What changed in this filing

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Item 1. Financial Statements

2021-05-11 compared with 2020-11-10 · 243 added, 249 removed, 323 unchanged (60% of the section changed)

4 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Current assets:

6 unchanged sentences

Operating lease right-of-use assets

Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)

Liabilities and stockholders’ equity

Current liabilities:

7 unchanged sentences

Long-term equipment financing liability

Contingent consideration liabilities

Other liabilities

Total liabilities

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

Redeemable convertible preferred stock

Stockholders’ equity (deficit):

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

Stockholders’ equity:

Preferred stock, $ 0.01 par value;

25,000,000 and no shares authorized, and no shares issued or outstanding at September 30, 2020 and December 31, 2019, respectively

25,000,000 shares authorized, and no shares issued or outstanding at March 31, 2021 and December 31, 2020, respectively

Common stock, $ 0.01 par value;

250,000,000 and 205,000,000 shares authorized, 51,930,943 and 9,981,991 issued, and 50,438,740 and 7,326,185 outstanding at September 30, 2020 and December 31, 2019, respectively

250,000,000 shares authorized, 62,528,153 and 58,446,016 issued, and 61,735,119 and 57,254,178 outstanding at March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)

Total stockholders’ equity

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

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

3 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

License revenue

6 unchanged sentences

Change in fair value of derivative liabilities

Interest and other income (expense), net

Change in fair value of contingent consideration liabilities

Interest and other income, net

Total other income (expense)

Unrealized (loss) gain on marketable securities

Unrealized loss on marketable securities

Comprehensive loss

6 unchanged sentences

Beam Therapeutics Inc.

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

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

( Unaudited )

4 unchanged sentences

Stockholders’

(Loss) Income

Balance at December 31, 2019

Issuance of Series B redeemable convertible preferred stock, net of issuance costs of $0.1 million

Accretion of redeemable convertible preferred stock to redemption value

Vesting of restricted common stock

Issuance of common stock related to license agreement

Stock-based compensation

Exercise of common stock options

Balance at March 31, 2019

Accretion of redeemable convertible preferred stock to redemption value

Vesting of restricted common stock

Stock-based compensation

Exercise of common stock options

Other comprehensive income

Balance at June 30, 2019

Accretion of redeemable convertible preferred stock to redemption value

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

( 130,616,784

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

Vesting of restricted common stock

2 unchanged sentences

Other comprehensive loss

Balance at September 30, 2019

Balance at March 31, 2020

Beam Therapeutics Inc.

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

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

( Unaudited )

(in thousands, except share amounts)

Redeemable Convertible

Preferred Stock

Comprehensive

Stockholders’

(Loss) Income

Balance at December 31, 2020

Accretion of redeemable convertible preferred stock to redemption value

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

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

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

Issuance of common stock to acquire Guide

Vesting of restricted common stock

3 unchanged sentences

Balance at March 31, 2021

Vesting of restricted common stock

Stock-based compensation

Exercise of common stock options

Other comprehensive income

Balance at June 30, 2020

Vesting of restricted common stock

Issuance of common stock related to license agreement

Stock-based compensation

Exercise of common stock options

Other comprehensive loss

Balance at September 30, 2020

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

3 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities

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

Depreciation and amortization

Amortization of investment discount (premiums)

In-process research and development charge

Stock-based compensation expense

2 unchanged sentences

Change in fair value of derivative liabilities

Change in fair value of contingent consideration liabilities

Changes in operating assets and liabilities:

4 unchanged sentences

Operating lease liabilities

Financing milestone liabilities

Other long-term liabilities

4 unchanged sentences

Maturities of marketable securities

Net cash acquired from Guide

Purchase of long-term investment

1 unchanged sentence

Financing activities

Proceeds from issuance of Series B Preferred Stock, net

Proceeds from initial public offering, net of underwriting discount

Payment of initial and follow-on public offering costs

Proceeds from offering of common stock

Payment of equity offering costs

Proceeds from equipment financings

10 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Supplemental disclosure of cash flow information:

4 unchanged sentences

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

Receipt of common stock in exchange for technology license

Issuance of common stock for research and development license

Equity issuance costs in accounts payable and accrued expenses

Contingent consideration liabilities assumed in asset acquisition

Fair value of equity instruments issued in connection with asset acquisition

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

4 unchanged sentences

Beam Therapeutics Inc.

(the “Company” or “Beam”) is a research stage biotechnology company committed to creating a new class of precision genetic medicines, based on the Company’s proprietary base editing technology, with a vision of providing life-long cures to patients suffering from serious diseases.

The Company was incorporated in January 2017 as a Delaware corporation and began operations in July 2017.

(the “Company” or “Beam”) is a biotechnology company committed to establishing the leading, fully integrated platform for precision genetic medicines.

Beam’s vision is to provide life-long cures to patients suffering from genetic diseases.

The Company was incorporated on January 25, 2017 (Inception) as a Delaware corporation and began operations in July 2017.

Its principal offices are in Cambridge, Massachusetts.

In February 2021, the Company entered into an Agreement and Plan of Merger (“the Guide Merger Agreement”) to acquire Guide Therapeutics, or Guide.

Pursuant to the Guide Merger Agreement, the Company paid Guide’s former stockholders and optionholders upfront consideration in an aggregate amount of $ 120.0 million, excluding customary purchase price adjustments, in shares of its common stock, based upon the volume-weighted average price of the common stock over the ten trading day period ending on February 19, 2021.

Liquidity and capital resources

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Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

In connection with the Company’s initial public offering, or IPO, the Company’s board of directors approved a one-for-4.4843 reverse stock split of its issued and outstanding common stock and stock options and a proportional adjustment to the existing conversion ratios for the Company’s redeemable convertible preferred stock effective as of January 24, 2020.

Accordingly, all common stock shares, per share amounts, and additional paid in capital amounts for all periods presented in the accompanying financial statements have been retroactively adjusted, where applicable, to reflect the reverse stock split and adjustment to the preferred stock conversion ratios.

In February 2020, the Company completed its IPO in which the Company issued and sold 12,176,471 shares of its common stock, including 1,588,235 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $17.00 per share, for aggregate gross proceeds of $207.0 million.

The Company received approximately $188.3 million in net proceeds after deducting underwriting discounts and estimated offering expenses payable by the Company.

In connection with the IPO, all outstanding shares of redeemable convertible preferred stock converted into 29,127,523 shares of the Company’s common stock.

In February 2020, the Company completed its initial public offering, or IPO, in which the Company issued and sold 12,176,471 shares of its common stock, including 1,588,235 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $ 17.00 per share, for aggregate gross proceeds of $ 207.0 million.

The Company received approximately $ 188.3 million in net proceeds after deducting underwriting discounts and offering expenses payable by the Company.

In connection with the IPO, all outstanding shares of the Company’s redeemable convertible preferred stock converted into 29,127,523 shares of its common stock.

In October 2020, the Company issued and sold 5,750,000 shares of its common stock, including 750,000 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $ 23.50 per share, for aggregate gross proceeds of $ 135.1 million.

The Company received approximately $126.6 million in net proceeds after deducting underwriting discounts and estimated offering expenses payable by the Company.

Since its inception, the Company has incurred substantial losses and had an accumulated deficit of $302.2 million as of September 30, 2020.

The Company received approximately $ 126.6 million in net proceeds after deducting underwriting discounts and offering expenses payable by the Company.

On January 16, 2021, the Company entered into a Securities Purchase Agreement with certain purchasers, pursuant to which the Company agreed to sell and issue to the purchasers, in a private placement, shares of common stock of the Company.

The closing of the private placement occurred on January 21, 2021.

The Company issued and sold 2,795,700 shares of its common stock at a purchase price of $ 93.00 per share for aggregate gross proceeds of $ 260.0 million, before deducting fees to the placement agents and other offering expenses payable by the Company (See Note 11, Preferred stock and common stock ).

The Company received approximately $ 252.0 million in net proceeds after deducting fees to the placement agents and offering expenses payable by the Company.

Since its inception, the Company has incurred substantial losses and had an accumulated deficit of $ 599.2 million as of March 31, 2021.

The Company expects to generate operating losses and negative operating cash flows for the foreseeable future.

The Company expects that its cash, cash equivalents, and marketable securities as of September 30, 2020 of $202.2 million, along with the proceeds from its common stock offering in October 2020, will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these financial statements.

The Company expects that its cash, cash equivalents, and marketable securities as of March 31, 2021 of $ 503.5 million will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these financial statements.

The Company will need additional financing to support its continuing operations and pursue its growth strategy.

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The Company will need to generate significant revenue to achieve profitability, and it may never do so.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, and pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

Any reference in these notes to applicable guidance is meant to

refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and Accou nting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements.

In the opinion of the Company’s management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of September 30, 2020, the results of its operations and other comprehensive loss, and redeemable convertible preferred stock and stockholders’ equity (deficit), for the three and nine months ended September 30, 2020 and 2019, and cash flows for the nine months ended September 30, 2020 and 2019.

Such adjustments are of a normal and recurring nature.

The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results for the year ending December 31, 2020, or for any future period.

These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2019, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 30, 2020.

Consolidation

The accompanying condensed consolidated financial statements include the accounts of Beam Therapeutics Inc.

and its wholly owned subsidiaries, Blink Therapeutics Inc., or Blink, which is a Delaware subsidiary that holds certain intellectual property related to RNA base editing, and Beam Therapeutics Securities Corporation, which is a Massachusetts subsidiary created to buy, sell and hold securities.

All intercompany transactions and balances have been eliminated in consolidation.

COVID-19-related significant risks and uncertainties

With the ongoing concern related to the COVID-19 pandemic in the first nine months of 2020, the Company has maintained and expanded its business continuity plans to address and mitigate the impact of the COVID-19 pandemic on its business.

With the ongoing concern related to the COVID-19 pandemic during 2020 and in the first three months of 2021, the Company has maintained and expanded its business continuity plans to address and mitigate the impact of the COVID-19 pandemic on its business.

In March 2020, to protect the health of its employees, and their families and communities, the Company restricted access to its offices to personnel who performed critical activities that must be completed on-site, limited the number of such personnel that could be present at its facilities at any one time, and requested that most of its employees work remotely.

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Disruptions to the global economy, disruption of global healthcare systems, and other significant impacts of the COVID-19 pandemic could have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects.

While the COVID-19 pandemic did not significantly impact the Company’s business or results of operations during the nine months ended September 30, 2020, the length and extent of the pandemic, its consequences, and containment efforts will determine the future impact on the Company’s operations and financial condition.

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

S ummary of significant accounting policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2019, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 30, 2020.

Since the date of those financial statements, there have been no material changes to Beam’s significant accounting policies.

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2020, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on March 15, 2021.

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

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP.

Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB.

Principles of consolidation

The accompanying condensed consolidated financial statements include the results of operations of the Company and its wholly-owned subsidiaries.

All intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses, and the disclosure of contingent assets and liabilities as of and during the reporting period.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses, the determination of the fair value equity instruments and intangible assets acquired in an asset acquisition, and the disclosure of contingent assets and liabilities as of and during the reporting period.

The Company bases its estimates and assumptions on historical experience, when available, and on various factors that it believes to be reasonable under the circumstances.

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Actual results could differ from these estimates.

The COVID-19 pandemic may have an impact on the development timelines of the Company’s pre-clinical programs.

Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment.

As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities.

These estimates may change as new events occur and additional information is obtained and are recognized in the consolidated financial

statements as soon as they become known.

Actual results could differ from those estimates and any such differences may be material to the Company’s financial state ments.

Cash, cash equivalents, and restricted cash

Cash and cash equivalents consist of standard checking accounts, money market accounts, and all highly liquid investments with an original maturity of three months or less at the date of purchase.

Cash and cash equivalents consist of standard checking accounts, money market accounts, and all highly liquid investments with a remaining maturity of three months or less at the date of purchase.

Restricted cash represents collateral provided for letters of credit issued as security deposits in connection with the Company’s leases of its corporate and manufacturing facilities.

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

September 30,

Cash and cash equivalents

1 unchanged sentence

Total cash, cash equivalents, and restricted cash

Asset Acquisitions

In 2018, the Company adopted ASU 2017-01, Business Combinations , or ASU 2017-01, which clarified the definition of a business.

The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes transaction costs, and the consideration is allocated to the items acquired based on a relative fair value methodology.

Goodwill is not recognized in asset acquisitions.

In an asset acquisition, the cost allocated to acquire in-process research and development with no alternative future use is charged to research and development expense at the acquisition date.

At the time of acquisition, the Company determines if a transaction should be accounted for as a business combination or acquisition of assets.

Contingent Consideration Liabilities

The estimated fair value of contingent consideration liabilities, initially measured and recorded on the acquisition date, are considered to be a Level 3 instrument and are reviewed quarterly, or whenever events or circumstances occur that indicate a change in fair value.

The contingent consideration liabilities are recorded at fair value at the end of each reporting period with changes in estimated fair values recorded in other income (expense) in the condensed consolidated statements of operations.

The estimated fair value is determined based on probability adjusted discounted cash flow models that include significant estimates and assumptions pertaining to technology and product development.

Significant changes in any of the probabilities of success would result in a significantly higher or lower fair value measurement.

Significant changes in the probabilities as to the periods in which milestones will be achieved would result in a significantly lower or higher fair value measurement.

Recent accounting pronouncements

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements , or ASC 808, which clarifies certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer.

ASC 808 will be effective for the Company in the first quarter of fiscal 2021, with early adoption permitted.

A retrospective adoption to the date the Company adopted ASC 606, Revenue from Contracts with Customers , is required by recognizing a cumulative-effect adjustment to the opening balance or retained earnings of the earliest period presented.

The Company is currently evaluating the impact of the adoption of this standard on its financial statements.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements , or ASU 2018-18, 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.

ASU 2018-18 became effective for the Company on January 1, 2021 .

As such the Company adopted ASU 2018-18 effective January 1, 2021 using a retrospective adoption date of January 1, 2018 when the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and its related amendments, or, collectively, ASC 606 .

The adoption of ASU 2018-18 did not 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.

The Company adopted ASU 2016-13 on January 1, 2021 .

The adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements.

P roperty and equipment, net

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

September 30,

Lab equipment

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Property and equipment, net

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

Three Months Ended September 30,

Nine Months Ended September 30,

Depreciation expense

Depreciation expense for the three months ended March 31, 2021 and 2020 was $ 1.4 million and $ 1.1 million, respectively.

f air value of financial instruments

The Company’s financial instruments that are measured at fair value on a recurring basis consist of cash equivalents, marketable securities, and success payment derivative liabilities pursuant to the license agreement between Harvard University, or Harvard, and the Company, or the Harvard License Agreement, and the license agreement between Broad Institute of MIT and Harvard, or Broad Institute, and Blink, or the Broad License Agreement.

The Company also holds investments in privately issued corporate equity securities, which are accounted for investments in equity securities.

The Company’s financial instruments that are measured at fair value on a recurring basis consist of cash equivalents, marketable securities, contingent consideration liabilities related to the Guide Merger and success payment derivative liabilities pursuant to the license agreement between Harvard University, or Harvard, and the Company, or the Harvard License Agreement, and the license agreement between Broad Institute of MIT and Harvard, or Broad Institute, and Blink, or the Broad License Agreement.

The Company also holds investments in privately issued corporate equity securities, which are accounted for 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 September 30, 2020, the Company held $2.5 million of investments in privately issued corporate equity securities.

During the nine months ended September 30, 2020, as a result of an observable market transaction (Level 2), the Company adjusted the value of its investment and recorded an unrealized gain of $0.5 million in interest and other income (expense), net in the Company’s consolidated statements of operations and other comprehensive loss.

ASC 820, Fair Value Measurements and Disclosures , establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs).

The hierarchy consists of three levels:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Unobservable inputs that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

The following table sets forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at September 30, 2020 (in thousands):

As of March 31, 2021, the Company held $ 3.6 million of investments in privately issued corporate equity securities.

During the three months ended March 31, 2021, as a result of an observable market transaction (Level 2), the Company adjusted the value of one of its investments and recorded an unrealized gain of $ 1.0 million in interest and other income (expense), net in the Company’s condensed consolidated statements of operations and other comprehensive loss.

The following table sets forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at March 31, 2021 (in thousands):

Cash equivalents:

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Commercial paper

Corporate notes

Marketable securities:

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Corporate notes

Treasury securities

Government securities

1 unchanged sentence

Success payment liability – Broad Institute

Contingent consideration liability - Technology

Contingent consideration liability - Product

Total liabilities

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Commercial paper

Corporate notes

Marketable securities:

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Corporate notes

Treasury securities

Government securities

Success payment liability – Harvard

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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, whi ch are either directly or indirectly observable as of the reporting date, and fair value is determined using models or other valuation methodologies.

Success Payment Liabilities – As discussed further in Note 8, License agreements , the Company is required to make success payments determined based upon the achievement of specified multiples of the initial weighted average value of the Company’s Series A Preferred at specified valuation dates.

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 Liabilities – As discussed further in Note 9, License agreements , the Company is required to make payments determined based upon the achievement of specified multiples of the initial weighted average value of the Company’s Series A Preferred Stock, or, subsequent to the IPO, the market value of Beam’s common stock, at specified valuation dates.

The Company’s liability for success payments under the Harvard License Agreement and Broad License Agreement are carried at fair value.

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Broad Institute

September 30,

Fair value of Series A Preferred (per share) (1)

Fair value of common stock (per share)

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Expected term (years)

The effect of the Company’s one-for-4.4843 reverse stock split in January 2020 only applied to its common stock and did not impact its redeemable convertible preferred stock.

As such, the Series A Preferred fair value per share as of December 31, 2019 does not show the effect of the reverse stock split.

If adjusted for the effect of the reverse stock split, the fair value per share of Series A Preferred would be $16.14 on December 31, 2019.

Upon completion of the Company’s IPO, all outstanding shares of redeemable convertible preferred stock converted into shares of the Company’s common stock.

At December 31, 2019, the fair value of the Series A Preferred was determined by management with the assistance of an independent third-party specialist.

At September 30, 2020, the fair value of the common stock was the market value of the Company’s common stock.

The computation of expected volatility was estimated using available information about the historical volatility of stocks of similar publicly traded companies for a period matching the expected term assumption.

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

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Broad Institute

Balance at December 31, 2020

Changes in fair value

Balance at September 30, 2020

Change in fair value

Balance at March 31, 2021

Contingent Consideration Liabilities – As discussed further in N ote 8, Guide Acquisition , under the Guide Merger Agreement, Guide’s former stockholders and optionholders are eligible to receive up to an additional $ 100.0 million in technology and $ 220.0 million in product milestone payments, payable in the Company’s common stock valued using the volume-weighted average price of the Company’s stock over the ten - day trading period ending two trading days prior to the date on which the applicable milestone is achieved.

As these milestones are payable in the Company’s common stock, the milestone payments result in liability classification under ASC 480, Distinguishing Liabilities from Equity .

These contingent consideration liabilities are carried at fair value which was estimated by applying a probability-based model, which utilized inputs that were unobservable in the market.

These contingent consideration liabilities are classified within Level 3 of the fair value hierarchy.

The fair value of the contingent consideration liabilities as of March 31, 2021 is $ 36.8 million.

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

Three Months Ended March 31, 2021

Technology Milestones

Product Milestones

Balance at February 23, 2021 (inception)

Change in fair value

Balance at March 31, 2021

The following variables were incorporated in the calculation of the estimated fair value of the Guide technology and product contingent consideration liabilities:

Technology Milestones

Product Milestones

Discount Rate

Probability of Payment

Projected Year of Payment

Marketable securities

The following table summarizes the Company’s marketable securities held at September 30, 2020 (in thousands):

The following table summarizes the Company’s marketable securities held at March 31, 2021 (in thousands):

Amortized Cost

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Corporate notes

Treasury securities

Government securities

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Corporate notes

U.S Treasury securities

Government securities

The amortized cost of marketable securities is adjusted for amortization of premiums and accretion of discounts to maturity.

At September 30, 2020 , the balance in accumulated other comprehensive income was comprised solely of activity related to marketable securities.

There were no realized gains or losses recognized on the sale or maturity of marketable securities for the nine months ended September 30, 2020 and 20 19 and, as a result, the Company did not reclassify any amounts out of accumulated other comprehensive income for the same period.

At March 31, 2021, the balance in accumulated other comprehensive loss 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 three months ended March 31, 2021 and 2020 and, as a result, the Company did not reclassify any amounts out of accumulated other comprehensive loss for the same periods.

The Company holds debt securities of companies with high credit quality and has determined that there was no material change in the credit risk of any of its debt securities.

The contractual maturity dates of all the investments are less than one year.

The contractual maturity date s of all the investments are less than one year.

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

September 30,

Prime license costs (1)

Process development and manufacturing costs

Employee compensation and related benefits

Professional fees

Other research costs

In September 2020, the Company elected to continue its collaboration with Prime Medicine, Inc., or Prime Medicine, and recognized and $5.0 million, which represents the fair value of Beam’s common stock to be issued to Prime Medicine.

Refer to Note 8, License agreements , for further discussion of the Prime Medicine license agreement.

Process development and manufacturing costs

Employee compensation and related benefits

Operating leases

The Company’s operating leases are as follow:

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 provides for $6.1 million in tenant improvements and a term extension option, which was not reasonably certain of exercise.

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 determined by the Company to be reasonably certain of being exercised.

Upon commencement of the March 2020 amendment, the Company recorded an operating lease right-of-use, or ROU, asset and a lease liability of $ 4.2 million.

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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 the second half of 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 are 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 March 31, 2021 and December 31, 2020.

Upon commencement of the first phase of this lease in October 2020, the Company recorded an operating lease ROU asset of $ 66.8 million and a lease liability of $ 68.8 million and upon commencement of the second phase of this lease in January 2021, the Company recorded an operating lease ROU asset of $ 22.0 million and a corresponding lease liability of $ 23.0 million.

The following table summarizes operating lease costs as well as sublease income (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating lease costs

Variable lease costs

Short-term lease costs

Sublease income

The following table summarizes the lease term and discount rate:

September 30,

The following table summarizes the lease term and discount rate for operating leases:

Weighted-average remaining lease term (years)

Operating leases

Weighted-average discount rate

Operating leases

The following table summarizes the cash paid for amounts included in the measurement of lease liabilities (in thousands):

The following table summarizes the lease costs for amounts included in the measurement of lease liabilities (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating cash flows used for operating leases

Operating lease liabilities arising from obtaining ROU assets

At September 30, 2020, the future minimum lease payments for the Company’s operating leases for each of the years ending December 31 were as follows (in thousands):

At March 31, 2021, the future minimum lease payments for the Company’s operating leases for each of the years ending December 31 were as follows (in thousands):

Remainder of 2021

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Total operating lease liabilities

In addition to the leases discussed above, the Company is party to an April 2019 lease for office and laboratory space to be built, with the rent payments for the first phase expected to commence at the earliest in late 2021 and the rent payments for the second phase expected to commence at the earliest in the first half of 2022.

The lease will terminate 12 years from the second phase commencement date.

The lease is subject to fixed-rate rent escalations and provides for $23.4 million in tenant improvements and the option to extend the lease for two terms of five years each.

Upon executing the lease, the Company made a security deposit of $11.8 million in the form of a letter of credit, which is included in restricted cash as of September 30, 2020.

In October 2020, the Company gained access to the lease space and will record a ROU asset and a lease liability.

The minimum amount of anticipated undiscounted lease payments due under this lease is $177.2 million.

Further, the tabular disclosure of minimum lease payments above does not include payments due under this lease.

In August 2020, the Company entered into a lease agreement with Alexandria Real Estate Equities, Inc.

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It is subject to fixed rate escalation increases and also provides up to $ 20.0 million for reimbursement of tenant improvements.

As the lease had not commenced as of September 30, 2020 , the Company has not recorded an operating lease ROU asset or lease liability for this lease in the accompanying condensed consolidated balance sheets.

As the lease had not commenced as of March 31, 2021 , the Company has not recorded an operating lease ROU asset or lease liability for this lease in the accompanying condensed consolidated balance sheets.

The lease payments are subject to adjustment following the determination of the total project costs of the landlord.

The initial estimate of minimum amount of undiscounted lease payments due under this lease is $63.9 million.

The 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 and October 2019, the Company sold certain equipment to a leasing company.

Contemporaneous with the closing of the sale, the Company entered into a lease agreement with the leasing company with a term of four years pursuant to which the Company leased back the equipment.

Further, in February 2020, the Company sold additional equipment to the leasing company for a total of $1.6 million and, concurrently, entered into a lease agreement with the leasing company to lease back the equipment for an annual rent of $0.5 million over a term of four years.

The equipment leases are being accounted for as financings as the l ease terms are for substantially all the remaining economic life of the underlying equipment.

Management concluded that control, including the significant risks and rewards of ownership, did not effectively transfer to the buyer-lessor at the inception of the sale and leaseback transactions.

As a result, the transactions are accounted for as failed sale and leasebacks and result in the recognition of financing liabilities.

The future minimum payments related to the equipment financing obligations at September 30, 2020, for each of the years ending December 31 were as follows (in thousands):

Remainder of 2020

amounts representing interest at 8.64%

residual values

Financing obligations

The following table summarizes the breakdown of the principal and interest portions of the equipment financing payments (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Paydown of principal

Payment of interest

Guide Acquisition

On February 23, 2021 , the Company entered into the Guide Merger Agreement.

Under the Guide Merger Agreement, the Company paid Guide’s former stockholders and optionholders upfront consideration in an aggregate amount of $ 120.0 million, excluding customary purchase price adjustments and closing costs, in shares of the Company’s common stock, based upon the volume-weighted average price of the Company’s stock over the ten trading day period ending on February 19, 2021.

Pursuant to the Guide Merger Agreement, Beam acquired all of the issued and outstanding shares of Guide.

The Company issued a total of 1,087,153 shares of its common stock valued at $ 120.0 million in connection with the upfront payments to Guide’s former stockholders and optionholders.

The Guide transaction resulted in the acquisition of certain know-how and intellectual property assets related to Guide’s proprietary in vivo LNP screening technology and its library of lipids and lipid nanoparticle formulations identified using the screening technology.

Management determined that the acquired assets do not meet the definition of a business pursuant to ASC 805, Business Combinations , as substantially all of the fair value of the acquired assets is concentrated into one identifiable asset, the LNP screening technology and associated lipid library.

As of the Merger Agreement Date, the asset acquired had no alternative future use and 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 condensed consolidated statements of operations and other comprehensive loss in the amount of $ 155.0 million.

The total transaction price was allocated to the assets acquired and liabilities assumed on a relative fair value basis

In addition, Guide’s former stockholders and optionholders will be eligible to receive up to an additional $ 100.0 million in technology and $ 220.0 million in product milestone payments, payable in the Company’s common stock valued using the volume-weighted average price of the Company’s stock over the ten-day trading period ending two trading days prior to the date on which the applicable milestone is received.

The Company determined that all future technology and product milestone payments are classified as contingent consideration liabilities under ASC 480 and therefore the Company recorded a liability for these milestones as of the Guide Merger Agreement Date at fair value of $ 36.5 million.

These contingent consideration liabilities will be remeasured at fair value each financial reporting period, with the resulting impact reflected in the Company’s condensed consolidated statements of operations and other comprehensive loss, presented within other income (expense)

The transaction price was determined and allocated as follows (in thousands):

Transaction price

Fair value of equity instruments issued

Technology and product contingent consideration liabilities

Transaction costs

Total transaction price

Transaction price allocated

In-process research and development

Cash acquired

Prepaid expenses and other assets

Property and equipment

Assembled workforce

Other liabilities assumed

Total transaction price

License agreements

Harvard license agreement

Under the terms of the Harvard License Agreement, Harvard is entitled to receive success payments, determined based upon the achievement of specified multiples of the initial weighted average value of the Company’s Series A Preferred at specified valuation dates.

Under the terms of the Harvard License Agreement, Harvard is entitled to receive success payments determined based upon the achievement of specified multiples of the initial weighted average value of the Company’s Series A Preferred Stock 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 Stock.

Subsequent to the Company’s February 2020 IPO, the amount of success payments is based on market value of Beam’s common stock.

The Company is required to make success payments to Harvard during a period of time, or the Harvard Success Payment Period, which has been determined to be the later of (1) the ninth anniversary of the Harvard License Agreement or (2) the earlier of (a) the twelfth anniversary of the Harvard License Agreement and (b) the third anniversary of the first date on which a licensed product receives regulatory approval in the United States.

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The following table summarizes the Company’s success payment liability for Harvard (in thousands):

September 30,

Harvard success payment liability

The following table summarizes the expense resulting from the change in the fair value of the success payment liability for Harvard (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Change in fair value of Harvard success payment liability

As of September 30, 2020, no success payments have been paid or are due to Harvard.

In addition, Harvard was entitled to receive financing milestone payments, which were paid by the Company during the year ended December 31, 2019.

As of March 31, 2021, no success payments have been paid or are due to Harvard.

In May 2021, the first success payment measurement occurred and amounts due to Harvard were calculated to be $ 15.0 million.

The Company has elected to make the payment in shares of the Company’s common stock, and thereby expects to issue shares of the Company’s common stock to settle this liability in June 2021 .

The annual maintenance fee under the Harvard License Agreement is recorded as research and development expense.

Patent prosecution costs are recognized as expense in the period incurred.

As of September 30, 2020, the Company determined that product development and regulatory approval milestones and royalties under the Harvard License Agreement were not probable and, as such, no amounts were recognized for the nine months ended September 30, 2020.

As of March 31, 2021, the Company determined that product development and regulatory approval milestones and royalties under the Harvard License Agreement were not probable and, as such, no amounts were recognized for the three months ended March 31, 2021.

Broad license agreement

Under the terms of the Broad License Agreement, Broad Institute is entitled to receive success payments, determined based upon the achievement of specified multiples of the initial weighted average value of the Blink Series A Preferred at specified valuation dates.

Under the terms of the Broad License Agreement, Broad Institute is entitled to receive success payments, determined based upon the achievement of specified multiples of the initial weighted average value of Series A Preferred Stock at specified valuation dates.

Subsequent to the Company’s February 2020 IPO, the amount of success payments is based on market value of Beam’s common stock.

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.

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The following table summarizes the Company’s success payment liability for Broad Institute (in thousands):

September 30,

Broad Institute success payment liability

The following table summarizes the expense resulting from the change in the fair value of the success payment liability for Broad Institute (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Change in fair value of Broad Institute success payment liability

As of September 30, 2020, no success payments have been paid or are due to Broad Institute.

In addition, Broad Institute was entitled to receive financing milestone payments, which were paid by the Company during the year ended December 31, 2019.

As of March 31, 2021, no success payments have been paid or are due to Broad Institute.

In May 2021, the first success payment measurement occurred and amounts due to Broad Institute were calculated to be $ 15.0 million.

The Company has elected to make the payment in shares of the Company’s common stock, and thereby expects to issue shares of the Company’s common stock to settle this liability in June 2021 .

The annual maintenance fee under the Broad License Agreement is recorded as research and development expense.

Patent prosecution costs are recognized as expense in the period incurred.

As of September 30, 2020, the Company determined that product development and regulatory approval milestones and royalties under the Broad License Agreement were not probable and, as such, no amounts were recognized for the nine months ended September 30, 2020.

As of March 31, 2021, the Company determined that product development and regulatory approval milestones and royalties under the Broad License Agreement were not probable and, as such, no amounts were recognized for the three months ended March 31, 2021.

Editas license agreement

In May 2018, the Company entered into a license agreement, or the Editas License Agreement, with Editas Medicine, Inc., or Editas, for certain intellectual property rights owned or controlled by Editas, for specified uses.

Under the Editas License Agreement, Editas granted to the Company a worldwide, exclusive, sublicensable license (subject to certain exceptions and conditions) under certain intellectual property controlled by Editas for the use of base editing therapies for the treatment of any field of human diseases and conditions, subject to certain exceptions, or the Beam Field, and the licenses granted or to be granted under the Editas License Agreement, or the Editas Development and Commercialization License.

Additionally, Editas granted to the Company a royalty-free, non-exclusive license under certain intellectual property owned or controlled by Editas to perform research activities in the Beam Field.

Editas provided the Company with an exclusive option to obtain an Editas Development and Commercialization License to three additional groups of intellectual property owned or controlled by Editas, on a group by group basis, during the specified option period, subject to certain exceptions.

Pursuant to the Editas License Agreement, the Company will use commercially reasonable efforts to develop a product that includes the rights licensed to the Company within a specified period of time and to commercialize any such products that have received regulatory approval in certain specified countries.

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.

The annual maintenance fees under the Editas License Agreement are recorded as research and development expense.

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In addition, the Company is required to make certain development, regulatory and commercial milestone payments to Editas upon the achievement of specified milestones.

As of September 30, 2020, the triggering of these milestone payments was not probable and, as such, no amounts were recognized for the nine months ended September 30, 2020.

In March 2019, the Company entered into a license agreement, or the Bio Palette License Agreement, with Bio Palette Co., Ltd., or Bio Palette, pursuant to which Beam received an exclusive (even as to Bio Palette), sublicensable license under certain patent rights related to base editing owned or controlled by Bio Palette to exploit products for the treatment of human disease throughout the world, but excluding products in the microbiome field in Asia.

As of March 31, 2021, the triggering of these milestone payments was not probable and, as such, no amounts were recognized for the three months ended March 31, 2021.

Bio Palette license agreement

In March 2019, the Company entered into a license agreement with Bio Palette Co., Ltd., or Bio Palette, pursuant to which Beam received an exclusive (even as to Bio Palette), sublicensable license under certain patent rights related to base editing owned or controlled by Bio Palette to exploit products for the treatment of human disease throughout the world, but excluding products in the microbiome field in Asia (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.

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Each party agrees to certain coordination obligations in the microbiome field if either party determines not to exploit their rights in such field.

Upon the execution of the Bio Palette License Agreement, the Company paid Bio Palette an upfront fee of $0.5 million and issued to Bio Palette 16,725 shares of its common stock valued at $0.1 million, which were recorded as research and development expense for the three months ended March 31, 2019.

Upon the issuance of a certain Bio Palette patent in the United States in June 2020 , the Company made a milestone payment of $2.0 million and , in July 2020, issue d to Bio Palett e 175,000 shares of its common stock valued at $0.3 million , which were recognized as research and development expense .

The fair value of the common stock issued to Bio Palette under the Bio Palette License Agreement was measured at the inception of arrang ement and expensed when the issuance of shares became probable.

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.

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.

As of March 31, 2020, the Company determined that the patent was probable of issuance and recognized $ 2.3 million as research and development expense for the three months ended March 31, 2020.

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.

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.

In September 2019, the Company entered into a collaboration and license agreement with Prime Medicine Inc., or 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.

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Each party has an obligation to assign rights in certain technology developed under the collaboration to the other party.

Beam has an obligation to issue $5.0 million in shares of its common stock to Prime Medicine, and Prime Medicine has an obligation to issue 5,000,000 shares of its common stock to Beam, should Beam elect to extend the collaboration beyond one year.

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 $5.0 million, which represents the fair value of Beam’s common stock to be issued to Prime Medicine, as research and development expense within the accompanying condensed consolidated statements of operations and other comprehensive loss for the three and nine months ended September 30, 2020, and within accrued expenses in the accompanying condensed consolidated balance sheets as of September 30, 2020.

Additionally, in October 2020, the Company received 5,000,000 shares of Prime Medicine’s common stock and recognized $0.1 million as an offset to research and development expense within the accompanying condensed consolidated statements of operations and other comprehensive loss for the three and nine months ended September 30, 2020, and within other current assets in the accompanying condensed consolidated balance sheets as of September 30, 2020.

As of September 30, 2020, the Company determined that milestones and royalties under the agreement were not probable of recognition.

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 during the year ended December 31, 2020.

Additionally, the Company provided immaterial interim management and startup services to Prime Medicine through March 2021.

As of March 31, 2021, the Company determined that future milestones and royalties under the agreement were not probable of recognition.

In April 2019, Beam entered into a collaboration and license agreement, or the Verve Agreement, with Verve Therapeutics, Inc., or Verve, to investigate gene editing strategies to modify genes associated with an increased risk of coronary diseases.

Under the terms of the Verve Agreement, the Company granted Verve an exclusive license to certain base editor technology and certain delivery technology, and improvements and Verve granted Beam a non-exclusive license under certain know-how and patents controlled by Verve, an interest in joint collaboration technology and an exclusive license (except as to Verve) under certain delivery technology.

As of September 30, 2020, the Company determined that milestones and royalties under the Verve Agreement were not probable of recognition.

As of March 31, 2021, the Company determined that milestones and royalties under the Verve Agreement were not probable of recognition.

Preferred and common stock

In January 2020, the Company authorized preferred stock issuable of 25,000,000 shares and increased its authorized common stock issuable to 250,000,000 shares, both with a $ 0.01 par value per share.

The Company’s board of directors approved a one-for-4.4843 reverse stock split of its common stock and stock options and a proportional adjustment to the existing conversion ratios for the Company’s redeemable convertible preferred stock effective as of January 24, 2020.

Accordingly, all common stock shares, per share amounts, and additional paid-in capital amounts for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the reverse stock split.

In February 2020, the Company completed its IPO in which the Company issued and sold 12,176,471 shares of its common stock, including 1,588,235 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $ 17.00 per share, for aggregate gross proceeds of $ 207.0 million.

The Company received approximately $188.3 million in net proceeds after deducting underwriting discounts and estimated offering expenses payable by the Company.

The Company received approximately $ 188.3 million in net proceeds after deducting underwriting discounts and offering expenses payable by the Company.

In connection with the IPO, all outstanding shares of the Company’s preferred stock converted into 29,127,523 shares of the Company’s common stock.

The Company received approximately $ 126.6 million in net p roceeds after deducting underwriting discounts and estimated offering expenses payable by the Company.

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 $ 252.0 million in net proceeds after deducting fees to the placement agents and offering expenses payable by the Company.

In April 2021, the Company entered into an At-The-Market (“ATM”) sales agreement with Jefferies LLC (“Jefferies”), under which the Company may offer and sell, from time to time at prevailing market prices, shares of the Company’s common stock having aggregate gross proceeds of up to $ 300.0 million.

The sales agent will be entitled to compensation at a commission rate of 3.0 % of the aggregate gross sales price per share sold by it under the sales agreement.

In the second quarter of 2021, the Company began to issue and sell securities under this sales agreement.

The Company sold 12,607 shares of its common stock under this agreement subsequent to March 31, 2021 through May 4, 2021 for net cash proceeds of $ 0.8 million, after deducting commission fees and offering expenses payable by the Company.

In May 2021, the first success payment measurements occurred and success payments to Harvard and Broad Institute were calculated to be $ 15.0 million and $ 15.0 million, respectively.

The Company elected to make each payment in shares of the Company’s common stock, and thereby expects to issue shares of the Company’s common stock to settle these liabilities to Harvard and Broad Institute in June 2021.

The holders of the Company’s 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 Company’s preferred stock are entitled, the holders of the Company’s common stock shall be entitled to receive ratably 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 Company’s 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.

Stock option and grant plan

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The Beam Therapeutics Inc.

2017 Stock Option and Grant Plan adopted by the Company’s board of directors in June 2017 and amended in February and May 2019, provides for the grant of qualified incentive stock options and nonqualified stock options, restricted stock or other awards to the Company’s employees, officers, directors, advisors, and outside consultants for the issuance or purchase of shares of the Company’s common stock.

2017 Stock Option and Grant Plan adopted by the Company’s board of directors in June 2017 and amended in February and May 2019, provides for the grant of qualified incentive stock options and nonqualified stock options, restricted stock awards, restricted stock units, or other awards to the Company’s employees, officers, directors, advisors, and outside consultants for the issuance or purchase of shares of the Company’s common stock.

In October 2019, the Company’s board of directors adopted the Beam Therapeutics Inc.

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The 2019 Plan provides for grant of qualified and nonqualified stock options, stock appreciation rights, restricted and unrestricted stock and stock units, performance awards, and other share-based awards to the Company’s employees, officers, directors, advisors, and outside consultants.

As of September 30, 2020, the Company had 8,021,083 shares reserved and 2,387,598 shares available for future issuance under the 2019 Plan.

As of March 31, 2021, the Company had 9,594,873 shares reserved and 2,891,667 shares available for future issuance.

Stock-based compensation expense recorded as research and development and general and administrative expenses in the condensed consolidated statements of operations and other comprehensive loss is as follows (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

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Outstanding at December 31, 2020

Outstanding at September 30, 2020

Exercisable as of September 30, 2020

The weighted-average grant date fair value per share of options granted in the nine months ended September 30, 2020 was $13.35.

As of September 30, 2020, there was $27.2 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.6 years.

Outstanding at March 31, 2021

Exercisable as of March 31, 2021

The weighted-average grant date fair value per share of options granted in the three months ended March 31, 2021 was $ 53.59 .

As of March 31, 2021, there was $ 79.4 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.6 years.

Restricted stock

The Company issues shares of restricted common stock, including both restricted stock units and restricted stock awards.

Restricted common stock issued generally vests over a period of two to four years .

The following summarizes the Company’s restricted stock activity:

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Unvested as of December 31, 2020

Unvested as of September 30, 2020

At September 30, 2020, there was approximately $4.7 million of unrecognized stock-based compensation expense related to restricted stock that is expected to vest.

Unvested as of March 31, 2021

At March 31, 2021, there was approximately $ 53.0 million of unrecognized stock-based compensation expense related to restricted stock that is expected to vest.

These costs are expected to be recognized over a weighted-average period of approximately 2.2 years.

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The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect:

As of September 30,

Redeemable convertible preferred stock

As of March 31,

Unvested restricted stock

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The following table summarizes the computation of basic and diluted net loss per share attributable to common stockholders of the Company (in thousands except share and per share amounts):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net loss attributable to common stockholders

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

As discussed in Note 9, Collaboration and license agreements , as of September 30, 2020, the Company had an obligation to issue $5.0 million in shares of its common stock to Prime Medicine.

In October 2020, the Company issued 200,307 shares of Beam common stock to Prime Medicine.

The shares are considered issued for the purposes of computing earnings per share at September 30, 2020 as the Company had an obligation to issue the shares as of September 26, 2020.

During the three and nine months ended September 30, 2020 and 2019, the Company recorded a full valuation allowance on federal and state deferred tax assets since management does not forecast the Company to be in a taxable position in the near future.

During the three months ended March 31, 2021 and 2020, the Company recorded a full valuation allowance on federal and state deferred tax assets since management does not forecast the Company to be in a taxable position in the near future.

Related party transactions

For the nine months ended September 30, 2020 and 2019, the Company made payments of $0.1 million and $0.1 million, respectively, to each of its three founder shareholders for scientific consulting and other expenses.

For the three months ended March 31, 2021 and 2020, the Company made payments of $ 0.1 million and $ 0.1 million, respectively, to its three founder shareholders for scientific consulting and other expenses.

The Company and Verve are parties to a collaboration and license agreement and have a common board member.

During the nine months ended September 30, 2020 and 2019, the Company purchased shares of Verve series A preferred stock valued at $0.8 million and $0.4 million, respectively.

During the nine months ended September 30, 2020, the Company recognized unrealized gains of $0.5 million on its investment in Verve preferred stock.

The Company purchased certain materials from Verve amounting to $0.3 million, which is recorded as research and development expenses within the accompanying condensed consolidated statements of operations and other comprehensive loss for the nine months ended September 30, 2020, and within accrued expenses in the accompanying condensed consolidated balance sheets as of September 30, 2020.

The Company also sold certain materials to Verve amounting to $0.2 million, which is recorded as interest and other income (expense), net within the accompanying condensed consolidated statements of operations and other comprehensive loss for the nine months ended September 30, 2020, and within prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets as of September 30, 2020.

During the three months ended March 31, 2020, the Company purchased shares of Verve series A preferred stock valued at $ 0.8 million.

During the three months ended March 31, 2021, the Company recorded unrealized gains of $ 1.0 million on its investment in Verve preferred stock.

The Company purchased certain materials from Verve amounting to $ 0.2 million, which are recorded as research and development expenses within the accompanying condensed consolidated statements of operations and other comprehensive loss, for the three months ended March 31, 2021.

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.

T he Company recognized $5.0 milli on, which represents the fair value of Beam’s common stock to be issued to Prime Medicine, as research and development expense within the accompanying condensed consolidated statements of operations and other comprehensive loss for the nine months ended Se ptember 30, 2020 , and within accrued expenses in the accompanying condensed consolidated balance sheets as of September 30, 2020.

Additionally, in October 2020, the Company received 5 ,000,00 0 shares of Prime Medicine’s common stock and recognized $ 0.1 mill ion as an offset to research and development expense within the accompanying condensed consolidated statements of operations and other comprehensive loss for the nine months ended September 30, 2020 , and within other current assets in the accompanying cond ensed consolidated balance sheets as of September 30, 2020.

Additionally, in September 2019, in connection with the Company’s collaboration and license agreement with Prime Medicine, the Company executed a letter agreement, as amended, to provide certain interim management and startup services to Prime Medicine for up to March 2021.

Prime Medicine is obligated to reimburse the Company’s out-of-pocket costs incurred in connection with performing the services and, beginning in October 2020, will pay the Company a $30 thousand monthly service fee.

For the nine months ended September 30, 2020, the Company did not recognize any amounts for performing such services or incur any out-of-pocket expenses.

Prime Medicine was obligated to reimburse the Company’s out-of-pocket costs incurred in connection with performing the services and, beginning in October 2020, paid the Company a $ 30 thousand monthly service fee.

For the three months ended March 31, 2021, 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.

Subsequent Events

At-the-Market Offering

In April 2021, the Company entered into an ATM sales agreement with Jefferies, under which the Company may offer and sell, from time to time at prevailing market prices, shares of the Company’s common stock having aggregate gross proceeds of up to $ 300.0 million.

The sales agent will be entitled to compensation at a commission rate of 3.0 % of the aggregate gross sales price per share sold by it under the sales agreement.

In the second quarter of 2021, the Company began to issue and sell securities under this sales agreement.

Success Payments

In May 2021, the first success payment measurements occurred and success payments to Harvard and Broad Institute were calculated to be $ 15.0 million and $ 15.0 million, respectively.

The Company elected to make each payment in shares of the Company’s common stock, and thereby expects to issue shares of the Company’s common stock to Harvard and Broad Institute to settle these liabilities in June 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements