LENZ Therapeutics, Inc. 10-K

Item 7. Management’s Discussion and Analysis o f Financial Condition and Results of Operations. Management’s discussion and analysis of financial condition and results of operations, referred to as the “Financial Review,” is intended to assist the reader in the understanding and assessment of significant changes and trends related to the results of operations and financial position of Graphite Bio (the “Company,” “Graphite,” “we,” “our,” or “us” and other similar pronouns). This discussion and analysis should be read in conjunction with the financial statements and accompanying financial notes in Item 8 of Part II of this Form 10-K. Certain statements in this report constitute forward-looking statements. See Cautionary Note Regarding Forward-Looking Statements of this Form 10-K for additional factors relating to these statements and Item 1A - Risk Factors in Part I of this Form 10-K for a list of certain risk factors applicable to our business, financial condition, and results of operations. Overview We have historically been a clinical-stage, next-generation gene editing company. In January 2023, Graphite announced a voluntary pause of its Phase 1/2 CEDAR study of nulabeglogene autogedtemcel (nula-cel), for sickle cell disease (“SCD”) due to a serious adverse event in the first patient dosed, which Graphite concluded is likely related to study treatment. Nula-cel was being developed as a highly differentiated approach to treating SCD, with the potential to directly correct the mutation that causes SCD and restore normal adult hemoglobin expression . In February 2023, we announced our decision to discontinue the development of nula-cel and initiate a process to explore strategic alternatives. As a result of this decision, we announced a corporate restructuring that resulted in an approximately 45.0% reduction in our workforce. In August 2023, we further reduced our workforce with an additional 33.1% of our total workforce, and in aggregate, a total of 78.1% of our total workforce. We also disclosed our intention to continue research activities associated with our pre-clinical non-genotoxic conditioning program, with the goal of advancing toward one or more potential development candidates. As part of the corporate restructuring, we also elected not to utilize the portion of our facilities space subject to our lease agreement with Bayside Area Development for purposes of our own operations. In August 2023, we entered into the LOA, pursuant to which we granted Kamau an option to acquire certain of our technology and intellectual property related to our nula-cel program and related pre-clinical platform assets. We also entered into an asset purchase agreement pursuant to which we transferred to Maro our pre-clinical non-genotoxic conditioning program, including technology and intellectual property, while we continued to explore strategic alternatives. On September 12, 2023, we and Kamau entered into an amendment to the LOA, under which we agreed to assign certain contracts to Kamau prior to exercise of the option, and as of December 31, 2023, these contracts have been assigned to Kamau. In October 2023, we entered into a sublease for a portion of the facility leased to us by Bayside Area Development, as well as an amendment to the master lease, which provided for an accelerated termination of the lease and a release of liabilities under the lease and the new sublease upon payment of a lump sum at the time of signing. Following this transaction, we are no longer obligated for any rent payments under our lease with Bayside Area Development. After a comprehensive review of strategic alternatives, including identifying and reviewing potential candidates for a strategic transaction, on November 14, 2023, we entered into the Merger Agreement with LENZ, pursuant to which Merger Sub will merge with and into LENZ, with LENZ surviving as our wholly-owned subsidiary. The merger was unanimously approved by our board of directors, and the board of directors resolved to recommend approval of the Merger Agreement to our stockholders. The closing is subject to approval by our stockholders and LENZ’s stockholders, as well as other customary closing conditions, including the effectiveness of a registration statement on Form S-4 filed with the SEC in connection with the merger and Nasdaq’s approval of the listing of the shares of the Graphite common stock to be issued in connection with the transaction. If the merger is completed, the business of LENZ will continue as the business of the combined company. Our future operations are highly dependent on the success of the merger and there can be no assurances that the merger or any other strategic transaction will be successfully consummated. If the strategic review process is unsuccessful, our board of directors may decide to pursue a dissolution and liquidation. We were incorporated in Ontario, Canada in June 2017 as Longbow Therapeutics Inc. and were reincorporated in the State of Delaware in October 2019. In February 2020, we changed our name to Integral Medicines, Inc. and in August 2020, we changed our name to Graphite Bio, Inc. Research and development of our initial technology ceased at the end of 2018 and we did not have any significant operations or any research and development activities in 2019. In March 2020, we identified new gene editing technology which it sought to further develop, and it licensed the related intellectual property rights from Stanford in December 2020. Since our inception in June 2017, we have devoted substantially all of our resources to performing research and development, enabling manufacturing activities in support of our product development efforts, hiring personnel, acquiring and developing our technology and product candidates, organizing and staffing the company, performing business planning, establishing our intellectual property portfolio, raising capital and providing general and administrative support for these activities. We have had one product candidate that has an accepted IND, which has been transferred to Kamau in connection with our execution of the LOA. All of our other product candidates 62 were in preclinical development, and we do not have any products approved for sale and have not generated any revenue from product sales. To date, we have funded our operations primarily with an aggregate of $197.7 million in aggregate gross proceeds from the sales of its redeemable convertible preferred stock and the issuance of convertible notes. In June and July 2021, we completed the IPO and issued 16,100,000 shares of our common stock for $17.00 a share with a total net proceeds of approximately $251.3 million, and total underwriting costs of $19.1 million and issuance costs of $3.2 million. We will continue to require additional capital to fund our operations for the foreseeable future and ensure we have adequate personnel, can pay for accounting, audit, legal, and consulting services, and can pay costs associated with maintaining compliance with Nasdaq listing rules and the requirements of the SEC, director and officer liability insurance and other expenses associated with operating as a public company. Accordingly, until such time as we can generate significant revenue from product sales, if ever, we expect to finance our cash needs through public or private equity or debt financings, and collaborations, strategic alliances and licensing arrangements with third parties. We have incurred significant operating losses since inception. As of December 31, 2023, we had cash and cash equivalents of $184.3 million and an accumulated deficit of $367.1 million. We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take at least several years. We may never achieve profitability, and unless and until then, we will need to continue to raise additional capital. Based upon our current operating plan, we estimate that our cash, cash equivalents and restricted cash as of December 31, 2023 will be sufficient to fund our operating expenses and capital expenditure requirements for at least the next 12 months. We expect to continue to incur significant expenses in connection with the merger or the process of evaluating other strategic alternatives if the merger is unsuccessful. There can be no assurance, however, that we will be able to successfully consummate the merger or any other strategic transaction. The process of continuing to evaluate strategic transactions may be very costly, time-consuming and complex, and we have incurred, and may in the future incur, significant costs related to these processes, such as legal, accounting and advisory fees and expenses and other related charges. A considerable portion of these costs will be incurred regardless of whether the merger or any other strategic transaction is completed. Any such expenses will decrease the remaining cash available for use in our business. In addition, the merger or any other strategic business combination or other transactions that we may consummate in the future could have a variety of negative consequences and we may implement a course of action or consummate a transaction that yields unexpected results that adversely affects our business and decreases the remaining cash available for use in our business or the execution of our strategic plan. There can be no assurances that any particular course of action, business arrangement, transaction, or series of transactions, will be pursued, successfully consummated, lead to increased stockholder value or achieve the anticipated results. Any failure of the merger or any other strategic business combination or other transactions to achieve the anticipated results could significantly impair our ability to enter into any future strategic transactions and may significantly diminish or delay any future distributions to our stockholders. Should we resume development of product candidates, our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more product candidates. In addition, we will incur substantial research and developments costs and other expenditures to develop such product candidates, particularly as it: • advances any product candidates through preclinical studies and clinical trials; • manufactures supplies for our preclinical studies and clinical trials; • seeks marketing approval for product candidates that successfully complete clinical development, if any; • maintains compliance with applicable regulatory requirements; • develops and scales up our capabilities to support preclinical activities and clinical trials for product candidates and commercialization of product candidates for which we obtain marketing approval, if any; • retains key personnel to continue our go-forward operations; • operates as a public company; • explores and executes on our strategic alternative process or a potential strategic transaction; • implements and maintains operational, financial and management systems; and • obtains, maintains, expands and protects our portfolio of intellectual property rights; We have relied and may in the future rely on third parties in the conduct of its preclinical studies and clinical trials and for manufacturing and supply of our product candidates if we resume any development activities. We have no internal manufacturing capabilities, and we may continue to rely on third parties for our preclinical and clinical trial materials, of which the main suppliers are single-source suppliers. Given our stage of development, we do not yet have a marketing or sales organization or commercial infrastructure. 63 Accordingly, if we obtain regulatory approval for any future product candidates, we also expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from sales of any product for which we receive regulatory approval, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and may be forced to reduce our operations. Stanford Exclusive License Agreement and Option Agreement In December 2020, we entered into an exclusive license agreement (the “License Agreement”), with The Board of Trustees of the Leland Stanford Junior University (“Stanford”), pursuant to which Stanford granted us a worldwide license to specified technology and patent rights to develop, manufacture and commercialize human prophylactic and therapeutic products. Other than with respect to specified, broadly applicable assays and procedures and subject to retained rights by Stanford, the license is exclusive with respect to human prophylactic and therapeutic products for the treatment of SCD, XSCID and beta thalassemia. The license is non-exclusive with respect to those broadly applicable assays and procedures and with respect to all human prophylactic and therapeutic products other than for the treatment of SCD, XSCID and beta thalassemia. To date, pursuant to the License Agreement, we have paid an upfront license fee to Stanford of $50.0 thousand and issued to Stanford and its designees an aggregate of approximately 0.6 million shares of our common stock. The acquisition of the exclusive license, including patent rights and know-how, and clinical supplies was accounted for as an asset acquisition and as the acquired technology and inventories did not have an alternative use, the total consideration of $2.8 million was recorded as research and development expense in the statements of operations and comprehensive loss for the year ended December 31, 2020. We are obligated to pay Stanford an annual license maintenance fee on each anniversary of the effective date of the License Agreement. The annual license maintenance fee initially is $5.0 thousand and will increase to $50.0 thousand in three increments over the first seven anniversaries of the effective date of the License Agreement. After the first commercial sale of a product falling within the scope of the license (the “Licensed Product”), the annual license maintenance fee is $200.0 thousand. In May 2021, we issued 640,861 shares of our common stock in connection with the License Agreement. Subsequently, in June 2021, related to the License Agreement, we repurchased 624,845 shares of our common stock from investors and founders. We are required to share with Stanford a portion of any non-royalty income we receive from sublicensing the licensed patent rights or technology, subject to specified exclusions. With respect to sublicenses granted to products for the treatment of SCD, XSCID and beta thalassemia, the portion of sublicense income we must share with Stanford varies by indication and declines from between a mid-teen to a second quartile double-digit percentage prior to the filing of an IND to between a high single-digit to very low double-digit percentage upon achievement of a specified clinical milestone. With respect to sublicenses granted under the licensed technology rights and not licensed patent rights, the portion of sublicense income shared with Stanford declines from between a mid-single-digit and very low double-digit percentage prior to the filing of an IND to a low single-digit percentage after filing of an IND. We are obligated to make payments to Stanford with respect to each Licensed Product of up to an aggregate of $12.8 million upon the achievement of certain development, regulatory and commercial milestones. Such amounts are payable only once upon the first occurrence of a particular milestone event with respect to each Licensed Product and only once with respect to each new indication covered by any of the Licensed Products. We also are obligated to pay Stanford low single-digit royalties based on worldwide annual net sales of any Licensed Product, subject to specified reductions. We will be obligated to continue to pay royalties on a Licensed Product-by-Licensed Product and country-by-country basis, until the latest of (i) the expiration of the last valid claim under the licensed patents that covers the sale or manufacture of such Licensed Product in such country, (ii) the expiration of any period of regulatory exclusivity with respect to such Licensed Product in such country or (iii) the expiration of ten years after the first commercial sale of such Licensed Product in such country. The term of the License Agreement expires on the later of (i) the expiration of the last patent or abandonment of the last patent application within the license patent rights or (ii) the expiration of all royalty terms with respect to Licensed Products. The License Agreement may be terminated by us at will or by Stanford if we remain in breach of the License Agreement following a cure period to remedy the breach. We are required to use diligent efforts to manufacture, market and sell Licensed Products for the treatment of each of SCD, XSCID and beta thalassemia. In addition, we are required to achieve specified milestones by specified dates with respect to Licensed Products for 64 the treatment of each of SCD, XSCID and beta thalassemia. If we fail to satisfy our diligence obligations, Stanford may terminate the License Agreement for our breach. For more details on the License Agreement, please see Note 5 of the Notes to Financial Statements. In January 2021, we entered into an option agreement (the “First Option Agreement”), with Stanford, pursuant to which Stanford granted us the right to obtain a license to specified patent rights relating to human prophylactic and therapeutic products. We may exercise the option in whole or in part to obtain a license under one or more of the optioned patent rights. Subject to our exercise of the option under the First Option Agreement and our execution of an amendment to the Stanford License Agreement that incorporates the optioned patent rights and any optioned technology, we have agreed to issue to Stanford 132,137 shares of our common stock and pay a license execution fee of $10.0 thousand. The term of the First Option Agreement expires 18 months after its effective date, subject to our right to extend such expiration date by up to an additional one year upon notice to Stanford and by another additional one year upon the reasonable agreement of Stanford. The First Option Agreement will terminate if the Stanford License Agreement terminates. On June 23, 2022, we exercised our right to extend the term of the First Option Agreement for an additional year. On June 6, 2023, we agreed to extend the term of the First Option Agreement for another additional year. As of December 31, 2023, we have not exercised the option and no fees have been paid for the First Option Agreement. In August 2023, the Company entered into the LOA, pursuant to which we granted Kamau an option to acquire certain of our technology and intellectual property related to our nula-cel program and related pre-clinical platform assets. The License Agreement and First Option Agreement is included in the assets that are subject to the LOA and may be assigned to Kamau if and when it exercises the option. In April 2021, we entered into an option agreement (the “Second Option Agreement”) with Stanford to negotiate the license for additional technologies from Stanford. Pursuant to the Second Option Agreement, we agreed to pay Stanford option fees in an aggregate amount of $30.0 thousand over the term of the option. On April 13, 2022, we entered into an amendment to the Second Option Agreement which extended the term for an additional year. On March 8, 2023, we terminated the Second Option Agreement without exercising the option to negotiate a license for additional technologies from Stanford. LCGM Service Agreement On August 30, 2021, we entered into a Master Manufacturing and Service Agreement with the Laboratory for Cell & Gene Medicine (“LCGM”) at Stanford (“LCGM MSA”). Pursuant to the LCGM MSA, LCGM will conduct clinical manufacturing, release testing, and product release for nula-cel in our Phase 1 clinical trial to treat SCD. During 2021, we entered into various SOWs under the LCGM MSA under which we received technology transfer and related services for HBB Beta-Globin Gene Variant for SCD, manufacturing engineer test runs, the exclusive use of a manufacturing suite at the LCGM facility, and Phase 1/2 clinical development and manufacturing of the HBB Variant for SCD. We have recognized $1.7 and $6.1 million in research and development expense in connection with the LCGM MSA during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the LCGM MSA has been terminated and we do not expect to incur any additional expenses. IDT License Agreement On June 7, 2021, we entered into a License Agreement (the “IDT License Agreement”) with Integrated DNA Technologies, Inc. (“IDT”). Pursuant to the IDT License Agreement, IDT granted us and our affiliates a worldwide, non-exclusive, sublicensable license to research and develop products incorporating HiFi Cas9 protein variants for use in human therapeutic applications for SCD, XSCID and Gaucher disease (the “Field”) and a worldwide, exclusive, sublicensable license to commercialize such products in the Field. We have also been granted the right to expand the licensed Field to include human therapeutic applications in the additional fields of beta thalassemia disorder and lysosomal storage disorders upon the payment of an exercise fee in the amount of $0.5 million per additional field or $1.0 million for both additional fields. In consideration of the licenses and rights granted to us under the IDT License Agreement, we agreed to pay to IDT an upfront payment in the amount of $3.0 million and up to $5.3 million (or $8.8 million if we elect to expand the Field as described above to include both the beta thalassemia and lysosomal storage disorders fields) in total regulatory milestone payments. Each regulatory milestone payment is payable once on an indication-by-indication basis. In addition, we have agreed to pay IDT a low single-digit royalty on the net sales of products, subject to reductions in specified circumstances. The acquisition of the license was accounted for as an asset acquisition and as the acquired technology did not have an alternative use, the total consideration of $3.0 million was recorded as research and development expense in the statement of operations and comprehensive loss for the year ended December 31, 2021. There are no milestones probable as of December 31, 2023; therefore, no milestone payments have been recognized or paid in during the year ended December 31, 2023. The IDT License Agreement remains in effect on a country-by-country and product-by-product basis until the expiration of the royalty term for such product in such jurisdiction. We and IDT each have the right to terminate the IDT License Agreement for the other party’s 65 material breach of its obligations under the IDT License Agreement, subject to specified rights to cure. Additionally, we may terminate the IDT License Agreement for any reason upon written notice. In August 2023, we entered into the LOA, pursuant to which we granted Kamau an option to acquire certain of our technology and intellectual property related to our nula-cel program and related preclinical platform assets. The IDT License Agreement is included in the assets that are subject to the LOA and may be assigned to Kamau if and when it exercises the option. During the year ended December 31, 2023, and as of December 31, 2023, we did not and do not expect to incur any expenses associated with the IDT License Agreement. Sale of Non-Genotoxic Targeted Conditioning Technology Assets On August 1, 2023, we entered into an asset purchase agreement (the “APA”) with Maro pursuant to which we sold to Maro, concurrently with the execution of the APA, certain assets related to our non-genotoxic conditioning technology in exchange for upfront consideration of $0.5 million. Additional consideration included certain contingent milestone payments totaling up to approximately $1.0 million in the aggregate, and potential fees upon the completion of certain transactions by the acquirer. The APA also provided for reimbursement of certain research and development amounts incurred prior to closing of approximately $0.6 million as well as certain transition services to be provided by us or Maro. Under the APA, Maro will also pay us a sub single digit percentage cash royalty of worldwide net sales of certain products incorporating the acquired technology. The royalty term will terminate on a product-by-product and country-by-country basis on the latest of (i) the ten (10) year anniversary of the first commercial sale of such product in such country, (ii) the expiration of the last-to-expire valid claim of a transferred patent that covers such product in such country, and (iii) the expiration of regulatory exclusivity with respect to such product in such country. The APA also includes customary representations and warranties, covenants and indemnification obligations for a transaction of this nature. The disposal of certain assets sold pursuant to the APA was accounted for as a deconsolidation of a subsidiary or group of assets in accordance with ASC 810. During the year ended December 31, 2023, we recognized a loss on disposal of $0.1 million, which was recorded in other expense. We will record amounts related to the contingent milestone payments, royalties, and potential transaction fees when contingencies are resolved and amounts are due in accordance with ASC 450. No contingencies were resolved and recorded as of December 31, 2023. License and Option to Acquire Nula-Cel Assets On August 4, 2023, we entered into the LOA with Kamau pursuant to which we exclusively licensed to Kamau, and granted Kamau, an option to acquire certain intellectual property and materials related to our nula-cel program and related pre-clinical platform assets. The option includes rights to assume the License Agreement and the First Option Agreement with Stanford, as well as the IDT License Agreement, among other agreements. Exercise of the option is contingent on Kamau raising a minimum of $10 million in funds no later than August 4, 2024 (the “Financing Milestone”), which contingency may be waived by Graphite. All rights to the intellectual property and materials will revert to us if the milestone is not achieved or if the counterparty elects not to exercise the option. In return for this license and option, we received an equity interest in the counterparty representing 20% of all outstanding shares on a fully diluted basis subject to dilution protection until the Financing Milestone. The LOA includes customary representations and warranties, limitations of liability and indemnification obligations for a transaction of this nature. The LOA automatically expires upon the first to occur of: (1) Kamau’s exercise of the option, (2) Kamau’s failure to exercise the option within a specified exercise period following achievement of the financing milestone, or (3) Kamau’s failure to achieve the financing milestone by the pre-agreed deadline. In addition, either party has the right to terminate the LOA for the uncured material breach or insolvency of the other party, and we have the right to terminate the LOA if Kamau challenges any of the patent rights that are subject to the option. As a result of the 20% equity interest, we have the ability to exert significant influence over Kamau and account for the interest as an equity method investment. We record our proportionate share of investee’s equity in earnings or losses based on the most recently available financial information. On September 12, 2023, we and Kamau entered into an amendment to the LOA, under which we agreed to assign certain contracts to Kamau prior to exercise of the option, and as of December 31, 2023, these contracts have been assigned to Kamau. The 20% equity interest in Kamau had minimal value upon execution of the LOA and we did not record any amount related to the equity interest as of December 31, 2023. As of December 31, 2023, Kamau has not achieved the financial milestone and does not have the right to exercise the option. 66 Components of Results of Operations Operating Expenses Research and Development Research and development costs consist primarily of external and internal costs incurred for our research activities and the development of our gene editing platform and associated rights which we licensed in December 2020. External costs include: • costs incurred under agreements with third-party CROs, CMOs and other third parties that conduct preclinical and clinical activities on our behalf and manufacture our product candidates; • costs associated with acquiring technology and intellectual property licenses that have no alternative future uses; and • other costs associated with our research and development programs, including laboratory materials and supplies and consulting fees. Inte rnal costs include: • employee-related costs, including salaries, benefits and stock-based compensation expense, for our research and development personnel; and • facilities and other expenses incurred in connection with our research and development programs, including expenses for allocated rent and facilities maintenance, and depreciation and amortization . Research and development costs are expensed as incurred. Since inception, we have not tracked our internal indirect costs and external research and development costs by program. The intellectual property we licensed in late 2020 is fundamental to our platform and we did not focus on any specific programs. The process of conducting preclinical research is costly and time-consuming. We are unable to determine the duration and completion costs of our research projects or if, when and to what extent they will lead to product candidates and enter into clinical research. If we resume any development of product candidates, our future research and development costs may vary significantly based on factors such as: • the scope, rate of progress, expense and results of our discovery and preclinical development activities; • the costs and timing of our CMC activities, including fulfilling GMP-related standards and compliance, and identifying and qualifying suppliers; • per patient clinical trial costs; • the number and duration of clinical trials required for approval of our product candidates; • the number of sites included in our clinical trials; • the countries in which the trials are conducted; • delays in adding a sufficient number of trial sites and recruiting suitable patients to participate in our clinical trials; • the number of patients that participate in the trials; • patient drop-out or discontinuation rates; • potential partial reimbursement from governmental agencies for our clinical activities; • potential additional safety monitoring requested by regulatory agencies; • the duration of patient participation in the trials and follow-up; • the cost and timing of manufacturing our product candidates; • the phase of development of our product candidates; • the efficacy and safety profile of our product candidates; the timing, receipt, and terms of any approvals from applicable regulatory authorities including the FDA and non-U.S. regulators; • maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates; • significant and changing government regulation and regulatory guidance; 67 • changes in the standard of care on which a clinical development plan was based, which may require new or additional trials; and • the extent to which we establish additional strategic collaborations or other arrangements. General and Administrative Expenses General and administrative expenses consist primarily of expenses related to employee-related costs, including salaries, benefits and stock-based compensation expense, for our executive, business development, finance and accounting, human resources and other administrative functions; legal services, including relating to intellectual property and corporate matters; accounting, auditing, consulting and tax services; insurance; and facility and other allocated costs not otherwise included in research and development expenses. We expect to continue to incur significant general and administrative expenses for the foreseeable future as we implement our restructuring plan, pursue potential strategic alternatives and conduct our operations generally. We also expect to continue to incur significant expenses associated with being a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with applicable Nasdaq and SEC requirements; director and officer insurance costs; and investor and public relations costs. Restructuring and Impairment Costs Restructuring and other charges consist primarily of costs incurred related to the corporate restructuring and the halting of research activities during the year ended December 31, 2023, including severance as well as lease termination, loss on disposal of property and equipment, and impairment of assets held for sale. Other Income (Expense), Net Interest and other income, net, consists of interest income and miscellaneous income and expense unrelated to our core operations. Results of Operations Years Ended December 31, 2023 and 2022 The following table summarizes our statements of operations and comprehensive loss for the respective years (in thousands): Year Ended December 31, 2023 2022 Operating expenses: Research and development $ 32,137 $ 72,787 General and administrative 40,973 32,852 Restructuring and impairment costs 62,081 — Total operating expenses 135,191 105,639 Loss from operations (135,191 ) (105,639 ) Other income (expense), net: Interest income, net 10,949 4,587 Loss on disposal of assets (71 ) — Other expense (338 ) — Total other income, net 10,540 4,587 Net loss $ (124,651 ) $ (101,052 ) Unrealized gain (loss) on investments 1,048 (1,048 ) Comprehensive loss $ (123,603 ) $ (102,100 ) Operating Expenses Research and Development Expenses Research and development expenses were $32.1 million for the year ended December 31, 2023 compared to $72.8 million for the year ended December 31, 2022, a decrease of $40.7 million. Research and development expenses decreased in the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to the Company's announcement on February 22, 2023 to cease its sickle cell disease program. Accordingly, the Company began to wind down certain clinical trial-related and contract manufacturing activities and had a decrease of $22.7 million in clinical expenses. Employee related expenses, including associated stock-based compensation expense, decreased by $12.4 million primarily due to reduction in workforce for R&D employees. Office- related expenses also decreased by $3.3 million, and related depreciation expense also decreased by $0.6 million, due to the termination of the LCGM 68 and Explora embedded leases. Other professional services decreased by $1.6 million due to wind down of research and development activities and decrease in consultant spend. General and Administrative Expenses General and administrative expenses were $41.0 million for the year ended December 31, 2023 compared to $32.9 million for the year ended December 31, 2022, an increase of $8.1 million. The increase in general and administrative expenses was comprised of an increase of $4.5 million primarily related to facilities costs and lease expense and an increase of $3.9 million in professional service agreements and general costs related to our reverse merger. This was partially offset by a decrease in personnel-related costs, including associated stock-based compensation expense as a result in the reductions in force throughout the year. Restructuring and Impairment Costs Restructuring and impairment costs for the year ended December 31, 2023 consisted primarily of costs incurred related to the corporate restructuring, including $45.5 million of non-cash impairment related to the decision not to utilize the Bayside Area Development lease, $8.1 million related to severance expense incurred as part of the Restructuring Plan, $7.1 million related to the impairment and loss on the disposal of property and equipment, and $1.4 million of non-cash impairment related to the decision not to utilize the South San Francisco lease. Other Income, Net The other income (expense), net for the years ended December 31, 2023 and 2022 comprised of interest income from the investments in marketable securities and income from money market funds. Liquidity and Capital Resources We have incurred losses since inception and have incurred negative cash flows from operations from inception through December 31, 2023. As of December 31, 2023, we had $184.3 million of cash and cash equivalents and our accumulated deficit was $367.1 million. In June and July 2021, we raised net proceeds of $251.3 million in our IPO, pursuant to which we sold an aggregate of 16,100,000 shares of common stock. Prior to our IPO, we funded our operations primarily from the sale of redeemable convertible preferred stock and issuance of convertible promissory notes. On July 21, 2022, we filed the shelf registration statement on Form S-3 (the “2022 Shelf”) with the SEC in relation to the registration of up to an aggregate offering price of $300.0 million of common stock, preferred stock, debt securities, warrants and units or any combination thereof. We also simultaneously entered into a Sales Agreement to provide for the offering, issuance and sale by us of up to an aggregate of $75.0 million of our common stock from time to time in “at-the-market” offerings under the 2022 Shelf and subject to the limitations thereof. We will pay to the Sales Agent cash commissions of up to 3.0 percent of the gross proceeds of sales of common stock under the Sales Agreement. We have not issued any shares or received any proceeds from any offerings under the 2022 Shelf through December 31, 2023. Future Funding Requirements Historically, our primary uses of cash were to fund our operations, which consisted primarily of research and development expenditures related to our programs and, to a lesser extent, general and administrative expenditures. We anticipate that we will continue to incur significant general and administrative expenses for the foreseeable future as we pursue other strategic alternatives, advance potential product candidates, maintain our corporate infrastructure, including the costs associated with being a public company, scale our laboratory and manufacturing operations, and incur marketing costs associated with potential commercialization. We are subject to all of the risks typically related to the development of new drug candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial additional funding in connection with our continuing operations. Based upon our current operating plan, we believe that, absent completing the merger, our existing cash, cash equivalents and restricted cash will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months. Until we can generate sufficient revenues from the commercialization of product candidates or from collaboration agreements with third parties, if ever, we expect to finance our future cash needs through public or private equity or debt financings, collaborations and other strategic alliances and licensing arrangements, or any combination of these approaches. The sale of equity or convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. Debt financings may subject us to covenant limitations or restrictions on our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Our ability to raise additional funds may be adversely impacted by negative global economic conditions and any disruptions to and volatility in the credit and financial markets in the United States and worldwide that have resulted and may result from inflationary pressures or other factors. There can be no assurance that we will be successful in acquiring additional funding at levels sufficient to fund our operations or on terms favorable or acceptable to us. If we are unable to obtain adequate financing when needed or on terms 69 favorable or acceptable to us, we may be forced to delay, reduce the scope of or eliminate one or more of our research and development programs. Because our resource requirements could materially change depending on the outcome of our ongoing strategic alternative review process, we are unable to estimate the exact amount of our working capital requirements. In addition to factors related to the strategic alternative review process, if we resume clinical development, our future capital requirements may depend on many other factors, including: • the timing, scope, progress, results and costs of research and development, discovery, preclinical and non-clinical studies and clinical trials for our current and future product candidates; • the number, scope and duration of clinical trials required for regulatory approval of our current and future product candidates; • the outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities for our product candidates, including any requirement to conduct more studies or generate additional data beyond that which we currently expect would be required to support a marketing application; • the cost of manufacturing clinical and commercial supplies of our current and future product candidates; • the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; • our ability to maintain existing, and establish new, strategic collaborations, licensing or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty or other payments due under any such agreement; • any product liability or other lawsuits related to our products; • the revenue, if any, received from commercial sales of any product candidates for which we may receive marketing approval; • our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payers; • the costs to establish, maintain, expand, enforce and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing our patents or other intellectual property rights; • expenses needed to attract, hire and retain skilled personnel; and • the costs of operating as a public company. A change in the outcome of any of these or other variables could significantly change the costs and timing associated with the development of our product candidates. Furthermore, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such change. Cash Flows The following table summarizes our sources and uses of cash for the periods presented (in thousands): Year Ended December 31, 2023 2022 Net cash used in operating activities $ (90,007 ) $ (87,980 ) Net cash provided by (used in) investing activities 226,346 (241,863 ) Net cash provided by financing activities 190 597 Net increase (decrease) in cash, cash equivalents and restricted cash $ 136,529 $ (329,246 ) Cash Flows from Operating Activities Net cash used in operating activities was $90.0 million for the year ended December 31, 2023, which was primarily attributable to our net loss of $124.7 million and net changes in operating assets and liabilities of $39.2 million, adjusted for net noncash charges of $73.9 million. Net noncash charges included approximately $36.6 million in impairment of assets, $10.6 million in stock-based compensation expense, $4.3 million in noncash lease expense, $2.4 million in depreciation and amortization expense, $1.5 million in net amortization of premiums and discounts in marketable securities, and $0.1 million in loss on disposal of assets, which was partially offset by $1.6 million in gain on asset abandonment. Net changes in operating assets and liabilities primarily consists of $41.4 million in operating lease liabilities, $2.4 million in accounts payable, and $2.3 million in accrued compensation, offset by $5.7 million in prepaid expenses and $1.8 million in accrued expenses. 70 Net cash used in operating activities was $88.0 million for the year ended December 31, 2022, which was primarily attributable to our net loss of $101.1 million and net changes in operating assets and liabilities of $7.2 million, adjusted for net noncash charges of $20.3 million. Net noncash charges included approximately $13.5 million in stock-based compensation expense, $6.0 million in noncash lease expense, $2.4 million in depreciation and amortization expense, which was partially offset by $1.6 million in net amortization of premiums and discounts in marketable securities. Net changes in operating assets and liabilities primarily consists of $5.5 million in operating lease liabilities, $3.2 million in prepaid expenses, offset by $1.1 million in accrued compensation and $0.4 million in accounts payable and accrued expenses. Cash Flows from Investing Activities Net cash provided by investing activities was $226.3 million for the year ended December 31, 2023, which was primarily attributable to sales and maturities from our investments in current and non-current marketable securities of $263.4 million and proceeds from sale of property and equipment of $1.9 million, offset by purchases of investments in marketable securities of $28.1 million and lab equipment of $10.8 million for use at our headquarters. Net cash used in investing activities was $241.9 million for the year ended December 31, 2022, which was primarily attributable to investment in current and non-current marketable securities of $405.5 million and the purchase of lab equipment of $6.6 million for use at our headquarters, offset by proceeds from our investments in current and non-current marketable securities of $170.2 million. Cash Flows from Financing Activities Net cash provided by financing activities was $0.2 million for the year ended December 31, 2023, which consisted primarily of proceeds from issuance of common stock related to stock option grants and employee stock purchase plan of $0.3 million, which was partially offset by repurchases of unvested early exercised stock grants and founders' shares of $0.1 million. Net cash provided by financing activities was $0.6 million for the year ended December 31, 2022, which consisted primarily of proceeds from issuance of common stock related to stock option grants and employee stock purchase plan of $0.7 million, which was partially offset by repurchases of unvested early exercised stock grants of $0.1 million. Recently Adopted Accounting Pronouncements For information on new accounting standards, see Note 2 to our financial statements included in Part II in this Form 10-K. Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including but not limited to those related to accrued research and development costs, investments in marketable securities, and common stock and stock-based compensation expense, the valuation of deferred tax assets, and uncertain income tax positions. We base our estimates on historical experience, known trends and events and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. Accrued research and development expenses As part of the process of preparing our financial statements, we estimate our accrued research and development expenses at each balance sheet date. This process involves reviewing purchase orders and open contracts, communicating with our personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments as necessary. The significant estimates in its accrued research and development expenses include the costs incurred for services performed by CROs and CMOs in connection with research and development activities for which we have not yet been invoiced. We base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and 71 development expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid accordingly. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Although we do not expect our estimates to be materially different from amounts incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low in any period. To date, there have been no material differences between our estimates of such expenses and the amounts incurred. Stock-based compensation We measure stock options and other stock-based awards granted to our employees, directors, consultants or founders based upon their fair value on the date of the grant and recognize stock-based compensation expense over the requisite service period, which is generally the vesting period of the respective award. We recognize forfeitures as they occur. The majority of our stock-based compensation awards are subject to either service- or performance-based vesting conditions. We apply the straight-line method of expense recognition to all awards with service-based vesting and recognize stock-based compensation for performance-based awards over the service period using the accelerated attribution method to the extent achievement of the of performance condition is probable. We estimate the fair value of each stock option grant on the date of grant using the Black-Scholes option-pricing model, which uses inputs such as the fair value of our common stock, assumptions we make for the volatility of our common stock, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield. The fair value of our common stock is used to determine the fair value of restricted stock awards. Prior to our IPO in June 2021, there was no public market for our common stock. As a result, prior to our IPO, the estimated fair value of our common stock was determined by our board of directors as of the date of each option grant, with input from management, considering our most recently available third-party valuations of common stock and our board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. Following our IPO, the fair value of our common stock is determined based on the quoted market price of our common stock. Leases ASU No. 2016-02, Leases (Topic 842), or ASC 842, requires the recognition of the right-of-use assets and related operating and finance lease liabilities on the balance sheet. For contracts entered into on or after the effective date, at the inception of a contract, we assess whether the contract is, or contains, a lease. The assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the right to direct the use of the asset. At inception of a lease, we allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any of these criteria. For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, if any, less any lease incentives received. All right-of-use assets are reviewed for impairment. The lease liability is initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, our secured incremental borrowing rate for the same term as the underlying lease. For real estate leases and other operating leases, we use our secured incremental borrowing rate. For finance leases, we use the rate implicit in the lease or our secured incremental borrowing rate if the implicit lease rate cannot be determined. Lease payments included in the measurement of the lease liability comprise the following: the fixed noncancelable lease payments, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early. Lease cost for operating leases consists of the lease payments plus any initial direct costs, primarily brokerage commissions and is recognized on a straight-line basis over the lease term. Included in lease cost are any variable lease payments incurred in the period that are not included in the initial lease liability and lease payments incurred in the period for any leases with an initial term of 12 months or 72 less. Lease cost for finance leases consists of the amortization of the right-of-use asset on a straight-line basis over the lease term and interest expense determined on an amortized cost basis. The lease payments are allocated between a reduction of the lease liability and interest expense. Leasehold improvements are not unique and are retained by the lessor at the end of the lease. However, we are the accounting owner of the leasehold improvements in the case of a space designed to be suitable for our specific real estate needs if we are also responsible for cost overruns. We elected to make an accounting policy of the short-term leases exemption to leases with a remaining lease term of less than 12 months as at the date of initial adoption. Impairment of Long-Lived Assets We assess the impairment of long-lived assets whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. In the case of property and equipment and right-of-use assets for our leases, we determine whether there has been an impairment by comparing the carrying value of the asset to the anticipated undiscounted net cash flows associated with the asset. If such cash flows are less than the carrying value, we write down the asset to its fair value, which may be measured as anticipated discounted net cash flows associated with the asset. As discussed in Note 13 to our financial statements included elsewhere in this Form 10-K, in connection with our Restructuring Plan, we have made the decision not to utilize the Bayside Area Development premises (the “Bayside lease”) and have been seeking to sublease the vacated premises while still maintaining sufficient office and laboratory space for our normal operations. As a result, we reviewed the Bayside lease for impairment as of April 2023 when we received access to the premises and as part of our impairment evaluation of the Bayside lease, we separately compared the estimated undiscounted income to the net book value of the related long-term assets, which include right-of-use assets and certain property and equipment, primarily leasehold improvements. We estimated sublease income using market participant assumptions, including the length of time to enter into a sublease and sublease payments, which we evaluated using sublease negotiations or agreements where applicable, current real estate trends, and market conditions. If such income exceeded the net book value of the related assets, we did not record an impairment charge. Otherwise, we recorded an impairment charge by reducing the net book value of the assets to their estimated fair value, which we determined by discounting the estimated sublease cash flows using the estimated borrowing rate of a market participant subtenant. Determination of these key assumptions is complex and highly judgmental. For certain impairment charges, we used the terms of active sublease negotiations or agreements to estimate sublease income. Our estimate of future cash flows on the remaining floors, including the time to enter into a sublease and the terms of sublease payments, including estimated free rent periods, are based on current real estate trends and market conditions. Accordingly, if our estimates for the time to enter the sublease and estimated free rent periods were longer (shorter), the impairment charge would be higher (lower), and if our estimates for the rental rates were lower (higher), the impairment charge would be higher (lower). Given the current office lease market rental conditions in the Bay Area, our estimates are subject to significant uncertainty. The ultimate amount of sublease income may be significantly lower or higher than the amounts used to record our impairment charges, and we may record additional impairment charges in future periods as our estimates change or when we enter into sublease negotiations or execute a sublease agreement. Emerging Growth Company and Smaller Reporting Company Status We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for emerging growth companies include presentation of only two years of audited financial statements in a registration statement for an initial public offering, an exemption from the requirement to provide an auditor’s report on internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation and less extensive disclosure about our executive compensation arrangements. We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. However, as described in Note 2 to our financial statements included elsewhere in this Form 10-K, we early adopted certain accounting standards, as the JOBS Act does not preclude an emerging growth company from adopting a new or revised accounting standard earlier than the time that such standard applies to private companies to the extent early adoption is permitted. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year in which we have total annual gross revenues of $1.235 billion or more, (ii) December 31, 2026, (iii) the date on which we are deemed to be a “large accelerated filer,” under the rules of the SEC, which means the market value of equity securities that is held by non-affiliates exceeds $700.0 million as of 73 the prior June 30th and (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. If we are a “smaller reporting company” at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation. Item 7A. Quantitative and Qualitat ive Disclosures about Market Risk. Under SEC rules and regulations, as a smaller reporting company, we are not required to provide the information required by this item. 74 Item 8. Financial Statement and Other Supplementary Information. Graphite Bio, Inc. INDEX TO FINANCIAL STATEMENTS Index to Audited Financial Statements as of and for the Years Ended December 31, 2023 and 2022: Page Report of Independent Registered Public Accounting Firm 76 Balance Sheets 77 Statements of Operations and Comprehensive Loss 78 Statements of Stockholders’ Equity 79 Statements of Cash Flows 80 Notes to Financial Statements 81 75 Report of Independent Regist ered Public Accounting Firm To the shareholders and the Board of Directors of Graphite Bio, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Graphite Bio, Inc. (the "Company") as of December 31, 2023 and 2022, the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows, for each of the two years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, 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 San Francisco, California February 27, 2024 We have served as the Company's auditor since 2021. 76 Graphite Bio, Inc. Balance Sheets (in thousands, except share and per share data) December 31, December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 184,259 $ 47,730 Investments in marketable securities, current — 220,499 Restricted cash, current 1,602 — Prepaid expenses and other current assets 2,160 7,136 Total current assets 188,021 275,365 Restricted cash, non-current 114 1,716 Investments in marketable securities, non-current — 15,322 Property and equipment, net — 22,630 Operating lease right-of-use assets 321 5,580 Other assets — 1,289 Total assets $ 188,456 $ 321,902 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 250 $ 2,608 Accrued compensation 1,534 3,799 Accrued research costs — 720 Accrued expenses and other current liabilities 2,728 1,871 Operating lease liabilities, current 285 4,045 Total current liabilities 4,797 13,043 Operating lease liabilities, non-current 77 1,749 Other long- term liabilities — 10,819 Total liabilities 4,874 25,611 Commitments and contingencies (Note 7) Stockholders’ equity: Preferred stock, $ 0.00001 par value, 10,000,000 shares authorized as of December 31, 2023 and 2022; and no shares issued and outstanding as of December 31, 2023 and 2022 — — Common stock, $ 0.00001 par value, 300,000,000 shares authorized as of December 31, 2023 and 2022; 58,008,396 and 58,221,760 shares issued and outstanding as of December 31, 2023 and 2022, respectively 1 1 Additional paid-in capital 550,635 539,741 Accumulated other comprehensive loss — ( 1,048 ) Accumulated deficit ( 367,054 ) ( 242,403 ) Total stockholders’ equity 183,582 296,291 Total liabilities and stockholders’ equity $ 188,456 $ 321,902 The accompanying notes are an integral part of these financial statements. 77 Graphite Bio, Inc. Statements of Operations and Comprehensive Loss (in thousands, except share and per share data) Year Ended December 31, 2023 2022 Operating expenses: Research and development $ 32,137 $ 72,787 General and administrative 40,973 32,852 Restructuring and impairment costs 62,081 — Total operating expenses 135,191 105,639 Loss from operations ( 135,191 ) ( 105,639 ) Other income (expense), net: Interest income, net 10,949 4,587 Loss on disposal of assets ( 71 ) — Other expense, net ( 338 ) — Total other income, net 10,540 4,587 Net loss $ ( 124,651 ) $ ( 101,052 ) Unrealized gain (loss) on investments in marketable securities 1,048 ( 1,048 ) Comprehensive loss $ ( 123,603 ) $ ( 102,100 ) Net loss per share attributable to common stockholders—basic and diluted $ ( 2.19 ) $ ( 1.84 ) Weighted-average shares used in computing net loss per share—basic and diluted 57,015,159 54,873,675 The accompanying notes are an integral part of these financial statements. 78 Graphite Bio, Inc. Statements of Stockholders’ Equity (in thousands, except share data) Accumulated Common Additional Other Total Stock Paid-In Comprehensive Accumulated Stockholders’ Shares Amount Capital Loss Deficit Equity Balance at December 31, 2021 58,010,823 $ 1 $ 525,400 $ — $ ( 141,351 ) $ 384,050 Common shares issued upon exercise of options 67,196 — 20 — — 20 Common shares issued under ESPP 333,155 — 656 — — 656 Vesting of early exercised shares — — 131 — — 131 Repurchase of unvested early exercised shares ( 189,414 ) — — — — — Stock-based compensation expense — — 13,534 — — 13,534 Unrealized loss on investments in marketable securities — — — ( 1,048 ) — ( 1,048 ) Net loss — — — — ( 101,052 ) ( 101,052 ) Balance at December 31, 2022 58,221,760 $ 1 $ 539,741 $ ( 1,048 ) $ ( 242,403 ) $ 296,291 Common stock issued upon exercise of options 101,900 — 100 — — 100 Common stock issued under ESPP 65,222 — 157 — — 157 Vesting of early exercised shares — — 63 — — 63 Repurchase of founders' shares ( 152,694 ) — — — — — Repurchase of unvested early exercised shares ( 227,792 ) — — — — — Stock-based compensation expense — — 10,574 — — 10,574 Unrealized gain on investments in marketable securities — — — 1,048 — 1,048 Net loss — — — — ( 124,651 ) ( 124,651 ) Balance at December 31, 2023 58,008,396 $ 1 $ 550,635 $ — $ ( 367,054 ) $ 183,582 The accompanying notes are an integral part of these financial statements 79 Graphite Bio, Inc. Statements of Cash Flows (in thousands) Year Ended December 31, 2023 2022 Cash flows from operating activities: Net loss $ ( 124,651 ) $ ( 101,052 ) Adjustments to reconcile net loss to net cash used in operating activities: Net amortization of premiums and discounts on investments in marketable securities 1,543 ( 1,600 ) Depreciation and amortization 2,407 2,352 Non-cash lease expense 4,289 5,994 Stock-based compensation expense 10,574 13,534 Gain on ROU asset abandonment ( 1,638 ) — Loss on sale/ disposal of assets 71 — Impairment of assets 56,621 — Changes in assets and liabilities: Prepaid expenses and other current assets and other assets 5,676 ( 3,211 ) Accounts payable ( 2,358 ) 194 Accrued compensation ( 2,265 ) 1,110 Accrued research costs ( 720 ) 87 Accrued expenses and other current liabilities and other liabilities 1,806 94 Operating lease liabilities ( 41,362 ) ( 5,482 ) Net cash used in operating activities ( 90,007 ) ( 87,980 ) Cash flows from investing activities: Purchases of property and equipment ( 10,856 ) ( 6,594 ) Proceeds from sales of property and equipment 1,904 — Purchases of investments in marketable securities ( 28,129 ) ( 405,519 ) Proceeds from sales and maturities of marketable securities 263,427 170,250 Net cash provided by (used in) investing activities 226,346 ( 241,863 ) Cash flows from financing activities: Proceeds from issuance of common stock upon exercise of vested stock options 100 20 Proceeds from employee stock purchase plan 157 656 Repurchase of unvested early exercised shares and founders' shares ( 67 ) ( 79 ) Net cash provided by financing activities 190 597 Net increase (decrease) in cash, cash equivalents and restricted cash 136,529 ( 329,246 ) Cash, cash equivalents and restricted cash, at beginning of period 49,446 378,692 Cash, cash equivalents and restricted cash, at end of period $ 185,975 $ 49,446 Reconciliation of cash, cash equivalents and restricted cash to statement of financial position: Cash and cash equivalents 184,259 47,730 Restricted cash 1,716 1,716 Cash, cash equivalents and restricted cash in statement of financial position $ 185,975 $ 49,446 Supplemental disclosures of non-cash investing and financing information: Property and equipment purchases in accounts payable and accrued expenses $ — $ ( 36 ) Lessor funded lease incentive additions included in property and equipment $ 7,193 $ 11,920 Additions to ROU assets from new operating lease liabilities $ 31,974 $ — Vesting of early exercised stock options $ 63 $ 131 Repurchase of unvested early exercised shares included in accounts payable $ — $ ( 17 ) The accompanying notes are an integral part of these financial statements. 80 Graphite Bio, Inc. Notes to Financi al Statements 1. Description of Business, Organization and Liquidity Organization and Business Graphite Bio, Inc. (the “Company”) has historically been a clinical-stage, next-generation gene editing company. In January 2023, the Company announced a voluntary pause of its Phase 1/2 CEDAR study of nulabeglogene autogedtemcel ("nula-cel"), the Company’s lead product candidate for sickle cell disease (“SCD”), due to a serious adverse event in the first patient dosed, which the Company concluded is likely related to study treatment. Nula-cel was designed to provide a highly differentiated approach with the potential to directly correct the mutation that causes SCD and restore normal adult hemoglobin expression. The Company was incorporated in Ontario, Canada in June 2017 as Longbow Therapeutics Inc., and was reincorporated in the State of Delaware in October 2019. In February 2020, the Company changed its name to Integral Medicines, Inc., and again in August 2020, changed the name to Graphite Bio, Inc. Research and development of the Company’s initial technology ceased at the end of 2018, and the Company did not have any significant operations or any research and development activities in 2019. In March 2020, the Company identified new gene editing technology which the Company sought to further develop, and the Company licensed the related intellectual property rights from The Board of Trustees of the Leland Stanford Junior University (“Stanford”) in December 2020 (Note 6). In February 2023, the Company announced its decision to discontinue the development of nula-cel and initiate a process to explore strategic alternatives (the “Restructuring Plan”). As a result of this decision, the Company conducted a corporate restructuring that resulted in an approximately 50% reduction in force in February 2023 and additional reductions in August 2023 that resulted in a total reduction in force of 78.1%. In August 2023, the Company subleased some of its facilities to recover a portion of the total costs. Together, these restructuring actions are intended to reduce the Company's operational cash burn in an effort to maximize its strategic optionality. The Company had previously disclosed its intention to continue research activities associated with its pre-clinical non-genotoxic conditioning program, with the goal of advancing toward one or more potential development candidates. In August, the Company entered into an asset purchase agreement pursuant to which the Company transferred to Maro Bio, Inc. (“Maro”) its pre-clinical non-genotoxic conditioning program, including its technology and intellectual property. Also in August 2023, the Company entered into a license and option agreement (the “LOA”), pursuant to which it granted another third-party an option to acquire certain of the Company’s technology and intellectual property related to its nula-cel program and related pre-clinical platform assets. On September 12, 2023, the Company and Kamau Therapeutics, Inc. (“Kamau”) entered into an amendment to the LOA, under which we agreed to assign certain contracts to Kamau prior to exercise of the option, and as of December 31, 2023, these contracts have been assigned to Kamau. In October 2023, the Company entered into an amendment to the master lease, with Bayside Area Development, which provided for an accelerated termination of the lease. The amendment to the master lease also provided for a release of liabilities under the master lease, as well as under the new sublease entered into for a portion of the facility leased to it by Bayside Area Development in October 2023, upon payment of a lump sum at the time of signing. Following this transaction, the Company is no longer obligated for any rent payments under its master lease with Bayside Area Development. After a comprehensive review of strategic alternatives, including identifying and reviewing potential candidates for a strategic transaction, on November 14, 2023, the Company entered into the Merger Agreement with LENZ, pursuant to which a wholly-owned subsidiary of the Company will merge with and into LENZ, with LENZ surviving as the Company’s wholly-owned subsidiary. The merger was unanimously approved by the Company’s board of directors, and the board resolved to recommend approval of the Merger Agreement to the stockholders. The closing of the merger is subject to approval by the Company and LENZ’s stockholders, as well as other customary closing conditions, including the effectiveness of a registration statement filed with the SEC in connection with the transaction and Nasdaq’s approval of the listing of the shares of the Graphite common stock to be issued in connection with the transaction. If the merger is completed, the business of LENZ will continue as the business of the combined company. From its inception in 2017, the Company’s primary activities have been to perform research and development, undertake preclinical studies and enable manufacturing activities in support of its product development efforts, organize and staff the Company, establish its intellectual property portfolio, and raise capital to support and expand such activities. The Company’s future operations are highly dependent on the success of the merger and there can be no assurances that the merger will be successfully consummated. There can be no assurance that the strategic review process or any transaction relating to a specific asset, including the merger or any asset sale, will result in the Company pursuing such a transaction(s), or that any transaction(s), if pursued, will be completed on terms favorable to the Company and its stockholders. If the strategic review process is unsuccessful, its board of directors may decide to pursue a dissolution and liquidation of the Company. Liquidity Matters The Company has incurred significant operating losses since inception and has primarily relied on private equity and convertible debt financings to fund its operations. As of December 31, 2023, the Company had an accumulated deficit of $ 367.1 million. The Company expects to continue to incur substantial losses. The Company may never achieve profitability, and unless and until then, the Company 81 will need to continue to raise additional capital. Management expects that the existing cash and cash equivalents of $ 184.3 million as of December 31, 2023 will be sufficient to fund the Company’s current operating plan for at least the next 12 months from the date of issuance of these financial statements. On July 21, 2022, the Company filed a shelf registration statement on Form S-3 (the “2022 Shelf”) with the SEC in relation to the registration of up to an aggregate offering price of $ 300.0 million of common stock, preferred stock, debt securities, warrants and units or any combination thereof. The Company also simultaneously entered into a Controlled Equity Offering SM Sales Agreement with Cantor Fitzgerald & Co. (the “Sales Agent”), to provide for the offering, issuance and sale by the Company of up to an aggregate of $ 75.0 million of its common stock from time to time in “at-the-market” offerings under the 2022 Shelf and subject to the limitations thereof (the “Sales Agreement”). The Company will pay to the Sales Agent cash commissions of up to 3.0 percent of the gross proceeds of sales of common stock under the Sales Agreement. The Company has not issued any shares or received any proceeds from any offerings under the 2022 Shelf through December 31, 2023 . 2. Summary of Significant Accounting Policies Basis of Presentation These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. On an ongoing basis, the Company evaluates estimates and assumptions, including but not limited to those related to the fair value of the marketable securities, stock-based compensation expense, accruals for research and development costs, lease assets and liabilities, the valuation of deferred tax assets, uncertain income tax positions, and impairment of long-lived assets. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates. Principles of Consolidation The Company assesses entities for consolidation based on the specific facts and circumstances surrounding that entity. The Company first considers whether an entity is considered a variable interest entity (“VIE”) and therefore whether to apply the consolidation guidance under the VIE model. Entities that do not qualify as VIEs are assessed for consolidation as voting interest entities (“VOE”) under the voting interest model. An entity is considered to be a VIE if any of the following conditions exist: (i) the equity investment at risk is not sufficient to finance the activities of the entity without additional subordinated financial support, (ii) as a group, the holders of the equity investment at risk lack the power to direct the activities that most significantly impact the entity’s economic performance or the obligation to absorb the expected losses or right to receive the expected residual returns, and (iii) the voting rights of some holders of the equity investment at risk are disproportionate to their obligation to absorb losses or right to receive returns, and substantially all of the activities are conducted on behalf of the holder of equity investment at risk with disproportionately few voting rights. The Company consolidates all VIEs in which it is the primary beneficiary. An entity is determined to be the primary beneficiary if it holds a controlling financial interest in a VIE. The consolidation guidance requires an analysis to determine (i) whether an entity in which the Company holds a variable interest is a VIE and (ii) whether the Company’s involvement, through holding interest directly or indirectly in the entity or contractually through other variable interests, would give it a controlling financial interest. Performance of that analysis requires judgment. Concentration of Credit Risk Cash and cash equivalents are financial instruments that potentially subject the Company to concentrations of credit risk. Substantially all of the Company’s cash and cash equivalents are deposited in accounts with major financial institution and amounts may exceed federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial strength of the depository institution in which the cash and cash equivalents are held. The Company has not experienced any losses on deposits of cash and cash equivalents. Risks and Uncertainties The Company is subject to certain risks and uncertainties, including, but not limited to, changes in any of the following areas that the Company believes could have a material adverse effect on the future financial position or results of operations: the timing of, and the Company’s ability to advance its current and future product candidates into and through clinical development; costs and timelines 82 associated with the manufacture of clinical supplies of the Company’s product candidates; regulatory approval and market acceptance of, and reimbursement for its product candidates; performance of third-party CROs and CMOs; competition from pharmaceutical companies with greater financial resources or expertise; protection of the intellectual property; litigation or claims against the Company based on intellectual property or other factors; and its ability to attract and retain employees necessary to support its growth. Disruption from CROs’, CMOs’ or suppliers’ operations would likely have a negative impact on the Company’s business, financial position and results of operations. Segment and Geographical Information The Company operates and manages its business as one reportable and operating segment. The chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. All of the Company’s long-lived assets are based in the United States. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of three months or less at the date of purchase to be cash equivalents. As of December 31, 2023 and 2022 , cash and cash equivalents consisted of cash, money market funds, and commercial paper. Restricted Cash Restricted cash of $ 0.1 million and $ 1.7 million as of December 31, 2023 and 2022, respectively, represented security deposits in the form of letters of credit issued in connection with the Company's leases. A lease amendment was executed in October 2023 for the Company's intended headquarters at 233 E. Grand Ave, whereby the Company did not have any further rent obligations to the landlord following the effective date. As of December 31, 2023 , the letter of credit of $ 1.6 million is expected to be returned within a year and is presented as Restricted cash, current on the balance sheet. The remaining letter of credit is related to the Company's former headquarters at 201 Haskins Way, which will be returned upon lease termination. Marketable Securities The Company’s marketable securities are accounted for as available-for-sale and recorded at fair value with the related unrealized gains and losses included in accumulated other comprehensive gain (loss). The Company reviews its investment portfolio to identify and evaluate investments that have an indication of possible other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value. Fair Value Measurements Fair value is defined 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 such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The carrying amounts of financial instruments, including restricted cash, prepaid expenses and other current assets, accounts payable, accrued compensation, accrued expenses, and other liabilities, approximate fair value due to their short-term maturities. The cash invested in money-market funds are carried at fair value. Property and Equipment, Net Property and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to five years . Repairs and maintenance expenditures, which are not considered improvements and do not extend the useful life of property and equipment, are expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is reflected in the statements of operations and comprehensive loss in the period realized. Leases Effective January 1, 2021, the Company adopted ASC Topic 842, Leases (“ASC 842”) using the optional transition method and applied the standard only to leases that existed at that date. Under the optional transition method, the Company does not need to restate the comparative periods in transition and will continue to present financial information and disclosures for periods before January 1, 2021 in accordance with ASC Topic 840. The Company has elected the package of practical expedients allowed under ASC Topic 842, which permits the Company to account for its existing operating leases as operating leases under the new guidance, without reassessing the Company’s prior conclusions about lease identification, lease classification and initial direct cost. As a result of the adoption of the new lease accounting guidance on January 1, 2021, the Company recognized no cumulative adjustment to accumulated deficit since the Company had only one operating lease with a term of less than 12 months and no plans to extend the lease. The Company determines the initial classification and measurement of its right-of-use assets and lease liabilities at the lease commencement date and thereafter if modified. The lease term includes any renewal options and termination options that the Company 83 is reasonably assured to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate. The incremental borrowing rate is determined by using the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment. Fixed lease expense for operating leases is recognized on a straight-line basis, unless the right-of-use assets have been impaired, over the reasonably assured lease term based on the total lease payments and is included in operating expenses in the statements of operations and comprehensive loss. Variable lease expenses are recognized as incurred. Fixed and variable lease expense on operating leases is recognized within operating expenses in the statements of operations and comprehensive loss. For operating leases for which the right-of-use assets have been impaired, the Company will recognize the amortization of the right-of-use assets on a straight-line basis over the remaining respective lease term with lease expense included in operating expenses in the statements of operations and comprehensive loss. For all leases, rent payments that are based on a fixed index or rate at the lease commencement date are included in the measurement of lease assets and lease liabilities at the lease commencement date. The Company has elected the practical expedient to not separate lease and non-lease components. The Company’s non-lease components are primarily related to maintenance, insurance and taxes, which varies based on future outcomes and is thus recognized in lease expense when incurred. Asset Acquisitions 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. Goodwill is not recognized in asset acquisitions. In an asset acquisition, the cost allocated to acquire in-process research and development (“IPR&D”) with no alternative future use is charged to research and development expense at the acquisition date. Please refer to Note 6 for more details on asset acquisition. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future undiscounted net cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows generated by the assets. During the year ended December 31, 2023 , the Company recognized $ 54.1 million related to the impairment of its leases and long- lived assets. There were no such impairments of long-lived assets in the year ended December 31, 2022 . Please refer to Note 13 for more details on impairment. Research and Development Expenses Research and development costs are expensed as incurred. Research and development costs include salaries, stock-based compensation, and benefits for employees performing research and development activities, an allocation of facility and overhead expenses, expenses incurred under agreements with consultants, CMOs, CROs and investigative sites that conduct preclinical studies, other supplies and costs associated with product development efforts, preclinical activities, and regulatory operations. Accrued Research and Development Expenses The Company has historically entered into various agreements with outsourced vendors, CROs and CMOs. Research and development accruals are estimated based on the level of services performed, progress of the studies, including the phase or completion of events, and contracted costs. The estimated costs of research and development services provided, but not yet invoiced, are included in accrued research costs on the balance sheets. If the actual timing of the performance of services or the level of effort varies from the original estimates, the Company will adjust the accrual accordingly. Payments made under these arrangements in advance of the performance of the related services are recorded as prepaid expenses and other current assets until the services are rendered. To date, there have been no material differences between estimates of such expenses and the amounts actually incurred. Tax Credit Receivable The Company is eligible for federal and California research and development credits for its research and development activities performed within the United States and California, respectively. The credits are, generally, available to offset federal and California income tax liabilities as applicable. The Company has applied $ 0.3 million of federal research and development credits to offset its federal payroll tax expenses as of the year ended December 31, 2023 due to its small business status. Income Taxes The Company accounts for income taxes using the asset and liability method. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets 84 and liabilities are determined based on the difference between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. In evaluating the ability to recover deferred income tax assets, the Company considers all available positive and negative evidence, including operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. In the event the Company determines that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance that would reduce the provision for income taxes. Conversely, in the event that all or part of the net deferred tax assets are determined not to be realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period when such determination is made. As of December 31, 2023 and 2022, the Company has recorded a full valuation allowance on deferred tax assets. Tax benefits related to uncertain tax positions are recognized when it is more likely than not that a tax position will be sustained during an audit. Interest and penalties related to unrecognized tax benefits are included within the provision for income tax. Stock-Based Compensation Expense The Company’s stock-based equity awards include restricted stock awards and stock options that are granted to employees and consultants that are accounted at fair value on the award grant date. Stock-based compensation expense is recognized over the awards’ vesting period on a straight-line basis and recorded as either research and development or general and administrative expenses in the statements of operations and comprehensive loss based on the function to which the related services are provided. Forfeitures are accounted for as they occur. As there was no public market for the Company’s common stock prior to the initial public offering of its common stock in June 2021, the estimated fair value of common stock was determined by the Company’s board of directors as of the date of each option grant, with input from management, considering third-party valuations of its common stock, as well as the Company’s board of directors’ assessment of additional objective and subjective factors that it believed were relevant, and which may have changed from the date of the most recent third-party valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation. Following the closing of the initial public offering, the fair value of the Company’s common stock is determined based on the quoted market price of common stock. The Company also lacks company‑specific historical and implied volatility information for its stock. The Company estimates its expected stock price volatility and expected term based on the historical volatility and expected term of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The risk‑free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. There is no expected dividend yield since the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. Employee Stock Purchase Plan The Company recognizes stock-based expense related to shares issued pursuant to its Employee Stock Purchase Plan (“ESPP”) on a straight-line basis over the offering period, which is typically 6 months. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a 15 percent discount on the lower price of either (i) the offering period begin date or (ii) the purchase date. The Company estimates the fair value of shares to be issued under the ESPP using the Black-Scholes option-pricing model. There are no employees enrolled in the ESPP as of December 31, 2023 . Comprehensive Loss Comprehensive loss is defined as the change in equity of a business 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 Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common stock outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock, common stock subject to repurchase, restricted common shares issued, and stock options are considered to be potentially dilutive securities. Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities. Restricted shares issued to the founders and upon early exercise of stock options also participate in dividends from the issuance date and are considered participating securities. Participating securities do not have a contractual obligation to share 85 in losses. As such, the net loss was attributed entirely to common stockholders. Because the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods. Adopted and Recent Accounting Pronouncements The Company is a smaller reporting company and an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Thus, the Company has elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) the Company is no longer an emerging growth company or (ii) the Company affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. However, the Company may early adopt certain accounting standards, as the JOBS Act does not preclude an emerging growth company from adopting a new or revised accounting standard earlier than the time that such standard applies to private companies to the extent early adoption is permitted. Recent Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). This update requires entities to disclose significant segment expenses by reportable segment if they are regularly provided to the Chief Operating Decision Maker and included in each reported measure of segment profit or loss and requires disclosure of other segment items by reportable segment and a description of its composition. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements. The Company operates and discloses its operations as a single segment and does not expect the adoption of this standard to have a material impact on its annual and interim disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-00”). This update requires entities to consistently categorize and provide greater disaggregation of information in the rate reconciliation and to further disaggregate income taxes paid by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 may be applied retrospectively or prospectively. The Company is currently evaluating the planned adoption date and the impact of this standard on its annual and interim disclosures. 3. Fair Value Measurements Assets and liabilities recorded at fair value on a recurring basis in the balance sheets, as well as assets and liabilities measured at fair value on a non-recurring basis or disclosed at fair value, are categorized based upon the level of judgment associated with inputs used to measure their fair values. The accounting guidance for fair value provides a framework for measuring fair value and requires certain disclosures about how fair value is determined. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance also establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows: Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2 — Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level 3 — Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. An assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. The Company recognizes transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs. As of December 31, 2023 and 2022, Level 1 securities consist of U.S. Treasury and money market funds, for which the carrying amounts are based on the quoted market prices in active markets. As of December 31, 2022, Level 2 securities consist of highly rated commercial paper, U.S. agency securities, and asset-backed securities, for which fair value is determined through the use of models or other valuation methodologies. 86 During the periods presented, the Company did not have any Level 3 securities. The following tables set forth the financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2023 and 2022 (in thousands): December 31, 2023 Total Fair Value Level 1 Level 2 Level 3 Cash equivalents: Money market funds (1) $ 184,259 $ 184,259 $ — $ — Commercial paper (1) — — — — Total cash equivalents $ 184,259 $ 184,259 $ — $ — December 31, 2022 Total Fair Value Level 1 Level 2 Level 3 Cash equivalents: Money market funds (1) $ 45,739 $ 45,739 $ — $ — Commercial paper (1) 1,991 — 1,991 — Total cash equivalents 47,730 45,739 1,991 — Marketable securities: U.S. treasuries (2) 65,391 65,391 — — Commercial paper (2) 115,061 — 115,061 — U.S. agency securities (2) 53,455 — 53,455 — Asset-backed securities (2) 1,914 — 1,914 — Total marketable securities 235,821 65,391 170,430 — Total cash equivalents and marketable securities $ 283,551 $ 111,130 $ 172,421 $ — (1) Included within cash and cash equivalents on the balance sheet . (2) Included within investments in marketable securities, current and investments in marketable securities, non-current on the balance sheet. 4. Marketable Securities The Company did not hold any marketable securities as of December 31, 2023. The amortized cost, gross unrealized holding gains or losses, and fair value of the Company’s marketable securities by major security type as of December 31, 2022 are summarized in the table below (in thousands): December 31, 2022 Amortized Cost Basis Unrealized Gains Unrealized Losses Fair Value Available-for-sale securities U.S. treasuries $ 65,807 $ — $ ( 416 ) $ 65,391 Commercial paper 115,381 13 ( 333 ) 115,061 U.S. agency securities 53,767 15 ( 327 ) 53,455 Asset-backed securities 1,914 — — 1,914 Total available-for-sale securities $ 236,869 $ 28 $ ( 1,076 ) $ 235,821 The amortized cost of available-for-sale securities is adjusted for amortization of premiums and accretion of discounts to maturity. As of December 31, 2023 , the Company did not hold any securities in an unrealized loss with remaining maturities of less than one year. As a result, the Company determined it did no t hold any investments with a credit loss at December 31, 2023. There were minimal realized gains (losses) recognized on the sale or maturity of available-for-sale securities during year ended December 31, 2023, and as a result, there was a reclassification out of accumulated other comprehensive gain (loss) for the same period. There were no realized gains or losses recognized on the sale or maturity of available-for-sale securities during year ended December 31, 2022 , and as a result, there were no reclassifications out of accumulated other comprehensive gain (loss) for the same period. The Company did not hold any marketable securities as of December 31, 2023 . 87 5. Balance Sheet Components Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets as of December 31, 2023 and 2022 consisted of the following (in thousands): December 31, 2023 December 31, 2022 Advances to suppliers — $ 2,486 Prepaid insurance 780 1,343 Other prepaid expenses 1,380 3,307 Total prepaid expenses and other current assets $ 2,160 $ 7,136 Property and Equipment, Net Property and equipment, net as of December 31, 2023 and 2022 consisted of the following (in thousands): December 31, 2023 December 31, 2022 Furniture and fixtures $ — $ 321 Computers and network equipment — 251 Lab equipment — 12,521 Leasehold improvements — 304 Construction-in-progress — 12,440 Total property and equipment — 25,837 Less: accumulated depreciation — ( 3,207 ) Total property and equipment, net $ — $ 22,630 Depreciation expense was $ 2.4 million for each of the years ended December 31, 2023 and 2022. As a result of the modification of our leases (see Note 8), we disposed of leasehold improvements, computer equipment, lab and office equipment, and furniture and fixtures and recorded a $ 0.1 million loss within Loss on disposal of assets and $ 11.3 million within Restructuring and impairment costs on the statement of operations and comprehensive loss during the year ended December 31, 2023. Accrued Expenses Accrued expenses as of December 31, 2023 and 2022 consisted of the following (in thousands): December 31, 2023 December 31, 2022 Professional fees $ 1,029 $ 367 Early exercise liability 21 150 Other accrued expenses 143 1,354 Accrued employee termination benefits 1,535 — Total accrued expenses and other current liabilities $ 2,728 $ 1,871 6. Significant Agreements Stanford Exclusive License Agreement License Agreement In December 2020, the Company entered into an exclusive license agreement (the “License Agreement”) with The Board of Trustees of the Leland Stanford Junior University (Stanford), pursuant to which Stanford granted the Company a worldwide license to specified technology and patent rights to develop, manufacture and commercialize human prophylactic and therapeutic products. Other than with respect to specified, broadly applicable assays and procedures and subject to retained rights by Stanford, the license is exclusive with respect to human prophylactic and therapeutic products for the treatment of SCD, XSCID and beta thalassemia. The license is non-exclusive with respect to those broadly applicable assays and procedures and with respect to all human prophylactic and therapeutic products other than for the treatment of SCD, XSCID and beta thalassemia. Pursuant to the License Agreement, the Company paid an upfront license fee of $ 50.0 thousand and as additional consideration for the license, the Company agreed to issue to Stanford approximately 0.6 million shares of common stock. As of December 31, 2020, the Company recorded its obligations to issue Stanford shares of common stock at an estimated fair value of $ 2.8 million to additional paid in capital. The shares of common stock were expected to be issued when Stanford provided the inventors’ names for allocation of the shares. Stanford also received an option to purchase up to 10 % of newly issued shares in the future private financings at the price paid by other participating investors. During the year ended December 31, 2021, the Company entered into an amendment to the License Agreement, pursuant to which it extended the time when the shares would be issued to May 7, 2021. 88 On May 7, 2021, the Company issued an aggregate of 640,861 shares of the Company’s common stock to Stanford and certain individuals designated by Stanford in consideration for rights granted to the Company under the Company’s exclusive license agreement. On June 18, 2021, the Company exercised its right to repurchase an aggregate of 624,845 shares from each founder and investor under the Stanford Adjustment Repurchase Right as described below. The acquisition of the exclusive license, including patent rights and know-how, and clinical supplies was accounted for as an asset acquisition and as the acquired technology and inventories did not have an alternative use, the total consideration of $ 2.8 million was recorded as research and development expense in the statements of operations and comprehensive loss for the year ended December 31, 2020. In connection with the License Agreement, the Company reimbursed Stanford $ 0.2 million for previously incurred patent costs, which were recorded in general and administrative expenses for the year ended December 31, 2020 and in addition, is obligated to reimburse future patent costs. The Company is also obligated to pay annual maintenance fees as follows: $ 5.0 thousand in the first year, $ 10.0 thousand in each year 2 and 3, $ 25.0 thousand in each year 3 through 6, $ 50.0 thousand each subsequent year until first commercial sale and $ 200.0 thousand each subsequent year after the first commercial sale. No fees were recorded during the year ended December 31, 2023. The Company did no t record any patent fees during the year ended December 31, 2023. The Company is obligated to make future development and regulatory milestone payments in total of up to $ 5.3 million, sales based milestone payments of up to $ 7.5 million and royalties on future sales at percentage rates ranging in the low single digits. In addition, if the Company receives any sublicense income, it is required to share it with Stanford as a certain percentage defined for each milestone in the License Agreement. The Company will record the maintenance fees, when payable, and will record milestones when contingencies are resolved and milestones are due. No milestones were achieved and recorded as of December 31, 2023. In August 2023, the Company entered into a license and option agreement (the “LOA”), pursuant to which the Company granted a third party an option to acquire certain of the Company’s technology and intellectual property related to its nula-cel program and related pre-clinical platform assets. The License Agreement is included in the assets that are subject to the LOA and may be assigned to this third party if and when it exercises the option. First Option Agreement In January 2021, the Company entered into an option agreement (the “First Option Agreement”) with Stanford, pursuant to which Stanford granted the Company the right to obtain a license to specified patent rights relating to human prophylactic and therapeutic products. The Company may exercise the option in whole or in part to obtain a license under one or more of the optioned patent rights. Subject to the Company’s exercise of the option under the First Option Agreement and its execution of an amendment to the License Agreement that incorporates the optioned patent rights and any optioned technology, the Company has agreed to issue to Stanford 132,137 shares of its common stock and pay a license execution fee of $ 10.0 thousand. The term of the First Option Agreement expires 18 months after its effective date, subject to the Company’s right to extend such expiration date by up to an additional one year upon notice to Stanford and by another additional one year upon the reasonable agreement of Stanford. The First Option Agreement will terminate if the License Agreement terminates. On June 23, 2022, the Company exercised its right to extend the term of the First Option Agreement for an additional year. On June 6, 2023, the Company and Stanford agreed to extend the term of the First Option Agreement for another additional year. As of December 31, 2023, the Company had not exercised the option under the First Option Agreement and no fees have been paid for the First Option Agreement. In August 2023, the Company entered into the LOA, pursuant to which it granted a third party an option to acquire certain of the Company’s technology and intellectual property related to its nula-cel program and related preclinical platform assets. The First Option Agreement is included in the assets that are subject to the LOA and may be assigned to this third party if and when it exercises the option. Second Option Agreement In April 2021, the Company entered into an option agreement (the “Second Option Agreement”) with Stanford to negotiate the license for additional technologies from Stanford. Pursuant to the Second Option Agreement, the Company agreed to pay Stanford option fees in an aggregate amount of $ 30.0 thousand over the term of the option. On April 13, 2022, the Company entered into an amendment to the Second Option Agreement which extended the term for an additional year. On March 8, 2023, the Company terminated the Second Option Agreement without exercising the option to negotiate a license for additional technologies from Stanford. No maintenance fees were paid during the year ended December 31, 2023. LCGM Service Agreement On August 30, 2021, the Company entered into a Master Manufacturing and Service Agreement with the Laboratory for Cell & Gene Medicine at Stanford (“LCGM MSA”). Pursuant to the LCGM MSA, LCGM will conduct clinical manufacturing, release testing, and product release for nula-cel in the Company’s Phase 1/2 CEDAR clinical trial to treat SCD. During 2021, the Company entered into various Statements of Work under the LCGM MSA under which it received technology transfer and related services for HBB 89 Beta-Globin Gene Variant for SCD, manufacturing engineer test runs, the exclusive use of a manufacturing suite at the LCGM facility, and Phase 1/2 CEDAR clinical development and manufacturing of the HBB Variant for SCD. During the years ended December 31, 2023 and 2022 , the Company has recognized $ 1.7 and $ 6.1 million in research and development expense in connection with the LCGM MSA. As of December 31, 2023, the LCGM MSA has been terminated and Graphite does not expect to incur any additional expenses. IDT License Agreement On June 7, 2021, the Company entered into a License Agreement (“IDT License Agreement”) with Integrated DNA Technologies, Inc. (“IDT”). Pursuant to the IDT License Agreement, IDT granted the Company and its affiliates a worldwide, non-exclusive, sublicensable license to research and develop products incorporating HiFi Cas9 protein variants for use in human therapeutic applications for SCD, XSCID and Gaucher disease (the “Field”) and a worldwide, exclusive, sublicensable license to commercialize such products in the Field. The Company has also been granted the right to expand the licensed Field to include human therapeutic applications in the additional fields of beta thalassemia disorder and lysosomal storage disorders upon the payment of an exercise fee in the amount of $ 0.5 million per additional field or $ 1.0 million for both additional fields. In consideration of the licenses and rights granted to the Company under the IDT License Agreement, the Company agreed to pay to IDT an upfront payment in the amount of $ 3.0 million and up to $ 5.3 million (or $ 8.8 million if the Company elects to expand the Field as described above to include both the beta thalassemia and lysosomal storage disorders fields) in total regulatory milestone payments. Each regulatory milestone payment is payable once on an indication-by-indication basis. In addition, the Company has agreed to pay IDT a low single-digit royalty on the net sales of products, subject to reductions in specified circumstances. As the acquisition of the license was accounted for as an asset acquisition and as the acquired technology did not have an alternative use, the total consideration of $ 3.0 million was recorded as research and development expense in the statement of operations and comprehensive loss during the year ended December 31, 2021. The IDT License Agreement remains in effect on a country-by-country and product-by-product basis until the expiration of the royalty term for such product in such jurisdiction. The Company and IDT each have the right to terminate the IDT License Agreement for the other party’s material breach of its obligations under the IDT License Agreement, subject to specified rights to cure. Additionally, the Company may terminate the IDT License Agreement for any reason upon written notice. During the year ended December 31, 2023 , the Company has no t recognized any research and development expense in connection with the IDT License Agreement. There are no milestones probable as of December 31, 2023 ; therefore, no milestone payments have been recognized in the year ended December 31, 2023. As of December 31, 2023, the Company does not expect to incur any additional expenses associated with the IDT License Agreement. In August 2023, the Company entered into the LOA, pursuant to which it granted a third party an option to acquire certain of the Company’s technology and intellectual property related to its nula-cel program and related preclinical platform assets. The IDT License Agreement is included in the assets that are subject to the LOA and may be assigned to this third party if and when it exercises the option. Sale of Non-Genotoxic Targeted Conditioning Technology Assets On August 1, 2023, the Company entered into an asset purchase agreement (the “APA”) with a third party pursuant to which the Company sold to the counterparty, concurrently with the execution of the APA, certain assets related to the Company’s non-genotoxic conditioning technology in exchange for upfront consideration of $ 0.5 million. Additional consideration included certain contingent milestone payments totaling up to approximately $ 1.0 million in the aggregate as well as royalties on net sales by the acquirer of certain products incorporating the acquired technology, and potential fees upon the completion of certain transactions by the acquirer. The APA also provided for reimbursement of certain research and development amounts incurred prior to closing of approximately $ 0.6 million. The disposal of certain assets sold pursuant to the APA was accounted for as a deconsolidation of a subsidiary or group of assets in accordance with ASC 810. During the year ended December 31, 2023, the Company recognized a loss on disposal of $ 0.1 million, which was recorded in other expense. The Company will record amounts related to the contingent milestone payments, royalties, and potential transaction fees when contingencies are resolved and amounts are due in accordance with ASC 450. No contingencies were resolved and recorded as of December 31, 2023. License and Option to Acquire Nula-Cel Assets On August 4, 2023, the Company entered into an LOA with a third party pursuant to which the Company exclusively licensed to the counterparty, and granted the counterparty, an option to acquire certain intellectual property and materials related to the Company’s nula-cel program and related pre-clinical platform assets. Exercise of the option is contingent on the counterparty timely achieving a financing milestone, and all rights to the intellectual property and materials will revert to the Company if the milestone is not achieved or if the counterparty elects not to exercise the option. In return for this license and option, the Company received an equity interest in the counterparty representing 20 % of all outstanding shares on a fully diluted basis. As a result of the 20% equity interest, the Company has the ability to exert significant influence over the counterparty and accounts for the interest as an equity method investment. The 90 Company records its proportionate share of investee’s equity in earnings or losses based on the most recently available financial information. The Company assessed the entity under the VIE model to assess whether to apply the consolidation guidance in accordance with ASC 810. The Company holds variable interests in the entity, and the entity was determined to be a VIE which is not consolidated as it is determined the Company lacks the power to direct the activities that most significantly impact the entity’s economic performance. The balance sheet does not contain assets and liabilities related to the Company’s interest in the non-consolidated VIE. Additionally, the Company’s maximum exposure to loss is limited to the carrying value of the equity interest in the counterparty. No arrangements exist where additional financial support would need to be provided by the Company. The 20% equity interest in the counterparty had minimal value upon execution of the LOA and the Company did no t record any amount related to the equity interest as of December 31, 2023. As of December 31, 2023 , the counterparty has not achieved the financial milestone and does not have the right to exercise the option. 7. Commitments and Contingencies Research and Development Agreements The Company enters into contracts in the normal course of business with CROs for clinical trials, with CMOS or other vendors for preclinical studies, supplies and other services and products for operating purposes. These contracts generally provide for termination on notice or may have a potential termination fee if a purchase order is cancelled within a specified time. As of December 31, 2023 and 2022 , there were no amounts accrued related to termination and cancellation charges as the Company does not expect to incur any additional expenses associated with termination and cancellation charges. License Agreements The Company enters into license agreements (Note 6), pursuant to which the Company may acquire or license other patents, patent applications or know-how from various third parties to access intellectual property covering product candidates that the Company is developing. Under these acquisitions or licensing agreements, the Company may be liable for certain diligence obligations and payments, which are contingent upon achieving various development, regulatory and commercial milestones. Also, pursuant to the terms of some of these license agreements, when and if commercial sales of a product commence, the Company may be obligated to pay royalties to such third parties on net sales of the respective products. No such milestones were achieved or probable as of December 31, 2023 and 2022. Legal Contingencies From time to time, the Company may become involved in legal proceedings arising from the ordinary course of business. The Company records a liability for such matters when it is probable that future losses will be incurred and that such losses can be reasonably estimated. Significant judgment by the Company is required to determine both probability and the estimated amount. Management is currently not aware of any legal matters that could have a material adverse effect on the Company’s financial position, results of operations or cash flows. Guarantees and Indemnifications In the normal course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification. Its exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To the extent permitted under Delaware law, the Company has agreed to indemnify its directors and officers for certain events or occurrences while the director or officer is, or was serving, at a request in such capacity. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. As of December 31, 2023 and 2022 , the Company did not have any material indemnification claims that were probable or reasonably possible and consequently has not recorded related liabilities. 8. Operating Leases As of December 31, 2023, the current and non-current portions of the total liability for operating leases was $ 0.3 million and $ 0.1 million, respectively. As of December 31, 2023 and 2022 , the weighted average remaining lease term on the operating lease was 15 and 19 months, respectively. As of December 31, 2023 and 2022 , the weighted average incremental borrowing rate used to determine the operating lease liabilities included on the balance sheets was 9.0 % and 8.5 %, respectively. Facility leases South San Francisco On January 27, 2021, the Company entered into a new lease agreement for office and lab space in South San Francisco, California that included two office suites. The lease terms for the two office suites commenced during July and August 2021 , respectively. The term of 91 the lease is 44 months for the first office suite and 43 months for the second office suite with an option to extend the term for an additional two years on the same terms and conditions. This option to extend the lease term was not determined to be reasonably certain and therefore has not been included in the Company’s calculation of the associated operating lease liability under ASC 842. The corresponding right-of-use assets and lease liabilities related to the two office suites were recorded on the Company’s balance sheet upon the lease commencement date, which was the date the Company was deemed to have obtained control of the premises. In August 2023, the Company subleased one of its office suites in the South San Francisco lease for 20 months starting from August 2023 for aggregate sublease payments of $ 0.5 million. The sublease income, while it reduces the rent expense, is not considered in the value of the right-of-use assets or lease liabilities. The Company’s sublease income was $ 0.1 million for the year ended December 31, 2023 . The Company did no t have any sublease income during the year ended December 31, 2022. In November 2023, the Company subleased its second office suite in the South San Francisco lease through the end of the lease term in March 2025. The third party agreed to assume all of the Company’s obligations under the head lease, including the obligation to make rent payments, as well as all of the Company’s obligations under the services agreement associated with the head lease, and to indemnify the Company for all obligations under the head lease and the associated services agreement, in exchange for the Company’s payment to the third party of approximately $ 1.4 million. As the Company was relieved of its primary obligations under the head lease, the Company accounted for the sublease as a lease termination, recording a loss on lease termination of $ 0.1 million, calculated as the carrying value of the lease liability on the date of termination, net of the payment made to the subtenant for assuming the lease. Additionally, following the sublease, the Company no longer has use of the related leasehold improvements. Therefore, the Company accounted for these assets as abandoned, recording a loss on abandonment of $ 0.1 million included in restructuring and impairment expenses on the statement of operations and comprehensive loss. Bayside On December 16, 2021, the Company entered into a lease agreement with Bayside Area Development, LLC (“Bayside”) for 85,165 square feet of office and laboratory space in South San Francisco, CA. The lease for the office and laboratory space commenced in April 2023. The term of the lease was 120 months with the option to extend the term up to an additional ten years. This option to extend the lease term was not determined to be reasonably certain and therefore was not included in the Company’s calculation of the associated operating lease liability. During the second quarter of 2023, the Company took possession of the lease and recognized a $ 32.0 million right-of-use asset and corresponding lease liability upon the lease commencement date. In addition, the Company recognized $ 27.2 million in leasehold improvements. Bayside provided a tenant improvement allowance of up to $ 14.9 million, which was fully utilized and recorded in lease liability. In August 2023, the Company recognized an impairment in conjunction with its restructuring activities related to its Bayside lease (Note 13). In October 2023, the Company subleased approximately 32,113 square feet of space in the Bayside premises. The term of the sublease commenced on October 26, 2023 and expires on December 31, 2024. Pursuant to the sublease, the subtenant agreed to make rent payments directly to Bayside. The subtenant assumed all rights and obligations of the Bayside lease relative to the subleased premises. Also in October 2023, the Company entered into an amendment to the Bayside lease to adjust the timeline for certain payments under the lease and to effect the acceleration of the termination date of the Bayside lease to terminate on December 31, 2024, subject to that the ability of Bayside to accelerate the termination date for the premises at its discretion. The Company prepaid all amounts payable during the amended term of the Bayside lease, in an amount equal to $ 15.9 million, as well as a lease termination payment of $ 20.8 million. Concurrent with the amendment, the Company sold all furniture, fixtures and equipment residing at the Bayside premises to the landlord for a nominal amount. Following the amendment and sublease, the Company no longer has use of any of the Bayside premises and has no further obligation thereunder. The Company accounted for the amendment to the Bayside lease as a lease modification, remeasuring the lease liability equal to the present value of the remaining lease payments over the amended term. Additionally, as the subtenant assumed all remaining rights and obligations under the head lease, there is no right-of-use asset or lease liability associated with the subleased space on the Company’s balance sheet. In November, the Company determined that it had no use of the Bayside premises and accounted for the remeasured right-of-use asset and related leasehold improvements as abandoned. In the aggregate, the Company recorded a net loss on modification, abandonment and sale of fixed assets of $ 10.8 million. As of December 31, 2023, the Company’s only operating lease with an associated right-of-use asset and lease liability related to the South San Francisco lease that was subleased without relieving the Company of its primary obligation under the head lease. As of December 31, 2023 , the Company had an operating lease right-of-use asset of $ 0.3 million and operating lease liability of $ 0.4 million recorded on its balance sheet. Embedded leases 92 The Company evaluated its vendor contracts to identify embedded leases, if any, and determined that two agreements with contract manufacturing suppliers constituted a lease under ASC 842 as the Company has the right to substantially all of the economic benefits from the use of the asset and can direct the use of the asset. On May 10, 2021 and August 30, 2021, the Company and LCGM entered into the LCGM MSA and Statement of Work #3 (“SOW #3”), respectively, for the exclusive use of a manufacturing suite at the LCGM facility. Pursuant to the terms of SOW #3, LCGM agreed to provide the Company with certain dedicated space for the clinical manufacturing, release testing, and product release in the Company’s Phase 1/2 CEDAR clinical trial to treat sickle cell disease. The Company concluded that the agreement contained an embedded lease as the Company controlled the use of a dedicated manufacturing suite and the equipment therein. The agreement included fixed lease payments of $ 5.6 million from inception of lease through April 30, 2023 , the expiration date of SOW #3. As of December 31, 2023, the Company does not have any remaining obligations related to SOW #3. The Company and Explora BioLabs, Inc. (“Explora”) entered into a License Service Agreement and Master Services Agreement (together, the “Explora Agreements”) on November 17, 2021 and December 16, 2021, respectively. Pursuant to the terms of the Explora Agreements, Explora agreed to provide a certain dedicated space to perform in vitro or in vivo studies, obtain or house research animals, and provide scientific or technical consultation to the Company. The Company concluded that the Explora Agreements contained an embedded lease as the Company controlled the use of a dedicated manufacturing suite and the equipment therein. The Explora Agreements contained fixed lease payments of $ 0.7 million from inception of lease through November 2023 . As of December 31, 2023, the Company does no t have any remaining obligations related to the Explora embedded lease. As of December 31, 2023 , the Company did no t have any operating lease right-of-use assets and operating lease liabilities related to the embedded leases recorded on its balance sheet. Operating Lease Obligations As of December 31, 2023, the future minimum lease payments for the Company’s operating leases for each of the years ending December 31 were as follows (in thousands): Amount 2024 304 2025 78 Total undiscounted lease payments 382 Present value adjustment ( 20 ) Total net lease liabilities $ 362 Lease expense was $ 7.3 million and $ 6.7 million for the years ended December 31, 2023 and 2022, respectively. Under the terms of the remaining lease agreements, the Company is also responsible for certain variable lease payments that are not included in the measurement of the lease liability. Variable lease payments for operating leases were $ 2.2 million and $ 1.3 million for the years ended December 31, 2023 and 2022, respectively, including non-lease components such as common area maintenance fees, taxes, and insurance. The following information represents supplemental disclosure for the statement of cash flows related to the operating leases (in thousands): December 31, 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows under operating leases $ 44,123 9. Common Stock As of December 31, 2023 and 2022 , the Company was authorized to issue 300,000,000 shares of its common stock with $ 0.00001 par value per share. Each share of the Company’s common stock is entitled to one vote. In connection with the IPO in June 2021, all outstanding shares of redeemable convertible preferred stock were converted into 30,761,676 shares of common stock. The IPO closed 93 on June 29, 2021, pursuant to which the Company issued and sold 14,000,000 shares of its common stock at a public offering price of $ 17.00 per share. On June 29, 2021, the underwriters also exercised their option to purchase an additional 2,100,000 shares of common stock at the IPO price, less the underwriting discounts and commissions. The closing of the offering of the additional shares occurred on July 2, 2021. The Company issued and sold 2,100,000 shares of its common stock at a public offering price of $ 17.00 per share. Shares Reserved for Future Issuance As of December 31, 2023 and 2022, the Company reserved common stock for future issuances as follows: December 31, 2023 December 31, 2022 Outstanding stock option awards 5,376,373 7,755,303 Shares available for future stock option grants 10,798,817 5,382,907 ESPP shares available for future grants 1,253,729 754,951 Total shares reserved for future issuance 17,428,919 13,893,161 Founders’ and Investor’s Restricted Common Stock In March 2020, the Board approved and in April 2020, the Company issued 6,081,413 shares of its common stock to its founders and 2,467,104 shares of its common stock to its investor at the purchase price of $ 0.00002 per share. As of December 31, 2020, the investor’s shares were fully vested and a portion of the shares issued were subject to the Company’s option to repurchase per the Stanford Adjustment Repurchase Right, as described below. The shares of the Company’s common stock issued to its founders for their services as an employee, advisor, or consultant vest monthly over four years with one year cliff from the vesting commencement date. The vesting commencement date was the date of the initial closing of the Series A preferred stock financing or June 24, 2020. Pursuant to the restricted stock purchase agreements with each of the founders, the vesting of the founders’ common stock shares could be accelerated upon the occurrence of certain events, including signing of the term sheet for the license with Stanford, a change in control, or if the founder’s service is terminated by the Company without cause. The Company signed the term sheet with Stanford in June 2020, and as a result, an aggregate of 912,212 shares of founders’ common stock vested pursuant to the acceleration terms. If a founder terminates the service relationship with the Company during the vesting period, the Company may repurchase any unvested restricted common stock at the price per share equal to the lower of (i) the original purchase price, subject to adjustment in the event of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or (ii) the current fair market value as of the date the Company elects to exercise its Stanford Adjustment Repurchase Right, as described below. The repurchase right lapses in 180 days after the termination of the founder’s service or employment. During the vesting term, holders of founders’ common stock awards are deemed to be common stockholders and have the right to receive dividends and voting rights. The founders’ shares of common stock are also subject to the Company’s option to repurchase per the Stanford Adjustment Repurchase Right, as described below. The Company accounts for shares issued to founders as equity compensation awards and the estimated fair value at the grant date was minimal. During the year ended December 31, 2023 , the Company repurchased 152,694 shares of founders' common stock awards. 431,863 and 1,938,430 shares of founders’ common stock awards were unvested and expected to vest in 0.5 years and 1.5 years as of December 31, 2023 and 2022, respectively. Stanford Adjustment Repurchase Right Upon the issuance of shares of common stock to Stanford pursuant to the License Agreement, as discussed in Note 5, the Company has a right to repurchase from each founder and an investor a number of shares of common stock equal to the number of shares issued to Stanford multiplied by the applicable number of shares issued to the founder or investor, as applicable, divided by 7,273,848 shares (a fully diluted number of shares of the Company at the end of March 2020, after the founders’ and the investors’ shares were approved by the board of directors). The Stanford Adjustment Repurchase Right may be exercised by the Company within six months following the date of the issuance of the shares of common stock to Stanford. The repurchase price per share is equal to the lower of (i) the purchase 94 price, subject to adjustment in the event of any reorganization, recapitalization, reclassification, etc., or (ii) the current fair market value as of the date the Company elects to exercise its Stanford Adjustment Repurchase Right. On May 7, 2021, the Company issued an aggregate of 640,861 shares of the Company’s common stock to Stanford and certain individuals designated by Stanford in consideration for rights granted to the Company under the Company’s exclusive license agreement. On June 18, 2021, the Company exercised its right to repurchase an aggregate of 624,845 shares from each founder and investor under the Stanford Adjustment Repurchase Right. As of December 31, 2023 , the Company has not exercised the right to purchase the remaining 16,016 shares. The Company accounts for the founders and investors’ shares of restricted common stock as equity share-based awards. 10. Equity Incentive Plans 2020 Stock Option and Grant Plan Prior to the effectiveness of the registration statement on Form S-1 (File No. 333-256838) for its IPO, the Company granted share-based awards under the 2020 Stock Option and Grant Plan, as amended (the “2020 Plan”). The Company was authorized to grant under the 2020 Plan incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units and other share-based awards to the Company’s officers, employees, directors and consultants. Options under the 2020 Plan could be granted for periods of up to 10 years and at prices no less than 100.0 % of the estimated fair value of the shares on the date of grant as determined by the Board, provided, however, that the exercise price of an incentive stock option granted to a 10.0 % stockholder shall not be less than 110.0 % of the estimated fair value of the shares on the date of grant and the option is not exercisable after the expiration of five years from the date of grant. Options generally vest monthly over four years with or without one year cliff vesting. Per the 2020 Plan, granted options may be early exercised prior to vesting and the Company will issue shares of restricted stock upon the early exercise with vesting terms consistent with the original grant. Upon completion of the Company’s IPO, the remaining shares available for issuance under the 2020 Plan were retired, and the Company no longer grants awards pursuant to the 2020 Plan. 2021 Stock Option and Incentive Plan In June 2021, the Company’s board of directors approved the 2021 Stock Option and Incentive Plan (the “2021 Plan”) that became effective immediately prior to the date when the Company’s prospectus was declared effective by the SEC on June 24, 2021. The Company initially reserved 5,636,000 shares of common stock for issuance of awards under the 2021 Plan. The 2021 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2022, by 5 % of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s compensation committee. On January 1, 2022 and 2023, the number of shares of common stock available under the 2021 Plan increased by 2,900,541 shares and 2,911,088 shares, respectively, pursuant to the evergreen provision of the 2021 Plan. The option exercise price of each option will be determined by the Company’s compensation committee but generally may not be less than 100 % of the fair market value of the Company’s common stock on the date of grant. The term of each option will be fixed by the Company’s compensation committee and may not exceed ten years from the date of grant. The grant date fair value of all awards made under the 2021 Plan and all other cash compensation paid by the Company to any non-employee director for services as a non-employee director in any calendar year may not exceed $ 1.0 million for the first year of service and $ 750.0 thousand for each year of service thereafter. As of December 31, 2023 , there were 10,798,817 shares available for future issuance under the 2021 Plan. Restricted Stock Awards During the year ended December 31, 2020, the Company issued 832,983 shares as restricted stock awards under the 2020 Plan. The purchase price of the restricted common stock awards was fair value as determined by the Board at the issuance date. The shares vest monthly over four years with the one-year cliff vesting from the grant date. Upon termination of employment, the Company has the right to repurchase any unvested restricted shares. The repurchase price for unvested shares of common stock will be the lower of (i) the fair market value on the date of repurchase or (ii) their original purchase price. There were no shares issued during the years ended December 31, 2023 and 2022. The Company accounted for restricted stock awards as early exercised options and recognized a liability in other liabilities when cash was received for the purchase of shares of restricted stock awards. As shares of restricted stock awards vest, the Company reclassified 95 the liability to common stock and additional paid in capital. As of December 31, 2023 and 2022, the Company recorded a minimal liability for restricted stock awards included in accrued expenses and other current liabilities. There were 163,830 and 5,140 shares of restricted stock award shares canceled and repurchased as of December 31, 2023 and 2022 , respectively. There were 751,758 and 553,443 shares of restricted stock vested as of December 31, 2023 and 2022, respectively. Employee Stock Purchase Plan In June 2021, the Company’s board of directors and stockholders approved the 2021 Employee Stock Purchase Plan (the “ESPP”) which became effective upon the IPO. Pursuant to the ESPP, certain employees of the Company, excluding consultants and non-employee directors, are eligible to purchase common stock of the Company at a reduced rate during offering periods. The ESPP permits participants to purchase common stock using funds contributed through payroll deductions, subject to a calendar year limit of $ 25,000 and at a purchase price of 85 % of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the applicable purchase date, which will be the final trading day of the applicable purchase period. The ESPP has two annual purchase periods extending from June to November and December to May. As of December 31, 2023, no employees were enrolled in the ESPP and the Company did not record a liability for ESPP in accrued liabilities as of December 31, 2023 . The Company had $ 0.1 million in accrued liabilities as of December 31, 2022 . The Company issued 65,222 shares and 333,155 shares under the ESPP during the years ended December 31, 2023 and 2022, respectively. Effective January 1, 2022 and 2023, the number of shares of common stock available under the 2021 ESPP increased by 564,000 shares pursuant to the evergreen provision of the 2021 ESPP. Year Ended December 31, 2023 2022 Expected volatility 75.00 % - 79.00 % 73.00 % - 75.00 % Expected dividend yield 0 % 0 % Expected term (in years) 0.5 0.5 Risk-free interest rate 4.65 % - 5.44 % 0.10 % - 4.65 % Incentive Stock Options and Nonqualified Stock Options Stock options issued under the 2020 Plan and 2021 Plan, generally, vest over a four-year period and expire ten years from the date of grant. Certain options provide for accelerated vesting if there is a change in control, as defined in the individual award agreements. The Company used the Black-Scholes option pricing model to estimate stock-based compensation expense for stock option awards granted during the periods presented, with the following assumptions. Year Ended December 31, 2023 2022 Expected volatility 77.00 % - 79.00 % 74.00 % - 75.00 % Expected dividend yield 0 % 0 % Expected term (in years) 6.04 5.97 - 6.01 Risk-free interest rate 3.50 % - 4.12 % 1.91 % - 4.23 % A summary of option activity under the 2020 Plan and the 2021 Plan during the year ended December 31, 2023 is as follows: Number of Options Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2022 7,755,303 $ 8.47 8.7 $ 794 Options granted - 2021 Plan 3,223,400 $ 2.22 Options exercised ( 101,900 ) $ 0.98 Options cancelled ( 5,500,430 ) $ 6.79 Outstanding as of December 31, 2023 5,376,373 $ 6.58 6.1 $ 847 Exercisable 3,812,992 $ 6.42 5.2 $ 664 Vested and expected to vest as of December 31, 2023 5,376,373 $ 6.58 6.1 $ 847 Aggregate intrinsic value represents the difference between the fair value of the underlying common stock and the exercise price as of December 31, 2023. The weighted-average grant date fair value of options granted during the December 31, 2023 was $ 1.56 per share. 96 The intrinsic value of the stock options exercised was $ 0.1 and $ 0.2 million for the years ended December 31, 2023 and 2022, respectively. Early Exercise of Stock Options The terms of the 2020 Plan permit the exercise of options granted prior to vesting, subject to required approvals. The unvested shares are subject to the repurchase right upon termination of employment at the original purchase price. The repurchase right lapses in 180 days after the termination of the employee’s employment. Shares purchased by employees pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be issued until those shares vest according to their respective vesting schedules. Cash received for early exercised stock options is recorded as other liabilities on the balance sheet and is reclassified to common stock and additional paid-in capital as such shares vest. During the years ended December 31, 2023 and 2022 , the Company repurchased 227,792 and 189,414 shares that were previously early exercised. At December 31, 2023 and 2022 , 68,868 and 554,695 shares, respectively, remained subject to the right of repurchase as a result of the early exercised stock options. The remaining liability related to early exercised shares as of December 31, 2023 and 2022 was minimal and was recorded in accrued expenses and other current liabilities in the balance sheets. Stock-Based Compensation Expense The following table presents the components of stock-based compensation expense for the Company’s stock-based awards for the periods presented (in thousands): Year Ended December 31, 2023 2022 Restricted stock awards and founders’ common stock awards $ 7 $ 11 ESPP 96 391 Stock options 10,471 13,132 Total stock-based compensation expense $ 10,574 $ 13,534 The above stock-based compensation expense also includes the expenses of $ 2.6 million and $ 2.2 million related to stock options issued to non-employees during the years ended December 31, 2023 and 2022, respectively. The following table presents the classification of stock-based compensation expense for the Company’s stock-based awards for the periods presented (in thousands): Year Ended December 31, 2023 2022 Research and development expenses $ 1,904 $ 5,317 General and administrative expenses 8,670 8,217 Total stock-based compensation expense $ 10,574 $ 13,534 As of the years ended December 31, 2023 and 2022 , there was $ 7.4 million and $ 31.0 million, respectively, of unrecognized stock-based compensation expense related to the employee and non-employee awards, which is expected to be recognized over a weighted-average period of 1.5 years and 2.6 years, respectively. 97 11. Net Loss Per Share Attributable to Common Stockholders The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders, which excludes shares which are legally outstanding, but subject to repurchase by the Company (in thousands, except share and per share amounts): Year Ended December 31, 2023 2022 Numerator: Net loss $ ( 124,651 ) $ ( 101,052 ) Denominator: Weighted-average common shares outstanding 58,046,553 58,111,437 Less: weighted-average unvested restricted shares and shares subject to repurchase ( 1,031,394 ) ( 3,237,762 ) Weighted-average shares used to compute basic and diluted net loss per share attributable to common stockholders 57,015,159 54,873,675 Net loss per share attributable to common stockholders — basic and diluted: $ ( 2.19 ) $ ( 1.84 ) Anti-dilutive Outstanding Shares or Equivalents The following outstanding options, unvested shares, and ESPP shares were excluded (as common stock equivalents) from the computation of diluted net loss per common share for the periods presented as their effect would have been antidilutive (in thousands): Year Ended December 31, 2023 2022 Options to purchase common stock 5,376,373 7,755,303 Common stock subject to vesting or repurchase 565,667 2,767,526 Employee Stock Purchase Plan shares — 168,080 Total 5,942,040 10,690,909 12. Income Taxes No provision for income taxes was recorded for the years ended December 31, 2023 and 2022. The Company has incurred net operating losses only in the United States since its inception. The Company has not reflected any benefit of such net operating loss carryforwards in the financial statements. A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate was as follows: Year Ended December 31, 2023 2022 Federal statutory income tax rate ate 21.00 % 21.00 % State taxes 1.01 1.10 Others ( 0.06 ) ( 0.69 ) Research and development credits 1.00 1.11 Transaction costs ( 1.01 ) — Lease Modification 3.27 — Interest expense — — Stock-based compensation ( 1.52 ) ( 0.97 ) Change in valuation allowance ( 23.69 ) ( 21.55 ) Provision for taxes 0.00 % 0.00 % 98 Net deferred tax assets and liabilities consisted of the following (in thousands): Year Ended December 31, 2023 2022 Deferred tax assets: Net operating losses - non-current $ 30,820 $ 15,940 Capitalized R&D 14,493 13,815 General business credit - non-current 7,201 5,699 Operating lease right-of-use assets 88 1,220 Lease termination costs 6,621 — Stock based compensation 2,017 1,703 Accruals and reserves 295 735 Fixed assets 6,161 170 Other 3 3 Gross deferred tax assets 67,699 39,285 Valuation allowance ( 67,626 ) ( 38,110 ) Net deferred tax assets 73 1,175 Fixed asset basis — — Operating lease liabilities ( 73 ) ( 1,175 ) Other — — Gross deferred tax liabilities ( 73 ) ( 1,175 ) Valuation allowance $ — $ — Net operating losses and tax credit carryforwards were as follows as of December 31, 2023 (dollars in thousands): Year Ended December 31, 2023 Amount Expiration Years Net operating losses, federal (starting from January 1, 2018) $ 146,450 Do Not Expire Net operating losses, state 29 2039 - 2043 Tax credits, federal 6,395 2041 - 2043 Tax credits, state 4,716 Do Not Expire Utilization of the net operating loss carryforwards and research credit carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code, as amended, (“IRC”), and similar state provisions. Annual limitations may result in the expiration of the net operating losses and tax credit carryforwards before they are utilized. The Company did not perform an IRC Section 382 analysis and any previous ownership changes may result in a limitation that will reduce the total amount of net operating loss and tax credit carryforwards disclosed that can be utilized. Subsequent ownership changes may affect the limitation in future years. During the years ended December 31, 2023 and 2022, the Company recorded a full valuation allowance on federal and state deferred balances since management does not forecast the Company to be in a profitable position in the near future. Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2023 and 2022 related primarily to the increases in net operating loss carryforwards and research and development tax credit carryforwards and were as follows (in thousands): Year Ended December 31, 2023 2022 Valuation allowance at the beginning of the year $ 38,110 $ 16,332 Increases recorded to income tax provision 29,516 21,778 Valuation allowance at the end of the year $ 67,626 $ 38,110 The Company’s U.S. federal and state income tax returns are generally subject to tax examinations for the tax years from inception through December 31, 2022. There are currently no pending income tax examinations. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state tax authorities to the extent utilized in a future period. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): Year Ended December 31, 2022 2022 Balance at beginning of year $ 2,701 $ 1,407 Additions based on tax positions related to current year 899 1,862 Reduction for prior period positions ( 42 ) ( 568 ) Unrecognized tax benefit-December 31 $ 3,558 $ 2,701 99 The entire amount of the unrecognized tax benefits would not impact the Company’s effective tax rate if recognized. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. The Company has elected to include interest and penalties as a component of tax expense. During the years ended December 31, 2023 and 2022 , the Company did no t recognize accrued interest and penalties related to unrecognized tax benefits. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease during the next 12 months. 13. Restructuring Activities In February 2023, the Company's board of directors approved a restructuring plan (the “First Restructuring Plan”) to reduce the Company’s operating costs and better align its workforce with the needs of its business. The First Restructuring Plan eliminated approximately 50 % of the Company’s workforce. Employees affected by the First Restructuring Plan obtained involuntary termination benefits that are provided pursuant to a one-time benefit arrangement. For employees who were notified of their termination in February 2023 and had no requirements to provide future service, the Company recognized the liability for the termination benefits in full at fair value in February 2023. For employees who were required to render services beyond a minimum retention period to receive their one-time termination benefits, the Company recognized the termination benefits ratably over their future service periods. The service periods began in February 2023 and ended at various dates through June 2023. The Company has incurred approximately $ 3.4 million of employee termination benefits expense to implement the First Restructuring Plan and does not have any remaining obligations as of December 31, 2023. In August 2023, the Company's board of directors approved a second restructuring plan (the “Second Restructuring Plan”; together with the First Restructuring Plan, the "Restructuring Plans") to further reduce the Company's operating costs and align its workforce with the needs of its business. The Second Restructuring Plan eliminated approximately an additional 33.1 % of its total workforce, and in aggregate, 78.1 % of its total workforce. Employees affected by the Second Restructuring Plan obtained involuntary termination benefits that are provided to an ongoing benefit arrangement. Accordingly, the Company recognized termination benefits upon announcement of termination to all employees. The Company has incurred approximately $ 3.5 million and has a remaining liability of $ 1.0 of employee termination benefits expense to implement the Second Restructuring Plan. The Company determined that it had set a precedence for providing terminated employees with severance benefits, and accordingly, it had a de facto severance plan. In September 2023, the Company determined that it was reasonably likely to incur additional employee termination benefits expense for its remaining employees within the next twelve months. It recognized termination benefits for the remaining employees totaling $ 1.0 million, of which $ 0.6 million was paid during the year ended December 31, 2023. The following table summarizes the Company’s restructuring liability that is included in accrued expenses and other current liabilities in the accompanying balance sheet: Year Ended December 31, 2023 Accrued employee termination benefits beginning balance $ — Employee termination benefits charges incurred during the period 8,100 Amounts paid or otherwise settled during the period ( 6,565 ) Accrued employee termination benefits as of December 31, 2023 $ 1,535 In addition, the board of directors determined that it was in the best interests of the Company and its stockholders to put in place arrangements designed to provide that the Company will have the continued dedication and commitment of those employees, including executives, determined to be key to the Company’s planned go-forward operations. In March 2023, the Board approved, and management implemented, a retention program for certain employees staying with the Company which includes cash retention bonuses totaling $ 4.2 million for certain retained employees provided that they remain within the Company through the requisite service period, which is the earlier of March 1, 2024 or the termination date upon a Restructuring Plan. As a result, these cash retention bonuses are being accrued over the requisite service period, with $ 3.7 million recognized during the year ended December 31, 2023 and included within general and administrative and research and development expenses in the statements of operations. During the year ended December 31, 2023 , the Company paid $ 3.2 million in retention bonuses to employees for fulfilling their requisite service periods. In June 2023, the Company committed to a plan to sell certain of its lab equipment associated with the Restructuring Plan. During the year ended December 31, 2023, the Company implemented a plan to sell its remaining lab equipment as well as other fixed assets not transferred to the Bayside lease. As of December 31, 2023, the Company disposed of all of its assets previously meeting the criteria of held for sale. These assets were recognized at the lower of cost or fair value less cost to sell using market approach. The fair value of these assets were classified as Level 3 in the fair value hierarchy due to a mix of unobservable inputs utilized such as independent research in the market as well as actual quotes from market participants. Subsequent changes to the estimated selling price of assets held for sale are recorded as gains or losses to the statements of operations and comprehensive loss wherein the recognition of subsequent gains is limited to the cumulative loss previously recognized. During the year ended December 31, 2023 , the Company recorded 100 impairment charges and loss on disposal of assets, which was included in restructuring and impairment costs in the statements of operations and comprehensive loss, of $ 7.0 million. In connection with the Restructuring Plans, the Company has determined that it will not utilize the Bayside and South San Francisco leases for purposes of its own operations. In August 2023, the Company subleased one of its office suites in the South San Francisco lease for 20 months starting from August 2023 for aggregate sublease payments of $ 0.5 million. In October 2023, the Company entered into a sublease agreement and amendment to the original master lease with the landlord to accelerate the termination date of the Bayside lease and in November 2023, the Company entered into an amendment to the original lease agreement to reassign the second suite of the South San Francisco lease (Note 8). The Company performed a recoverability test by comparing the future cash flows attributable to the asset group to the carrying value of the long-lived assets. Future cash flows were estimated using comparable laboratory and office facilities discounted at a market discount rate over the remaining term of the Company's lease. During the year ended December 31, 2023 , the Company recorded a non-cash impairment of $ 46.9 million, to the right-of-use asset and related leasehold improvement, which was included in restructuring and impairment costs in the statements of operations and comprehensive loss. The Company entered into an asset purchase agreement with Maro pursuant to which the Company sold to the counterparty, concurrently with the execution of the APA, certain assets related to the Company’s non-genotoxic conditioning technology in exchange for upfront consideration of $ 0.5 million. Additional consideration included certain contingent milestone payments totaling up to approximately $ 1.0 million in the aggregate, as well as royalties on net sales by Maro of certain products incorporating the acquired technology, and potential fees upon the completion of certain transactions by Maro. The APA also provided for reimbursement of certain research and development amounts incurred prior to closing of approximately $ 0.6 million. In addition, the Company also entered into an LOA with Kamau Therapeutics, Inc. (“Kamau”) pursuant to which the Company exclusively licensed to Kamau, and granted the counterparty an option to acquire, certain intellectual property and materials related to the Company’s nulabeglogene autogedtemcel (nula-cel) program and related pre-clinical platform assets. Exercise of the option is contingent on Kamau timely achieving a financing milestone, and all rights to the intellectual property and materials will revert to the Company if the milestone is not achieved or if the counterparty elects not to exercise the option. In return for this license and option, the Company received an equity interest in the counterparty representing 20 % of all outstanding shares on a fully diluted basis. 14. Subsequent Events The Company has evaluated all subsequent events that occurred after the date of the accompanying financial statements and determined that there were no events or transactions during this subsequent event reporting period which require recognition or disclosure in our financial statements other than those disclosed elsewhere within this Form 10-K. 101 Item 9. Changes in and Disagreements with Accou ntants on Accounting and Financial Disclosure. None. Item 9A. Control s and Procedures. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Form 10-K. Based upon that evaluation, our Chief Executive Officer has concluded that, as of December 31, 2023, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control 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) under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive officer and principal financial officer, or persons performing similar functions, and effected by a company’s 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 those policies and procedures that: • pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of a company’s 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 a company’s receipts and expenditures are being made only in accordance with authorizations of the company’s 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 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. Under the supervision of and with the participation of our principal executive officer and principal financial officer, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013 framework). Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2023. This Form 10-K does not include an attestation report of the Company's independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. Changes in Internal Control Over Financial Reporting 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) that occurred during the three month period ending December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitations on Effectiveness of Controls Our management, including our Chief Executive Officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving 102 its stated goals under all potential future conditions, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Item 9B. Other Information. No Rule 10b5-1 plans or non-Rule 10b5-1 trading arrangements were adopted , modified , or terminated by our officers or directors, nor were there any material changes to the procedures by which securityholders may recommend nominees to the our board of directors, during the quarter ended December 31, 2023. Item 9C. Disclosure Regarding Foreign J urisdictions that Prevent Inspections. Not applicable. 103 PART III Item 10. Directors, Executive Off icers and Corporate Governance. Directors Our directors are elected to serve for three-year terms until the next annual meeting of stockholders and until his or her successor shall have been duly elected and qualified. The following table sets forth the name and age of each director, indicating all positions and offices with us currently held by the director. Name Positions and Offices Held with Graphite Bio, Inc. Director Since Class and Year in Which Term Will Expire Age Perry Karsen Director and Board Chair 2020 Class I - 2025 69 Jerel Davis, Ph.D. Director 2019 Class I - 2025 47 Joseph Jimenez Director 2020 Class I - 2025 64 Abraham Bassan Director 2020 Class II - 2026 39 Matthew Porteus, M.D., Ph.D. Director 2020 Class II - 2026 59 Jo Viney, Ph.D. Director 2021 Class II - 2026 58 Kimberlee C. Drapkin Interim President and Chief Executive Officer and Director 2023 Class III - 2024 55 Kristen M. Hege, M.D. Director 2021 Class III - 2024 60 Carlo Rizzuto, Ph.D. Director 2020 Class III - 2024 53 Smital Shah Director 2021 Class III - 2024 47 Perry Karsen has served as the chair of our board of directors since October 2020 and as a member of our board of directors since June 2020. From May 2013 to December 2015, Mr. Karsen was the Chief Executive Officer of Celgene Cellular Therapeutics, Inc., a division of Celgene Corporation (collectively, “Celgene”). Prior to that, Mr. Karsen served as Chief Operations Officer and Executive Vice President of Celgene from July 2010 to May 2013, and as Senior Vice President and Head of Worldwide Business Development of Celgene from 2004 to 2009. From February 2009 and July 2010, Mr. Karsen was Chief Executive Officer of Pearl Therapeutics Inc., subsequently acquired by AstraZeneca plc. (Nasdaq: AZN). Prior to that, Mr. Karsen held executive positions at Human Genome Sciences, Inc., a publicly traded biotechnology company (since acquired by GlaxoSmithKline plc (Swiss: GSK.SW)), Bristol-Myers Squibb Co., Genentech, Inc. (since acquired by Hoffmann-La Roche AG (Roche)), and Abbott Laboratories. In addition, Mr. Karsen served as a General Partner at Pequot Capital Management, Inc. He is currently a member of the boards of Jounce Therapeutics, Inc. (Nasdaq: JNCE) since January 2016 and Nitrase Therapeutics, Inc. since May 2020. Mr. Karsen formerly served on the boards of several public biotechnology companies, including Intellia Therapeutics, Inc. (Nasdaq: INTL) from April 2016 to December 2020, Oncomed Pharmaceuticals, Inc. (Nasdaq: OMED) (until it was acquired by Mereo BioPharma (Nasdaq: MREO)), from January 2016 to April 2019, Voyager Therapeutics, Inc. (Nasdaq: VYGR) from July 2015 to August 2019, Agios Pharmaceuticals, Inc. (Nasdaq: AGIO) from November 2011 to March 2016, and Alliqua Biomedical, Inc. (Nasdaq: ALQA) from December 2013 to February 2016. Mr. Karsen was also formerly a member of the boards of directors of the Biotechnology Innovation Organization (BIO) and the Alliance for Regenerative Medicine. Mr. Karsen received his B.S. in Biological Sciences from the University of Illinois, Urbana-Champaign, a Masters of Management from Northwestern University’s Kellogg Graduate School of Management and an M.A.T. in Biology from Duke University. We believe that Mr. Karsen’s executive leadership experience, including his experience as an executive at large and successful multi-national pharmaceutical companies and membership on boards of directors of various publicly traded biotechnology companies, qualifies him to serve as a member of our board of directors. Jerel Davis, Ph.D. has served on our board of directors since our inception in October 2019. Dr. Davis is currently a Managing Director of Versant Venture Management, LLC, a healthcare investment firm which he joined in 2012 and has held his current role since 2015. Dr. Davis currently serves on the boards of public companies, Chinook Therapeutics, Inc. (Nasdaq: KDNY) since December 2018 and Repare Therapeutics, Inc. (Nasdaq: RPTX) since September 2016. Dr. Davis also serves on the boards of a number of private companies including Nested Therapeutics, Inc., RayzeBio, Inc., Tentarix Biotherapeutics, Inc., Ventus Therapeutics Inc., and Turnstone Biologics Corp., among others. Prior to joining Versant Venture Management, LLC, Dr. Davis worked at McKinsey & Company, Inc., where he serviced various healthcare markets including the United States, Europe and China. Dr. Davis received a B.S. in Mathematics and Biology from Pepperdine University and a Ph.D. in Population Genetics from Stanford University. We believe that Dr. Davis’s broad and extensive experience in the life sciences industry, both investing in and launching numerous life sciences companies, qualifies him to serve as a member of our board of directors. Joseph Jimenez has served on our board of directors since June 2020. Mr. Jimenez is currently the Co-Founder and Managing Partner of Aditum Bio Management Company LLC, a biotechnology venture fund, where he has served since August 2019. He was formerly the Chief Executive Officer of Novartis AG, a position he held from February 2010 to January 2018. Prior to that, Mr. Jimenez held several senior positions at Novartis AG from April 2007 to January 2010, including Division Head of Novartis Pharmaceuticals and leadership of the company’s Consumer Health Division. Prior to that, Mr. Jimenez was advisor to the Blackstone Group L.P. from July 104 2006 to March 2007. Additionally, Mr. Jimenez has held various leadership roles at H. J. Heinz Company, L.P. in Europe and North America from 1999 to 2006 and at ConAgra Foods Inc. from 1993 to 1998. Mr. Jimenez is currently a member of the board of directors of General Motors Company (NYSE: GM) since June 2015, Procter & Gamble Co. (NYSE: PG) since March 2018 and Century Therapeutics, Inc. (Nasdaq: IPSC) since August 2019. Mr. Jimenez received a B.A. in Economics from Stanford University and an M.B.A. from University of California, Berkeley’s Haas School of Business. We believe that Mr. Jimenez’s extensive leadership experience and executive leadership at various technology companies qualify him to serve on our board of directors. Abraham Bassan has served on our board of directors since June 2020. Mr. Bassan is currently a Principal at Samsara BioCapital, L.P., a life science investment firm that takes a long-term view to company building in the biotech space. Since 2017, Mr. Bassan has been part of the investment team at Samsara Biocapital, L.P., where he plays a central role in sourcing new investments and overseeing operations at current portfolio companies in his capacity as a director or board observer. Mr. Bassan currently serves on the boards of directors of CARGO Therapeutics, Inc. (formerly Syncopation Life Sciences, Inc.), since February, 2021, Septerna, Inc., since November, 2021, Vedere Bio II, Inc., since April, 2021, and Link Cell Therapies Inc., since May, 2022. From February 2021 to May 2022, Mr. Bassan was President of CARGO Therapeutics, Inc. (formerly Syncopation Life Sciences, Inc.). From December 2014 to July 2017, Mr. Bassan held various leadership roles at Revolution Medicines, Inc. (Nasdaq: RVMD), including Director of Program Biology and Director of Project Management, where he co-led the initial stages of RVMD’s 4EBP1/mTORC1 cancer program. From May 2010 to August 2012, Mr. Bassan was an Associate Director at bluebird bio, Inc. (Nasdaq: BLUE), where he was also the Project Manager for the company’s β-Thalassemia, Sickle Cell Anemia, and ALD gene therapy programs. Mr. Bassan received his A.B. in Molecular Biology from Princeton University and a Master of Sciences in Development Biology from Stanford University. We believe that Mr. Bassan’s significant knowledge of the life sciences industry and experience and expertise in evaluating and investing in life sciences companies qualify him to serve as a member of our board of directors. Matthew Porteus, M.D., Ph.D. has served on our board of directors since March 2020. Dr. Porteus is an Associate Professor of Pediatrics of the Department of Pediatrics, Divisions of Hematology/Oncology and Human Gene Therapy, at Stanford School of Medicine, where he has served in various leadership roles since October 2010. Prior to joining the Stanford School of Medicine, Dr. Porteus served as an Assistant Professor at the University of Texas Southwestern Medical Center from February 2003 to August 2010. His research focuses on developing homologous recombination-based therapies for genetic and other diseases. Dr. Porteus also maintains a clinical practice at the Lucille Packard Children’s Hospital, where he is an Attending Physician for the Pediatric Bone Marrow Transplant Service. Dr. Porteus completed his residency training in Pediatrics at Boston Children’s Hospital and fellowship training in Pediatric Hematology/Oncology at Boston Children’s Hospital and the Dana Farber Cancer Institute. For his post-doctoral work, Dr. Porteus trained at the Massachusetts Institute of Technology and the California Institute of Technology. During this time, he began studying gene editing and was the first to show that engineered nucleases could be used to precisely modify human cells by homologous recombination. Dr. Porteus graduated Magna Cum Laude with an A.B. in History and Science from Harvard University and completed his M.D. and Ph.D. degrees at Stanford University. We believe that Dr. Porteus’s medical background and extensive knowledge surrounding genetic diseases, gene therapy and gene editing qualify him to serve as a member of our board of directors. Jo Viney, Ph.D. has served on our board of directors since March 2021. Since October 2021, Dr. Viney has been a Co-Founder, President and Chief Executive Officer of Seismic Therapeutic, Inc., a biotechnology company. From July 2019 to October 2021, Dr. Viney was the Co-Founder and President of Pandion Therapeutics Inc. (Nasdaq: PAND), subsequently acquired by Merck & Co Inc. (NYSE: MRK), after serving as its Chief Scientific Officer since April 2017. From November 2015 to November 2016, Dr. Viney served as Senior Vice President, Drug Discovery at Biogen Inc. (Nasdaq: BIIB), after serving as Vice President, Immunology Research from July 2011 to October 2015. From September 2003 to April 2011, Dr. Viney served as Executive Director of Inflammation Research at Amgen, Inc. (Nasdaq: AMGN), after serving as Director of Inflammation Research from July 2002 to August 2003. Dr. Viney currently serves on the boards of public biotechnology companies, Harpoon Therapeutics, Inc. (Nasdaq: HARP) and Finch Therapeutics Group, Inc. (Nasdaq: FNCH). Dr. Viney holds a BSc in Biophysical Science from the University of East London and a Ph.D. in Immunology from the University of London, St. Bartholomew’s Hospital Medical School. We believe that Dr. Viney’s substantial leadership experience in the biotechnology industry qualifies her to serve as a member of our board of directors. Kimberlee C. Drapkin has served as a member of our board of directors since July 2023 and as our interim President and Chief Executive Officer since August 2023. Ms. Drapkin has over 25 years of experience working with private and publicly traded biotechnology and pharmaceutical companies, including building and leading finance functions, raising capital, and leading strategic financial planning. Most recently, Ms. Drapkin was the Chief Financial Officer at Jounce Therapeutics, Inc., a position she held from August 2015 until the company’s acquisition by Concentra Biosciences, LLC in May 2023, playing a key role in building Jounce’s financial infrastructure. Prior to joining Jounce, Ms. Drapkin owned a financial consulting firm where she served as the interim chief financial officer for numerous early-stage biotechnology companies. Previously, she was the Chief Financial Officer at EPIX Pharmaceuticals, Inc. and also spent ten years in roles of increasing responsibility within the finance organization at Millennium Pharmaceuticals, Inc. Her career began in the technology and life sciences practice at PricewaterhouseCoopers LLP. Ms. Drapkin served as a member of the board of directors of Proteostasis Therapeutics, Inc. until the completion of the merger of Proteostasis and Yumanity Therapeutics, Inc., at which point she became a member of the Yumanity board of directors. Ms. Drapkin then served on the board of directors of Yumanity through the completion of its reverse merger with Kineta, Inc. She currently serves on the board of directors of Acumen Pharmaceuticals, Inc. (Nasdaq: ABOS), Imugene Limited (ASX: IMU) and Kineta, Inc. (Nasdaq: KA), where she is a member of audit committee at all three 105 companies. Ms. Drapkin holds a B.S. in accounting from Babson College. We believe that Ms. Drapkin’s role as our interim president and chief executive officer qualifies her to serve on our board of directors. Kristen M. Hege, M.D. has served as a member of our board of directors since April 2021. Dr. Hege joined Celgene Corporation in 2010 as Vice President, Translational Development and is currently Senior Vice President, Early Clinical Development, Hematology/Oncology & Cell Therapy at Bristol Myers Squibb Company (NYSE: BMY) (following its acquisition of Celgene Corporation in 2019). Prior to Celgene Corporation, she served as Chief Medical Officer at Cellerant Therapeutics, Inc. and Acting Chief Medical Officer at Aragon Pharmaceuticals, Inc. and Theraclone Sciences, Inc. Dr. Hege was also Vice President, Clinical Research and Development at Cell Genesys. She currently serves as a member of the board of directors at Mersana Therapeutics, Inc. (Nasdaq: MRSN) since 2016 and has previously served as a member of the board of directors at Arcus Biosciences, Inc. (NYSE: RCUS) from 2018 to 2019 and as a Board Observer for Flexus Biosciences from 2014 to 2015. She also previously served as a Volunteer-at-Large Director for the Society for Immunotherapy of Cancer from 2016 to 2019 and the BayBio/California Life Sciences Association from 2014 to 2016. Dr. Hege is currently a volunteer Clinical Professor of Medicine, Hematology/Oncology at the University of California, San Francisco Medical Center, where she was previously an active faculty member since 1996. Dr. Hege received a B.A. in Biochemistry from Dartmouth College summa cum laude, an M.D. from University of California, San Francisco, Internal Medicine training at Harvard’s Brigham & Women’s Hospital, and Board certification in Hematology and Medical Oncology from the University of California, San Francisco. We believe that Dr. Hege’s medical background and experience in the biotechnology industry qualify her to serve on our board of directors. Carlo Rizzuto, Ph.D. has served as a member of our board of directors since March 2020. Dr. Rizzuto is currently a Managing Director at Versant Venture Management, LLC, a healthcare investment firm. He has been with the firm since November 2012 where he has served in a variety of roles including operating principal, venture partner and partner. Prior to that, Dr. Rizzuto worked at Novartis AG, where he was a Global Program Team Director from 2010 to 2012. Dr. Rizzuto currently serves on the board of directors of Century Therapeutics, Inc. (Nasdaq: IPSC) since March 2018 and previously served on the board of directors of Pandion Therapeutics, Inc., from January 2018 until its acquisition by Merck (NYSE: MRK) in March 2021. Dr. Rizzuto received a B.A. in Biology from the University of Virginia and a Ph.D. in Virology from Harvard University. We believe that Dr. Rizzuto’s experience as an investor in the life sciences industry qualifies him to serve on our board of directors. Smital Shah has served as a member of our board of directors since April 2021. Ms. Shah currently serves on the board of directors of Pliant Therapeutics, Inc. (Nasdaq: PLRX) since March 2019. From December 2018 to December 2022, Ms. Shah was the Chief Business and Financial Officer at ProQR Therapeutics NV (Nasdaq: PRQR) and prior to that, she was the company’s Chief Financial Officer from October 2014 to December 2018. From August 2012 to September 2014, Ms. Shah was in Corporate Treasury at Gilead Sciences, Inc. (Nasdaq: GILD). Prior to Gilead Sciences, Inc., she was an investment banker at Leerink Partners LLC and JP Morgan Chase and Co., where she focused on capital raising and strategic transactions in the biotechnology space. Ms. Shah also held various research and development roles at Johnson & Johnson Company. Ms. Shah holds a B.S. in Chemical Engineering from the University of Mumbai, a M.S. in Chemical Engineering from Virginia Tech and an M.B.A. from the University of California, Berkeley Haas School of Business. We believe that Ms. Shah’s extensive experience in the life sciences industry and her leadership experience as a senior financial executive qualify her to serve as a member of our board of directors. Board Diversity Our Corporate Governance Guidelines provide that diversity of background and experience should be considered in determining director candidates as well as other factors such as a candidate’s character, judgment, skills, education, expertise and absence of conflicts of interest. However, we do not have a formal policy concerning the diversity of the board of directors. Our priority in selection of board members is identification of members who will further the interests of our stockholders through their established records of professional accomplishment, their ability to contribute positively to the collaborative culture among board members, and their knowledge of our business and understanding of the competitive landscape in which we operate and adherence to high ethical standards. Although the nominating and corporate governance committee does not have a formal diversity policy and does not follow any ratio or formula with respect to diversity in order to determine the appropriate composition of the board of directors, the nominating and corporate governance committee and the full board of directors are committed to creating a board of directors that promotes our strategic objectives and fulfills its responsibilities to our stockholders, and considers diversity of gender, race, national origin, education, professional experience, and differences in viewpoints and skills when evaluating proposed director candidates. We comply with Nasdaq Rule 5605 by having four diverse directors (40%), including two from underrepresented minorities. As required by Nasdaq Rule 5606 as approved by the SEC in August 2021, we are providing additional information about the gender and demographic diversity of our directors in the format required by such rule. The information in the matrix below is based solely on information provided by our directors about their gender and demographic self-identification. 106 Board Diversity Matrix (As of February 1, 2024) Total Number of Directors 10 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 4 6 Part II: Demographic Background African American or Black Alaskan Native or Native American Asian 1 Hispanic or Latinx 1 Native Hawaiian or Pacific Islander White 3 4 Two or More Races or Ethnicities LGBTQ+ Did Not Disclose Demographic Background 1 Executive Officers The following table identifies our sole current executive officer, and her current positions at Graphite Bio and her age as of February 1, 2024 . You should refer to “ Directors ” above for biographical information about her. Name Position Held with Graphite Bio, Inc. Since Age Executive Officers Kimberlee C. Drapkin Interim President and Chief Executive Officer and Director 2023 55 Board Committees Our board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee, each of which operate pursuant to a charter adopted by our board of directors. We believe that the composition and functioning of all of our committees comply with the applicable requirements of Nasdaq, the Sarbanes-Oxley Act of 2002 and SEC rules and regulations that are applicable to us. We intend to comply with future requirements to the extent they become applicable to us. The full text of our audit committee charter, compensation committee charter and nominating and corporate governance charter is posted on the investor relations portion of our website at https://ir.graphitebio.com/corporate-governance . The Board of Directors also has a standing science and technology committee, which is an advisory committee. Matthew Porteus, M.D., Ph.D., and Carlo Rizzuto, Ph.D., serve on the science and technology committee, which is chaired by both Kristen Hege, M.D., and Jo Viney, Ph.D. Audit Committee Smital Shah, Perry Karsen and Joseph Jimenez serve on the audit committee, which is chaired by Ms. Shah. Our board of directors has determined that each member of the audit committee is “independent” for audit committee purposes as that term is defined in the rules of the SEC and the applicable Nasdaq rules, and that each member of the audit committee has sufficient knowledge in financial and auditing matters to serve on the audit committee. Our board of directors has designated Ms. Shah as an “audit committee financial expert,” as defined under the applicable rules of the SEC. The audit committee’s responsibilities include: • appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm; • pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm; • reviewing the overall audit plan with our independent registered public accounting firm and members of management responsible for preparing our financial statements; • reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us; • coordinating the oversight and reviewing the adequacy of our internal control over financial reporting; • establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns; 107 • recommending based upon the audit committee’s review and discussions with management and our independent registered public accounting firm whether our audited financial statements shall be included in our Form 10-K; • monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters; • preparing the audit committee report required by SEC rules to be included in our annual proxy statement; • reviewing all related person transactions for potential conflict of interest situations and approving all such transactions; and • reviewing quarterly earnings releases. Compensation Committee Abraham Bassan, Perry Karsen and Carlo Rizzuto, Ph.D. serve on the compensation committee, which is chaired by Mr. Bassan. Our board of directors has determined that each member of the compensation committee is “independent” as defined in the applicable Nasdaq rules. The compensation committee’s responsibilities include: • annually reviewing and recommending to the board of directors the corporate goals and objectives relevant to the compensation of our principal executive officer; • evaluating the performance of our principal executive officer in light of such corporate goals and objectives and based on such evaluation: (i) determining, or recommending to the board of directors, cash compensation of our principal executive officer; and (ii) reviewing and approving, or recommending to the board of directors, grants and awards to our principal executive officer under equity-based plans; • reviewing and approving the cash compensation (including severance), incentive compensation plans, equity-based plans, perquisites and other benefits of our other executive officers; • reviewing management’s aggregate decision regarding the compensation of all employees of the Company; • reviewing and establishing our overall management compensation philosophy and policy; • overseeing and administering our compensation and similar plans; • evaluating and assessing potential and current compensation advisors in accordance with the independence standards identified in the applicable Nasdaq rules; • reviewing and approving, or, at the request of the board of directors, recommending to the board of directors, our policies and procedures for the grant of equity-based awards; • evaluating and determining, or recommending for determination by the board of directors, the achievement of milestones under any inventive or equity-based awards to officers, consultants and other employees; • reviewing and recommending to the board of directors the compensation of our directors; • preparing the compensation committee report required by SEC rules, if and when required, to be included in our annual proxy statement; and • reviewing and approving the retention, termination or compensation of any consulting firm or outside advisor to assist in the evaluation of compensation matters. Nominating and Corporate Governance Committee Perry Karsen, Jerel Davis, Ph.D., and Joseph Jimenez serve on the nominating and corporate governance committee, which is chaired by Mr. Karsen. Our board of directors has determined that each member of the nominating and corporate governance committee is “independent” as defined in the applicable Nasdaq rules. The nominating and corporate governance committee’s responsibilities include: • developing and recommending to the board of directors criteria for board and committee membership; • establishing procedures for identifying and evaluating board of director candidates, including nominees recommended by stockholders; • reviewing the composition of the board of directors to ensure that it is composed of members containing the appropriate skills and expertise to advise us; • identifying individuals qualified to become members of the board of directors; 108 • recommending to the board of directors the persons to be nominated for election as directors and to each of the board’s committees; • developing and recommending to the board of directors a code of business conduct and ethics and a set of corporate governance guidelines; and • overseeing the evaluation of our board of directors and management. The nominating and corporate governance committee considers candidates for our board of directors membership suggested by its members and the Chief Executive Officer. Additionally, in selecting nominees for directors, the nominating and corporate governance committee will review candidates recommended by stockholders in the same manner and using the same general criteria as candidates recruited by the committee and/or recommended by our board of directors. Identifying and Evaluating Director Nominees. Our nominating and corporate governance committee is responsible for filling vacancies on our board of directors and for nominating candidates for election by our stockholders each year in the class of directors whose term expires at the relevant annual meeting. Our board of directors delegates the selection and nomination process to the nominating and corporate governance committee, with the expectation that other members of our board of directors, and of management, will be requested to take part in the process as appropriate. In identifying and recommending nominees for directors, the nominating and corporate governance committee may consider, among other factors that it considers appropriate, character, integrity, judgment, diversity, independence, skills, education, expertise, business acumen, business experience, length of service, understanding of our business and industry, conflicts of interest, and other commitments. Board and Committee Meetings During 2023, the full board of directors met thirteen times, the audit committee met four times, and the compensation committee met four times. There were no nominating and corporate governance meetings during 2023. During 2023, each member of the board of directors attended in person or participated in 75% or more of the aggregate of (i) the total number of meetings of the board of directors (held during the period for which such person has been a director) and (ii) the total number of meetings held by all committees of the board of directors on which such person served (during the periods that such person served). Code of Business Conduct and Ethics Our board of directors adopted a Code of Business Conduct and Ethics in connection with our IPO in June 2021. The Code of Business Conduct and Ethics applies to all of our employees, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions), agents and representatives, including directors and consultants. The full text of our Code of Business Conduct and Ethics is posted on our website at https://ir.graphitebio.com/corporate-governance/documents-charters . If we make any substantive amendments to, or grant any waivers from, the Code of Business Conduct and Ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K. Policy on Trading, Pledging and Hedging of Company Stock Our Insider Trading Policy prohibits our executive officers, the non-employee members of our board of directors and certain other employees from engaging in the following transactions: • selling any of our securities that they do not own at the time of the sale (referred to as a “short sale”); • buying or selling puts, calls, other derivative securities of the Company or any derivative securities that provide the economic equivalent of ownership of any of our securities or an opportunity, direct or indirect, to profit from any change in the value of our securities or engaging in any other hedging transaction with respect to our securities; • using our securities as collateral in a margin account; and • pledging our securities as collateral for a loan (or modifying an existing pledge). As of the date of this Form 10-K, none of our executive officers or non-employee directors have previously engaged in any hedging or pledging transaction involving our securities. Board Leadership Structure and Board’s Role in Risk Oversight The roles of chairperson and of President and Chief Executive Officer are currently separated. Perry Karsen is our current chair of the board and Kimberlee Drapkin is our current interim President and Chief Executive Officer. We believe that separating these positions allows our President and Chief Executive Officer to focus on setting our overall strategic direction, expanding the organization to deliver 109 on our strategy and overseeing our day-to-day business, while allowing the chair of the board to lead the board of directors in its fundamental role of providing strategic advice to and independent oversight of management. Our board of directors recognizes the time, effort and energy that the President and Chief Executive Officer is required to devote to her position in the current business environment, as well as the commitment required to serve as our chair of the board, particularly as the board of directors’ oversight responsibilities continue to grow. While our amended and restated bylaws and corporate governance guidelines do not require that our chair of the board and president positions be separate, our board of directors believes that having separate positions is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance. Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including risks relating to our financial condition, development and commercialization activities, operations, strategic direction and intellectual property. Management is responsible for the day-to-day management of risks we face, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. The role of our board of directors in overseeing the management of our risks is conducted primarily through committees of our board of directors, as disclosed in the descriptions of each of the committees above and in the charters of each of the committees. Our full board of directors (or the appropriate board committee in the case of risks that are under the purview of a particular committee) discusses with management our major risk exposures, their potential impact on us, and the steps we take to manage them. When a board committee is responsible for evaluating and overseeing the management of a particular risk or risks, the chairperson of the relevant committee reports on the discussion to the full board of directors during the committee reports portion of the next board meeting. This enables our board of directors and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships. Compensation Risk Assessment We believe that although a portion of the compensation provided to our executive officers and other employees is performance-based, our executive compensation program does not encourage excessive or unnecessary risk taking. This is primarily due to the fact that our compensation programs are designed to encourage our executive officers and other employees to remain focused on both short-term and long-term strategic goals, in particular in connection with our pay-for-performance compensation philosophy. As a result, we do not believe that our compensation programs are reasonably likely to have a material adverse effect on us. Item 11. Execut ive Compensation. Non-Employee Director Compensation Non-Employee Director Advisor Agreement We have entered into an advisor agreement with Dr. Porteus as one of our founders. The material terms of his advisor agreement are summarized below. Matthew Porteus, M.D., Ph.D. On March 24, 2020, we entered into an advisory agreement with Dr. Porteus (the “Porteus Agreement”), pursuant to which he serves on our Scientific & Clinical Advisory Board and among other things, provides consulting services to us involving the development of techniques and improvements in the field of clustered regularly interspaced short palindromic repeats or CRISPR, cell and gene therapy and derivatives technologies for the prevention and treatment of human disease, assists us in reviewing goals and developing strategies for achieving such goals, advises on scientific research and supports the recruitment of personnel in our research and product development activities. As consideration for such services, Dr. Porteus is entitled to receive an annual retainer of $70,000, subject to his performance of services for nine (9) days per quarter. Furthermore, Dr. Porteus received a restricted stock grant of up to 3,819,901 shares, subject to reduction based on our issuance of common stock to Stanford University, as set forth in the applicable restricted stock purchase agreement. The shares of restricted stock are subject to a four (4) year vesting schedule (up to 25% of the total amount of shares granted (to the extent not previously vested) will vest on June 24, 2021, the first anniversary of the date on which we sold preferred stock with aggregate proceeds of at least $10 million, and the remaining 75% vests in equal monthly installments thereafter, subject to continued service through each such date); provided, that 364,884 shares vested on June 10, 2020 upon our execution of a term sheet for a license with Stanford and 100% of the then-unvested shares will vest upon a “change in control” (as defined in the Porteus Agreement) subject to Dr. Porteus remaining in continued service through such date. The Porteus Agreement also provides for reimbursement of travel and out-of-pocket expenses incurred by Dr. Porteus in providing services at our request, with any expense in excess of $500 per month requiring pre-approval by us. Pursuant to the Porteus Agreement, Dr. Porteus is subject to certain standard assignment of intellectual property and confidentiality covenants, as well as twenty-four (24) month post-termination non-solicitation of employees, consultants and customers restrictive covenants. 110 Non-Employee Director Compensation Policy We have adopted a non-employee director compensation policy to enable us to attract and retain, on a long-term basis, highly qualified non-employee directors. Under the policy, our non-employee directors are eligible to receive cash retainers (which are payable quarterly in arrears and prorated for partial years of service) and equity awards as set forth below: Annual Retainer for Board Membership $35,000 for general availability and participation in meetings and conference calls of our board of directors Additional Annual Retainer for Committee Membership Audit Committee Chairperson: $ 15,000 Audit Committee member (other than Chairperson): $ 7,500 Compensation Committee Chairperson: $ 10,000 Compensation Committee member (other than Chairperson): $ 5,000 Nominating and Corporate Governance Committee Chairperson: $ 8,000 Nominating and Corporate Governance Committee member (other than Chairperson): $ 4,000 Science & Technology Committee Chairperson: $ 10,000 Science & Technology Committee member (other than Chairperson): $ 5,000 Additional Retainer for Non-Executive Chairperson of the Board: $ 30,000 In addition, our policy provides that, upon initial election or appointment to our board of directors, each new non-employee director will be granted a one-time grant of a non-statutory stock option to purchase 40,000 shares of our common stock on the date of such director’s election or appointment to the board of directors (the “Director Initial Grant”). The Director Initial Grant will vest in substantially equal monthly installments over three years, subject to the non-employee director’s continued services to us. On the date of each annual meeting of our stockholders, each non-employee director who will continue as a non-employee director following such meeting will be granted an annual award of a non-statutory stock option to purchase 20,000 shares of common stock (the “Director Annual Grant”). The Director Annual Grant will vest in full on the earlier of the one-year anniversary of the grant date or on the date of our next annual meeting of stockholders, subject to the non-employee director’s continued services to us. If a new non-employee director joins our board of directors on a date other than the date of our annual meeting of stockholders, then in lieu of the Director Annual Grant above, such non-employee director will be granted a pro-rata portion of the Director Annual Grant at the next annual meeting of stockholders based on the time between such non-employee director’s appointment and such next annual meeting of stockholders. The Director Initial Grant and Director Annual Grant are subject to full acceleration vesting upon the sale of our company. The aggregate amount of compensation, including both equity compensation and cash compensation, paid to any non-employee director for service as a non-employee director in a calendar year period will not exceed $1,000,000 in the first calendar year such individual becomes a non-employee director and $750,000 in any other calendar year. We will reimburse all reasonable out-of-pocket expenses incurred by directors for their attendance at meetings of our board of directors or any committee thereof. Employee directors will receive no additional compensation for their service as a director. Director Compensation Table The following table presents the total compensation for each of our non-employee directors who served as a member of our board of directors during the fiscal year ended December 31, 2023. Dr. Lehrer and Ms. Drapkin, who each served as a director and our President and Chief Executive Officer for a portion of 2023, did not receive any additional compensation for their services as a director. The compensation received by Ms. Drapkin and Dr. Lehrer, as our named executive officers, is presented in the “2023 Summary Compensation Table” in the “Executive Compensation” section below. Other than as set forth in the table and described more fully below, we did not pay any compensation, make any equity or awards to or reimburse any expenses of, any of our non-employee directors in 2023. Name Fees Earned or Paid in Cash ($) Option Awards ($)(1) All Other Compensation ($) Total ($) Abraham Bassan (2) $ 45,000 $ 38,398 $ — $ 83,398 Jerel Davis, Ph.D. (3) $ 46,500 $ 38,398 $ — $ 84,898 Kristen M. Hege, M.D. (4) $ 45,000 $ 38,398 $ — $ 83,398 Joseph Jimenez (5) $ 46,500 $ 38,398 $ — $ 84,898 Perry Karsen (6) $ 78,000 $ 38,398 $ — $ 116,398 Matthew Porteus, M.D., Ph.D. (7) $ 40,000 $ 38,398 $ 70,000 (8 ) $ 148,398 Carlo Rizzuto, Ph.D. (9) $ 45,000 $ 38,398 $ — $ 83,398 Smital Shah (10) $ 50,000 $ 38,398 $ — $ 88,398 Jo Viney, Ph. D. (11) $ 45,000 $ 38,398 $ — $ 83,398 111 (1) The amounts reported represent the aggregate grant date fair value of the stock options granted to our directors during the 2023 fiscal year, calculated in accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”), Topic 718. Such grant date fair values do not take into account any estimated forfeitures. The assumptions used in calculating the grant date fair value of the stock options reported in this column are set forth in notes 2 and 11 to our financial statements. The amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by our directors upon the exercise of the stock options or any sale of the underlying shares of common stock. (2) As of December 31, 2023, Mr. Bassan held options to purchase an aggregate of 80,000 shares of common stock. (3) As of December 31, 2023, Dr. Davis held options to purchase an aggregate of 80,000 shares of common stock. (4) As of December 31, 2023, Dr. Hege held options to purchase an aggregate of 133,585 shares of common stock. (5) As of December 31, 2023, Mr. Jimenez held (i) 153,815 shares of restricted stock from the early exercise of his options and (ii) options to purchase an aggregate of 52,469 shares of common stock. (6) As of December 31, 2023, Mr. Karsen held (i) 155,908 shares of restricted stock from the early exercise of his options and (ii) options to purchase an aggregate of 133,492 shares of common stock (7) As of December 31, 2023, Dr. Porteus held (i) 3,528,529 shares of founder restricted stock and (ii) options to purchase an aggregate of 40,000 shares of common stock. (8) Amount represents the advisor fees earned by Dr. Porteus during the fiscal year ended December 31, 2023. (9) As of December 31, 2023, Dr. Rizzuto held options to purchase an aggregate of 80,000 shares of common stock. (10) As of December 31, 2023, Ms. Shah held options to purchase an aggregate of 133,585 shares of common stock. (11) As of December 31, 2023, Dr. Viney held options to purchase an aggregate of 133,585 shares of common stock. Executive Officer Compensation Our named executive officers for the year ended December 31, 2023 are: • Kimberlee C. Drapkin, who has served as our interim President and Chief Executive Officer since August 21, 2023; • Josh Lehrer, M.D., our former President and Chief Executive Officer, who served as our President and Chief Executive Officer through August 21, 2023; and • Alethia Young, our former Chief Financial Officer, who served as our Chief Financial Officer through June 30, 2023. 2023 Summary Compensation Table The following table presents the compensation awarded to, earned by or paid to each of our named executive officers for the years indicated: Name and Principal Position Year Salary ($) Bonus ($) Option Awards ($) (1) Non-equity Incentive Plan Compensation ($) All Other Compensation ($) Total ($) Kimberlee C. Drapkin (2) 2023 200,521 — 71,148 — — 271,669 Interim President and Chief Executive Officer and Director Josh Lehrer, M.D. (3) 2023 361,778 — 1,050,446 (4) — 491,253 (5) 1,903,477 Former President, Chief Executive Officer and Director 2022 550,000 — 4,705,285 233,750 1,500 5,490,535 Alethia R. Young (6) 2023 232,950 — 385,164 (7) — 50,000 (8) 668,114 Former Chief Financial Officer 2022 337,500 170,000 1,212,715 115,274 151,350 1,986,839 _______________ (1) The amounts reported represent the aggregate grant date fair value of the stock options granted to Graphite’s named executive officers during the applicable fiscal year, calculated in accordance with FASB ASC Topic 718. Such grant date fair values do not take into account any estimated forfeitures. The assumptions used in calculating the grant date fair value of the stock options reported in this column are set forth in notes 2 and 11 to Graphite’s financial statements included herein for the year ended December 31, 2023. The amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by Graphite’s named executive officers upon the exercise of the stock options or any sale of the underlying shares of common stock. (2) Ms. Drapkin commenced employment with Graphite on August 21, 2023. Her 2023 annual base salary is pro-rated based on her employment commencement date. (3) Dr. Lehrer resigned as Chief Executive Officer on August 21, 2023 and transitioned to serve as a consultant to Graphite on such date. His 2023 annual base salary is pro-rated based on his resignation date. Dr. Lehrer did not receive any cash compensation for his services as a consultant to Graphite. (4) Includes an aggregate grant date fair value of $918,480 for Dr. Lehrer’s 2023 option grants as well as an incremental fair value of $131,966, in each case calculated in accordance with FASB ASC Topic 718, related to the modification of the Dr. Lehrer’s outstanding options to provide for the extension of their post-termination exercise periods. (5) Includes a payment equal to $286,000 pursuant to the Lehrer Retention Agreement, as well as severance payments in the amount of $190,667 in base salary continuation and $14,586 in COBRA premium reimbursements, made to Dr. Lehrer pursuant to the Lehrer Separation Agreement. (6) Ms. Young resigned as Chief Financial Officer, effective June 30, 2023. (7) Includes an aggregate grant date fair value of $336,776 for Ms. Young’s 2023 option grants as well as an incremental fair value of $48,388, in each case calculated in accordance with FASB ASC Topic 718, related to the modification of Ms. Young’s outstanding options to provide for the extension of their post-termination exercise periods. (8) Includes reimbursements for relocation housing assistance paid to Ms. Young for the first quarter of the fiscal year ended December 31, 2023. 112 Narrative to 2023 Summary Compensation Table Our compensation committee reviews compensation annually for all employees, including our executive officers. In setting executive base salaries and bonuses and granting equity incentive awards, the compensation committee considers compensation for comparable positions in the market, the historical compensation levels of our executive officers, individual performance as compared to our expectations and objectives, internal equity, our desire to motivate our employees to achieve short- and long-term results that are in the best interests of our stockholders, and a long-term commitment to us. We target a general competitive position, based on independent third-party benchmark analytics to inform the mix of compensation of base salary, bonus and long-term incentives. Our compensation committee is primarily responsible for determining the compensation for our executive officers. Our compensation committee typically reviews and discusses management’s proposed compensation with our Chief Executive Officer for all executives other than the Chief Executive Officer. Based on those discussions and its discretion, taking into account the factors noted above, the compensation committee then sets the compensation for each executive officer other than the Chief Executive Officer. For the Chief Executive Officer, our compensation committee determines and approves the compensation, or upon request of the board of directors, recommends our Chief Executive Officer’s compensation for approval by our board of directors. Our compensation committee may delegate certain authorities to an officer of the company and has delegated to our Chief Executive Officer the authority to make certain equity award grants to employees (other than our executive officers), within specified limits approved by the compensation committee. Our compensation committee has the authority to engage the services of a consulting firm or other outside advisor to assist it in designing our executive compensation programs and in making compensation decisions. During 2023, the compensation committee retained the services of Aon plc (“Aon”), formerly known as Radford, as its external compensation consultant to advise on executive compensation matters including our overall compensation program design and collection of market data to inform our compensation programs for our executive officers and members of our board of directors. Aon reports directly to our compensation committee. Our compensation committee annually assesses its independence consistent with Nasdaq’s listing standards and concluded that the engagement of such consultant did not raise any conflict of interest. Base Salaries The annual base salary for each of Ms. Drapkin, Dr. Lehrer and Ms. Young for the fiscal year ended December 31, 2023 was $550,000, $572,000, and $468,000, respectively. The pro-rated annual base salary for Ms. Drapkin from her hiring on August 21, 2023 to December 31, 2023 was $200,521. The pro-rated annual base salaries for Dr. Lehrer and Ms. Young from January 1, 2023 to their respective employment termination dates were $361,778 and $232,950, respectively. Graphite’s compensation committee reviews the base salaries of Graphite’s executive officers, including Graphite’s named executive officers, from time to time and makes adjustments (or, in the case of our Chief Executive Officer, may recommend adjustments for approval by the Graphite board of directors) as it determines to be reasonable and necessary to reflect the scope of the executive officer’s performance, contributions, responsibilities, experience, prior salary level, position (in the case of a promotion) and market conditions, including base salary amounts relative to similarly situated executive officers at peer group companies. Bonuses Ms. Drapkin does not have a target annual bonus and does not participate in any of our incentive compensation plans. The target annual bonuses for Dr. Lehrer and Ms. Young from January 1, 2023 through the termination of their respective employments were 50%, and 40%, respectively, of the applicable named executive officer’s annual base salary. Both Dr. Lehrer and Ms. Young terminated employment with us prior to December 31, 2023 and, as such, did not receive an annual bonus (or any portion thereof) for 2023. Equity Compensation During the fiscal year ended December 31, 2023, we granted stock option awards to each of our named executive officers, as described in more detail in the “Outstanding Equity Awards at Fiscal 2023 Year-End” table. Perquisites or Personal Benefits We generally do not provide significant perquisites or personal benefits to our employees with an aggregate equal to or greater than $10,000, other than reimbursements for relocation expenses for Ms. Young. 401(k) Plan We maintained a tax-qualified retirement plan (the “401(k) Plan”) through December 31, 2023 that provided eligible U.S. employees with an opportunity to save for retirement on a tax-advantaged basis. Plan participants were able to defer eligible compensation subject to applicable annual Code limits. We were able to provide matching contributions under the 401(k) Plan, but did not provide any such contributions during the 2023 fiscal year. The 401(k) Plan was intended to be qualified under Section 401(a) of the Code with the 401(k) Plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) Plan and earnings on those contributions were not taxable to the employees until distributed from the 401(k) Plan. We terminated the 401(k) Plan on December 31, 2023. Executive Employment Arrangements 113 We have entered into an offer letter with each of the named executive officers in connection with his or her employment with us, which set forth the terms and conditions of his or her employment. Each named executive officer has also entered into our standard proprietary information and inventions agreement. Employment and Severance Agreements in Place During the Fiscal Year Ended December 31, 2023 for Our Named Executive Officers Kimberlee C. Drapkin On August 21, 2023, we entered into an offer letter with Ms. Drapkin (the “Drapkin Letter”), for the position of interim Chief Executive Officer. The Drapkin Letter provides for Ms. Drapkin’s at-will employment. Ms. Drapkin’s current base salary is $550,000, which is subject to periodic review and adjustment. Ms. Drapkin is eligible to participate in the employee benefit plans generally available to our employees. The Drapkin Letter also provides that Ms. Drapkin will be entitled to cash severance payments in the amount of (i) $400,000 in the event of a termination of her employment other than for cause or death upon or within 12 months after the closing of a Strategic Transaction (as defined in the Drapkin Letter and which includes the merger), plus an additional $200,000 if the definitive agreement for such Strategic Transaction is executed within three (3) months after the Start Date or (ii) $350,000 in the event of a termination of her employment other than for cause or death upon or within 12 months after our board of directors’ approval of our plan of dissolution under Delaware law, in each case subject to Ms. Drapkin’s execution and non-revocation of a separation agreement and release, as further provided in the Drapkin Letter. In addition, in connection with Ms. Drapkin’s appointment as a member of our board of directors, on July 28, 2023, Ms. Drapkin received an initial equity grant in the amount of 40,000 shares of Graphite common stock, which vests in substantial equal monthly installments over a period of three years, subject to Ms. Drapkin’s continued services to us. Such initial grant is subject to full accelerated vesting upon our sale, including the merger. Ms. Drapkin did not receive any additional compensation, including cash retainers, for her services as a director. Josh Lehrer, M.D. On March 21, 2023, we entered into a retention agreement with Dr. Lehrer (the “Lehrer Retention Agreement”), which provided for a lump sum cash payment equal to 50% of Dr. Lehrer’s then-current annualized base salary, payable upon the earliest of (A) a termination by us other than for “cause,” as defined in the Lehrer Retention Agreement, death or disability, (B) a resignation for “good reason,” as defined in the Lehrer Retention Agreement, and (C) February 22, 2024, provided that clauses (A) and (B) above shall be subject to the execution and delivery of an effective release of claims in our favor. In addition, the Lehrer Retention Agreement provided for (i) the full acceleration of vesting of 50% of any outstanding and unvested equity awards granted in 2023 to Dr. Lehrer in the event he is terminated by us other than for cause or due to death or disability, or he resigns after June 30, 2023, and (ii) an extension of the exercise period for all stock options held by Dr. Lehrer at the time his employment is terminated until the earlier of (i) 12 months following such termination and (ii) the applicable expiration date of the stock option. On September 7, 2023, we and Dr. Lehrer entered into a separation and release agreement (the “Lehrer Separation Agreement”), pursuant to which Dr. Lehrer is entitled to, in addition to the retention entitlements included in the Lehrer Retention Agreement, (i) a separation payment in the amount of $47,666.67 per month for a period of twelve (12) months and (ii) COBRA continuation coverage for twelve (12) months following August 21, 2023 (the “Termination Date”), or until he has commenced other employment and is eligible for healthcare coverage under the new employer’s plan, whichever comes first. Pursuant to the Lehrer Separation Agreement, Dr. Lehrer will continue to serve as a consultant to us until the earlier of (i) twelve (12) months from the Termination Date or (ii) the date of completion of a Strategic Transaction (as defined in the Lehrer Separation Agreement and which includes the merger) (the “Post- Employment Consulting Period”). During the Post-Employment Consulting Period, Dr. Lehrer’s outstanding equity awards in us will continue to vest in accordance with their existing terms as in effect as of the Termination Date; provided, that in the event the Post-Employment Consulting Period ends upon the consummation of a Strategic Transaction prior to February 21, 2024, we shall accelerate the vesting of a number of shares equal to the number of shares subject to Dr. Lehrer’s equity awards that would otherwise have vested through February 21, 2024 had his service relationship with us continued through such period (or such lesser amount then remaining unvested thereunder). Alethia Young Ms. Young resigned as our Chief Financial Officer, effective June 30, 2023. Although she did not enter into a separation agreement with us upon her resignation, fifty percent (50%) of the outstanding and unvested equity awards granted in 2023 to Ms. Young were immediately vested and the post termination exercise period for all options was extended from three (3) months to twelve (12) months. Executive Severance Plan Our board of directors has adopted an Executive Severance Plan (the “Severance Plan”), in which our named executive officers, and certain other executives, participate. The benefits provided in the Severance Plan replace any severance for which our named executive officers may be eligible under their existing offer letters or other agreements or arrangements. 114 The Severance Plan provides that upon a termination by us for any reason other than for “cause,” as defined in the Severance Plan, death or “disability,” as defined in the Severance Plan, or resignation for “good reason”, as defined in the Severance Plan, in each case outside of the change in control period (i.e., the period of one year after a “change in control,” as defined in the Severance Plan), an eligible participant will be entitled to receive, subject to the execution and delivery of an effective release of claims in favor of the Company and continued compliance with all applicable restrictive covenants, (i) 12 months of “base salary” (i.e., the higher of the annual base salary in effect immediately prior to the date of termination or the annual base salary in effect for the year immediately prior to the year in which the date of termination occurs) for our Chief Executive Officer, 9 months for Tier 2 officers (which is determined by the plan administrator and includes the named executive officers other than the Chief Executive Officer) and 6 months for Tier 3 officers (which is determined by the plan administrator) and (ii) an amount equal to the monthly employer contribution, based on the premiums as of the date of termination, that we would have made to provide health insurance for the named executive officer if he or she had remained employed by us for up to 12 months for our Chief Executive Officer, 9 months for Tier 2 officers and 6 months for Tier 3 officers. The payments under (i) and (ii) will be paid in substantially equal installments in accordance with our payroll practice over 12 months for our Chief Executive Officer, 9 months for Tier 2 officers and 6 months for Tier 3 officers. The Severance Plan also provides that upon a (A) termination by us other than for cause, death or disability or (B) resignation for good reason, in each case within the change in control period, an eligible participant will be entitled to receive, in lieu of the payments and benefits above and subject to the execution and delivery of an effective release of claims in favor of the company and continued compliance with all applicable restrictive covenants, (I) a lump sum amount equal to 150% of the base salary and 150% of the target annual bonus in effect immediately prior to the date of termination (or immediately prior to the change in control, if higher) for our Chief Executive Officer, 100% of the base salary and 100% of the target annual bonus in effect immediately prior to the date of termination (or immediately prior to the change in control, if higher) for our Tier 2 officers and 75% of the base salary for our Tier 3 officers, (II) a lump sum amount equal to the eligible participant’s annual target bonus in effect immediately prior to such termination, pro-rated for the number of days of service provided by the participant during the year of the termination, (III) a lump sum amount equal to the monthly employer contribution, based on the premiums as of the date of termination, that we would have made to provide health insurance for the participant if the applicable named executive officer had remained employed by us for 18 months for our Chief Executive Officer, 12 months for our Tier 2 officers and 9 months for our Tier 3 officers, and (IV) for all outstanding and unvested equity awards that are subject to time-based vesting held by the participant, full accelerated vesting of such awards; provided, that the performance conditions applicable to any outstanding and unvested equity awards subject to performance-based vesting will be deemed satisfied at the target level specified in the terms of the applicable award agreement. The payments and benefits provided under the Severance Plan in connection with a change in control may not be eligible for a federal income tax deduction by us pursuant to Section 280G of the Code. These payments and benefits may also subject an eligible participant, including the named executive officers, to an excise tax under Section 4999 of the Code. If the payments or benefits payable in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Code, then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to the participant. Outstanding Equity Awards at Fiscal 2023 Year-End The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2023: Option Awards (1) Stock Awards (1) Name Grant Date Vesting Commencement Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) (2) Kimberlee C. Drapkin 7/28/2023 7/28/2023 5,555 (3) 34,445 $ 2.52 7/27/2033 — Josh Lehrer, M.D. 4/20/2020 4/20/2020 — — $ — — 55,867 (4) 146,372 5/20/2020 4/20/2020 — — $ — — 9,095 (4) 23,829 1/13/2021 4/20/2020 — — $ — — 31,168 (4)(5) 81,660 3/17/2021 3/17/2021 546,697 (6) 248,499 $ 6.11 3/16/2031 — — 3/17/2021 3/17/2021 234,298 (6)(7) 106,500 $ 6.11 3/16/2031 — — 2/16/2022 1/1/2022 311,458 (6) 338,542 $ 11.02 2/15/2032 — — 2/21/2023 1/1/2023 450,000 (8) 150,000 $ 2.18 2/20/2033 — — Alethia R. Young 4/1/2022 4/1/2022 109,375 350,000 $ 5.23 7/3/2024 — — 2/21/2023 1/1/2023 110,000 (9) 110,000 $ 5.23 7/3/2024 — — _______________ (1) Each equity award is subject to the terms of Graphite’s 2020 Stock Option Plan, as amended (the “2020 Plan”), or Graphite’s 2021 Stock Option Plan, as amended 115 (the “2021 Plan”). Grants made subsequent to June 24, 2021 are subject to the terms of the 2021 Plan. (2) Based on the closing price of a share of the Graphite common stock on December 29, 2023, the last business day of the most recently completed fiscal year, which was $2.62. (3) The shares of common stock underlying the option vest in 36 equal monthly installments following the vesting commencement date, subject to the named executive officer’s continuous service relationship with Graphite through each applicable vesting date. Notwithstanding the foregoing, in connection with (and contingent on) the consummation of the merger, all unvested shares shall immediately vest and become exercisable. (4) The shares of restricted stock vest as follows: 25% of the shares on the first anniversary of the vesting commencement date and the remaining 75% in 36 equal monthly installments thereafter, subject to the named executive officer’s continuous service relationship with Graphite through each applicable vesting date, including his continuous service relationship as a consultant to Graphite. During his post-employment consulting period, Dr. Lehrer’s outstanding equity awards will continue to vest in accordance with the foregoing terms; provided, that in the event the consummation of the merger occurs prior to February 21, 2024, Graphite shall accelerate the vesting of a number of shares equal to the number of shares subject to Dr. Lehrer’s equity awards that would otherwise have vested through February 21, 2024 had Dr. Lehrer’s service relationship with Graphite continued through such period (or such lesser amount then remaining unvested thereunder). The foregoing vesting schedule is discussed further in the section of this Form 10-K titled “Graphite Executive Compensation—Narrative to 2023 Summary Compensation Table—Executive Employment Arrangements—Josh Lehrer, M.D.” above. (5) The named executive officer received an early exercisable stock option award, which the named executive officer early exercised in its entirety. (6) The shares of Graphite common stock underlying the option vest in 48 equal monthly installments following the vesting commencement date, subject to the named executive officer’s continuous service relationship with Graphite through each applicable vesting date. Notwithstanding the foregoing, during his post-employment consulting period, Dr. Lehrer’s outstanding equity awards shall continue to vest in accordance with the foregoing terms; provided, that in the event the consummation of the merger occurs prior to February 21, 2024, Graphite shall accelerate the vesting of a number of shares equal to the number of shares subject to Dr. Lehrer’s equity awards that would otherwise have vested through February 21, 2024 had Dr. Lehrer’s service relationship with Graphite continued through such period (or such lesser amount then remaining unvested thereunder. The foregoing vesting schedule is discussed further in the section of this Form 10-K titled “Graphite Executive Compensation—Narrative to 2023 Summary Compensation Table—Executive Employment Arrangements—Josh Lehrer, M.D.” above. (7) The option was granted subject to the achievement by Graphite of performance vesting criteria. On June 29, 2021, the performance vesting criteria was met such that the option became subject to time-based vesting in accordance with the vesting schedule described in footnote (6) above. (8) The shares of common stock underlying the option vest in 48 equal monthly installments following the vesting commencement date, subject to the named executive officer’s continuous service relationship with the Company through each applicable vesting date. Notwithstanding the foregoing, pursuant to the Lehrer Separation Agreement, 50% of the unvested shares underlying such option accelerated upon his termination with Graphite (i.e., August 21, 2023), and the remaining unvested shares shall continue to vest during his post-employment consulting period in accordance with the foregoing vesting terms; provided, that in the event the consummation of the merger occurs prior February 21, 2024, Graphite shall accelerate the vesting of a number of shares equal to the number of shares subject to Dr. Lehrer’s equity awards that would otherwise have vested through February 21, 2024 had Dr. Lehrer’s service relationship with Graphite continued through such period (or such lesser amount then remaining unvested thereunder). The foregoing vesting schedule is discussed further in the section of this Form 10-K titled “Graphite Executive Compensation—Narrative to 2023 Summary Compensation Table—Executive Employment Arrangements—Josh Lehrer, M.D.” above. (9) The shares of common stock underlying the option vest in 48 equal monthly installments following the vesting commencement date, subject to Ms. Young’s continuous service relationship with the Company through each applicable vesting date. Notwithstanding the foregoing, upon Ms. Young’s resignation, fifty percent (50%) of the unvested shares underlying such option accelerated and the remaining unvested shares of Graphite common stock were forfeited. Securities Authorized for Issuance under Equity Compensation Plans Equity Compensation Plan Information The following table provides information as of December 31, 2023 with respect to the shares of our common stock that may be issued under our existing equity compensation plans. Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights (1) Number of securities remaining available for future issuance under equity compensation plans (excluding securities in first column) Plan Category Equity compensation plans approved by security holders (2) 5,376,373 $ 6.58 10,798,817 (3) Equity compensation plans not approved by security holders — $ — — Total 5,376,373 $ 6.58 10,798,817 _______________ 116 (1) The weighted average exercise price is calculated based solely on outstanding stock options. (2) Includes the following plans: our 2021 Plan, our 2020 Plan, and our 2021 Employee Stock Purchase Plan (the “2021 ESPP”). (3) As of December 31, 2023, a total of 10,798,817 shares of Graphite common stock have been reserved for issuance pursuant to the 2021 Plan, which number excludes the 2,900,419 shares that were added to the plan as a result of the automatic annual increase on January 1, 2024. The number of shares of Graphite common stock reserved and available for issuance under the 2021 Plan is subject to an automatic annual increase on each January 1, beginning January 1, 2022, by an amount equal to the lesser of: (i) 5% of the number of shares of Graphite common stock issued and outstanding on the immediately preceding December 31, and (ii) such lesser number of shares of Graphite common stock as determined by the Graphite board of directors or its compensation committee. This number will be subject to adjustment in the event of a stock split, stock dividend or other change in Graphite’s capitalization. The shares of Graphite common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by Graphite prior to vesting, satisfied without the issuance of stock, expire or are otherwise terminated, other than by exercise, under the 2021 Plan and the 2020 Plan will be added back to the shares of Graphite common stock available for issuance under the 2021 Plan. Graphite no longer makes grants under the 2020 Plan. As of December 31, 2023, a total of 1,253,729 shares of Graphite common stock have been reserved for issuance pursuant to the 2021 ESPP, which number excludes the 564,000 shares that were added to the plan as a result of the automatic annual increase on January 1, 2024. The number of shares of Graphite common stock reserved and available for issuance under the 2021 ESPP is subject to an automatic annual increase on each January 1, beginning January 1, 2022, by an amount equal to the least of: (i) 564,000 shares of common stock, (ii) 1% of the number of shares of Graphite common stock issued and outstanding on the immediately preceding December 31, and (iii) such lesser number of shares of Graphite common stock as determined by the Graphite board of directors or its compensation committee. This number will be subject to adjustment in the event of a stock split, stock dividend or other change in Graphite’s capitalization. Item 12. Security Ownership of Certain Beneficial O wners and Management and Related Stockholder Matters. The following table sets forth information, to the extent known by us or ascertainable from public filings, with respect to the beneficial ownership of our common stock as of February 1, 2024 by: • each of our directors; • each of our named executive officers; • all of our directors and executive officers as a group; and • each person, or group of affiliated persons, who is known by us to beneficially own greater than 5.0% of our outstanding common stock. The column entitled “Shares Beneficially Owned” is based on a total of 58,232,864 shares of our common stock outstanding as of February 1, 2024. Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to our common stock. Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of February 1, 2024 are considered outstanding and beneficially owned by the person holding the options for the purpose of calculating the percentage ownership of that person but not for the purpose of calculating the percentage ownership of any other person. Except as otherwise noted, the persons and entities in this table have sole voting and investing power with respect to all of the shares of our common stock beneficially owned by them, subject to community property laws, where applicable. Except as otherwise indicated in the table below, addresses of named beneficial owners are in care of Graphite Bio, Inc., 611 Gateway Blvd, Suite 120, South San Francisco, CA, 94080. 117 Shares beneficially owned Name Number Percentage 5% or Greater Stockholders: Entities Affiliated with Versant Ventures (1) 16,416,117 28.19 % Entities Affiliated with Samsara BioCapital (2) 8,497,067 14.59 % Entities Affiliated with EcoR1 Capital LLC (3) 8,538,446 14.66 % Matthew Porteus, M.D., Ph.D. (4) 3,548,529 6.09 % Named Executive Officers and Directors: Kimberlee C. Drapkin (5) 8,888 * Josh Lehrer, M.D. (6) 2,899,270 4.83 % Alethia Young (7) 219,375 * Perry Karsen (8) 272,851 * Abraham Bassan (9) 56,666 * Jerel Davis, Ph.D. (10) 56,666 * Kristen M. Hege, M.D. (11) 113,585 * Joseph Jimenez (12) 191,292 * Matthew Porteus, M.D., Ph.D. (4) 3,548,529 6.09 % Carlo Rizzuto, Ph.D. (13) 56,666 * Smital Shah (14) 119,467 * Jo Viney, Ph.D. (15) 113,585 * All executive officers and directors as a group (12 persons) (16) 7,656,840 12.58 % _______________ * Represents beneficial ownership of less than one percent. (1) Based on Amendment No. 1 to Schedule 13D filed on November 17, 2023. Consists of (i) 14,708,398 shares of common stock held by Versant Venture Capital VI, L.P., (“Versant VI”), and (ii) 1,707,719 shares of common stock held by Versant Vantage II, L.P. (“Versant Vantage II”, and together with Versant IV, the “Versant Funds”). Versant Ventures VI GP-GP, LLC (“Versant Ventures VI GP-GP”) is the general partner of Versant Ventures VI GP, L.P. (“Versant Ventures VI GP”), which is the general partner of Versant VI. Each of Versant Ventures VI GP-GP and Versant Ventures VI GP share voting and dispositive power with respect to the shares held by Versant VI. Versant Vantage II GP-GP, LLC (“Versant Vantage II GP-GP”) is the general partner of Versant Vantage II GP, L.P. (“Versant Vantage II GP”), which is the general partner of Versant Vantage II. Each of Versant Vantage II GP and Versant Vantage II GP-GP share voting and dispositive power with respect to the shares held by Versant Vantage II. The address for the Versant Funds is One Sansome Street, Suite 1650, San Francisco, CA 94104. (2) Based on a Schedule 13G/A filed on February 14, 2023. Consists of (i) 8,459,314 shares of common stock held by Samsara BioCapital, L.P. (“Samsara LP”) and (ii) 37,753 shares of common stock held by 436, L.P. The general partner of Samsara LP is Samsara BioCapital GP, LLC, or Samsara LLC. The general partner of 436, L.P. is 436, LLC. Voting and dispositive decisions with respect to the shares held by Samsara LP and 436, L.P. are made by Dr. Srinivas Akkaraju, MD, Ph.D., a manager of Samsara GP LLC and 436, LLC, and, accordingly, Dr. Akkaraju may be deemed to beneficially own the shares held by Samsara LP. And 436, L.P. The address of the principal business and office of Samsara LP and 436, L.P. is 628 Middlefield Road, Palo Alto, CA 94301. (3) Based on a Schedule 13G/A filed on January 9, 2023. Consists of 8,538,446 shares of common stock held by EcoR1 Capital, LLC (“EcoR1”), EcoR1 Capital Fund Qualified, L.P. (“Qualified Fund”) and Oleg Nodelman. The general partner and investment adviser of investment funds, including Qualified Fund, is EcoR1. Mr. Nodelman is the control person of EcoR1. The principal business office of EcoR1, Qualified Fund, and Oleg Nodelman is 357 Tehama Street #3, San Francisco, CA 94103. (4) Consists of (i) 3,528,529 shares of common stock held by Dr. Porteus, and (ii) 20,000 shares of common stock underlying options directly held by Dr. Porteus exercisable within 60 days of February 1, 2024. (5) Consists of 8,888 shares of common stock underlying options held by Ms. Drapkin exercisable within 60 days of February 1, 2024. (6) Consists of (i) 1,161,670 shares of common stock held by Dr. Lehrer, and (ii) 1,737,600 shares of common stock underlying options directly held by Dr. Lehrer exercisable within 60 days of February 1, 2024. (7) Consists of 219,375 shares of common stock underlying options held by Ms. Young exercisable within 60 days of February 1, 2024. (8) Consists of (i) 164,034 shares of common stock held by Mr. Karsen, and (ii) 108,817 shares of common stock underlying options directly held by Mr. Karsen exercisable within 60 days of February 1, 2024. (9) Consists of 56,666 shares of common stock underlying options directly held by Mr. Bassan exercisable within 60 days of February 1, 2024. Mr. Bassan, a member of our board of directors, is a vice president at Samsara BioCapital. Mr. Bassan has no voting or dispositive power over the shares held by the Samsara BioCapital entities referred to in Footnote 2 above. (10) Consists of 56,666 shares of common stock underlying options directly held by Dr. Davis exercisable within 60 days of February 1, 2024. Dr. Davis, a member of our board of directors, is a Managing Director at Versant Ventures. Dr. Davis has no voting or dispositive power over the shares held by the Versant Ventures entities referred to in Footnote 1 above. (11) Consists of 113,585 shares of common stock underlying options held by Dr. Hege exercisable within 60 days of February 1, 2024. (12) Consists of (i) 161,941 shares of common stock held by Mr. Jimenez, and (ii) 29,351 shares of common stock underlying options held by Mr. Jimenez exercisable within 60 days of February 1, 2024. (13) Consists of 56,666 shares of common stock underlying options directly held by Dr. Rizzuto exercisable within 60 days of February 1, 2024. Dr. Rizzuto, a member of our board of directors, is a Partner at Versant Ventures. Dr. Rizzuto has no voting or dispositive power over the shares held by the Versant Ventures entities referred to in Footnote 1 above. (14) Consists of (i) 5,882 shares of common stock held by Ms. Shah, and (ii) 113,585 shares of common stock underlying options held by Ms. Shah exercisable within 60 days of February 1, 2024. (15) Consists of 113,585 shares of common stock underlying options held by Dr. Viney exercisable within 60 days of February 1, 2024. (16) Includes the number of shares beneficially owned by our current executive officers and directors listed in the table above. 118 Item 13. Certain Relationships and Related Transactions, and Director Independence. Certain Relationships and Transactions Other than the compensation agreements and other arrangements described under “Executive Compensation” and “Non-Employee Director Compensation” in this Form 10-K, and the transactions described below, since January 1, 2023, there has not been and there is not currently proposed, any transaction or series of similar transactions to which we were, or will be, a party in which the amount involved exceeded, or will exceed, $120,000 (or, if less, 1% of the average of our total assets amounts at December 31, 2021 and 2022) and in which any director, executive officer, holder of five percent or more of any class of our capital stock or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest. License and Option to Acquire Nula-Cel Assets On August 4, 2023, we entered into a license and option agreement with Kamau (the “LOA”) pursuant to which we exclusively licensed to Kamau, and granted Kamau, an option to acquire, certain intellectual property and materials related to our nula-cel program and related pre-clinical platform assets. The option includes rights to assume the License Agreement and the First Option Agreement with Stanford, as well as the IDT License Agreement, among other agreements. Exercise of the option is contingent on Kamau raising a minimum of $10 million in funds no later than August 4, 2024 (the “Financing Milestone”), which contingency may be waived by us. All rights to the intellectual property and materials will revert to us if the milestone is not achieved or if Kamau elects not to exercise the option. In return for this license and option, we received an equity interest in Kamau representing 20% of all outstanding shares on a fully diluted basis subject to dilution protection until the Financing Milestone. The LOA includes customary representations and warranties, limitations of liability and indemnification obligations for a transaction of this nature. The LOA automatically expires upon the first to occur of: (1) Kamau’s exercise of the option, (2) Kamau’s failure to exercise the option within a specified exercise period following achievement of the financing milestone, or (3) Kamau’s failure to achieve the financing milestone by the pre-agreed deadline. In addition, either party has the right to terminate the LOA for the uncured material breach or insolvency of the other party, and we have the right to terminate the LOA if Kamau challenges any of the patent rights that are subject to the option. As a result of the 20% equity interest, we have the ability to exert significant influence over Kamau and accounts for the interest as an equity method investment. We record our proportionate share of investee’s equity in earnings or losses based on the most recently available financial information. Dr. Porteus is a director and stockholder of us and is the founder and chief executive officer of Kamau. On September 12, 2023, we entered into an amendment to the LOA with Kamau, under which we agreed to assign certain contracts to Kamau prior to exercise of the option. As of December 31, 2023, Kamau has not achieved the financial milestone and does not have the right to exercise the option. Sale of Non-Genotoxic Targeted Conditioning Technology Assets On August 1, 2023, we entered into an asset purchase agreement with Maro pursuant to which we sold to Maro, concurrently with the execution of the asset purchase agreement, certain assets related to our non-genotoxic conditioning technology in exchange for upfront consideration of $0.5 million. Maro is formed by Samsara BioCapital and funds affiliated with Versant Ventures, both of which are greater than 5% stockholders of us. Additional consideration included certain contingent milestone payments totaling up to approximately $1.0 million in the aggregate, and potential fees upon the completion of certain transactions by the acquirer. The asset purchase agreement also provided for reimbursement of certain research and development amounts incurred prior to closing of approximately $0.6 million as well as certain transition services to be provided by Graphite or Maro. Under the asset purchase agreement, Maro will also pay us a sub single digit percentage cash royalty of worldwide net sales of certain products incorporating the acquired technology. The royalty term will terminate on a product-by-product and country-by-country basis on the latest of (i) the ten (10) year anniversary of the first commercial sale of such product in such country, (ii) the expiration of the last-to-expire valid claim of a transferred patent that covers such product in such country, and (iii) the expiration of regulatory exclusivity with respect to such product in such country. The asset purchase agreement also includes customary representations and warranties, covenants and indemnification obligations for a transaction of this nature. Support Agreements Under the Merger Agreement with LENZ Concurrently with the execution of the Merger Agreement, certain of our stockholders, owning in the aggregate approximately 52% of the outstanding shares of our common stock, entered into support agreements to vote all of their shares of our common stock in favor of each proposal as set forth in the Registration Statement on Form S-4, as filed with the SEC on December 6, 2023, as amended (the “Graphite Stockholder Proposals”). In the event our board changes its recommendation, then the aggregate number of shares of our common stock subject to the support agreements will automatically be reduced on a pro rata basis so that the aggregate number of such shares of our common stock shall collectively only constitute the greater of (a) 20% of the outstanding shares of our capital stock or (b) 30% of the votes cast in support of the Graphite Stockholder Proposals. Lock-Up Agreements 119 Concurrently with the execution of the Merger Agreement, certain of our executive officers, directors and stockholders have entered into lock-up agreements with our company, pursuant to which such parties have agreed not to, except in limited circumstances, sell or transfer their shares of our common stock, for the 90-day period following the closing. The stockholders who have executed lock-up agreements as of November 14, 2023 owned in the aggregate approximately 43% of the shares of our outstanding capital stock. Policies for Approval of Related Party Transactions Prior to our IPO, we did not have a formal policy regarding approval of transactions with related parties. We have adopted a written related person transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of related person transactions. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and any related person are, were, or will be participants and in which the amount involved exceeds $120,000 or one percent of our total assets at year-end for the last two completed fiscal years. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A related person is any executive officer, director, or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons. Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our audit committee, or, if audit committee approval would be inappropriate, to another independent body of our board of directors, for review, consideration, and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction, and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from each director, executive officer, and, to the extent feasible, significant stockholder to enable us to identify any existing or potential related person transactions and to effectuate the terms of the policy. In addition, under our Code of Business Conduct and Ethics, our employees and directors have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related person transactions, our audit committee, or other independent body of our board of directors, will take into account the relevant available facts and circumstances including, but not limited to: • the risks, costs, and benefits to us; • the impact on a director’s independence in the event that the related person is a director, immediate family member of a director, or an entity with which a director is affiliated; • the availability of other sources for comparable services or products; and • the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. The policy requires that, in determining whether to approve, ratify, or reject a related person transaction, our audit committee, or other independent body of our board of directors, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our stockholders, as our audit committee, or other independent body of our board of directors, determines in the good faith exercise of its discretion. All of the transactions described above were entered into prior to the adoption of the written policy, but all were approved by our board of directors considering similar factors to those described above. Director Independence Our common stock is listed on The Nasdaq Global Market. Under the Nasdaq listing rules, independent directors must comprise a majority of a listed company’s board of directors within twelve months from the date of listing. In addition, the Nasdaq listing rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent within twelve months from the date of listing. Audit committee members must also satisfy additional independence criteria, including those set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and compensation committee members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act. Under Nasdaq listing rules, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3 under the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries, other than compensation for board service; or (2) be an affiliated person of the listed company or any of its subsidiaries. In order to be considered independent for purposes of Rule 10C-1, the board of directors must consider, for each member of a compensation committee of a listed company, all factors specifically relevant to determining whether a 120 director has a relationship to such company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: the source of compensation of the director, including any consulting advisory or other compensatory fee paid by such company to the director, and whether the director is affiliated with the company or any of its subsidiaries or affiliates. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors has determined that all members of the board of directors, except Ms. Drapkin and Dr. Porteus, are independent directors, including for purposes of Nasdaq and the SEC rules. In making such independence determination, our board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances that our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. In considering the independence of the directors listed above, our board of directors considered the association of our directors with the holders of more than 5% of our common stock and with licensors and service providers of our Company. We expect that the composition and functioning of our board of directors and each of our committees will comply with all applicable requirements of Nasdaq and the rules and regulations of the SEC. Ms. Drapkin is not an independent director under these rules because she is currently employed as the interim chief executive officer of our Company, and Dr. Porteus is not an independent director under these rules because he is currently providing services to us as a paid consultant and has an affiliation with our licensor and service provider. Item 14. Principal Accou ntant Fees and Services. Our independent public accounting firm is Deloitte & Touche LLP , San Francisco, CA , PCAOB Auditor ID 34 . Graphite Bio incurred the following fees from Deloitte & Touche LLP for the audit of the financial statements and for other services provided during the years ended December 31, 2023 and 2022. 2023 2022 Audit Fees (1) $ 2,648,839 $ 1,118,341 Audit-Related Fees (2) — — Tax Fees (3) — — All Other Fees (4) — — $ 2,648,839 $ 1,118,341 _______________ (1) Audit fees for the fiscal years ended December 31, 2023 and 2022 consist of fees for professional services rendered for the audit, quarterly review of our financial statements filed with the SEC on Form 10-K, 10-Q and services provided in connection with SEC filings, including consents and comfort letters, and matters related to the Merger including required filings (2) Audit-related fees consist of services that are reasonably related to the performance of the audit or review of our financial statements. There were no such fees incurred in 2023 or 2022. (3) Tax Fees consist of fees for tax compliance, advice and tax planning and includes fees for tax return preparation. (4) There were no other fees incurred in 2023 or 2022. Audit Committee Pre-approval Policy and Procedures Our audit committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm. This policy provides that we will not engage our independent registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by our audit committee or the engagement is entered into pursuant to the pre-approval procedure described below. From time to time, our audit committee may pre-approve specified types of services that are expected to be provided to us by our independent registered public accounting firm during the next twelve (12) months. Any such pre-approval details the particular service or type of services to be provided and is also generally subject to a maximum dollar amount. During our 2023 and 2022 fiscal years, no services were provided to us by Deloitte & Touche LLP other than in accordance with the pre-approval policies and procedures described above. 121 PART IV Item 15. Exhibits, Finan cial Statement Schedules. Exhibit Number Description 2.1 Agreement and Plan of Merger, dated as of November 14, 2023, by and among Graphite Bio, Inc., Generate Merger Sub, Inc. and LENZ Therapeutics, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K (File No. 001-40532) filed on November 15, 2023). 3.1 Amended and Restated Certificate of Incorporation, as currently in effect (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-40532) filed on June 30, 2021) . 3.2 Amended and Restated Bylaws, as currently in effect (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-40532) filed on June 30, 2021) . 4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 11, 2021) . 4.2 Amended and Restated Investors’ Rights Agreement by and among the Registrant and certain of its stockholders, dated March 11, 2021 (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 4, 2021) . 4.3 Description of Registrant’s Securities (incorporated by reference to Exhibit 4.3 to the Registrant's Annual Report on Form 10-K (File No. 001-40532) filed on March 21, 2022). 10.1# 2020 Stock Option and Grant Plan and forms of award agreements thereunder (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 4, 2021). 10.2# 2021 Stock Option and Incentive Plan and forms of award agreements thereunder (incorporated by reference to Exhibit 10.2 to Amendment No. 2 the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 21, 2021). 10.3# 2021 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.3 to Amendment No. 2 the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 21, 2021). 10.4# Senior Executive Cash Incentive Bonus Plan (incorporated by reference to Exhibit 10.4 to Amendment No. 2 the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 21, 2021). 10.5# Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.5 to Amendment No. 2 the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 21, 2021). 10.6 Forms of Indemnification Agreement by and between the Registrant and each of its directors and officers (incorporated by reference to Exhibit 10.9 to Amendment No. 2 the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 21, 2021). 10.7 Office Lease, by and between the Registrant and ARE-San Francisco No. 12, LLC, dated April 24, 2020, as amended by the First Amendment to Lease dated March 3, 2021 (incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 4, 2021). 10.8 Laboratory Lease, by and between the Registrant and ARE-San Francisco No. 65, LLC, dated February 26, 2021 (incorporated by reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 4, 2021). 10.9 Exclusive License Agreement by and between the Registrant and The Board of Trustees of the Leland Stanford Junior University, dated December 7, 2020 (incorporated by reference to Exhibit 10.12 to Amendment No. 2 the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 21, 2021) . 10.10† Amendment No. 1 to the Exclusive License Agreement by and between the Registrant and The Board of Trustees of the Leland Stanford Junior University, dated March 4, 2021 (incorporated by reference to Exhibit 10.13 to Amendment No. 2 the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 21, 2021) 10.11† Amendment No. 2 to the Exclusive License Agreement by and between the Registrant and The Board of Trustees of the Leland Stanford Junior University, dated April 7, 2021 (incorporated by reference to Exhibit 10.14 to Amendment No. 2 the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 21, 2021) 10.12† Exclusive Option Agreement by and between the Registrant and The Board of Trustees of the Leland Stanford Junior University, dated January 22, 2021 (incorporated by reference to Exhibit 10.15 to Amendment No. 2 the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 21, 2021) 122 10.13† Exclusive Option Agreement by and between the Registrant and The Board of Trustees of the Leland Stanford Junior University, dated April 12, 2021 (incorporated by reference to Exhibit 10.16 to Amendment No. 2 the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 21, 2021) 10.14# Executive Severance Plan (incorporated by reference to Exhibit 10.17 to Amendment No. 2 the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 21, 2021). 10.15# Advisor Agreement by and between the Registrant and Matthew Porteus, dated March 24, 2020 (incorporated by reference to Exhibit 10.19 to the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 4, 2021). 10.16† License Agreement by and between the Registrant and Integrated DNA Technologies, Inc., dated June 7, 2021 (incorporated by reference to Exhibit 10.20 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-256838) filed on June 11, 2021). 10.17 Sublease Agreement between the Registrant and Annexon, Inc. dated November 10, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-40532) filed on November 16, 2021). 10.18 Lease Agreement between the Registrant and Bayside Area Development, LLC dated December 16, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-40532) filed on December 20, 2021). 10.19# Employment Offer Letter, by and between Graphite Bio, Inc. and Kimberlee C. Drapkin, dated August 21, 2023 (incorporated by reference to Exhibit 10.1 to Graphite Bio, Inc.’s Quarterly Report on Form 10-Q (File No. 001-40532) filed on November 13, 2023). 10.20# Separation and Release Agreement, by and between Graphite Bio, Inc. and Josh Lehrer, dated September 7, 2023 (incorporated by reference to Exhibit 10.2 to Graphite Bio, Inc.’s Quarterly Report on Form 10-Q (File No. 001-40532) filed on November 13, 2023). 10.21 Subscription Agreement, dated November 14, 2023, by and among the Registrant, certain existing LENZ stockholders and new investors and certain parties thereto (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K (File No. 001-40532) filed on November 15, 2023). 10.22 Form of Graphite Bio, Inc. Stockholder Support Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-40532) filed on November 15, 2023). 10.23 Form of Lock-up Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No. 001-40532) filed on November 15, 2023). 10.24 Sublease Agreement, dated October 26, 2023, by and between the Registrant and Soleil Labs, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-40532) filed on October 30, 2023). 10.25 First Amendment to Lease, dated October 26, 2023, by and between the Registrant and Bayside Area Development, LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-40532) filed on October 30, 2023). 10.26 Form of Retention and Severance Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-40532) filed on March 16, 2023). 10.27 Compensation Recovery Policy 21.1 Subsidiaries of the Registrant. 23.1 Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. 24.1 Power of Attorney (included on signature page to this Annual Report on Form 10-K) 31.1 Certification of Principal Executive Officer and 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. 32.1* Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 123 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) 124 _____________ † Portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Item 601(b)(10) of Regulation S-K. # Indicates a management contract or any compensatory plan, contract or arrangement. * This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (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. (b) Financial Statements: The financial statements of the Registrant are included in Item 8 of this Form 10-K. (c) Financial Statements Schedules: Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto. Item 16. Form 1 0-K Summary. Not applicable. 125 Signat ures 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 . GRAPHITE BIO, INC. Date: February 27, 2024 By: /s/ Kimberlee C. Drapkin Kimberlee C. Drapkin Interim President and Chief Executive Officer and Director Power of Attorney Each person whose individual signature appears below hereby constitutes and appoints Kimberlee C. Drapkin and Perry Karsen and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof. 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. Signature Title Date /s/ Kimberlee C. Drapkin Kimberlee C. Drapkin Interim President and Chief Executive Officer and Director (Principal Executive Officer and Principal Accounting and Financial Officer) February 27, 2024 /s/ Perry Karsen Perry Karsen Chairman of the Board and Director February 27, 2024 /s/ Abraham Bassan Abraham Bassan Director February 27, 2024 /s/ Jerel Davis, Ph.D. Jerel Davis, Ph.D. Director February 27, 2024 /s/ Kristen M. Hege, M.D. Kristen M. Hege, M.D. Director February 27, 2024 /s/ Joseph Jimenez Joseph Jimenez Director February 27, 2024 /s/ Matthew Porteus, M.D., Ph.D. Matthew Porteus, M.D., Ph.D. Director February 27, 2024 /s/ Carlo Rizzuto, Ph.D. Carlo Rizzuto, Ph.D. Director February 27, 2024 /s/ Smital Shah Smital Shah Director February 27, 2024 /s/ Jo Viney, Ph.D. Jo Viney, Ph.D. Director February 27, 2024 126