime Medicine, Inc., or Prime Medicine, and recognized and $5.0 million, which represents the fair value of Beam’s common stock to be issued to Prime Medicine. Refer to Note 8, License agreements , for further discussion of the Prime Medicine license agreement. 7. Leases Operating leases The Company’s operating leases are as follow: • A February 2018 lease for 38,203 square feet of office and laboratory space, which commenced in March 2018 and terminates in September 2028. The lease is subject to fixed-rate rent escalations and provides for $6.1 million in tenant improvements and a term extension option, which was not reasonably certain of exercise. • An October 2018 lease for laboratory space, which commenced in April 2019 and was amended in March 2020 and April 2020. The amended lease commenced in April 2020 and terminates in December 2025. The amended lease is subject to fixed-rate rent escalations and provides an option to extend the lease for two additional two-year periods through December 31, 2029, which were not determined by the Company to be reasonably certain of being exercised. Upon commencement of the March 2020 amendment, the Company recorded an operating lease right-of-use, or ROU, asset and a lease liability of $4.2 million. Upon commencement of the April 2020 amendment, the Company recorded an operating lease ROU asset and a lease liability of $1.8 million. • Leases in June and July 2019 for office and laboratory space, both of which commenced in October 2019 and terminate in December 2021. The leases are subject to fixed-rate rent escalations. The following table summarizes operating lease costs as well as sublease income (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Operating lease costs $ 1,644 $ 1,001 $ 4,947 $ 2,620 Variable lease costs 249 140 786 439 Short-term lease costs — 17 — 116 Sublease income — (12 ) — (34 ) Total $ 1,893 $ 1,146 $ 5,733 $ 3,141 12 The following table summarizes the lease term and discount rate: September 30, 2020 December 31, 2019 Weighted-average remaining lease term (years) Operating leases 6.8 years 7.4 years Weighted-average discount rate Operating leases 9.7 % 9.8 % The following table summarizes the cash paid for amounts included in the measurement of lease liabilities (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Operating cash flows used for operating leases $ 2,014 $ 1,204 $ 5,132 $ 2,906 Operating lease liabilities arising from obtaining ROU assets — — 5,795 — At September 30, 2020, the future minimum lease payments for the Company’s operating leases for each of the years ending December 31 were as follows (in thousands): Remainder of 2020 $ 1,780 2021 6,507 2022 4,745 2023 4,879 2024 5,033 2025 5,123 Thereafter 10,411 Undiscounted lease payments 38,478 Less: imputed interest (10,328 ) Total operating lease liabilities $ 28,150 In addition to the leases discussed above, the Company is party to an April 2019 lease for office and laboratory space to be built, with the rent payments for the first phase expected to commence at the earliest in late 2021 and the rent payments for the second phase expected to commence at the earliest in the first half of 2022. The lease will terminate 12 years from the second phase commencement date. The lease is subject to fixed-rate rent escalations and provides for $23.4 million in tenant improvements and the option to extend the lease for two terms of five years each. Upon executing the lease, the Company made a security deposit of $11.8 million in the form of a letter of credit, which is included in restricted cash as of September 30, 2020. In October 2020, the Company gained access to the lease space and will record a ROU asset and a lease liability. The minimum amount of anticipated undiscounted lease payments due under this lease is $177.2 million. Further, the tabular disclosure of minimum lease payments above does not include payments due under this lease. In August 2020, the Company entered into a lease agreement with Alexandria Real Estate Equities, Inc. to build a 100,000 square foot manufacturing facility in Research Triangle Park, North Carolina intended to support a broad range of clinical programs. The lease has a term of fifteen years following the commencement date and provides the Company the option to extend the lease term for two five-year terms. It is subject to fixed rate escalation increases and also provides up to $20.0 million for reimbursement of tenant improvements. As the lease had not commenced as of September 30, 2020 , the Company has not recorded an operating lease ROU asset or lease liability for this lease in the accompanying condensed consolidated balance sheets. The lease payments are subject to adjustment following the determination of the total project costs of the landlord. The initial estimate of minimum amount of undiscounted lease payments due under this lease is $63.9 million. The Company expects to invest up to $83.0 million over a five-year period and anticipates that the facility will be operational by the first quarter of 2023. Further, the tabular disclosure of minimum lease payments above does not include payments due under this lease. Financing obligations In July 2019 and October 2019, the Company sold certain equipment to a leasing company. Contemporaneous with the closing of the sale, the Company entered into a lease agreement with the leasing company with a term of four years pursuant to which the Company leased back the equipment. Further, in February 2020, the Company sold additional equipment to the leasing company for a total of $1.6 million and, concurrently, entered into a lease agreement with the leasing company to lease back the equipment for an annual rent of $0.5 million over a term of four years. 13 The equipment leases are being accounted for as financings as the l ease terms are for substantially all the remaining economic life of the underlying equipment. Management concluded that control, including the significant risks and rewards of ownership, did not effectively transfer to the buyer-lessor at the inception of the sale and leaseback transactions. As a result, the transactions are accounted for as failed sale and leasebacks and result in the recognition of financing liabilities. The future minimum payments related to the equipment financing obligations at September 30, 2020, for each of the years ending December 31 were as follows (in thousands): Remainder of 2020 $ 551 2021 2,200 2022 2,200 2023 1,550 2024 70 Total 6,571 Less: amounts representing interest at 8.64% (926 ) Plus: residual values 536 Financing obligations $ 6,181 The following table summarizes the breakdown of the principal and interest portions of the equipment financing payments (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Paydown of principal $ 410 $ 170 $ 1,158 $ 170 Payment of interest 140 68 422 68 8. License agreements Harvard license agreement Under the terms of the Harvard License Agreement, Harvard is entitled to receive success payments, determined based upon the achievement of specified multiples of the initial weighted average value of the Company’s Series A Preferred at specified valuation dates. The Company is required to make success payments to Harvard during a period of time, or the Harvard Success Payment Period, which has been determined to be the later of (1) the ninth anniversary of the Harvard License Agreement or (2) the earlier of (a) the twelfth anniversary of the Harvard License Agreement and (b) the third anniversary of the first date on which a licensed product receives regulatory approval in the United States. During the Harvard Success Payment Period, the Company will perform a calculation of any amounts owed to Harvard on each rolling 90-day period, commencing one year after the Company’s IPO. The following table summarizes the Company’s success payment liability for Harvard (in thousands): September 30, 2020 December 31, 2019 Harvard success payment liability $ 8,200 $ 3,900 The following table summarizes the expense resulting from the change in the fair value of the success payment liability for Harvard (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Change in fair value of Harvard success payment liability $ (1,400 ) $ 800 $ 4,300 $ 1,800 As of September 30, 2020, no success payments have been paid or are due to Harvard. In addition, Harvard was entitled to receive financing milestone payments, which were paid by the Company during the year ended December 31, 2019. The annual maintenance fee under the Harvard License Agreement is recorded as research and development expense. Patent prosecution costs are recognized as expense in the period incurred. As of September 30, 2020, the Company determined that product development and regulatory approval milestones and royalties under the Harvard License Agreement were not probable and, as such, no amounts were recognized for the nine months ended September 30, 2020. 14 Broad license agreement Under the terms of the Broad License Agreement, Broad Institute is entitled to receive success payments, determined based upon the achievement of specified multiples of the initial weighted average value of the Blink Series A Preferred at specified valuation dates. The Company is required to make success payments to Broad Institute during a period of time, or the Broad Success Payment Period, which has been determined to be the earliest of (1) the twelfth anniversary of the Broad License Agreement, or (2) the third anniversary of the first date on which a licensed product receives regulatory approval in the United States. During the Broad Success Payment Period, the Company will perform a calculation of any amounts owed to Broad Institute on each rolling 90-day period, commencing one year after the Company’s IPO . The following table summarizes the Company’s success payment liability for Broad Institute (in thousands): September 30, 2020 December 31, 2019 Broad Institute success payment liability $ 8,300 $ 3,900 The following table summarizes the expense resulting from the change in the fair value of the success payment liability for Broad Institute (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Change in fair value of Broad Institute success payment liability $ (1,300 ) $ 800 $ 4,400 $ 1,800 As of September 30, 2020, no success payments have been paid or are due to Broad Institute. In addition, Broad Institute was entitled to receive financing milestone payments, which were paid by the Company during the year ended December 31, 2019. The annual maintenance fee under the Broad License Agreement is recorded as research and development expense. Patent prosecution costs are recognized as expense in the period incurred. As of September 30, 2020, the Company determined that product development and regulatory approval milestones and royalties under the Broad License Agreement were not probable and, as such, no amounts were recognized for the nine months ended September 30, 2020. Editas license agreement In May 2018, the Company entered into a license agreement, or the Editas License Agreement, with Editas Medicine, Inc., or Editas, for certain intellectual property rights owned or controlled by Editas, for specified uses. Under the Editas License Agreement, Editas granted to the Company a worldwide, exclusive, sublicensable license (subject to certain exceptions and conditions) under certain intellectual property controlled by Editas for the use of base editing therapies for the treatment of any field of human diseases and conditions, subject to certain exceptions, or the Beam Field, and the licenses granted or to be granted under the Editas License Agreement, or the Editas Development and Commercialization License. Additionally, Editas granted to the Company a royalty-free, non-exclusive license under certain intellectual property owned or controlled by Editas to perform research activities in the Beam Field. Editas provided the Company with an exclusive option to obtain an Editas Development and Commercialization License to three additional groups of intellectual property owned or controlled by Editas, on a group by group basis, during the specified option period, subject to certain exceptions. Pursuant to the Editas License Agreement, the Company will use commercially reasonable efforts to develop a product that includes the rights licensed to the Company within a specified period of time and to commercialize any such products that have received regulatory approval in certain specified countries. The annual maintenance fees under the Editas License Agreement are recorded as research and development expense. Annual patent costs are expensed as incurred. In addition, the Company is required to make certain development, regulatory and commercial milestone payments to Editas upon the achievement of specified milestones. As of September 30, 2020, the triggering of these milestone payments was not probable and, as such, no amounts were recognized for the nine months ended September 30, 2020. Bio Palette In March 2019, the Company entered into a license agreement, or the Bio Palette License Agreement, with Bio Palette Co., Ltd., or Bio Palette, pursuant to which Beam received an exclusive (even as to Bio Palette), sublicensable license under certain patent rights related to base editing owned or controlled by Bio Palette to exploit products for the treatment of human disease throughout the world, but excluding products in the microbiome field in Asia. In addition, the Company granted Bio Palette an exclusive (even as to Beam) license under certain patent rights related to base editing and gene editing owned or controlled by the Company to exploit products in the microbiome field in Asia. Each party to the 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 if either party determines not to exploit their rights in such field. 15 Upon the execution of the Bio Palette License Agreement, the Company paid Bio Palette an upfront fee of $0.5 million and issued to Bio Palette 16,725 shares of its common stock valued at $0.1 million, which were recorded as research and development expense for the three months ended March 31, 2019. Upon the issuance of a certain Bio Palette patent in the United States in June 2020 , the Company made a milestone payment of $2.0 million and , in July 2020, issue d to Bio Palett e 175,000 shares of its common stock valued at $0.3 million , which were recognized as research and development expense . The fair value of the common stock issued to Bio Palette under the Bio Palette License Agreement was measured at the inception of arrang ement and expensed when the issuance of shares became probable. 9. Collaboration and license agreements Prime Medicine In September 2019, the Company entered into a collaboration and license agreement with Prime Medicine to research and develop a novel gene editing technology developed by one of Beam’s founders. Under the terms of the agreement, the Company granted Prime Medicine a non-exclusive license to certain of its CRISPR technology (including Cas12b), delivery technology and certain other technology controlled by Beam to develop and commercialize gene editing products for the treatment of human diseases. The Company is not currently using the intellectual property licensed from Prime Medicine in any of its current programs, but it is required to use commercially reasonable efforts to develop new product candidates using the intellectual property licensed from Prime Medicine. Additionally, each party granted to the other party certain exclusive and non-exclusive licenses to certain technology developed after the effective date of the agreement and controlled by the granting party or jointly owned by the parties. Each party has an obligation to assign rights in certain technology developed under the collaboration to the other party. Beam has an obligation to issue $5.0 million in shares of its common stock to Prime Medicine, and Prime Medicine has an obligation to issue 5,000,000 shares of its common stock to Beam, should Beam elect to extend the collaboration beyond one year. In September 2020, the Company elected to continue the collaboration and, in October 2020, issued 200,307 shares of the Company’s common stock to Prime Medicine. The Company recognized $5.0 million, which represents the fair value of Beam’s common stock to be issued to Prime Medicine, as research and development expense within the accompanying condensed consolidated statements of operations and other comprehensive loss for the three and nine months ended September 30, 2020, and within accrued expenses in the accompanying condensed consolidated balance sheets as of September 30, 2020. Additionally, in October 2020, the Company received 5,000,000 shares of Prime Medicine’s common stock and recognized $0.1 million as an offset to research and development expense within the accompanying condensed consolidated statements of operations and other comprehensive loss for the three and nine months ended September 30, 2020, and within other current assets in the accompanying condensed consolidated balance sheets as of September 30, 2020. As of September 30, 2020, the Company determined that milestones and royalties under the agreement were not probable of recognition. Verve In April 2019, Beam entered into a collaboration and license agreement, or the Verve Agreement, with Verve Therapeutics, Inc., or Verve, to investigate gene editing strategies to modify genes associated with an increased risk of coronary diseases. Under the terms of the Verve Agreement, the Company granted Verve an exclusive license to certain base editor technology and certain delivery technology, and improvements and Verve granted Beam a non-exclusive license under certain know-how and patents controlled by Verve, an interest in joint collaboration technology and an exclusive license (except as to Verve) under certain delivery technology. As of September 30, 2020, the Company determined that milestones and royalties under the Verve Agreement were not probable of recognition. 10. Preferred and common stock In January 2020, the Company authorized preferred stock issuable of 25,000,000 shares and increased its authorized common stock issuable to 250,000,000 shares, both with a $0.01 par value per share. The Company’s board of directors approved a one-for-4.4843 reverse stock split of its common stock and stock options and a proportional adjustment to the existing conversion ratios for the Company’s redeemable convertible preferred stock effective as of January 24, 2020. Accordingly, all common stock shares, per share amounts, and additional paid-in capital amounts for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the reverse stock split. In February 2020, the Company completed its IPO in which the Company issued and sold 12,176,471 shares of its common stock, including 1,588,235 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $17.00 per share, for aggregate gross proceeds of $207.0 million. The Company received approximately $188.3 million in net proceeds after deducting underwriting discounts and estimated offering expenses payable by the Company. In connection with the IPO, all outstanding shares of the Company’s preferred stock converted into 29,127,523 shares of the Company’s common stock. 16 In October 2020, the Company issued and sold 5,750,000 shares of its common stock , including 75 0,000 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $ 23.50 per share, for aggregate gross proceeds of $135.1 million. The Company received approximately $ 126.6 million in net p roceeds after deducting underwriting discounts and estimated offering expenses payable by the Company. 11. Stock option and grant plan Stock option and grant plan The Beam Therapeutics Inc. 2017 Stock Option and Grant Plan adopted by the Company’s board of directors in June 2017 and amended in February and May 2019, provides for the grant of qualified incentive stock options and nonqualified stock options, restricted stock or other awards to the Company’s employees, officers, directors, advisors, and outside consultants for the issuance or purchase of shares of the Company’s common stock. In October 2019, the Company’s board of directors adopted the Beam Therapeutics Inc. 2019 Equity Incentive Plan, or the 2019 Plan, and, subsequent to the IPO, all equity-based awards are granted under the 2019 Plan. The 2019 Plan provides for grant of qualified and nonqualified stock options, stock appreciation rights, restricted and unrestricted stock and stock units, performance awards, and other share-based awards to the Company’s employees, officers, directors, advisors, and outside consultants. As of September 30, 2020, the Company had 8,021,083 shares reserved and 2,387,598 shares available for future issuance under the 2019 Plan. Stock-based compensation expense recorded as research and development and general and administrative expenses in the condensed consolidated statements of operations and other comprehensive loss is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Research and development $ 1,999 $ 1,175 $ 5,577 $ 3,150 General and administrative 1,013 854 2,996 1,821 Total stock-based compensation expense $ 3,012 $ 2,029 $ 8,573 $ 4,971 Stock options A summary of option activity under the Company’s equity award plans: Number of options Weighted average exercise price Outstanding at December 31, 2019 4,791,047 $ 4.72 Granted 1,346,146 19.40 Exercised (469,958 ) 2.28 Forfeitures (33,750 ) 7.33 Outstanding at September 30, 2020 5,633,485 8.32 Exercisable as of September 30, 2020 1,337,259 3.95 The weighted-average grant date fair value per share of options granted in the nine months ended September 30, 2020 was $13.35. As of September 30, 2020, there was $27.2 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.6 years. Restricted stock The following summarizes the Company’s restricted stock activity: Shares Weighted- average grant date fair value Unvested as of December 31, 2019 2,655,806 $ 2.73 Vested (1,163,603 ) 2.32 Unvested as of September 30, 2020 1,492,203 $ 3.14 At September 30, 2020, there was approximately $4.7 million of unrecognized stock-based compensation expense related to restricted stock that is expected to vest. These costs are expected to be recognized over a weighted-average period of approximately 0.6 years. 17 12. Net loss per share attributable to common stockholders As noted above, for periods in which the Company reports a net loss attributable to common stockholders, potentially dilutive securities have been excluded from the computation of diluted net loss per share as their effects would be anti-dilutive. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect: As of September 30, 2020 2019 Redeemable convertible preferred stock — 29,127,523 Unvested restricted stock 1,492,203 3,043,669 Outstanding options to purchase common stock 5,633,485 4,939,038 Total 7,125,688 37,110,230 The following table summarizes the computation of basic and diluted net loss per share attributable to common stockholders of the Company (in thousands except share and per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net loss attributable to common stockholders $ (34,452 ) $ (22,267 ) $ (100,405 ) $ (59,927 ) Denominator: Weighted average number of common shares, basic and diluted 50,087,747 6,717,792 43,438,919 6,254,069 Net loss per common share attributable to common stockholders, basic and diluted $ (0.69 ) $ (3.31 ) $ (2.31 ) $ (9.58 ) As discussed in Note 9, Collaboration and license agreements , as of September 30, 2020, the Company had an obligation to issue $5.0 million in shares of its common stock to Prime Medicine. In October 2020, the Company issued 200,307 shares of Beam common stock to Prime Medicine. The shares are considered issued for the purposes of computing earnings per share at September 30, 2020 as the Company had an obligation to issue the shares as of September 26, 2020. 13. Income taxes During the three and nine months ended September 30, 2020 and 2019, the Company recorded a full valuation allowance on federal and state deferred tax assets since management does not forecast the Company to be in a taxable position in the near future. 14. Related party transactions Founders For the nine months ended September 30, 2020 and 2019, the Company made payments of $0.1 million and $0.1 million, respectively, to each of its three founder shareholders for scientific consulting and other expenses. Verve The Company and Verve are parties to a collaboration and license agreement and have a common board member. During the nine months ended September 30, 2020 and 2019, the Company purchased shares of Verve series A preferred stock valued at $0.8 million and $0.4 million, respectively. During the nine months ended September 30, 2020, the Company recognized unrealized gains of $0.5 million on its investment in Verve preferred stock. The Company purchased certain materials from Verve amounting to $0.3 million, which is recorded as research and development expenses within the accompanying condensed consolidated statements of operations and other comprehensive loss for the nine months ended September 30, 2020, and within accrued expenses in the accompanying condensed consolidated balance sheets as of September 30, 2020. The Company also sold certain materials to Verve amounting to $0.2 million, which is recorded as interest and other income (expense), net within the accompanying condensed consolidated statements of operations and other comprehensive loss for the nine months ended September 30, 2020, and within prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets as of September 30, 2020. Prime Medicine The Company and Prime Medicine are parties to a collaboration and license agreement and have a common founder and several common board members. In September 2020, the Company elected to continue its collaboration with Prime Medicine and, in October 18 2020, as required by the terms under its collaboration and license agreement with Prime Medicine, issued 200,307 shares of the Company’s common stock to Prime Medicine. T he Company recognized $5.0 milli on, which represents the fair value of Beam’s common stock to be issued to Prime Medicine, as research and development expense within the accompanying condensed consolidated statements of operations and other comprehensive loss for the nine months ended Se ptember 30, 2020 , and within accrued expenses in the accompanying condensed consolidated balance sheets as of September 30, 2020. Additionally, in October 2020, the Company received 5 ,000,00 0 shares of Prime Medicine’s common stock and recognized $ 0.1 mill ion as an offset to research and development expense within the accompanying condensed consolidated statements of operations and other comprehensive loss for the nine months ended September 30, 2020 , and within other current assets in the accompanying cond ensed consolidated balance sheets as of September 30, 2020. Additionally, in September 2019, in connection with the Company’s collaboration and license agreement with Prime Medicine, the Company executed a letter agreement, as amended, to provide certain interim management and startup services to Prime Medicine for up to March 2021. Prime Medicine is obligated to reimburse the Company’s out-of-pocket costs incurred in connection with performing the services and, beginning in October 2020, will pay the Company a $30 thousand monthly service fee. For the nine months ended September 30, 2020, the Company did not recognize any amounts for performing such services or incur any out-of-pocket expenses. 19