Beam Therapeutics Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act . The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation of our disclosure controls and procedures as of December 31, 2020, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date were effective at the reasonable assurance level. Management’s Report on Internal Controls over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes policies and procedures that: • pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We continue to review our internal control over financial reporting and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, our senior management has concluded that the internal control over financial reporting was effective as of December 31, 2020. 104 This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for “emerging growth companies”. Changes in Internal Control over Financial Reporting We continuously seek to improve the efficiency and effectiveness of our internal controls. This results in refinements to processes throughout our company. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. During the year ended December 31, 2020, we have not experienced any material impact in our internal controls over financial reporting despite our employees working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 pandemic to determine any potential impacts on our internal controls over financial reporting including changes to their design and operating effectiveness. Item 9B. Other Information. None. 105 PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this Item 10 will be included in our definitive proxy statement to be filed with the Securities and Exchange Commission, or SEC, with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference. We have adopted a written code of business conduct and ethics, or Code, that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the Code is available on the investor section of our website at investors.beamtx.com. We intend to disclose on our website any amendments to, or waivers from, our Code that are required to be disclosed pursuant to SEC rules. Item 11. Executive Compensation. The information required by this Item 11 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item 12 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item 13 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference. Item 14. Principal Accounting Fees and Services. The information required by this Item 14 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference. 106 PART IV Item 15. Exhibits, Financial Statement Schedules. 1. Financial Statements For a list of the financial statements included herein, see Index to the Consolidated Financial Statements on page F-1 of this Annual Report on Form 10-K, incorporated into this Item by reference. 2. Financial Statement Schedules Financial statement schedules have been omitted because they are either not required or not applicable or the information is included in the consolidated financial statements or the notes thereto. 3. Exhibits Exhibit Number Description of Exhibit Form File Number Date of Filing Exhibit Number Filed Herewith 2.1# Agreement and Plan of Merger, dated February 22, 2021, among Beam Therapeutics Inc., Galileo Merger Sub I, Inc., Galileo Merger Sub II, LLC, Guide Therapeutics, Inc. (“Guide”), Shareholder Representative Services LLC, and the Guide Holders Signatory thereto X 3.1 Fourth Amended Certificate of Incorporation of Beam Therapeutics Inc. 8-K 001-39208 02/11/2020 3.1 3.2 Amended and Restated By-laws of Beam Therapeutics Inc. 8-K 001-39208 02/11/2020 3.2 4.1 Specimen stock certificate evidencing shares of common stock S-1 333-233985 09/27/2019 4.1 4.2 Amended and Restated Investors’ Rights Agreement, among Beam Therapeutics Inc. and the investors party thereto, dated November 8, 2018 S-1 333-233985 09/27/2019 4.2 4.3 Description of Registered Securities 10-K 001-39208 3/30/2020 4.3 10.1 Lease, between UP 26 Landsdowne, LLC and Beam Therapeutics Inc., dated February 21, 2018 S-1 333-233985 09/27/2019 10.1 10.2 Indenture of Lease, between Massachusetts Institute of Technology and Beam Therapeutics Inc., dated April 24, 2019 S-1 333-233985 09/27/2019 10.2 10.3 License Agreement, between MIL 21E, LLC and Beam Therapeutics Inc., dated June 25, 2019 S-1 333-233985 09/27/2019 10.3 10.4# License Agreement, between the President and Fellows of Harvard College and Beam Therapeutics Inc., dated June 27, 2017 S-1 333-233985 09/27/2019 10.4 10.5# Amendment No. 1 to License Agreement, between the President and Fellows of Harvard College and Beam Therapeutics Inc., dated December 12, 2017 X 10.6# Amendment No. 2 to License Agreement, between the President and Fellows of Harvard College and Beam Therapeutics Inc., dated March 27, 2020 X 10.7# License Agreement, between The Broad Institute, Inc. and Blink Therapeutics Inc., dated May 9, 2018 S-1 333-233985 09/27/2019 10.5 10.8# First Amendment to License Agreement, between The Broad Institute, Inc. and Blink Therapeutics Inc., dated September 4, 2018 X 107 Exhibit Number Description of Exhibit Form File Number Date of Filing Exhibit Number Filed Herewith 10.9# License Agreement, between Editas Medicine, Inc. and Beam Therapeutics Inc., dated May 9, 2018 S-1 333-233985 09/27/2019 10.6 10.10# Letter Agreement, between Beam Therapeutics Inc., The Broad Institute, Inc., the President and Fellows of Harvard College, and Editas Medicine, Inc., dated September 26, 2018 X 10.11 Letter Agreement, between the President and Fellows of Harvard College, The Broad Institute, Inc., and Beam Therapeutics Inc., dated January 7, 2021. X 10.12# License Agreement, between Bio Palette Co., Ltd. and Beam Therapeutics Inc., dated March 27, 2019 S-1 333-233985 09/27/2019 10.7 10.13+ Beam Therapeutics Inc. 2017 Stock Option and Grant Plan S-1/A 333-233985 01/27/2020 10.8 10.14+ Form of Restricted Stock Agreement under the Beam Therapeutics Inc. 2017 Stock Option and Grant Plan S-1 333-233985 09/27/2019 10.9 10.15+ Form of Incentive Stock Option Grant Notice under the Beam Therapeutics Inc. 2017 Stock Option and Grant Plan S-1 333-233985 09/27/2019 10.10 10.16+ Form of Non-Qualified Stock Option Grant Notice under the Beam Therapeutics Inc. 2017 Stock Option and Grant Plan S-1 333-233985 09/27/2019 10.11 10.17+ Form of Indemnification Agreement between Beam Therapeutics Inc. and its directors and officers S-1 333-233985 09/27/2019 10.12 10.18+ Letter Agreement between Beam Therapeutics Inc. and John Evans, dated January 24, 2020 S-1/A 333-233985 01/27/2020 10.13 10.19+ Amended and Restated Employment Agreement between Beam Therapeutics Inc. and Giuseppe Ciaramella, dated January 24, 2020 S-1/A 333-233985 01/27/2020 10.14 10.20+ Letter Agreement between Beam Therapeutics Inc. and Terry-Ann Burrell, dated January 24, 2020 S-1/A 333-233985 01/27/2020 10.15 10.21+ Beam Therapeutics Inc. 2019 Equity Incentive Plan S-1/A 333-233985 01/27/2020 10.16 10.22+ Form of Incentive Stock Option Agreement under the Beam Therapeutics Inc. 2019 Equity Incentive Plan S-1/A 333-233985 01/27/2020 10.17 10.23+ Form of Non-Statutory Stock Option Agreement under the Beam Therapeutics Inc. 2019 Equity Incentive Plan S-1/A 333-233985 01/27/2020 10.18 10.24+ Form of Non-Statutory Stock Option Agreement (Non-Employee Directors) under the Beam Therapeutics Inc. 2019 Equity Incentive Plan S-1/A 333-233985 01/27/2020 10.19 10.25+ Form of Restricted Stock Unit Award Agreement under the Beam Therapeutics Inc. 2019 Equity Incentive Plan X 10.26+ Form of Restricted Stock Award Agreement under the Beam Therapeutics Inc. 2019 Equity Incentive Plan X 10.27+ Beam Therapeutics Inc. 2019 Employee Stock Purchase Plan S-1/A 333-233985 01/27/2020 10.20 10.28+ Beam Therapeutics Inc. 2019 Cash Incentive Plan S-1/A 333-233985 01/27/2020 10.21 10.29+ Beam Therapeutics Inc. Non-Employee Director Compensation Policy, as amended X 10.30 Lease Agreement between Beam Therapeutics Inc. and ARE-NC Region No. 14, LLC 10-Q 001-39208 08/12/2020 10.1 108 Exhibit Number Description of Exhibit Form File Number Date of Filing Exhibit Number Filed Herewith 21.1 List of Subsidiaries of Beam Therapeutics Inc. X 23.1 Consent of Deloitte & Touche LLP X 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.1* Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 32.2* Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X # Portions of this exhibit have been omitted because the Registrant has determined they are not material and are they type that the Registrant treats as private or confidential. + Indicates management contract or compensatory plan. * This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing. Item 16. Form 10-K Summary Not applicable. 109 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . BEAM THERAPEUTICS INC. Date: March 15, 2021 By: /s/ John Evans John Evans Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ John Evans Chief Executive Officer and Director March 15, 2021 John Evans (Principal Executive Officer) /s/ Terry-Ann Burrell Chief Financial Officer and Treasurer March 15, 2021 Terry-Ann Burrell (Principal Financial Officer and Principal Accounting Officer) /s/ Kristina Burow Director March 15, 2021 Kristina Burow /s/ Graham Cooper Director March 15, 2021 Graham Cooper /s/ Mark Fishman Director March 15, 2021 Mark Fishman, M.D. /s/ Stephen Knight Director March 15, 2021 Stephen Knight, M.D. /s/ Carole Ho Director March 15, 2021 Carole Ho, M.D. /s/ Robert Nelsen Director March 15, 2021 Robert Nelsen /s/ Kathleen Walsh Director March 15, 2021 Kathleen Walsh 110 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of independent registered public accounting firm F-2 Consolidated balance sheets F-3 Consolidated statements of operations and other comprehensive loss F-4 Consolidated statements of redeemable convertible preferred stock and stockholders’ equity (defici t) F-5 Consolidated statements of cash flows F-6 Notes to consolidated financial statements F-8 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Beam Therapeutics Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Beam Therapeutics Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and other comprehensive loss, redeemable convertible preferred stock and stockholders' equity (deficit), and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Boston, Massachusetts March 15, 2021 We have served as the Company’s auditor since 2017. F-2 Beam Therapeutics Inc. Consolidated Balance Sheets (in thousands, except share and per share amounts) December 31, 2020 2019 Assets Current assets: Cash and cash equivalents $ 162,171 $ 37,221 Marketable securities 137,500 54,627 Prepaid expenses and other current assets 8,650 2,696 Total current assets 308,321 94,544 Property and equipment, net 38,513 24,290 Restricted cash 14,840 13,332 Operating lease right-of-use assets 86,859 18,957 Other assets 3,144 4,976 Total assets $ 451,677 $ 156,099 Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) Current liabilities: Accounts payable $ 6,314 $ 7,846 Accrued expenses and other current liabilities 18,487 7,852 Derivative liabilities 71,200 7,800 Current portion of lease liability 4,218 4,337 Current portion of equipment financing liability 2,118 1,303 Total current liabilities 102,337 29,138 Long-term lease liability 96,014 21,187 Long-term equipment financing liability 5,294 4,411 Other liabilities 2,471 418 Total liabilities 206,116 55,154 Commitments and contingencies (See Note 7, Leases , Note 8, License agreements and Note 9, Collaboration and license agreements) Redeemable convertible preferred stock (See Note 10, 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 December 31, 2020 and 2019, respectively — — Common stock, $0.01 par value; 250,000,000 and 205,000,000 shares authorized, 58,446,016 and 9,981,991 issued, and 57,254,178 and 7,326,185 outstanding at December 31, 2020 and 2019, respectively 573 73 Additional paid-in capital 642,633 1,851 Accumulated other comprehensive (loss) income (9 ) 16 Accumulated deficit (397,636 ) (203,044 ) Total stockholders’ equity (deficit) 245,561 (201,104 ) Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) $ 451,677 $ 156,099 The accompanying notes are an integral part of these consolidated financial statements. F-3 Beam Therapeutics Inc. Consolidated Statements of O perations and Other Comprehensive Loss (in thousands, except share and per share amounts) Years Ended December 31, 2020 2019 License revenue $ 24 $ 18 Operating expenses: Research and development 103,179 54,619 General and administrative 29,605 20,553 Total operating expenses 132,784 75,172 Loss from operations (132,760 ) (75,154 ) Other income (expense): Change in fair value of derivative liabilities (63,400 ) (5,400 ) Interest and other income (expense), net 1,568 2,228 Total other income (expense) (61,832 ) (3,172 ) Net loss $ (194,592 ) $ (78,326 ) Unrealized (loss) gain on marketable securities (25 ) 16 Comprehensive loss $ (194,617 ) $ (78,310 ) Reconciliation of net loss to net loss attributable to common stockholders: Net loss (194,592 ) (78,326 ) Accretion of redeemable convertible preferred stock to redemption value, including dividends on preferred stock (1,277 ) (12,714 ) Net loss attributable to common stockholders $ (195,869 ) $ (91,040 ) Net loss per common share attributable to common stockholders, basic and diluted $ (4.19 ) $ (14.05 ) Weighted-average common shares used in net loss per share attributable to common stockholders, basic and diluted 46,733,221 6,479,591 The accompanying notes are an integral part of these consolidated financial statements. F-4 Beam Therapeutics Inc. Consolidated Statements of Redeemable C onvertible Preferred Stock and Stockholders’ Equity (Deficit) (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 Equity (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 $95 11,308,397 37,901 — — — — — — Accretion of redeemable convertible preferred stock to redemption value — 12,714 — — (12,714 ) — — (12,714 ) Vesting of restricted common stock — — 1,559,126 15 (15 ) — — — Exercise of common stock options — — 184,966 2 183 — — 185 Issuance of common stock related to license agreement — — 16,725 — 113 — — 113 Stock-based compensation — — — — 7,028 — — 7,028 Other comprehensive income — — — — — 16 — 16 Net loss — — — — — — (78,326 ) (78,326 ) 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 Issuance of common stock from October 2020 public offering, net of issuance costs of $8.5 million — — 5,750,000 58 126,566 — — 126,624 Issuance of common stock related to license agreements — — 375,307 4 5,747 — — 5,751 Vesting of restricted common stock — — 1,638,968 16 (16 ) — — — Stock-based compensation — — — — 15,380 — — 15,380 Exercise of common stock options — — 859,724 9 3,146 — — 3,155 Other comprehensive loss — — — — — (25 ) — (25 ) Net loss — — — — — — (194,592 ) (194,592 ) Balance at December 31, 2020 — $ — 57,254,178 $ 573 $ 642,633 $ (9 ) $ (397,636 ) $ 245,561 The accompanying notes are an integral part of these consolidated financial statements. F-5 Beam Therapeutics Inc. Consolidated S tatements of Cash Flows (in thousands) Years Ended December 31, 2020 2019 Operating activities Net loss $ (194,592 ) $ (78,326 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 4,735 3,503 Amortization of investment discount (premiums) 118 (920 ) Stock-based compensation expense 15,380 7,028 Change in operating lease right-of-use assets 4,737 1,904 Non-cash research and development license expense 5,651 113 Change in fair value of derivative liabilities 63,400 5,400 Other (517 ) — Changes in operating assets and liabilities: Prepaid expenses and other current assets (5,726 ) (1,258 ) Other long-term assets (154 ) (634 ) Accounts payable 60 4,092 Accrued expenses and other liabilities 7,035 3,571 Operating lease liabilities 3,151 (2,535 ) Financing milestone liabilities — (13,750 ) Other long-term liabilities 981 (191 ) Net cash used in operating activities (95,741 ) (72,003 ) Investing activities Purchases of property and equipment (16,357 ) (12,518 ) Purchases of marketable securities (281,612 ) (129,760 ) Maturities of marketable securities 198,596 76,069 Purchase of long-term investment (750 ) (450 ) Net cash used in investing activities (100,123 ) (66,659 ) Financing activities Proceeds from issuance of Series B Preferred Stock, net — 37,901 Proceeds from initial public offering, net of underwriting discount 192,510 — Proceeds from October 2020 public offering, net of underwriting discount 127,018 — Payment of initial and follow-on public offering costs (2,059 ) (2,521 ) Proceeds from equipment financings 3,267 6,178 Repayment of equipment financings (1,569 ) (464 ) Proceeds from exercise of stock options 3,155 185 Net cash provided by financing activities 322,322 41,279 Net increase (decrease) in in cash, cash equivalents and restricted cash 126,458 (97,383 ) Cash, cash equivalents and restricted cash—beginning of period 50,553 147,936 Cash, cash equivalents and restricted cash—end of period $ 177,011 $ 50,553 The accompanying notes are an integral part of these consolidated financial statements. F-6 Beam Therapeutics Inc. Consolidated statements of cash flows (continued) (in thousands) Years Ended December 31, 2020 2019 Supplemental disclosure of cash flow information: Cash paid for interest $ 561 $ 187 Supplemental disclosure of non-cash 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 $ 5,067 $ 2,465 Receipt of common stock in exchange for technology license $ 100 $ 460 Operating lease liabilities arising from obtaining right-of-use assets $ 74,723 $ 6,221 Issuance of common stock for research and development licenses $ 5,751 $ 113 Equity issuance costs in accounts payable and accrued expenses $ — $ 593 Accretion of redeemable convertible preferred stock to redemption value, including dividends on preferred stock $ 1,277 $ 12,714 The accompanying notes are an integral part of these consolidated financial statements F-7 Beam Therapeutics Inc. Notes to consolidated financial statements 1. Nature of the business and basis of presentation Organization Beam Therapeutics Inc. (the “Company” or “Beam”) is a biotechnology company committed to establishing the leading, fully integrated platform for precision genetic medicines. Beam’s vision is to provide life-long cures to patients suffering from genetic diseases. The Company was incorporated on January 25, 2017 (Inception) as a Delaware corporation and began operations in July 2017. Its principal offices are in Cambridge, Massachusetts. 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 offering expenses payable by the Company. In connection with the IPO, all outstanding shares of Company’s redeemable convertible preferred stock converted into 29,127,523 shares of its common stock. In October 2020, the Company issued and sold 5,750,000 shares of its common stock, including 750,000 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $23.50 per share, for aggregate gross proceeds of $135.1 million. The Company received approximately $126.6 million in net proceeds after deducting underwriting discounts and offering expenses payable by the Company. On January 16, 2021, the Company entered into a Securities Purchase Agreement with certain purchasers, pursuant to which the Company agreed to sell and issue to the Purchasers, in a private placement, shares of common stock of the Company. The closing of the private placement occurred on January 21, 2021. The Company issued and sold 2,795,700 shares of its common stock at a purchase price of $93.00 per share for aggregate gross proceeds of $260.0 million, before deducting fees to the placement agents and other estimated offering expenses payable by the Company (See Note 11, Preferred stock and common stock ). The Company received approximately $252.1 million in net proceeds after deducting estimated offering expenses payable by the Company. Since its inception, the Company has incurred substantial losses and had an accumulated deficit of $397.6 million as December 31, 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 December 31, 2020 of $299.7 million will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these financial statements. The Company will need additional financing to support its continuing operations and pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed would have a negative impact on the Company’s financial condition and its ability to pursue its business strategy. The Company will need to generate significant revenue to achieve profitability, and it may never do so. F-8 COVID-19-related significant risks and uncertainties With the ongoing concern related to the COVID-19 pandemic during 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 twelve months ended December 31, 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 Basis of presentation The accompanying 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 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. All intercompany transactions and balances have been eliminated in consolidation. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses, 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 consolidated financial statements include, but are not limited to, incremental borrowing rate used in the calculation of lease liabilities, the fair values of common stock, redeemable convertible preferred stock, stock-based compensation, and success payments. Actual results could differ from these estimates. Cash, and 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 consolidated balance sheets to the total of the amounts shown in the consolidated statements of cash flows (in thousands): December 31, 2020 2019 Cash and cash equivalents $ 162,171 $ 37,221 Restricted cash 14,840 13,332 Total cash, cash equivalents, and restricted cash $ 177,011 $ 50,553 F-9 Marketable securities The Company classifies marketable securities with a remaining maturity when purchased of greater than three months as available-for-sale. Available-for-sale securities are maintained by the Company’s investment managers and consist of commercial paper, high-grade corporate notes, U.S. Treasury securities and government securities. Available-for-sale securities are carried at fair value with the unrealized gains and losses included in accumulated other comprehensive (loss) income as a component of stockholders’ equity until realized. Any premium or discount arising at purchase is amortized and/or accreted to interest income and/or expense over the life of the instrument. Realized gains and losses are determined using the specific identification method and are included in interest and other income (expense), net. Concentrations of credit risk Financial instruments that are potentially subject to significant concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, and restricted cash. The Company attempts to minimize the risk related to marketable securities by working with highly rated financial institutions that invest in a broad and diverse range of financial instruments as defined the Company. The Company has established guidelines relative to credit ratings and maturities intended to safeguard principal balances and maintain liquidity. The Company maintains its funds in accordance with its investment policy, which defines allowable investments, specifies credit quality standards and is designed to limit credit exposure to any single issuer. Guarantees and indemnifications As permitted under Delaware law, the Company indemnifies its officers, directors, consultants, and employees for certain events or occurrences that happen by reason of the relationship with, or position held at, the Company. For the twelve months ended December 31, 2020 and 2019, the Company had not experienced any losses related to these indemnification obligations, and no claims were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established. Equity issuance costs The Company capitalizes incremental legal, professional, accounting and other third-party fees that were directly associated with its stock offerings as other non-current assets until the offerings are consummated. Upon consummation, these costs are recorded in stockholders’ equity (deficit) as a reduction of additional paid-in-capital generated as a result of the offerings. As of December 31, 2020, there were no deferred offering costs. As of December 31, 2019, equity issuance costs of $3.1 million related to the IPO were included in other assets in the accompanying consolidated balance sheets. Fair value of financial instruments ASC Topic 820, Fair Value Measurement , or ASC 820, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the assets or liability and are developed based on the best information available in the circumstances. ASC 820 identifies fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tiered value hierarchy that distinguishes between the following: Level 1—Quoted market prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves. Level 3—Unobservable inputs for the asset or liability (i.e. supported by little or no market activity). Level 3 inputs include management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgement. Accordingly, the degree of judgement exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. There have been no changes to the valuation methods utilized during the years ended December 31, 2020 and 2019. The Company evaluates transfers between levels at the end of each reporting period. There were no transfers of financial instruments between levels during the years ended December 31, 2020 and 2019. F-10 Property and equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the estimated useful life of each assets as follows: Asset category Estimated useful life Computer equipment and software 3 years Laboratory equipment and office furniture 5 years Leasehold improvements Shorter of useful life or remaining term Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in interest and other income (expense), net. Expenditures for repairs and maintenance are charged to expense as incurred. Impairment of long-lived assets The Company evaluates its long-lived assets, which consist primarily of property and equipment and operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. There were no impairment losses recognized during the years ended December 31, 2020 and 2019. Freestanding financial instruments and derivatives Pursuant to a license agreement between the President and Fellows of Harvard College, or Harvard, and the Company, or the Harvard License Agreement, and a license agreement with the Broad Institute of MIT and Harvard, or Broad Institute, and the Company, or the Broad License Agreement, (see Note 8, License Agreements ), the Company is required to make success payments to Harvard and Broad Institute based the achievement of specified multiples of the initial weighted average value of the Company’s redeemable convertible Series A-1 Preferred Stock and the Company’s redeemable convertible Series A-2 Preferred Stock, or together the Series A Preferred, at specified valuation dates, payable in cash or Company common stock. Subsequent to the IPO, the amount of the success payments are based on the market value of Beam’s common stock. The success payments are accounted for under ASC 815, Derivatives and Hedging and were initially recorded at fair value with a corresponding charge to research and development expense. The liabilities are marked to market at each balance sheet date with all changes in value recognized in other income (expense) in the consolidated statement of operations and other comprehensive loss. The Company will continue to adjust the liability for changes in fair value until the earlier of the achievement or expiration of the success payment obligation. To determine the estimated fair value of the success payments, the Company used a Monte Carlo simulation model, which models the value of the liability based on several key variables, including probability of event occurrence, timing of event occurrence, as well as the value of the Series A Preferred, prior to the IPO, and the value of the Company’s common stock, subsequent to the IPO. Leases and rent expense On January 1, 2019, the Company adopted ASU No. 2016-02, Leases (Topic 842) , or ASC 842. Under the standard the Company accounts for leases using a right-of-use, or ROU, model, which recognizes that, at the date of commencement, a lessee has a financial obligation to make lease payments to the lessor for the right to use the underlying asset during the lease term. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as ROU assets and short-term and long-term lease liabilities, as applicable. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. The Company typically only includes an initial lease term in its assessment of a lease arrangement. It also considers termination options and factors those into the determination of lease payments. Options to renew a lease are not included in the assessment unless there is reasonable certainty that the Company will renew. Operating lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the ROU asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate, which reflects the fixed rate at which it could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Lease expense for lease payments is recognized on a straight-line basis over the lease term. F-11 The Company is required to pay fees for operating expenses in addition to monthly base rent for certain operating leases (non-lease components). The Company has elected the practical expedient which allows non-lease components to be combined with lease components for all asset classes. Variable non-lease components are not included within the lease right-of-use asset and lease liability on the consolidated balance sheet, and instead are reflected as expense in the period they are paid. Leasehold improvements are not unique and are retained by the lessor at the end of the lease. However, in the case of a space designed to be suitable for the Company’s specific real estate needs and if the Company is responsible for cost overruns, the Company is the accounting owner of the leasehold improvements. The Company’s real estate operating leases provide for scheduled annual rent increases throughout the lease terms. The Company recognizes the effects of the scheduled rent increases on a straight-line basis over the full terms of the lease. Tenant improvement allowances, if any, provided by a landlord are recorded as a reduction of the ROU asset related to that lease. Redeemable convertible preferred stock The Company has classified redeemable convertible preferred stock as temporary equity on the accompanying consolidated balance sheet because it becomes redeemable due to the passage of time or could become redeemable due to certain change in control clauses that are outside of the Company’s control. As a result of becoming redeemable due to the passage of time, the Company records changes in the redemption value and accretes the redeemable convertible preferred stock immediately to redemption value as they occur. These increases are recorded as charges against retained earnings, if any, and then to additional paid-in capital. Then, in the absence of additional paid-in capital, the accretion is charged to the accumulated deficit. All of the Company’s outstanding redeemable convertible preferred stock converted into the Company’s common stock upon the closing of the IPO in February 2020. Revenue recognition The Company recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and its related amendments, or, collectively, ASC 606. At inception, the Company determines whether contracts are within the scope of ASC 606 or other topics. For contracts that are determined to be within the scope of ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services. To achieve this core principle, the Company applies the following five steps (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when performance obligation is satisfied. The Company only applies the five-step model to contracts when it determines that collection of substantially all consideration for goods and services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. To the extent a contract includes multiple promised goods and services, the Company applies judgment to determine whether promised goods and services are both capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in management’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes. Determining the transaction price requires significant judgment. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The consideration to be received is allocated among the separate performance obligations based on relative standalone selling prices. The Company typically determines standalone selling prices using an adjusted market assessment approach model. The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized over time if either (i) the customer simultaneously receives and consumes the benefits provided by the entity’s performance, (ii) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. If the entity does not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring the control of a promised good or service to a customer. F-12 Licenses of intellectual property, or IP: If the license to the Company’s IP is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from consideration allocated to the license when the license is transferred to the customer and the customer can use and benefit from the licenses. For licenses that are combined with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. See Note 9, Collaboration and license agreements , for a discussion of Beam’s license agreement with Verve Therapeutics, Inc, or Verve . Milestone payments: At the inception of each arrangement that includes development or regulatory milestone payments, the Company evaluates the probability of reaching the milestones and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur in the future, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control or the licensee’s, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore revenue recognized is constrained as management is unable to assert that a reversal of revenue would not be possible. The transaction price is then allocated to each performance obligation on a relative standalone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. To date, the Company has not recognized any milestone revenue resulting from any of its agreements. Commercial Milestone Payments and Royalties: For arrangements that include sales-based royalties, including milestone payments based on levels of sales, if the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of its agreements. When no performance obligations are required of the Company, or following the completion of the performance obligation period, such amounts are recognized as revenue upon transfer of control of the goods or services to the customer. Generally, all amounts received or due other than sales-based milestones and royalties are classified as license fees. Sales-based milestones and royalties will be recognized as royalty revenue at the later of when the related sales occur or when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Deferred revenue arises from amounts received in advance of the culmination of the earnings process and is recognized as revenue in future periods as performance obligations are satisfied. Deferred revenue expected to be recognized within the next twelve months is classified as a current liability. Upfront payment contract liabilities resulting from the Company’s license agreements do not represent a financing component as the payment is not financing the transfer of goods or services, and the technology underlying the licenses granted reflects research and development expenses already incurred by the Company. Research and development costs Research and development costs are charged to expense as incurred. Research and development costs consist of costs incurred in performing research and development activities, including salaries and bonuses, stock-based compensation, employee benefits, facilities costs, laboratory supplies, depreciation, manufacturing expenses, preclinical expenses, consulting, and other contracted services. Further, the fair value of the Company’s common stock issued under license agreements, such as those with Bio Palette Co., Ltd., or Bio Palette, and Prime Medicine Inc., or Prime Medicine, are recorded as research and development costs. Additionally, under the terms of the Harvard License Agreement and the Broad License Agreement, the Company is obligated to make future payments should certain development and regulatory milestones be achieved. The Company has included such costs as research and development as the costs incurred related to the license agreements had no alternative future use. Costs for certain research and development activities are recognized based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development costs. Stock-based compensation The Company’s stock-based compensation program allows for grants of stock options, restricted stock awards and restricted stock units. Grants are awarded to employees and non-employees, including directors. The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation , or ASC 718. ASC 718 requires all stock-based payments to employees, non-employees and directors, to be recognized as expense in the consolidated statements of operations and comprehensive loss based on their fair values. The Company estimates the fair value of options granted using the Black-Scholes option pricing model, or Black-Scholes, for stock option grants to both employees and non-employees. The fair value of the Company’s common stock is used to determine the fair value of restricted stock awards and restricted stock units. F-13 Stock-based compensation awards are subject to either service- or performance-based vesting conditions. Compensation expense related to awards to employees, directors and non-employees with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. Compensation expense related to awards to employees with performance-based vesting conditions is recognized based on grant date fair value over the requisite service period using the accelerated attribution method to the extent achievement of the of performance condition is probable. The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate, and (iv) expected dividends. Due to the lack of a public market for the Company’s common stock prior to the IPO and continued lack of sufficient company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with expected term assumption. The Company uses the simplified method as prescribed by the SEC Staff Accounting Bulletin No. 107, Share-Based Payment , to calculate the expected term for options granted to employees and non-employees, whereby, the expected term equals the arithmetic average of the vesting term and the original contractual term of the options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company recognizes forfeitures as they occur. Due to the absence of an active market for the Company’s common stock prior to the IPO, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation , to estimate the fair value of its common stock. In determining the exercise prices for options granted, the Company considered the estimated fair value of the common stock as of the measurement date. The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm’s-length sales of the Company’s capital stock (including redeemable convertible preferred stock), the effect of the rights and preferences of the preferred shareholders, and the prospects of a liquidity event. Among other factors are the Company’s financial position and historical financial performance, the status of technological developments within the Company’s research, the composition and ability of the current research and management team, an evaluation or benchmark of the Company’s competition, and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date. Subsequent to the IPO, the Company has used the market value of its common stock on the measurement date. Patent costs All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred. Due to the uncertainty about the recovery of the expenditure, amounts incurred are classified as general and administrative expenses in the accompanying consolidated statements of operations and other comprehensive loss. Variable interest entities The Company reviews each legal entity in which it has a financial interest to determine whether or not the entity is a variable interest entity, or VIE. If the entity is a VIE, the Company assesses whether or not it is the primary beneficiary of that VIE based on a number of factors, including (i) which party has the power to direct the activities that most significantly affect the VIE’s economic performance, (ii) the parties’ contractual rights and responsibilities pursuant to any contractual agreements and (iii) which party has the obligation to absorb losses or the right to receive benefits from the VIE. If the Company determines that it is the primary beneficiary of a VIE, it consolidates the financial statements of the VIE into its consolidated financial statements at the time that determination is made. On a quarterly basis, the Company evaluates whether it continues to be the primary beneficiary of any consolidated VIEs. If the Company determines that it is no longer the primary beneficiary of a consolidated VIE, or no longer has a variable interest in the VIE, the Company deconsolidates the VIE in the period that the determination is made. Income taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s financial statements and tax returns. Deferred tax assets and liabilities are determined based upon the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and for loss and credit carryforwards, using enacted tax rates expected to be in effect in the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that these assets may not be realized. The Company determines whether it is more likely than not that a tax position will be sustained upon examination. If it is not more likely than not that a position will be sustained, none of the benefit attributable to the position is recognized. The tax benefit to be recognized for any tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes. F-14 Comprehensive loss Comprehensive loss is defined as the change in stockholders’ equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss includes net loss as well as other changes in stockholders’ deficit which includes certain changes in equity that are excluded from net loss. The Company’s only element of other comprehensive loss is unrealized gains and losses on marketable securities. Net loss per share The Company follows the two-class method when computing net loss per share, as the Company has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents. For purposes of the dilutive net loss per share calculation, stock options and stock units for which the performance and market vesting conditions have been deemed probable, potential dilutive securities, which include redeemable convertible preferred stock, unvested restricted stock, and common stock options are considered to be common stock equivalents, while stock options and stock units with performance- or market-based vesting conditions that were not deemed probable are not considered to be common stock equivalents. The Company’s redeemable convertible preferred stock contractually entitled the holders of such shares to participate in dividends but did not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reported a net loss, such losses were not allocated to such participating securities. In periods in which the Company reported a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders was the same as basic net loss per share attributable to common stockholders, since dilutive common shares were not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common stockholders for the years ended December 31, 2020 and 2019. Segment and geographic information Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or CODM, or decision-making group, in deciding how to allocate resources and in assessing performance. The CODM is the Company’s Chief Executive Officer. The Company views its operations as and manages its business in one operating segment operating exclusively in the United States. 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 is required by recognizing a cumulative-effect adjustment to the opening balance or retained earnings of the earliest period presented. The Company does not expect the adoption of ASU 2018-18 to have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 , Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , or ASU 2016-13, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes may result in earlier recognition of credit losses. For public entities that are Securities and Exchange Commission filers, excluding entities eligible to be smaller reporting companies, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. This standard will be effective for the Company on January 1, 2021. The Company does not expect the adoption of ASU 2016-13 to have a material impact on the Company’s consolidated financial statements. F-15 3. P roperty and equipment, net Property and equipment consist of the following (in thousands): December 31, 2020 2019 Lab equipment $ 17,201 $ 12,029 Leasehold improvements 12,706 12,653 Furniture and fixtures 1,078 1,040 Computer equipment 547 547 Construction in process 15,880 2,185 Total property and equipment 47,412 28,454 Less accumulated depreciation (8,899 ) (4,164 ) Property and equipment, net $ 38,513 $ 24,290 The following table summarizes depreciation expense incurred (in thousands) : Years Ended December 31, 2020 2019 Depreciation expense $ 4,735 $ 3,503 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 Harvard License Agreement and the Broad License Agreement. The Company also holds investments in privately issued corporate equity securities, which are accounted for as 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 December 31, 2020, the Company held $2.6 million of investments in privately issued corporate equity securities. During the year ended December 31, 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. 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, 2020 (in thousands): Carrying amount Fair value Level 1 Level 2 Level 3 Assets Cash equivalents: Money market funds $ 88,259 $ 88,259 $ 88,259 $ — $ — Commercial paper 60,494 60,497 — 60,497 — Corporate notes 12,314 12,308 — 12,308 — Marketable securities: Commercial paper 113,622 113,622 — 113,622 — Corporate notes 7,836 7,836 — 7,836 — U.S. Treasury securities 11,009 11,009 — 11,009 — Government securities 5,033 5,033 — 5,033 — Total Assets $ 298,567 $ 298,564 $ 88,259 $ 210,305 $ — Liabilities Success payment liability – Harvard 35,500 35,500 — — 35,500 Success payment liability – Broad Institute 35,700 35,700 — — 35,700 Total liabilities $ 71,200 $ 71,200 $ — $ — $ 71,200 F-16 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, 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 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. Success Payment Liability – As discussed further in Note 8, License agreements , t he Company is required to make payments to Harvard and Broad Institute based upon the achievement of specified multiples of the initial weighted average value of the Company’s Series A Preferred or, subsequent to the IPO, the market value of Beam’s common stock, at specified valuation dates. The Company’s liability for the share-based success payments under the Harvard and Broad License Agreements 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 December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Fair value of Series A Preferred (per share) (1) $ — $ 3.60 $ — $ 3.60 Fair value of common stock (per share) 81.64 — 81.64 — Expected volatility 74 % 72 % 74 % 72 % Expected term (years) 0.35-8.49 0.10-8.01 0.35-9.36 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 December 31, 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. F-17 The following table reconciles the change in the fair value of success payment liabilities based on Level 3 inputs (in thousands): Harvard Broad Balance at December 31, 2018 $ 1,200 $ 1,200 Change in fair value 2,700 2,700 Balance at December 31, 2019 $ 3,900 $ 3,900 Change in fair value 31,600 31,800 Balance at December 31, 2020 $ 35,500 $ 35,700 5. Marketable securities The following table summarizes the Company’s marketable securities held at December 31, 2020 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Commercial paper $ 113,628 $ 11 $ (17 ) $ 113,622 Corporate notes 7,839 2 (5 ) 7,836 U.S. Treasury securities 11,009 — — 11,009 Government securities 5,033 — — 5,033 Total $ 137,509 $ 13 $ (22 ) $ 137,500 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 The amortized cost of marketable securities is adjusted for amortization of premiums and accretion of discounts to maturity. At December 31, 2020, the balance in accumulated other comprehensive (loss) 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 years ended December 31, 2020 and 2019 and, as a result, the Company did not reclassify any amounts out of accumulated other comprehensive (loss) income for the same periods. The Company held 21 debt securities in an unrealized loss position at December 31, 2020. The aggregate fair value of securities held by the Company in an unrealized loss position for less than 12 months at December 31, 2020 was $82.8 million, and there were no securities held by the Company in an unrealized loss position for more than 12 months. 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, and as of December 31, 2020 the Company did not intend to sell, and was more than likely not required to sell, the debt securities in a loss position before recovery of their amortized cost bases. As a result, the Company determined it did not hold any investments with any other-than-temporary impairment at December 31, 2020. 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): December 31, 2020 2019 Employee compensation and related benefits 7,591 3,531 Process development and manufacturing costs 2,272 593 Other research costs 2,423 955 Professional fees 1,948 1,541 Other 4,253 1,232 Total $ 18,487 $ 7,852 F-18 7. Leases Operating leases The Company’s operating leases are as follows: • 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 provided 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 reasonably certain of exercise. Upon commencement of the March 2020 amendment, the Company recorded an operating lease 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. • 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 rent 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, which were not reasonably certain of exercise. The Company determined that it is the accounting owner of all tenant improvements. 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 December 31, 2020. Upon commencement of the first phase of this the lease in October 2020, the Company recorded an operating lease ROU asset of $66.8 million and a lease liability of $68.8 million. As the commencement of the second phase of this lease is expected to occur during the first quarter of 2021, the Company has not recorded an operating lease ROU asset or lease liability for this phase at December 31, 2020. Undiscounted lease payments under the second phase are anticipated to be $42.7 million, which are not included in the tabular disclosure of minimum lease payments below. The Company identified and assessed the following estimates in recognizing the operating lease right-of-use asset and corresponding liability: • Expected lease term: The expected lease term includes noncancelable lease periods and, when applicable, periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, as well as periods covered by an option to terminate the lease if Beam is reasonably certain not to exercise that option. • Incremental borrowing rate: As the discount rates in the Company’s lease are not implicit, management estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. • Lease and non-lease components: The Company is required to pay fees for operating expenses in addition to monthly base rent for certain operating leases (non-lease components). The Company has elected the practical expedient which allows non-lease components to be combined with lease components for all asset classes. Variable non-lease components are not included within the lease right-of-use asset and lease liability on the consolidated balance sheet, and instead are reflected as expense in the period they are paid. F-19 The following table summarizes operating lease costs as well as sublease income (in thousands): December 31, 2020 2019 Operating lease costs $ 8,415 $ 4,078 Variable lease costs 929 811 Short-term lease costs — 116 Sublease income — (51 ) Total $ 9,344 $ 4,954 The following table summarizes the lease term and discount rate for operating leases: December 31, 2020 2019 Weighted-average remaining lease term (years) 11.5 years 7.4 years Weighted-average discount rate 7.4 % 9.8 % The following table summarizes the lease costs included in the measurement of lease liabilities (in thousands): Years Ended December 31, 2020 2019 Operating cash flows used for operating leases $ 6,911 $ 4,950 Operating lease liabilities arising from obtaining ROU assets 74,723 6,221 At December 31, 2020 , the future minimum lease payments for the Company’s facility operating leases for each of the next five years and total thereafter were as follows (in thousands): 2021 $ 9,096 2022 13,686 2023 14,088 2024 14,519 2025 14,893 Thereafter 103,062 Total undiscounted lease payments 169,344 Less: imputed interest (69,112 ) Total operating lease liabilities $ 100,232 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 December 31, 2020, the Company has not recorded an operating lease ROU asset or lease liability for this lease in the accompanying 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 the 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, the Company sold certain equipment to a leasing company for a total of $3.8 million, and, concurrently, entered into a lease agreement with the leasing company to lease back the equipment for an annual rent of $1.0 million over a term of four years. In October 2019, the Company sold additional equipment to the leasing company for a total of $2.4 million and, concurrently, entered into a lease agreement with the leasing company to lease back the equipment for an annual rent of $0.7 million over a term of four years. F-20 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 . In December 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. The equipment leases are being accounted for as financings as the lease terms are for substantially all the remaining economic life of the underlying equipment. The Company 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 for each of the next five years were as follows (in thousands): Years ending December 31, Amount 2021 $ 2,685 2022 2,663 2023 2,013 2024 511 2025 — Total 7,872 Less: amounts representing interest at 8.76% (1,135 ) Plus: residual values 675 Financing obligations $ 7,412 The following table summarizes the breakdown of the principal and interest portions of the equipment financing payments (in thousands): Years Ended December 31, 2020 2019 Paydown of principal $ 1,569 $ 464 Payment of interest 561 187 8. License agreements Harvard license agreement In June 2017, the Company entered into the Harvard License Agreement for certain base editing technology pursuant to which the Company received an exclusive, worldwide, sublicensable, royalty-bearing license under specified patent rights to develop and commercialize licensed products and a nonexclusive, worldwide, sublicensable, royalty-bearing license under certain patent rights to research and develop licensed products. The Company agreed to use commercially reasonable efforts to develop licensed products in accordance with the development plan, to introduce any licensed products that gain regulatory approval into the commercial market, to market licensed products that have gained regulatory approval following such introduction into the market, and to make licensed products that have gained regulatory approval reasonably available to the public. The license term extends until the later of the expiration of (i) the last to expire licensed patent covering a licensed product, (ii) the period of exclusivity associated with a licensed product or (iii) a certain period after the first commercial sale of a licensed product, unless terminated earlier by either party under certain provisions. As partial consideration for the rights granted under the Harvard License Agreement, the Company issued to Harvard 101,363 shares of the Company’s common stock. Additional consideration under the Harvard License Agreement included an Anti-Dilution Issuance Right, which was settled during the year ended December 31, 2018, Financing Milestone Payments related to Series A Preferred and Series B Preferred financings, which were paid and settled in the year ended December 31, 2019, and Success Payments, which are further described below. The Anti-Dilution Issuance Right and Financing Milestone Payments related to Series A Preferred and Series B Preferred financings were both expensed in the year 2018 and prior. Success Payments – Under the Harvard License Agreement, Harvard is entitled to receive success payments, in cash or shares of Company stock, determined based upon the achievement of specified multiples of the initial weighted average value of the Company’s Series A Preferred at specified valuation dates. The success payments range from $5.0 million to a maximum of $105.0 million and have valuation multiples that range from 5 times to 40 times the initial weighted average value of the Series A Preferred. Subsequent to the Company’s February 2020 IPO, the amount of success payments is based on market value of Beam’s common stock. F-21 The Company shall 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 12th 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. T he first success payment measurement will occur during May 2021 . The following table summarizes the Company’s success payment liability for Harvard (in thousands): December 31, 2020 2019 Harvard success payment liability $ 35,500 $ 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): Years Ended December 31, 2020 2019 Change in fair value of Harvard success payment liability $ 31,600 $ 2,700 Other Payments – The Company agreed to pay Harvard an annual license maintenance fee ranging from low-to-mid five figures to low six figures, depending on the calendar year. The Company is responsible for the payment of certain patent prosecution and maintenance costs incurred by Harvard related to licensed patents. To the extent achieved, the Company is obligated to pay up to an aggregate of $75.9 million in product development and regulatory approval milestones, or Harvard Product Milestones. If the Company completes a change of control during the term of the Harvard License Agreement, then certain of the milestone payments would be increased. To the extent there are sales of a licensed product, the Company is required to pay low single digit royalties on net sales. The Company is entitled to certain reductions and offsets on these royalties with respect to a licensed product in a given country. If the Company sublicenses its rights to develop or commercialize a licensed product under the Harvard License Agreement to a third party and the Company receives non-royalty sublicense income, then Harvard is entitled to a percentage of such consideration, ranging from the high single digits to low double digits depending on the date in which such sublicense agreement is executed and the stage of development of the Company’s licensed products at such time. The annual maintenance fees will be recorded as an expense on an annual basis based on the stated amount for the applicable year. Annual patent costs will be expensed as incurred. Upon determination that a Harvard Product Milestone is probable to occur, the amount due will be recorded as research and development expense. The Company will monitor the Harvard Product Milestone payments for this arrangement on an ongoing basis. The achievement of these milestone payments was not considered probable as of the acquisition date, and no expense has been recorded for these milestones in years ended December 31, 2020 and 2019. Lastly, to the extent products are commercialized under the Harvard License Agreement, the Company will accrue royalty expense and sublicense nonroyalty payments, as applicable, for the amount it is obligated to pay, with adjustments as sales are made. Broad license agreement In May 2018, the Broad License Agreement was entered into with Broad Institute for certain RNA base editing technology including an RNA editor platform. Under the Broad License Agreement, Broad Institute granted an exclusive and non-exclusive worldwide, sublicensable, royalty-bearing licenses under specified patent rights to develop and commercialize licensed product and a nonexclusive, worldwide, sublicensable, royalty-bearing license under certain patent rights to research and develop licensed products. Under the agreement the Company shall use commercially reasonable efforts to develop licensed products in accordance with the development plan, to introduce any licensed products that gain regulatory approval into the commercial market, to market licensed products that have gained regulatory approval following such introduction into the market, and to make licensed products that have gained regulatory approval reasonably available to the public. The license term extends until the later of the expiration of (i) the last to expire licensed patent covering a licensed product, (ii) the period of regulatory exclusivity associated with a licensed product or (iii) a certain period after the first commercial sale of a licensed product unless terminated earlier by either party under certain provisions. Additional consideration under the Broad License Agreement included an Anti-Dilution Issuance Right, which was paid and settled during the year ended December 31, 2018, Financing Milestone Payments related to Series A Preferred and Series B Preferred financings, which were settled in the year ended December 31, 2019, and Success Payments, which are further described below. The Anti-Dilution Issuance Right and Financing Milestone Payments related to Series A Preferred and Series B Preferred financings were both expensed in the year 2018 and prior. F-22 Success Payments – Under the Broad License Agreement, Broad Institute is entitled to receive success payments, in cash or shares of Company common stock , determined based upon the achievement of specified multiples of the initial weighted average value of the Series A Preferred at specified valuation dates. Subsequent to the February 2020 IPO, the amount of success payments will be based on market value of Beam’s common stock. The success payments range from $ 5.0 million to a maximum of $ 105.0 million and have valuation multiples that range from 5 times to 40 times the initial weighted average value of the Series A Preferred. 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. T he first success payment measurement will occur during May 2021 . The following table summarizes the Company’s success payment liability for Broad Institute (in thousands): December 31, 2020 2019 Broad Institute success payment liability $ 35,700 $ 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): Years Ended December 31, 2020 2019 Change in fair value of Broad Institute success payment liability $ 31,800 $ 2,700 Other Payments – The Company agreed to pay Broad Institute an annual license maintenance fee ranging from low-to-mid five figures to low six figures, depending on the particular calendar year. The Company is responsible for the payment of certain patent prosecution and maintenance costs incurred by Broad Institute related to licensed patents. To the extent achieved, the Company is obligated to pay up to an aggregate of $75.9 million in product development and regulatory approval milestones, or Broad Product Milestones. If the Company completes a change of control during the term of the Broad License Agreement, then certain of the milestone payments would be increased. To the extent there are commercial sales of a licensed product, the Company is required to pay low single digit royalties on net sales. The Company is entitled to certain reductions and offsets on these royalties with respect to a licensed product in a given country. If the Company sublicenses its rights to develop or commercialize a licensed product under the Broad License Agreement to a third party and the Company receives non-royalty sublicense income, then Broad Institute is entitled to a percentage of such consideration, ranging from the high single digits to low double digits depending on the date in which such sublicense agreement is executed and the stage of development of the Company’s licensed products at such time. The annual maintenance fees will be recorded as an expense on an annual basis based on the stated amount for the applicable year. Annual patent costs will be expensed as incurred. Upon determination that a Broad Product Milestone is probable to occur, the amount due will be recorded as research and development expense. The Company will monitor the Broad Product Milestone payments for this arrangement on an ongoing basis. The triggering of these milestone payments was not considered probable as of the acquisition date, and no expense has been recorded for these milestones during the years ended December 31, 2020 and 2019. Lastly, to the extent products are commercialized under the Broad License Agreement, the Company will accrue royalty expense and sublicense nonroyalty payments, as applicable, for the amount it is obligated to pay, with adjustments as sales are made. Editas license agreement In May 2018, the Company entered into a license agreement, or the Editas License Agreement, with Editas Medicine, Inc., or Editas. Pursuant to the Editas License Agreement, Editas granted to the Company licenses and options to acquire licenses to certain intellectual property rights owned or controlled by Editas, for specified uses. More specifically, 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, or the Editas Research License. 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. F-23 Additional consideration will be due to Editas if the Company elects to exercise its option to obtain an Editas Development and Commercialization License to any of the three categories of intellectual property underlying the Editas Research License, for a fee ranging from a mid-teen million dollar amount to a low to mid-eight digit dollar amount per group, depending on the timing of the option exercise. Additionally, the Company is required to reimburse Editas for certain payments Editas may be obligated to make under existing Editas license agreements related to the intellectual property being licensed to the Company, including ( i ) development, regulatory and commercial milestone payments and certain sublicense income payments due as a result of the Editas License Agreement and (ii) a percentage of the annual maintenance fees and patent fees due to certain of the Editas ’ licensors . In addition, to the extent any products are commercialized under an Editas Development and Commercialization License, the Company would be required to make royalty payments equivalent to the royalties that would be due from Editas to any applicable licensors of Editas related to the sales of such licensed products, plus an additional tiered low- to mid-single digit royalty, depending on whether such licensed product is covered by an Editas -owned patent. The license rights and option rights granted by Editas to the Company are subject to the terms and conditions of the underlying license agreements that Editas is a party to and under which Editas licensed rights or option rights to the Company and the termination of such in-licenses, as applicable. Unless earlier terminated by either party pursuant to the terms of the agreement, the Editas License Agreement will continue in full force and effect and will expire on a licensed product-by licensed product and country-by-country basis upon the later of (i) the last-to-expire royalty term under any applicable institutional license to Editas and (ii) the date at which such product is no longer covered by a valid claim of a licensed Editas-owned patent in such country. The Company has the right, at its sole discretion, at any time to terminate Editas License Agreement in its entirety or on a group-by-group of intellectual property basis, upon ninety days written notice to Editas. Upon termination of the Editas License Agreement, all rights and licenses granted by the Editas to the Company (including the rights to exercise options and obtain such licenses) will immediately terminate and patents within a group of patents will no longer be deemed licensed patents. Expiration or termination of the Editas License Agreement for any reason does not release either party of any obligation or liability which had accrued, or which is attributable to a period prior to such expiration or termination. The option exercise fees under the agreement will be recorded as research and development expense, if and when the Company exercises such options. To date, no options have been exercised. The annual maintenance fees are recorded as an expense on an annual basis based on the stated amount for the applicable year. 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. The triggering of these milestone payments was not considered probable as of the acquisition date, and no expense has been recorded for these milestones during the years ended December 31, 2020 and 2019. To the extent applicable, sublicense income payments will be accrued for the amount the Company is obligated to pay under each applicable in-license as amounts are due Editas. Lastly, to the extent products are commercialized under the Editas License agreement, the Company will accrue royalty expense for the amount it is obligated to pay, with adjustments as sales are made. Bio Palette license agreement In March 2019, the Company entered into a license agreement with 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 (the “Bio Palette License Agreement”). 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. Unless earlier terminated, the Bio Palette License Agreement will expire on a licensed product-by-licensed product and country-by-country basis upon the expiration of the applicable royalty term for each such licensed product and country. The Company also agreed to pay a royalty at a fraction of a percent on net sales of products that are covered by the patents licensed by Bio Palette to Beam, and Bio Palette agreed to pay a royalty at a fraction of a percent on net sales of products that are covered by the patents licensed by Beam to Bio Palette. The royalty term for a product in a country will terminate on the later of the expiration of (i) patent-based exclusivity with respect to such licensed product in such country or (ii) regulatory exclusivity with respect to such licensed product in such country. To the extent achieved, the Company is required to make a certain milestone payment to Bio Palette. The triggering of this milestone was not considered probable at the inception of the Bio Palette License Agreement, and no expense has been recorded as of December 31, 2020 and 2019. To the extent products are commercialized under the Bio Palette License Agreement, the Company will accrue royalty expense for the amount it is obligated to pay, with adjustments as sales are made. F-24 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 year ended December 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, issued to Bio Palette 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 arrangement and expensed when the issuance of shares became probable. Management concluded that the licenses acquired from each transaction above did not meet the accounting definition of a business as inputs, but no processes or outputs were acquired with the licenses, and the licensed technology had not achieved technological feasibility. As the inputs that were acquired along with the licenses do not constitute a “business,” the transactions have been accounted as asset acquisitions. As of the date of each License Agreement, the assets acquired had no alternative future use and the assets had not reached a stage of technological feasibility. As a result, all share-based and cash payment obligations have been recorded as research and development expense in the accompanying consolidated statements of operations and other comprehensive loss. 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. For products that use technology licensed from Prime Medicine, the Company is required to make milestone payments to Prime Medicine upon the achievement of certain clinical, regulatory and commercial events. It is also required to use commercially reasonable efforts to develop and seek regulatory approval for two products that use licensed technology from Prime Medicine in certain specified countries and to commercialize any such product(s) for which approval has been obtained in certain specified countries. Prime Medicine and Beam are each required to use commercially reasonable efforts to conduct the activities for which they are responsible under any development plan(s) under the agreement. Prime Medicine has an option to jointly develop and commercialize, and share expenses and revenue for, certain products that use technology licensed from Prime Medicine in the United States. Royalty payments may become due by either party to the other based on the net sales of commercialized products under the agreement. In addition, certain of the rights licensed under the agreement are sublicensed from third parties, and Beam or Prime Medicine may be required to make certain payments to such third parties to the extent the Beam or Prime Medicine develop and commercialize products under such rights. Beam had an obligation to issue $5.0 million in shares of its common stock to Prime Medicine, and Prime Medicine had 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 $5.5 million, which represented the fair value of Beam’s common stock issued to Prime Medicine, as research and development expense within the accompanying consolidated statements of operations and other comprehensive loss for the year ended December 31, 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 consolidated statements of operations and other comprehensive loss for the year ended December 31, 2020. Additionally, the Company will provide immaterial interim management and startup services to Prime Medicine through March 2021. As of December 31, 2020, the Company determined that future milestones and royalties under the agreement were not probable of recognition. Verve In April 2019, Beam entered into a Collaboration and License Agreement with Verve, or the Verve License Agreement, to investigate gene editing strategies to modify genes associated with an increased risk of coronary diseases. Under the terms of the agreement, the Company granted Verve an exclusive license to certain base editor technology and certain delivery technology 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. Verve is responsible for all costs associated with the research and development activities under the Verve License agreement. The Company has the option to share in the future F-25 development of certain products, with no associated fee at the time the right is exercised. Upon exercise of the Company’s option, the profits and expenses of such product will be shared, as defined in the agreement. To date, Beam has not exercised its option. In connection with the Verve License Agreement, Verve issued Beam 2.6 million shares of its common stock as partial consideration for the licenses granted, having a fair value of $0.5 million. The fair value of the Verve common stock was determined by management with the assistance of a third-party valuation specialist. In addition, to the extent certain clinical, regulatory, and commercial milestones are met with respect to licensed products, Verve will be required to pay to Beam certain amounts, as defined in the agreement. Either party may owe the other party other milestone payments for certain clinical and regulatory events related to the delivery technology products. Royalty payments may become due by either party to the other based on the net sales of any delivery technology products under the agreement. Lastly, to the extent there are sales of a licensed product, Verve is obligated to pay Beam royalties, as defined in the agreement. The term of the agreement commenced in April 2019 and, unless earlier terminated in accordance with the terms of the agreement, will continue until the last to expire royalty term for any licensed product. Management determined that the performance obligations associated with the Verve License Agreement are the combined licenses and improvements related to the licensed technology. All other items promised to Verve are immaterial in the context of the agreement. The fair value of the shares issued by Verve to Beam were considered a fixed upfront payment of $0.5 million in the form of non-cash consideration. The Company determined that its performance obligations associated with the Verve License Agreement at contract inception were not distinct and represented a single performance obligation, and that the obligations would be completed over the performance period of the agreement. Accordingly, the upfront payment will be recognized as revenue using a time-based proportional performance model over the contract term (April 2019 through 2038) of the collaboration, as license revenue. For the years ended December 31, 2020 and 2019, the Company recognized approximately $24,000 and $18,000, respectively of license revenue and has recorded approximately $0.4 million of deferred revenue at December 31, 2020. To date, no commercial milestone payments or royalties are due. The remaining fees that may be paid under the agreement are considered variable consideration and will be constrained until it is probable that a significant revenue reversal would not occur. To date, the Company has not exercised its option to opt-in to a licensed product and no milestones or royalties have been achieved. 10 . Redeemable convertible preferred stock In February 2019, the Company authorized the sale of an additional 2,980,000 shares of Series B Preferred stock. In January and February 2019, the Company issued 11,308,397 shares of Series B Preferred stock at a price of $3.36 per share, resulting in gross cash proceeds of $38.0 million, and incurred issuance costs of $0.1 million. In January 2020, 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. In February 2020, upon the closing of the IPO, all outstanding shares of Preferred Stock converted into 29,127,523 shares of the Company’s common stock. There is no Preferred Stock outstanding as of December 31, 2020. During the years ended December 31, 2020 and 2019 , the Company recorded accretion of redeemable convertible preferred stock to redemption value, including dividends on preferred stock of $1.3 million and $12.7 million, respectively. At December 31, 2019, Preferred Stock consisted of the following (in thousands, except for share data): Preferred stock authorized Preferred stock issued and outstanding Carrying value Liquidation preference Common stock issuable upon conversion Series A-1 Preferred 26,833,324 26,833,324 $ 30,877 $ 30,877 5,983,826 Series A-2 Preferred 63,604,886 63,604,886 125,647 105,620 14,183,880 Series B Preferred 40,230,000 40,178,574 145,525 145,525 8,959,817 130,668,210 130,616,784 $ 302,049 $ 282,022 29,127,523 11. Preferred stock and common stock In January 2020, the Company authorized the issuance of 25,000,000 shares of preferred stock and increased its authorized common stock issuable to 250,000,000 shares, both with a $0.01 par value per share. The holders of common stock are entitled to one vote for each share of common stock. Subject to the payment in full of all preferential dividends to which the holders of the Preferred Stock are entitled, the holders of common stock shall be entitled to receive dividends out of funds legally available. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, after the payment or provision for payment of all debts and liabilities of the Company and all preferential amounts to which the holders of Preferred Stock are entitled with respect to the distribution of assets in liquidation, the holders of common stock shall be entitled to share ratably in the remaining assets of the Company available for distribution. F-26 As noted previously, 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 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 offering expenses payable by the Company. In connection with this financing, all outstanding shares of Preferred Stock converted into 29,127,523 shares of the Company’s common stock. In July 2020, upon the issuance of a certain Bio Palette patent in the United States in June 2020, the Company issued to Bio Palette 175,000 shares of its common stock. In October 2020, the Company issued and sold 5,750,000 shares of its common stock, including 750,000 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $23.50 per share, for aggregate gross proceeds of $135.1 million. The Company received approximately $126.6 million in net proceeds after deducting underwriting discounts and offering expenses payable by the Company. In October 2020, due to the Company’s election to continue the collaboration agreement between Beam and Prime Medicine, the Company issued 200,307 shares of the Company’s common stock to Prime Medicine. In January 2021, the Company issued and sold 2,795,700 shares of its common stock in a private placement at an offering price of $93.00 per share for aggregate gross proceeds of $260.0 million. The Company received $252.1 million in net proceeds after deducting estimated offering expenses payable by the Company. 12. Stock option and grant plan 2017 stock option and grant plan In June 2017, the Company’s board of directors adopted the Beam Therapeutics Inc. 2017 Stock Option and Grant Plan, or the 2017 Plan, which provided 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 May 2019, the 2017 Plan was amended to provide up to 8,078,681 shares of common stock for the issuance of stock options and restricted stock. The 2017 Plan is administered by the board of directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the common stock on the date of grant. Stock options awarded under the 2017 Plan expire 10 years after the grant date, unless the board of directors sets a shorter term. Vesting periods for awards under the 2017 Plan are determined at the discretion of the board of directors. Incentive stock options granted to employees and shares of restricted stock granted to officers, founders and consultants of the Company typically vest over four years. Certain options provide for accelerated vesting if there is a change in control, as defined in the 2017 Plan. Non-statutory options granted to employees, officers, members of the board of directors and consultants of the Company typically vest over four years. 2019 incentive plan In October 2019, the Company’s board of directors adopted the Beam Therapeutics Inc. 2019 Equity Incentive Plan, or the 2019 Plan, and, following 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. The maximum number of shares of the Company’s common stock that may be issued under the 2019 Plan is 3,700,000 shares, or the Share Pool, plus the number of shares of the Company’s common stock underlying awards under the 2017 Plan, not to exceed 5,639,818 shares, that become available again for grant under the 2017 Plan in accordance with its terms. The Share Pool will automatically increase on January 1st of each year from 2021 to 2029 by the lesser of (i) four percent of the number of shares of the Company’s common stock outstanding as of the close of business on the immediately preceding December 31st and (ii) the number of shares determined by the Company’s board of directors on or prior to such date for such year. As of December 31, 2020, the Company had 7,456,317 shares reserved and 2,036,376 shares available for future issuance under the 2019 Plan. F-27 Stock-based compensation expense recorded as research and development and general and administrative expenses in the consolidated statements of operations and other comprehensive loss is as follows (in thousands): Years Ended December 31, 2020 2019 Research and development $ 11,199 $ 4,236 General and administrative 4,181 2,792 Total stock-based compensation expense $ 15,380 $ 7,028 Stock options The assumptions used in the Black-Scholes option-pricing model for stock options granted were: Years Ended December 31, 2020 2019 Expected volatility 75.6-82.6% 86.4-87.6% Weighted-average risk-free interest rate 1.07 % 2.17 % Expected dividend yield 0.00 % 0.00 % Expected term (in years) 6.24 6.25 A summary of option activity under the Company’s equity award plans : Number of options Weighted average exercise price Weighted average remaining contractual life (years) Aggregate intrinsic value (1) (in thousands) Outstanding as of December 31, 2019 4,791,047 $ 4.72 9.0 $ 43,394 Granted 1,487,096 22.47 Exercised (859,724 ) 3.67 Forfeitures (81,978 ) 7.27 Outstanding as of December 31, 2020 5,336,441 9.70 8.3 383,901 Exercisable as of December 31, 2020 1,432,552 4.38 7.9 110,678 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in the money as of December 31, 2020 and 2019. The Company has granted stock options to certain employees to purchase shares of common stock that contain certain performance-based vesting criteria, primarily related to the achievement of certain development milestones related to editing applications, and the closing price of the Company’s common stock following an IPO. Recognition of stock-based compensation expense associated with these performance-based stock options commences when the performance condition is considered probable of achievement, using management’s best estimates, which consider the inherent risk and uncertainty regarding the future outcomes of the milestones. The expense related to performance-based stock options was immaterial for the year ended December 31, 2020 and no expense was recognized for the year ended December 31, 2019. The weighted-average grant date fair value per share of stock options granted during the years ended December 31, 2020 and 2019, was $15.32 and $6.64, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2020 and 2019 was $29.9 million and $1.6 million. As of December 31, 2020, there was $29.3 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.5 years. Restricted stock The Company issued shares of restricted common stock during the year ended December 31, 2020, including both restricted stock units and restricted stock awards. The Company did not issue any shares of restricted common stock during the year ended December 31, 2019. Restricted common stock issued generally vests over a period of two to four years. Under the 2017 Plan, the Company granted restricted common stock awards with service conditions. In 2018, the Company issued shares of restricted common stock to certain of the Company’s scientific founders and a portion of these issued shares are subject to vesting over a period of four years, with the commencement of vesting of the remaining shares upon the achievement of certain financing milestones, and in certain instances continued service after the milestones are achieved. F-28 If the holders of restricted common stock cease to have a business relationship with the Company, the Company may reacquire any unvested shares of common stock held by these individuals for the original purchase price, and in certain instances for no consideration. The amounts received to date for the purchase price of restricted stock are immaterial. The unvested shares of restricted common stock are not considered outstanding shares for accounting purposes until the shares vest. 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 Issued 258,500 52.29 Vested (1,638,968 ) 4.24 Unvested as of December 31, 2020 1,275,338 $ 10.95 The aggregate fair value of restricted shares that vested during the years ended December 31, 2020 and 2019, was $6.9 million, and $3.6 million, respectively. At December 31, 2020, there was approximately $13.8 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 remaining vesting period of 0.87 years. 2019 Employee Stock Purchase Plan In January 2020, the Beam Therapeutics Inc. 2019 Employee Stock Purchase Plan, or the 2019 ESPP, was adopted by the Company’s board of directors and approved by the Company’s stockholders. The purpose of the 2019 ESPP is to provide eligible employees of the Company with opportunities to purchase shares of the Company’s common stock at a discount of up to 15% based on the lower of the price at the start of the offering period and at the end of the relevant purchase period within such offering period. 465,000 shares of common stock in the aggregate have been approved and reserved for this purpose. On January 1, 2021 and each January 1 thereafter until January 1, 2029, the number of shares of the Company’s common stock reserved and available for issuance under the 2019 ESPP shall be cumulatively increased by the lesser of (i) one percent of the number of shares of the Company’s common stock outstanding as of the close of business on the immediately preceding December 31st and (ii) the number of shares of stock determined by the Company’s board of directors on or prior to such date for such year up to a maximum of 5,083,204 shares in the aggregate. As of December 31, 2020, the Company has not yet implemented the 2019 ESPP. 13. 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: December 31, 2020 2019 Redeemable convertible preferred stock — 29,127,523 Unvested restricted stock 1,275,338 2,655,806 Outstanding options to purchase common stock 5,336,441 4,791,047 Total 6,611,779 36,574,376 F-29 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): Years Ended December 31, 2020 2019 Numerator: Net loss $ (194,592 ) $ (78,326 ) Accretion of redeemable convertible preferred stock to redemption value, including dividends on preferred stock (1,277 ) (12,714 ) Net loss attributable to common stockholders (195,869 ) (91,040 ) Denominator: Weighted average number of common shares, basic and diluted 46,733,221 6,479,591 Net loss per common share attributable to common stockholders, basic and diluted $ (4.19 ) $ (14.05 ) 14. Income taxes A reconciliation of the income tax expense computed using the federal statutory income tax rate to the Company’s effective income tax rate is as follows: Years Ended December 31, 2020 2019 Federal statutory rate 21.0 % 21.0 % State income taxes, net of federal benefit 7.2 7.4 Research and development tax credits 2.1 3.1 Nondeductible/ nontaxable permanent items 0.8 (1.8 ) Change in valuation allowance (31.1 ) (29.7 ) Total 0.0 % 0.0 % The components of the Company’s deferred taxes are as follows (in thousands): December 31, 2020 2019 Deferred tax assets: Net operating loss carryforwards $ 58,338 $ 26,767 Research and development tax credits 8,756 4,876 Accrued expenses and other 1,445 1,106 Derivative liabilities 19,421 2,131 Stock options 1,975 123 Amortization 2,079 11 Lease liability 27,340 6,973 Total deferred tax assets 119,354 41,987 ROU asset (23,692 ) (5,179 ) Property and equipment (558 ) (373 ) Other (141 ) — Less: valuation allowance (94,963 ) (36,435 ) Deferred tax assets, net $ — $ — The Company had no income tax expense due to the operating loss incurred for the years ended December 31, 2020 and 2019. Management has evaluated the positive and negative evidence bearing upon the realizability of the Company’s net deferred tax assets and has determined that it is more likely than not that the Company will not recognize the benefits of the net deferred tax assets. As a result, the Company has recorded a full valuation allowance at December 31, 2020 and 2019. The valuation allowance increased by $58.5 million in 2020, due to the increase in deferred tax assets, primarily due to net operating loss carryforwards, and research and development tax credits, amortization expenses and the fair value of the derivative liability. The valuation allowance increased by $21.4 million in 2019. F-30 As of December 31, 20 20 , the Company had $ 2 15.2 million of federal and $ 2 08 .0 million of state net operating loss carryforwards. If not utilized, both the federal and state net operating loss carryforwards expire starting in 2037 . Included in the $ 2 15.2 million federal net operating loss carryforwards is $ 2 11.9 million of net operating loss generated in 2018 , 2019 and 2020 that will not expire. Additionally, as of December 31, 20 20 , the Company had $ 7.1 million of federal and $ 2 .0 million of Massachusetts tax credits that expire starting in 2038 and 2033 , respectively. As of December 31, 2020, and 2019, the Company had no uncertain tax positions. The Company recognizes both interest and penalties associated with unrecognized tax benefits as a component of income tax expense. The Company has not recorded any interest or penalties for unrecognized tax benefits since its inception. The Company filed income tax returns in the United States and the Commonwealth of Massachusetts in all tax years since inception. The tax year 2017 remains open to examination by these jurisdictions, as carryforward attributes generated in past years may be adjusted in a future period. The Company’s 2018 tax return is currently under audit by the IRS. The IRS has not made any assessments as of December 31, 2020. 15. Related party transactions Founders For the years ended December 31, 2020 and 2019, the Company made payments of $0.5 million and $0.5 million, respectively, to 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 years ended December 31, 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 year ended December 31, 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 $0.4 million, which is recorded as research and development expenses within the accompanying consolidated statements of operations and other comprehensive loss for the year ended December 31, 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 consolidated statements of operations and other comprehensive loss for the year ended December 31, 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 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. The Company recognized $5.5 million, which represents the fair value of Beam’s common stock issued to Prime Medicine, as research and development expense within the accompanying consolidated statements of operations and other comprehensive loss for the year ended December 31, 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 consolidated statements of operations and other comprehensive loss for the year ended December 31, 2020. Management services provided to the Company by Prime Medicine were immaterial for the year ended December 31, 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 through 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 $30,000 monthly service fee. For the year ended December 31, 2020, the Company recognized $0.1 million for performing such services in interest and other income (expense), net, within the accompanying consolidated statements of operations and other comprehensive loss. 16. Employee benefits In 2018, the Company established a defined-contribution plan under Section 401(k) of the Internal Revenue Code, or the 401(k) Plan. The 401(k) Plan covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Beginning January 1, 2020, the Company made matching contributions equal to 50% of the employee’s contributions, subject to a maximum of 6% of eligible compensation. The Company made matching contributions of $0.6 million for the year ended December 31, 2020. F-31 1 7 . S ubsequent events Private Placement In January 2021, the Company issued and sold 2,795,700 shares of its common stock in a private placement at an offering price of $93.00 per share for aggregate gross proceeds of $260.0 million. The Company received $252.1 million in net proceeds after deducting estimated offering expenses payable by the Company. Merger Agreement In February 2021, the Company entered into an Agreement and Plan of Merger with Guide Therapeutics, Inc., or Guide. The Company paid Guide’s former stockholders and optionholders upfront consideration in an aggregate amount of $120.0 million, excluding customary purchase price adjustments, in shares of the Company’s common stock, based upon the volume-weighted average price of the Company’s common stock over the ten trading day period ending on February 19, 2021. In addition, Guide’s former stockholders and optionholders will be eligible to receive up to an additional $100.0 million in technology and $220.0 million in product success milestone payments, payable in the Company’s common stock valued using the volume-weighted average price of the Company’s common stock over the ten trading day period ending two trading days prior to the date on which the applicable milestone is achieved. F-32