What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2022-11-14 · 322 added, 782 removed, 259 unchanged (81% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, December 31,

(In thousands, except share and per share data) 2022 2021

(in thousands, except share and per share amounts) March 31,

2023 December 31,

Current assets:

1 unchanged sentence

Short-term investments 109,923 98,467

Related party short-term investment 9,543 15,962

Short-term investment — related party 6,133 7,834

Prepaid expenses and other current assets 3,982 2,697

1 unchanged sentence

Property and equipment, net 21,590 19,009

Operating lease right-of-use lease assets 32,344 10,746

Operating lease right-of-use assets 26,714 29,545

Restricted cash 13,496 13,496

1 unchanged sentence

Total assets $ 316,946 $ 360,314

Liabilities, Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Deficit

Liabilities and Stockholders’ Equity

Current liabilities:

1 unchanged sentence

Accrued expenses and other current liabilities (1)

Related party forward contract liability — 12,020

Operating lease liability 11,767 11,694

3 unchanged sentences

Total liabilities 38,145 44,044

Commitments and contingencies (Note 11)

Series A redeemable convertible preferred stock, $ 0.00001 par value;

115,761,842 shares authorized, issued and outstanding at September 30, 2022;

liquidation preference of $ 131,927 at September 30, 2022;

115,761,842 shares authorized, issued and outstanding at December 31, 2021;

liquidation preference of $ 125,000 at December 31, 2021

196,157 196,157

Series B convertible preferred stock, $ 0.00001 par value;

45,658,957 shares authorized, issued and outstanding at September 30, 2022;

liquidation preference of $ 222,766 at September 30, 2022;

45,658,957 shares authorized, issued and outstanding at December 31, 2021;

liquidation preference of $ 210,814 at December 31, 2021

199,643 199,643

Stockholders’ deficit:

Common stock, $ 0.00001 par value;

293,258,790 , and 293,258,790 shares authorized at September 30, 2022 and December 31, 2021, respectively;

and 33,559,912 , and 32,413,860 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Commitments and contingencies

Stockholders’ equity

Common stock, par value of $ 0.0001 per share;

775,000,000 shares authorized;

97,227,809 and 97,209,213 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 611,598 609,849

1 unchanged sentence

Accumulated deficit ( 332,594 ) ( 293,197 )

Total stockholders’ deficit ( 223,096 ) ( 156,240 )

Total liabilities, redeemable convertible and convertible preferred stock and stockholders’ deficit $ 215,265 $ 301,856

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

Total stockholders’ equity 278,801 316,270

Total liabilities and stockholders’ equity $ 316,946 $ 360,314

(1) Includes related party amount of $ 0.3 million as of March 31, 2023 and December 31, 2022.

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

PRIME MEDICINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended

September 30, Nine Months Ended

September 30,

(In thousands, except share and per share data) 2022 2021 2022 2021

Three Months Ended March 31,

(in thousands, except share and per share amounts) 2023 2022

Operating expenses:

Research and development (1)

$ 30,880 $ 13,677

General and administrative 9,153 6,221

2 unchanged sentences

Other income (expense):

Change in fair value of preferred stock tranche right liability — — — ( 74,319 )

Change in fair value of anti-dilution obligation — — — ( 6,681 )

Change in fair value of related party short-term investment 1,789 ( 8,354 ) ( 6,419 ) 1,075

Other income (expense), net (1)

728 ( 1 ) 977 —

Total other expense, net 2,517 ( 8,355 ) ( 5,442 ) ( 79,925 )

Change in fair value of short-term investment — related party ( 1,701 ) ( 4,485 )

Other income, net 2,135 11

Total other income (expense), net 434 ( 4,474 )

Net loss before income taxes ( 39,599 ) ( 24,372 )

Provision for (benefit from) income taxes 212 ( 2,370 ) ( 762 ) ( 1,867 )

Benefit from income taxes ( 202 ) ( 532 )

Net loss $ ( 39,397 ) $ ( 23,840 )

Accretion of preferred stock to redemption value — — — ( 1,468 )

Cumulative dividend on preferred stock — ( 6,224 )

4 unchanged sentences

Net loss $ ( 39,397 ) $ ( 23,840 )

Change in unrealized (losses) gains on investments, net of tax ( 304 ) 25 ( 427 ) ( 9 )

Total other comprehensive loss ( 304 ) 25 ( 427 ) ( 9 )

Change in unrealized loss on investments, net of tax 179 ( 5 )

Comprehensive loss $ ( 39,218 ) $ ( 23,845 )

__________________

(1) Includes no related party amounts for the three months ended September 30, 2022 and 2021, and zero and $( 429 ) for the nine months ended September 30, 2022 and 2021, respectively (see Note 13).

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

(1) Includes related party amount of $ 0.3 million for the quarter ended March 31, 2023.

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

PRIME MEDICINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE AND CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

Redeemable Convertible Preferred Stock Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Losses Accumulated Deficit Total Stockholders' Deficit

(In thousands, except share amounts) Shares Amount Shares Amount Shares Amount

Balances at December 31, 2021

115,761,842 $ 196,157 45,658,957 $ 199,643 32,413,860 $ — $ 15,163 $ ( 27 ) $ ( 171,376 ) $ ( 156,240 )

Reclassification of related party forward contract — — — — 1,101,525 — 12,020 — — 12,020

Repurchase of unvested restricted common stock — — — — — — — — — —

Stock-based compensation expense — — — — — — 1,123 — — 1,123

Net loss — — — — — — — — ( 23,840 ) ( 23,840 )

Change in unrealized gain on investments, net of tax — — — — — — — ( 5 ) — ( 5 )

Balances at March 31, 2022 115,761,842 $ 196,157 45,658,957 $ 199,643 33,515,385 $ — $ 28,306 $ ( 32 ) $ ( 195,216 ) $ ( 166,942 )

Reclassification of related party forward contract — — — — — — — — — —

Repurchase of unvested restricted common stock — — — — ( 3,116 ) — — — — —

Stock-based compensation expense — — — — — — 1,345 — — 1,345

Net loss — — — — — — — — ( 29,348 ) ( 29,348 )

Change in unrealized gain on investments, net of tax — — — — — — — ( 118 ) — ( 118 )

Balance at June 30, 2022 115,761,842 $ 196,157 45,658,957 $ 199,643 33,512,269 $ — $ 29,651 $ ( 150 ) $ ( 224,564 ) $ ( 195,063 )

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Additional

Capital Accumulated Other

Comprehensive

Losses Accumulated

Deficit Total

Stockholders'

(in thousands, except share amounts) Shares Amount

Balance as of December 31, 2022 97,209,213 $ 2 $ 609,849 $ ( 384 ) $ ( 293,197 ) $ 316,270

Issuance of common stock upon exercise of stock options 18,596 — 68 — — 68

Reclassification of related party forward contract — — — — — — — — — —

Repurchase of unvested restricted common stock — — — — ( 8,044 ) — — — — —

Stock-based compensation expense — — 1,681 — — 1,681

Change in unrealized loss on investments, net of tax — — — 179 — 179

Net loss — — — — ( 39,397 ) ( 39,397 )

Change in unrealized gain on investments, net of tax — — — — — — — ( 304 ) — ( 304 )

Balances at September 30, 2022

115,761,842 $ 196,157 45,658,957 $ 199,643 33,559,912 $ — $ 31,272 $ ( 454 ) $ ( 253,914 ) $ ( 223,096 )

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

Balance as of March 31, 2023 97,227,809 $ 2 $ 611,598 $ ( 205 ) $ ( 332,594 ) $ 278,801

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

PRIME MEDICINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE AND CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

Redeemable Convertible Preferred Stock Convertible Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Losses Accumulated Deficit Total Stockholders' Equity (Deficit)

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE AND CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

Redeemable Convertible Preferred Stock Convertible Preferred Stock Common Stock Additional

Capital Accumulated Other

Comprehensive

Losses Accumulated

Deficit Total

Stockholders'

(in thousands, except share amounts) Shares Amount Shares Amount Shares Amount

Balances at December 31, 2020

45,000,000 $ 31,136 — $ — 28,489,599 $ — $ 8,347 $ — $ ( 6,009 ) $ 2,338

Accretion of redeemable convertible preferred stock to redemption value — 1,194 — — — — ( 1,194 ) — — ( 1,194 )

Issuance of common stock and settlement of the anti-dilution obligation — — — — 1,443,638 — — — — —

Stock-based compensation expense — — — — — — 206 — — 206

Net loss — — — — — — — — ( 86,660 ) ( 86,660 )

Balances at March 31, 2021 45,000,000 $ 32,330 — $ — 29,933,237 $ — $ 7,358 $ — $ ( 92,669 ) $ ( 85,310 )

Issuance of Series A redeemable convertible preferred stock, including the settlement of the third and fourth tranche right liability, net of issuance costs of $ 41

70,761,842 71,719 — — — — ( 998 ) — — ( 998 )

Reclassification of preferred stock tranche liability upon settlement — 91,834 — — — — — — — —

Accretion of redeemable convertible preferred stock to redemption value — 274 — — — — ( 274 ) — — ( 274 )

Issuance of Series B convertible preferred stock, net of issuance costs of $ 80

— — 45,658,957 199,643 — — — — — —

Issuance of common stock and settlement of the anti-dilution obligation — — — — 2,498,850 — 7,536 — — 7,536

Stock-based compensation expense — — — — — — 94 — — 94

Net loss — — — — — — — — 616 616

Change in unrealized gain on investments, net of tax — — — — — — — ( 34 ) — ( 34 )

Balances at June 30, 2021 115,761,842 $ 196,157 45,658,957 $ 199,643 32,432,087 $ — $ 13,716 $ ( 34 ) $ ( 92,053 ) $ ( 78,370 )

Repurchase of unvested restricted common stock — — — — ( 18,227 ) — — — — —

Balance as of December 31, 2021 115,761,842 $ 196,157 45,658,957 $ 199,643 32,413,860 $ 1 $ 15,162 $ ( 27 ) $ ( 171,376 ) $ ( 156,240 )

Reclassification of forward contract — related party — — — — 1,101,525 — 12,020 — — 12,020

Stock-based compensation expense — — — — — — 1,123 — — 1,123

Net loss — — — — — — — — ( 23,840 ) ( 23,840 )

Change in unrealized gain on investments, net of tax — — — — — — — 25 — 25

Balances at September 30, 2021

115,761,842 $ 196,157 45,658,957 $ 199,643 32,413,860 $ — $ 14,055 $ ( 9 ) $ ( 108,465 ) $ ( 94,418 )

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

Change in unrealized loss on investments, net of tax — — — — — — — ( 5 ) — ( 5 )

Balance as of March 31, 2022 115,761,842 196,157 45,658,957 199,643 33,515,385 $ 1 $ 28,305 $ ( 32 ) $ ( 195,216 ) $ ( 166,942 )

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

PRIME MEDICINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended March 31,

(in thousands) 2023 2022

Cash flows from operating activities:

Cash flows used in operating activities:

Net loss $ ( 39,397 ) $ ( 23,840 )

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

Depreciation and amortization expense 1,354 339

Amortization of premiums and discount on short-term investments 100 —

Stock-based compensation expense 3,885 639

Non cash lease expense 2,831 1,775

Change in fair value of short-term investment — related party 1,701 4,485

Stock-based compensation expense 1,681 1,123

Depreciation expense 1,052 293

Amortization of premiums and discount on short-term investments ( 611 ) 193

Deferred income taxes ( 202 ) ( 532 )

Loss on disposal of property and equipment 8 —

Change in fair value of preferred stock tranche right liability — 74,319

Change in fair value of anti-dilution obligation — 6,681

Change in fair value of related party short-term investment 6,419 ( 1,075 )

Non cash other income (expense) — —

Changes in operating assets and liabilities:

4 unchanged sentences

Net cash used in operating activities ( 41,561 ) ( 50,793 )

Cash flows from investing activities:

Cash flows (used in) provided by investing activities:

Purchases of property and equipment ( 1,999 ) ( 1,688 )

Purchase of short-term investments ( 89,464 ) ( 81,841 )

Matured short-term investments 68,000 —

Purchases of investments ( 45,666 ) —

Maturities of investments 35,000 32,500

Payments of security deposits — 81

Net cash used in investing activities ( 33,409 ) ( 85,780 )

Cash flows from financing activities:

Proceeds from the issuance of convertible preferred stock series A, net of issuance costs paid — 70,721

Proceeds from the issuance of convertible preferred stock series B, net of issuance costs paid — 199,643

Net cash (used in) provided by investing activities ( 12,665 ) 30,893

Cash flows provided by (used in) financing activities:

Payments of deferred offering costs — ( 1,272 )

Net proceeds from stock option exercises 68 —

Net cash (used in) provided by financing activities ( 2,579 ) 270,364

Net (decrease) increase in cash, cash equivalents and restricted cash ( 137,102 ) 163,689

Cash and cash equivalents at beginning of period 198,545 36,975

Cash and cash equivalents at end of period $ 61,443 $ 200,664

Supplemental cash flow information:

Right-of-use assets obtained in exchange for new operating lease liabilities $ 28,590 $ 10,103

Supplemental disclosure of non-cash investing and financing activities:

Settlement of Series A preferred stock tranche obligation $ — $ 91,834

Issuance of Series A preferred stock at a price below fair value $ — $ 998

Settlement of anti-dilution obligation $ — $ 7,536

Settlement of related party forward contract $ 12,020 $ —

Deferred offering costs included in accounts payable and accrued expenses at period end $ 239 $ —

Purchases of property and equipment included in accounts payable and accrued expenses at period end $ 870 $ —

Accretion of preferred stock to redemption value $ — $ 1,468

Unrealized loss on short-term investments $ 454 $ 9

Net cash provided by (used in) financing activities 68 ( 1,272 )

Net change in cash, cash equivalents, and restricted cash ( 54,158 ) ( 21,172 )

Cash, cash equivalents, and restricted cash at beginning of period 201,116 198,545

Cash, cash equivalents, and restricted cash at end of period $ 146,958 $ 177,373

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents $ 47,947 $ 200,664

Cash, cash equivalents, and restricted cash at end of period $ 146,958 $ 177,373

restricted cash 13,496 13,125

Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 61,443 $ 200,664

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

Total cash, and cash equivalents $ 133,462 $ 164,248

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

PRIME MEDICINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

(in thousands) 2023 2022

Supplemental disclosure of non-cash investing and financing activities:

Purchases of property and equipment included in accounts payable and accrued expenses $ 2,603 $ 1,144

Settlement of forward contract — related party $ — $ 12,020

Deferred offering costs included in accounts payable and accrued expenses $ — $ 547

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

PRIME MEDICINE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5 unchanged sentences

Reverse Stock Split

On October 12, 2022, in connection with the Company’s initial public offering (“IPO”), the Company effected a 1-for-3.10880 reverse stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios of each series of the Company’s preferred stock (see Note 6).

Accordingly, all share and per share amounts for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this stock split and adjustment of the preferred stock conversion ratios.

Liquidity and capital resources

Since its inception, the Company has devoted substantially all of our resources to building our Prime editing platform and advancing development of our portfolio of programs, establishing and protecting our intellectual property, conducting research and development activities, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations.

Since its inception, the Company has devoted substantially all of our resources to building its Prime editing platform and advancing development of our portfolio of programs, establishing and protecting our intellectual property, conducting research and development activities, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations.

2 unchanged sentences

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

In October 2022, the Company completed its IPO of its common stock.

In connection with its IPO, the Company issued and sold 11,721,456 shares of its common stock, including 1,427,338 shares pursuant to the exercise of the underwriters’ option to purchase additional shares, at a price to the public of $ 17.00 per share.

In connection with its IPO, completed in October 2022, the Company issued and sold 11,721,456 shares of its common stock, including 1,427,338 shares pursuant to the exercise of the underwriters’ option to purchase additional shares, at a price to the public of $ 17.00 per share.

As a result of the IPO, the Company received $ 180.2 million in net proceeds, after deducting underwriting discounts, commissions and offering costs of $ 19.1 million.

In connection with the IPO, all outstanding shares of redeemable convertible preferred stock converted into 51,923,758 shares of the Company’s common stock.

The Company is subject to risks and uncertainties common to early stage companies in the biotechnology industry, including, but not limited to, completing preclinical studies and clinical trials, obtaining regulatory approval for product candidates, market acceptance of products, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third-party organizations, protection of proprietary technology, compliance with government regulations, the impact of the COVID-19 pandemic, and the ability to raise additional capital to fund operations.

The Company’s product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization.

Risks and uncertainties

The Company is subject to risks and uncertainties common to early stage companies in the biotechnology industry, including, but not limited to, completing preclinical studies and clinical trials, obtaining regulatory approval for product candidates, market acceptance of products, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third-party organizations, protection of proprietary technology, compliance with government regulations, and the ability to raise additional capital to fund operations.

The Company’s product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and

regulatory approval prior to commercialization.

These efforts require significant amounts of additional capital, adequate personnel and infrastructure, and extensive compliance-reporting capabilities.

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

Since its inception, the Company has incurred substantial losses and as of September 30, 2022, the Company had an accumulated deficit of $ 253.9 million.

The Company expects to generate operating losses and negative

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

operating cash flows for the foreseeable future.

The Company expects that its cash, cash equivalents, and short term investments as of September 30, 2022 of $ 146.7 million will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these financial statements.

Since its inception, the Company has incurred substantial losses and as of March 31, 2023, the Company had an accumulated deficit of $ 332.6 million.

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

The Company expects that its cash, cash equivalents, and investments as of March 31, 2023 of $ 249.5 million will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these financial statements.

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

6 unchanged sentences

Intercompany balances and transactions have been eliminated in consolidation.

The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”).

The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S.

Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

1 unchanged sentence

are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2022 and the results of its operations for the three and nine months ended September 30, 2022 and 2021, and its cash flows for the nine months ended September 30, 2022 and 2021.

The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2022 and 2021 are also unaudited.

The results for the nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2023, the results of its operations for the three months ended March 31, 2023 and 2022, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2023 and 2022, and its cash flows for the three months ended March 31, 2023 and 2022.

The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 are also unaudited.

The results for the three months ended March 31, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period.

The condensed consolidated balance sheet data as of December 31, 2022 was derived from our audited financial statements, but does not include all disclosures required by U.S.

generally accepted accounting principles, or U.S.

These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2021, and notes thereto, which are included in the Company’s final prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the Securities and Exchange Commission (the “SEC”) on October 21, 2022.

Impact of the COVID-19 Pandemic

The Company is subject to a number of risks associated with the COVID-19 global pandemic, including potential delays associated with the Company’s ongoing preclinical studies and anticipated clinical trials.

COVID-19 may have an adverse impact on the Company’s operations, supply chains and distribution systems or those of its third-party vendors and collaborators, and increase expenses, including as a result of impacts associated with preventive and precautionary measures that are being taken, such as restrictions on travel and border crossings, quarantine policies and social distancing.

The Company and its third-party vendors and collaborators may experience disruptions in supply of items that are essential for its research and development activities.

The Company cannot predict the scope and severity of any economic recovery after the COVID-19 pandemic abates, including following any additional “waves” or other intensifying of the pandemic will have on its financial condition, operations, and business plans.

These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2022, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2023.

Summary of Significant Accounting Policies

The Company's significant accounting policies are disclosed in Note 2, "Summary of significant accounting policies," in the audited consolidated financial statements for the year ended December 31, 2021, and notes thereto, included in the Company’s final prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act with

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the SEC on October 21, 2022.

The Company’s significant accounting policies are disclosed in Note 2, Summary of significant accounting policies , in the audited consolidated financial statements for the year ended December 31, 2022, and notes thereto, included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 9, 2023.

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

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

Significant estimates and assumptions reflected within these condensed consolidated financial statements include, but are not limited to, revenue recognition, the valuation of the Company’s common stock and stock-based awards, the valuation of preferred stock tranche right liability, the valuation of the anti-dilution obligation and the valuation of the related party forward contract liability.

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

Significant estimates and

assumptions reflected within these condensed consolidated financial statements include, but are not limited to the valuation of the Company’s common stock and stock-based awards, and the valuation of the related party forward contract liability.

The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances.

1 unchanged sentence

Actual results may differ materially from those estimates or assumptions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the time of initial purchase to be cash equivalents .

As of September 30, 2022 and December 31, 2021, the amount of cash equivalents included in cash and cash equivalents totaled $ 28.8 million and $ 49.5 million, respectively.

Restricted Cash

Restricted cash consisted of letters of credit totaling $ 13.5 million and $ 13.1 million as of September 30, 2022 and December 31, 2021, respectively, that are required to be maintained in connection with the Company’s lease arrangements.

Both letters of credit are in the name of the Company’s landlords and are required to fulfill lease requirements in the event the Company should default on its lease obligations.

As of both September 30, 2022 and December 31, 2021, the Company classified its restricted cash as non-current on the consolidated balance sheets based on the release dates of the restrictions.

Recently Issued Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).

This standard eliminates the beneficial conversion and cash conversion accounting models for convertible instruments.

It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions.

In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted earnings per share (“EPS”) computation.

Additionally, the amended guidance requires the application of the if-converted method for calculating diluted EPS and the treasury stock method will no longer be available.

For public business entities, it is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years using the fully retrospective or modified retrospective method.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company is currently evaluating the potential impact that ASU 2020-06 will have on its condensed consolidated financial statements and related disclosures but does not currently expect that the adoption of ASU 2020-06 will have a material impact.

Other accounting standards that have been issued by the Financial Accounting Standards Board or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption .

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements

We record cash equivalents, short-term investments, preferred stock tranche right liability, anti-dilution obligation and the related party forward contract liability at fair value.

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

The carrying values of the Company’s accounts payable and accrued expenses approximate their fair values due to the short-term nature of these liabilities.

The hierarchy consists of three levels:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value (in thousands):

Fair Value Measurements at September 30, 2022:

Level 1 Level 2 Level 3 Total

Accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption .

Fair Value Measurements and Investments

The following tables present the Company’s fair value hierarchy for its assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair value:

As of March 31, 2023:

(in thousands) Level 1 Level 2 Level 3 Total

Cash equivalents:

Money market funds $ — $ 29,711 $ — $ 29,711

Short-term investment:

Treasury bills and government securities — 99,943 — 99,943

Short-term investments:

Treasury bills and government securities — 109,923 — 109,923

Related party short-term investment:

Beam equity securities 6,133 — — 6,133

$ 9,543 $ 117,994 $ — $ 127,537

Fair Value Measurements at December 31, 2021

Level 1 Level 2 Level 3 Total

Total cash equivalents and investments $ 6,133 $ 239,577 $ — $ 245,710

As of December 31, 2022:

(in thousands) Level 1 Level 2 Level 3 Total

Cash equivalents:

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Short-term investment:

Treasury bills and government securities — 68,238 — 68,238

Treasury securities — $ 98,467 — 98,467

Related party short-term investment:

Beam equity securities 7,834 — — 7,834

$ 15,962 $ 117,688 $ — $ 133,650

Related party forward contract liability — — 12,020 12,020

$ — $ — $ 12,020 $ 12,020

Total cash equivalents and short-term investments $ 7,834 $ 218,978 $ — $ 226,812

The Company classifies its U.S.

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The fair value of the Company’s U.S.

Treasury securities and money market funds are classified as Level 2 because they are valued using observable inputs to quoted market prices, benchmark yields, reported trades,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency and U.S.

Treasury securities and money market funds are classified as Level 2 because they are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency and U.S.

Treasury securities.

The underlying securities held in the money market funds held by the Company are all government backed securities.

Short-term investments consisted of the following (in thousands):

Fair Value Measurements at September 30, 2022

Amortized Cost Unrealized Gains Unrealized Losses Fair Value

Short-term investments:

Investments in debt securities

Unrealized gains and losses of investments in debt securities consisted of the following:

As of March 31, 2023:

(in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value

Short-term investments in debt securities:

Treasury bills and government securities $ 110,134 $ 3 $ ( 214 ) $ 109,923

Related party short-term investment:

Beam equity securities 5,486 4,057 — 9,543

$ 95,115 $ 4,057 $ ( 454 ) $ 98,718

December 31, 2021

Amortized Cost Unrealized Gains Unrealized Losses Fair Value

Total investments in debt securities $ 110,134 $ 3 $ ( 214 ) $ 109,923

As of December 31, 2022:

(in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value

Short-term investments:

Treasury bills and government securities $ 98,851 $ — $ ( 384 ) $ 98,467

Related party short-term investment:

Beam equity securities $ 5,486 $ 10,476 $ — $ 15,962

$ 73,751 $ 10,476 $ ( 27 ) $ 84,200

The contractual maturities of the Company’s short-term investments in available-for-sale debt securities held were as follows:

September 30,

The contractual maturities of the Company’s investments in debt securities held were as follows:

(in thousands) March 31,

2023 December 31,

Due within one year $ 109,923 $ 98,467

$ 89,175 $ 68,238

Valuation of Preferred Stock Tranche Right Liability

The preferred stock tranche right liability in the table above is composed of the fair value of rights to purchase Series A Preferred Stock (see Note 6).

The fair value of the preferred stock tranche right liability was determined based on significant inputs not observable in the market, which represented a Level 3 measurement within the fair value hierarchy.

The fair value of the preferred stock tranche right liability was determined using a Black-Scholes option pricing model, which considered as inputs the estimated fair value of the preferred stocks as of each valuation date, the risk-free interest rate, volatility and estimated time to each tranche closing.

The most significant assumption in the Black-Scholes option pricing model impacting the fair value of the preferred stock tranche right liability is the fair value of the Company’s convertible preferred stock as of each measurement date.

The Company determines the fair value per share of the underlying convertible preferred stock by taking into consideration the most recent sales of its convertible preferred stock, results obtained from third-party valuations and additional factors the Company deems relevant.

In November 2020, the second tranche of the Series A Preferred Stock closed.

The fair value of each Series A Preferred Stock was $ 0.73 per share upon the closing of the second tranche.

As of December 31, 2020, the fair value of Series A Preferred Stock was $ 0.76 per share.

In April 2021, the third and fourth tranches of the Series A Preferred Stock closed.

Upon satisfaction of certain conditions and the closing date of the third and fourth tranches, the associated Series A preferred stock tranche right

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

liability was settled.

The fair value of Series A Preferred Stock was $ 2.31 per share upon the closing of the third and fourth tranches.

The risk-free interest rate is determined by reference to the U.S.

Treasury yield curve for time periods approximately equal to the remaining estimated time to each tranche closing.

The volatility is based on the historical volatility of publicly traded peer companies.

Changes in the estimated fair value of the Company’s convertible preferred stock can have a significant impact on the fair value of the preferred stock tranche right liability.

The preferred stock tranche right liability was initially recorded at fair value upon the date of issuance of the preferred stock tranche right and is subsequently remeasured to fair value at each reporting date, and immediately prior to the closing dates of Series A preferred stock tranches.

Changes in the fair value of the preferred stock tranche right liability are recognized as a component of other income (expense), net in the consolidated statement of operations and comprehensive loss.

Changes in the fair value of the preferred stock tranche right liability were recognized until the preferred stock tranche right liability was settled in full upon the satisfaction of certain conditions in April 2021.

The following table provides a roll-forward of the aggregate fair value of the Company’s preferred stock tranche right liability, for which fair value is determined using Level 3 inputs (in thousands):

Preferred Stock Tranche Right

Balance as of December 31, 2020 $ 17,515

Change in fair value of Series A preferred stock tranche right liability 74,319

Reclassification of Series A preferred stock tranche right liability upon settlement ( 91,834 )

Balance as of December 31, 2021 $ —

Valuation of Anti-dilution Obligation

The fair value of the anti-dilution obligation recognized in connection with the anti-dilution provisions set forth in the Company's license agreement with Broad Institute (see Note 11) was determined based on significant inputs not observable in the market, which represented a Level 3 measurement within the fair value hierarchy.

The fair value of the anti-dilution obligation was estimated using a probability-weighted scenario which considered as inputs the probability of occurrence of events that would trigger the issuance of shares, including (i) the closing of Series A Preferred Stock, (ii) the Company’s initial public offering, and (iii) no future sale of equity securities.

The weighted-average fair value of all scenarios was calculated utilizing the fair value per share of the underlying common stock.

Changes in the estimated fair value of common stock and the probability of achieving different financing scenarios can have a significant impact on the fair value of the anti-dilution obligation.

The most significant assumption impacting the fair value of the anti-dilution obligation was the fair value of the Company’s common stock as of each measurement date.

The Company determined the fair value per share of the underlying common stock by taking into consideration the most recent sales of its convertible preferred stock, results obtained from third-party valuations and additional factors the Company deems relevant.

The per share fair value of the Company’s common stock was $ 0.35 as of December 31, 2020.

Immediately prior to the settlement of the anti-dilution obligation, the fair value of the Company’s common stock was $ 3.02 per share.

The anti-dilution obligation was initially recorded at fair value upon entering into the license agreement with Broad Institute and was subsequently remeasured to fair value at each reporting date.

Changes in fair value of the anti-dilution obligation were recognized as a component of other income (expense), net in the consolidated statements of operations and comprehensive loss.

Changes in the fair value of the anti-dilution obligation were recognized until achievement of $ 100.0 million in cumulative equity financing is raised by the Company, which was achieved in connection with the fourth Series A Preferred Stock closing, resulting in the issuance of 2,498,850 shares of common stock to Broad Institute with a fair value of $ 7.5 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a roll-forward of the aggregate fair value of the Company’s anti-dilution obligation, for which fair value was determined using Level 3 inputs (in thousands):

Anti-dilution Obligation

Balance as of December 31, 2020 $ 855

Change in fair value of anti-dilution obligation 6,681

Reclassification of anti-dilution obligation upon settlement ( 7,536 )

Balance as of December 31, 2021 $ —

Valuation of the Related Party Forward Contract Liability

The Company measured its related party forward contract liability, which was established in connection with its obligation to issue shares of its common stock to Myeloid Therapeutics, Inc.

(“Myeloid”) under a stock subscription agreement (see Note 11), at fair value based on significant inputs not observable in the market, which represented a Level 3 measurement within the fair value hierarchy.

The initial fair value of the related party forward contract liability was determined based on the number of shares to be issued by the Company and the then per share fair value of the Company’s common stock, which was determined based, in part, on a third-party valuation that utilized methodologies and assumptions consistent with the Company’s most recent common stock valuations, including on a minority, nonmarketable interest basis.

Changes in the fair value of the related party forward contract liability will be recognized as other income (expense), net in the consolidated statements of operations through the settlement date.

There was no change in the fair value of the Co mpany’s common stock from the initial date of the related party forward contract liability and December 31, 2021 and the settlement which occurred in January 2022.

Upon settlement, the fair value of the related party forward contract liability was reclassified to equity upon issuance of the common stock to Myeloid.

A reconciliation of the related party forward contract liability measured and recorded at fair value on a recurring basis is as follows (in thousands):

Forward Contract

Balance as of December 31, 2021 $ 12,020

Reclassification of related party forward contract liability upon settlement ( 12,020 )

Balance as of September 30, 2022 $ —

Marketable securities in unrealized loss positions consisted of the following:

As of March 31, 2023:

(in thousands, except number of securities) Number of Securities Fair Value Gross Unrealized Losses

Investments in continuous loss position for less than 12 months:

Treasury bills and government securities 30 $ 105,015 $ ( 214 )

Based on factors such as historical experience, market data, issuer-specific factors, and current economic conditions, the Company did not record an allowance for credit losses as of March 31, 2023 related to these investments.

Further, given the lack of significant change in the credit risk, the Company does not consider these investments to be impaired.

Short-term investments in equity securities — related party

Unrealized gains and losses of short-term investments in equity securities — related party consisted of the following:

Three Months Ended March 31,

(in thousands) 2023 2022

Net unrealized losses recognized during the period $ ( 1,701 ) $ ( 4,485 )

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

September 30, December 31,

Property and equipment, net consisted of the following:

(in thousands) March 31,

2023 December 31,

Property and equipment:

Laboratory equipment $ 21,204 $ 19,422

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Computer hardware and software 11 11

Construction in progress 3,401 1,608

Total property and equipment $ 25,473 $ 21,840

Accumulated depreciation and amortization ( 1,961 ) ( 611 )

Property and equipment, net $ 14,967 $ 4,932

Depreciation and amortization expense of property and equipment for the three and nine months ended September 30, 2022 was $ 0.6 million and $ 1.4 million, respectively.

Depreciation and amortization expense of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

property and equipment for the three and nine months ended September 30, 2021 was $ 0.2 million and $ 0.3 million, respectively.

Accumulated depreciation ( 3,883 ) ( 2,831 )

Total property and equipment, net $ 21,590 $ 19,009

Depreciation expense related to property and equipment is as follows:

Three Months Ended March 31,

(in thousands) 2023 2022

Depreciation Expense $ 1,052 $ 293

Accrued Expenses and Other Current Liabilities

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

September 30, December 31,

Accrued Myeloid license fee – related party

Accrued employee compensation and benefits 4,111 2,364

Accrued expenses and other current liabilities consisted of the following:

(in thousands) March 31,

2023 December 31,

Accrued expenses and other current liabilities

Accrued professional fees $ 2,544 $ 2,162

Lab-related supplies and services (1)

Other 182 279

Total $ 6,530 $ 37,192

Convertible Preferred Stock

The Company has issued Series A Preferred Stock and Series B convertible preferred stock (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, the “Preferred Stock”).

The Series A preferred stock and Series B preferred stock, described in more detail below, converted into 37,236,772 shares and 14,686,986 shares of common stock, respectively, in October 2022 as part of the Company’s IPO.

In September 2019, the Company completed its first closing of its Series A Preferred Stock and issued and sold 10,000,001 shares of Series A Preferred Stock at a price of $ 1.00 per share for gross proceeds of $ 10.0 million (the “2019 Preferred Stock Financing”).

The Company incurred issuance costs of $ 20,000 in connection with this transaction.

The purchase agreement for the Series A Preferred Stock obligated the investors of the 2019 Preferred Stock Financing to purchase an additional 104,999,997 Series A Preferred Stock at a price of $ 1.00 per share in the subsequent closings upon certain conditions (“Series A Subsequent Closings”).

The investors’ obligation to purchase shares in the subsequent closing terminated upon occurrence of a Deemed Liquidation Event (as defined below), the Company’s initial public offering, or bankruptcy by the Company.

If an investor did not participate in the subsequent closing when obligated to do so, then any existing Series A Preferred Stock held by that investor would be converted into common shares of the Company on a ten-for-one basis.

The Company concluded that these obligations of investors to participate in the subsequent closing of Series A Preferred Stock met the definition of a freestanding financial instrument that was required to be recorded as a liability at fair value as (i) the instruments are legally detachable and separately exercisable from the Series A Preferred Stock and (ii) the rights will require the Company to transfer assets upon future closings of the Series A Preferred Stock.

Upon the first closing of the Series A Preferred Stock in September 2019, the Company recorded a preferred stock tranche right liability of $ 6.3 million and a corresponding reduction to the carrying value of the Series A Preferred Stock (see Note 3).

In November 2020, the Company completed the second closing of its Series A Preferred Stock, in which the Company issued and sold 34,999,999 shares of Series A Preferred Stock, at a price of $ 1.00 per share, for gross proceeds of $ 35.0 million and incurred $ 46,000 of issuance costs.

As the fair value of the Series A Preferred Stock was $ 0.73 at the time of the second closing, the Company recorded a capital contribution of $ 9.5 million for the difference between the fair value per share and the $ 1.00 per share paid by the holders of the Series A Preferred Stock participating in the second closing, which included members of the Company’s board of directors.

In April 2021, the Company completed the third and fourth closings of its Series A Preferred Stock, in which the Company issued and sold an aggregate of 70,761,842 shares of Series A Preferred Stock, at a price of $ 1.00 per

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

share, for gross proceeds of $ 70.8 million and incurred $ 41,000 of issuance costs.

As a result of this issuance, the Series A preferred stock tranche right liability with a then fair value of $ 91.8 million, based on a fair value of $ 2.31 per share of Series A Preferred Stock immediately prior to the closings, was settled in full and reclassified as an increase to the carrying value of Series A Preferred Stock.

In April 2021, the Company issued and sold 45,658,957 shares of Series B Preferred Stock, at a price of $ 4.3803 per share, for gross proceeds of $ 200.0 million and incurred $ 0.4 million of issuance costs.

Upon issuance of each series of Preferred Stock, the Company assessed the embedded conversion and liquidation features of the securities and determined that such features did not require the Company to separately account for these features.

The Company also concluded that no beneficial conversion feature existed on the issuance date of each series of Preferred Stock.

On October 12, 2022, in connection with the Company’s IPO, the Company effected a 1-for-3.10880 reverse stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios of each series of the Company’s preferred stock.

As of each balance sheet date, the Preferred Stock consisted of the following (in thousands, except share amounts):

September 30, 2022

Preferred Stock Authorized Preferred Stock Issued and Outstanding Carrying Value Liquidation Preference Conversion price per share Common Stock Issuable Upon Conversion

Series A Preferred Stock 115,761,842 115,761,842 $ 196,157 $ 131,927 $ 3.10880 37,236,772

Series B Preferred Stock 45,658,957 45,658,957 199,643 $ 222,766 $ 13.6175 14,686,986

161,420,799 161,420,799 $ 395,800 $ 354,693 51,923,758

December 31, 2021

Preferred Stock Authorized Preferred Stock Issued and Outstanding Carrying Value Liquidation Preference Conversion price per share Common Stock Issuable Upon Conversion

Series A Preferred Stock 115,761,842 115,761,842 $ 196,157 $ 125,000 $ 3.10880 37,236,776

Series B Preferred Stock 45,658,957 45,658,957 $ 199,643 $ 210,814 $ 13.6175 14,686,988

161,420,799 161,420,799 $ 395,800 $ 335,814 51,923,764

The holders of the Preferred Stock have the following rights and preferences:

The holders of the Preferred Stock are entitled to vote, together with the holders of common stock, as a single class, on all matters submitted to the shareholders for a vote and are entitled to the number of votes equal to the number of common stock into which the Preferred Stock could convert on the record date for determination of shareholders entitled to vote.

A majority vote of the holders of Preferred Stock is required to, among others, liquidate or dissolve the Company, amend the certificate of incorporation or bylaws, reclassify common stock or establish another class of capital stock, create shares that would rank senior to or authorize additional shares of Preferred Stock, declare a dividend or make a distribution, or change the authorized number of directors constituting the board of directors.

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In addition, the holders of shares of Series A Preferred Stock, voting exclusively and as a separate class, are entitled to elect three directors of the Company.

The holders of shares of common stock and any other class or series of voting stock (including the Series B Preferred Stock), exclusively and voting together as a single class, are entitled to elect the balance of the total number of directors of the Company.

Each Preferred Stock is convertible into voting common stock, at any time, at the option of the holder, and without the payment of additional consideration, at the applicable conversion ratio then in effect.

In addition, each share of Preferred Stock will be automatically converted into shares of common stock at the then-effective applicable conversion ratio upon either (i) the closing of a firm-commitment underwritten public offering of its common stock resulting in at least $ 50.0 million of gross proceeds, net of underwriting discount and commissions, to the Company, or (ii) the date specified by vote or written consent of the holders of a majority in voting power of the outstanding shares of Preferred Stock, voting as a single class.

The conversion ratio of each class of Preferred Stock is determined by dividing the Original Issue Price of each class of Preferred Stock by the Conversion Price of each class.

As of September 30, 2022 and December 31, 2021, the Conversion Price was $ 3.10880 per share for Series A Preferred Stock and $ 13.6175 per share for Series B Preferred Stock, each subject to appropriate adjustment in the event of any share dividend, share split, combination or other similar recapitalization with respect to the Preferred Stock.

Upon the closing of the IPO in October 2022, 161,420,799 shares of outstanding convertible preferred stock were automatically converted into 51,923,758 shares of common stock, after the effect of the one-for-3.10880 reverse stock split, with the related carrying value of $ 395.8 million reclassified to common stock and additional paid-in capital.

There shall be no adjustment in the conversion price of the Series A Preferred Stock as the result of the issuance or deemed issuance of additional shares of Company’s common stock if the Company receives written notice from the holders of at least 65 percent of the then outstanding shares of Series A Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of additional shares of the Company’s common stock.

There shall be no adjustment in the conversion price of the Series B Preferred Stock as the result of the issuance or deemed issuance of additional shares of the Company’s common stock if the Company receives written notice from the holders of at least a majority of the then outstanding shares of Series B Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such additional shares of the Company’s common stock.

In the event that any holder of shares of Series A Preferred Stock is required to participate in a Series A Subsequent Closing pursuant to the purchase agreement does not purchase the aggregate number of subsequent closing shares, then each share of Series A Preferred Stock held by such holder shall automatically be converted into shares of common stock at a ratio of one share of common stock for every ten shares of Series A Preferred Stock held immediately prior to the consummation of such Series A Subsequent Closing.

The holders of the Series A Preferred Stock are entitled to receive cumulative dividends at a rate of $ 0.25 per share per annum of the Original Issue Price when, as and if declared by the board of directors (the “Series A Preferred Dividend”).

The holders of the series B Preferred Stock are entitled to receive cumulative dividends at a rate of $ 1.09 per share per annum of the Original Issue Price when, as and if declared by the board of directors (the “Series B Preferred Dividend”, and together with Series A Preferred Dividend, the “Preferred Dividend”).

The Company may not declare, pay or set aside any dividends on common shares of the Company unless the holders of Preferred Stock then outstanding first receive, or simultaneously receive, the Preferred Dividend on each outstanding Preferred Stock and a dividend on each outstanding Preferred Stock in an amount at least equal to the greater of (i) the amount of the aggregate Preferred Dividend then accrued on such share of Preferred Stock and not previously paid and (ii) (a) in the case of a dividend on common stock or any class or series that is convertible into common stock, that dividend per share of Preferred Stock as would equal to the product of (1) the dividend payable

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

on each share of such class or series determined, as if all shares of such class or series had been converted into common stock and (2) the number of shares of common stock issuable upon conversion of a share of such series of Preferred Stock, in each case calculated on the record date for determination of the holders entitle to receive such dividend or the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into common shares or (b) in the case of a dividend on any class or series that is not convertible into common stock, at a rate per share of Preferred Stock determined by (1) dividing the amount of dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock and (2) multiplying such faction by an amount equal to the Original Issue Price for such series of Preferred Stock.

If the Company declares, pays, or sets aside, on the same date, a dividend on shares of more than one class or series of shares in the capital of the Company (other than the Preferred Stock), the dividend payable to the holders of Preferred Stock shall be calculated based upon the dividend on the class or series of shares in the capital of the Company that would result in the highest dividend on the Preferred Stock.

Through September 30, 2022 and December 31, 2021 no cash dividends have been declared or paid.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or upon the occurrence of a Deemed Liquidation Event (as defined below), the holders of shares of Preferred Stock then outstanding are entitled, on a pari passu basis, to be paid out of the assets or funds of the Company available for distribution to stockholders before any payment is made to the holders of common stock.

The holders of Preferred Stock are entitled to an amount per share equal to (i) in the case of Series A Preferred Stock, the Original Issue Price plus any accruing dividends accrued but unpaid thereon, whether or not declared, together with any other dividends declared but unpaid thereon, and (ii) in the case of Series B Preferred Stock, the greater of (a) the applicable Original Issue Price plus any accruing dividends accrued but unpaid thereon, whether or not declared, together with any other dividends declared, or not declared, but unpaid thereon (the "Series B Preference Amount") or (b) the amount that would have been payable had all shares of each series of Preferred Stock been converted into common stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (as defined below).

After the payment in full of the Series A Preferred Stock preference amount and if applicable, the Series B Preference Amount, the remaining assets of the Company available for distribution to stockholders shall be distributed among the holders of Series A Preferred Stock and common stock on a pro rata basis provided that such distribution includes holders of Series B Preferred Stock if such distribution is greater than the Series B Preference Amount.

Unless at least the holders of a majority in voting power of the outstanding shares of Preferred Stock, elect otherwise, a Deemed Liquidation Event shall include a merger, consolidation, or share exchange (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) or a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company.

As of December 31, 2020, at the written election of at least 65 percent of the holders of the outstanding shares of Series A Preferred Stock, voting together as a single class and on an as-converted to common stock basis, the shares of Series A Preferred Stock outstanding were redeemable, at any time on or after the fifth anniversary of issuance, in three equal annual installments commencing 60 days after receipt of the required vote.

Shares of Series A Preferred Stock were redeemable in an amount equal to the Original Issue Price per share plus any accruing dividends accrued but unpaid thereon, whether or not declared.

In April 2021, in connection with the Series B Preferred Stock closing, the Company adopted an amended and restated certificate of incorporation, which removed the redemptions rights of the holders of Series A Preferred Stock.

As a result of this amendment, Series A Preferred Stock was no longer redeemable at the option of the holders.

The Company determined that the changes to the rights underlying the Series A Preferred Stock was not substantive and did not materially modify the rights and preferences of the holders of Series A Preferred Stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Prior to the amendment, the Company recognized changes in the redemption values of its Series A Preferred Stock over the period from the date of issuance to the earliest redemption date and adjusted the carrying value of the instrument to equal the redemption value at the redemption date.

During the period from September 19, 2019 (inception) to December 31, 2019, the years ended December 31, 2020 and 2021, the Company recorded adjustments to increase the carrying values of the Series A Preferred Stock by an aggregate of $ 0.3 million, $ 1.6 million, and $ 1.5 million, respectively, which resulted in an increase in redeemable convertible preferred stock by those amounts, offset by charges against additional paid-in-capital, if any, and then in the absence of additional paid-in capital the accretion is charged to the accumulated deficit.

The Company’s articles of the corporation, as amended and restated, does not provide redemption rights to the holders of Series B Preferred Stock.

The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth above.

Each share of common stock entitles the holder to one vote, together with the holders of the Preferred Stock, on all matters submitted to the stockholders for a vote.

The holders of common stock are entitled to receive dividends, if any, as declared by the Company’s board of directors, subject to the preferential dividend rights of Preferred Stock.

As of September 30, 2022 the Company had reserved 57,287,852 shares, respectively, of common stock for the potential conversion of shares of Preferred Stock into common stock, the exercise of outstanding stock options for common stock, and the issuance of common stock options and restricted stock awards remaining available for grant under the 2019 Equity Incentive Plan.

Accrued employee compensation and benefits 2,237 6,529

Total accrued expenses and other current liabilities $ 7,543 $ 10,688

(1) Includes related party amount of $ 0.3 million as of March 31, 2023 and December 31, 2022.

Stock-Based Compensation

1 unchanged sentence

The Company’s 2019 Stock Option and Grant Plan (the “2019 Plan”) provides for the Company to grant incentive stock options (“ISO”), non-qualified stock options, unrestricted stock awards, restricted stock awards (“RSA”) and other stock-based awards (collectively, the “Awards”) to the officers, employees, consultants and other key persons of the Company.

The 2019 Plan is administered by the board of directors, or at the discretion of the board of directors, by a committee of the board of directors.

The 2019 Plan was administered by the Board of Directors, or at the discretion of the Board of Directors, by a committee of the Board of Directors.

The exercise prices, vesting and other restrictions are determined at the discretion of the Board of Directors, or its committee if so delegated.

The total number of shares of common stock issuable under the 2019 Plan was 6,171,635 .

In April 2021, the Company’s board of directors further increased the number of shares of common stock reserved for issuance under the plan from 6,171,635 shares to 11,561,815 shares.

As of September 30, 2022 there were 1,392,540 shares remaining available for future grants under the 2019 Plan.

Shares of unused common stock underlying any Awards that are forfeited, canceled or reacquired by the Company prior to vesting will again be available for the grant of awards under the 2019 Plan.

The exercise price for stock options granted may not be less than the fair market value of the Company’s common stock on the date of grant, as determined by the board of directors, or at least 110 percent of the fair market value of the Company’s common stock on the date of grant in the case of an ISO granted to an employee who owns stock representing more than 10 percent of the voting power of all classes of stock (“10% Owner”) as determined by the board of directors as of the date of grant.

The Company’s board of directors determines the fair market value of the Company’s common stock, taking into consideration its most recently available valuation of common stock performed by third parties as well as additional factors which may have changed since the date of the most recent contemporaneous valuation through the date of grant.

Unless otherwise provided, at the time of grant, the options granted pursuant to the 2019 Plan expire ten years from the date of grant, or five years from the date of grant in the case of an ISO that is granted to a 10 % Owner.

Awards typically vest over four years , with the first 25 percent vesting on the first anniversary of the vesting commencement date and the remainder vesting in 36 equal monthly installments thereafter, contingent on the recipient’s continued employment, service or relationship with the Company.

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In October 2022, the Company completed its IPO, and in connection with the closing the Board determined that no further awards would be granted under the 2019 Plan.

In October 2022, in connection with the closing of the Company’s IPO, the Board of Directors determined that no further awards would be granted under the 2019 Plan.

2022 Stock Option and Incentive Plan

On February 9, 2022, the Company’s board of directors adopted, and on October 10, 2022 its stockholders approved, the 2022 Stock Option and Incentive Plan (the “2022 Plan”), which became effective immediately preceding the date on which the registration statement for the Company’s IPO is declared effective by the SEC.

On February 9, 2022, the Company’s Board of Directors adopted, and on October 10, 2022 its stockholders approved, the 2022 Stock Option and Incentive Plan (the “2022 Plan”), which became effective immediately preceding the date on which the registration statement for the Company’s IPO was declared effective by the SEC.

The 2022 Plan allows the Company to make equity-based and cash-based incentive awards to its officers, employees, directors, and consultants.

The 2022 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards.

The number of shares initially reserved for issuance under the 2022 Plan is 8,041,688 shares, which includes the number of shares remaining available for grant under the 2019 Plan, as of the effective date, for the issuance of awards under the 2022 Plan.

In addition, the number of shares reserved and available for issuance under the 2022 Plan will automatically increase on January 1, 2023 and each January 1 thereafter, by five percent of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number of shares as determined by the compensation committee.

The shares of common stock underlying any awards under the 2022 Plan and the 2019 Plan that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of stock, expire, or are otherwise terminated (other than by exercise) will be added back to the shares of common stock available for issuance under the 2022 Plan.

As of September 30, 2022, no options were issued and outstanding under the 2022 Plan.

The number of shares reserved and available for issuance under the 2022 Plan automatically increased on January 1, 2023 and will automatically increase on each January 1 hereafter, by five percent of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Compensation Committee.

On January 1, 2023, the annual increase resulted in an additional 4,860,461 shares authorized being added to the 2022 Plan.

As of March 31, 2023, the Company had 16,830,614 shares reserved under the 2022 Plan and the 2019 Plan, and 9,594,830 shares available for issuance under the 2022 Plan.

2022 Employee Stock Purchase Plan

On February 9, 2022, the Company’s board of directors adopted, and on October 10, 2022 its stockholders approved, the 2022 Employee Stock Purchase Plan (the “2022 ESPP”), which became effective immediately preceding the date on which the registration statement for the Company’s IPO is declared effective by the SEC.

A total of 971,350 shares of common stock were initially reserved for issuance under this plan.

The number of shares of common stock that may be issued under the 2022 ESPP shall cumulatively increase beginning on January 1, 2023 and each January 1 thereafter through January 1, 2032, by the least of (i) 971,350 shares of common stock, (ii) one percent of the outstanding number of shares of common stock on the immediately preceding December 31, or (iii) such number of shares of common stock as determined by the administrator of the 2022 ESPP.

No shares of the Company’s common stock were issued and no stock-based compensation expense was recognized during the three and nine months ended September 30, 2022 related to the 2022 ESPP.

On February 9, 2022, the Company’s Board of Directors adopted, and on October 10, 2022 its stockholders approved, the 2022 Employee Stock Purchase Plan (the “2022 ESPP”), which became effective immediately preceding the date on which the registration statement for the Company’s IPO was declared effective by the SEC.

The number of shares of common stock that may be issued under the 2022 ESPP cumulatively increased beginning on January 1, 2023 and shall increase on each January 1 hereafter through January 1, 2032, by the least of (i) 971,350 shares of common stock, (ii) one percent of the outstanding number of shares of common stock on the immediately preceding December 31, or (iii) such number of shares of common stock as determined by the administrator of the 2022 ESPP.

On January 1, 2023, the annual increase resulted in an additional 971,350 shares authorized being added to the 2022 Plan.

As of March 31, 2023, the Company had 1,942,700 shares available for issuance under the 2022 Plan.

No shares of the Company’s common stock were issued during the three months ended March 31, 2023 related to the 2022 ESPP.

Stock Options

The following table summarizes the Company’s stock option activity since December 31, 2021:

The following table summarizes the Company’s stock option activity for the three months ended March 31, 2023:

Number of Shares Weighted-Average Exercise Price

Balance at December 31, 2021 3,002,803 $ 3.96

Outstanding at December 31, 2022 3,954,265 $ 6.43

Granted 2,904,472 12.48

Exercised ( 18,596 ) 3.67

Forfeited ( 135,633 ) 4.66

Balance at September 30, 2022 3,971,557 $ 5.24

Options vested and exercisable at September 30, 2022 536,064 $ 3.71

Options vested and expected to vest at September 30, 2022 3,971,557 $ 5.24

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2022, there was $ 16.1 million of total unrecognized compensation cost related to time-based unvested stock options the Company expects to recognize such amount over a remaining weighted-average period of 3.2 years.

Cancelled or forfeited ( 16,087 ) 17.00

Outstanding at March 31, 2023 6,824,054 $ 8.99

Options vested and exercisable at March 31, 2023 1,095,290 $ 4.41

Options vested and expected to vest at March 31, 2023 6,824,054 $ 8.99

As of March 31, 2023, there was $ 42.8 million of total unrecognized compensation cost related to time-based unvested stock options the Company expects to recognize such amount over a remaining weighted-average period of 3.3 years.

Performance-Based Stock Options

During the year ended December 31, 2021, the Company granted performance-based stock options to purchase 241,248 shares of common stock.

The performance-based options commence vesting upon the achievement of (i) IND acceptance, (ii) consummation of the Company’s IPO and (iii) a research milestone to be mutually agreed upon and vest over three equal installments.

On February 9, 2022, the Company’s board of directors established and approved the third performance-based vesting milestone, which requires the building of a chemistry facility, initiation of pegRNA piloting operations, and production of a GLP toxicology lot suitable for in vivo non-human primate studies, for stock options to purchase 80,416 shares of common stock granted on October 27, 2021 to the Company’s CTO.

The first two performance-based vesting conditions for stock options to purchase 160,833 shares of common stock granted were established by the board of directors on October 27, 2021.

The grant date of these awards for accounting purposes is the date on which the performance conditions of the award were established by the board of directors and all terms of the award were known by the recipient.

As a result, the grant-date fair value of each such award for accounting purposes was determined on October 27, 2021 and such awards are reflected in the Company’s total stock options outstanding as of December 31, 2021.

The performance-based vesting condition for stock options to purchase 80,416 shares of common stock granted on October 27, 2021 which was not established by the Company’s board of directors until February 9, 2022 and therefore a grant date for accounting purposes had not been established for those stock options as of December 31, 2021 although such stock options are included in the Company’s total stock options outstanding as of December 31, 2021.

The accounting grant date was established on February 9, 2022 and as such are outstanding stock options for accounting purposes as of September 30, 2022.

In June 2022, the Company granted three performance-based stock options to purchase a total of 32,166 shares of common stock.

The performance-based options commence vesting upon the achievement of (i) IND acceptance, (ii) consummation of the Company’s IPO and (iii) first regulatory designation granted to Prime Medicine and vest over three equal installments.

The grant date of these awards for accounting purposes is the date on which the performance conditions of the award are established by the board of directors and all terms of the award are known by the recipient.

As a result, the grant-date fair value for accounting purposes for the first performance-based stock options to purchase 10,722 shares of common stock was determined on June 3, 2022, when the performance-based vesting conditions were established by the board of directors and the terms of the awards were communicated to the recipients.

The second and third performance-based vesting conditions for stock options to purchase the remaining 21,444 shares of common stock was not established by the Company’s board of directors until August 4, 2022 and therefore a grant date for accounting purposes had not been established for those stock options as of September 30, 2022 although such stock options are included in the Company’s total stock options outstanding for legal purposes as of September 30, 2022.

In August 2022, the Company granted 90,066 shares of performance-based options, at an exercise price of $ 7.96 per share.

This includes two grants, and 57,900 of the performance-based options vest in three equal installments upon the achievement of (i) IND acceptance, (ii) consummation of the Company’s IPO and (iii) business development deals which generate $ 100.0 million or more in upfront and near-term unrestricted cash.

The remaining 32,166 of the performance-based options vest in three equal installments upon the achievement of (i) IND acceptance, (ii) consummation of the Company’s IPO and (iii) maximize the senior leadership team effectiveness by accomplishment of four criteria through year end 2023.

As a result, the grant-date fair value for accounting purposes was determined on August 4, 2022, when the performance-based vesting conditions were established by the board of directors and the terms of the awards were communicated to the recipients.

The aggregate grant-date fair value is $ 0.5 million.

Through September 30, 2022, the Company concluded that the achievement of all of the performance conditions for such awards was not probable or consummated.

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2022 and December 31, 2021, there was $ 2.6 million and $ 1.4 million respectively, of total unrecognized compensation cost related to performance-based stock options.

The following table summarizes the Company’s performance-based stock option activity for the three months ended March 31, 2023:

Number of Shares Weighted-Average

Grant Date Fair

Outstanding at December 31, 2022 411,730 $ 6.65

Exercised — —

Cancelled or forfeited — —

Outstanding at March 31, 2023 411,730 $ 6.65

Vested and exercisable at March 31, 2023 121,160 $ 5.11

As of March 31, 2023, there was $ 2.3 million of total unrecognized compensation cost related to performance-based stock options.

Restricted Common Stock Awards

The Company awards restricted common stock to employees and non-employees under its 2019 Plan.

The fair value of each share of restricted common stock is based on the market price of the Company's common stock on the date of grant.

For a period of up to six months from a grantee’s termination, the Company has the right and option to repurchase unvested restricted common stock at the lower of (i) the original purchase price per share ($ 0.00004 ) or (ii) the fair market value per share as of the date of the Company elects to exercise its repurchase right.

In August 2021, the Company repurchased 18,227 unvested shares of the restricted common stock at a price of $ 0.00004 per share, the original sale price, and the repurchased common shares were restored to the amount of unissued, authorized shares of common stock as of December 31, 2021.

In May 2022, the Company repurchased 3,116 unvested shares of the restricted common stock at a price of $ 0.00004 per share, the original sale price, and the repurchased common shares were restored to the amount of unissued, authorized shares of common stock as of September 30, 2022.

Shares of restricted common stock granted to employees and directors are not deemed, for accounting purposes, to be outstanding until those shares have vested.

Each award type is discussed below.

The Company awarded restricted common stock to employees and non-employees under its 2019 Plan.

The vesting of these restricted stock awards are time-based or performance-based.

Time-Based Restricted Common Stocks

The majority of the restricted common stock have time-based vesting conditions and vest over a four-year period, subject to the employee’s continued employment with, or service to, the Company on such vesting date.

Compensation expense is recognized on a straight-line basis over the vesting period.

Time-Based Restricted Common Stock

In September 2019, a co-founder of the Company was granted a total of 20,835,277 shares of restricted common stock, of which 3,472,545 shares are performance-based restricted common stock as described below.

The remaining 17,362,732 shares are subject to service conditions.

In February 2020, another co-founder of the Company was granted 694,679 shares of restricted common stock that are subject to service conditions.

These awards vest over a four-year period and provide for accelerated vesting of a portion of the unvested awards, as determined in the award agreement, upon the initial or subsequent closings of the Series A Preferred Stock.

Upon the grant date, the Company determined the initial and subsequent closings of the Series A Preferred Stock were probable to occur and recognized the compensation expense over the expected service period.

The following table summarizes the Company’s time-based restricted common stock activity since December 31, 2021:

The following table summarizes the Company’s time-based restricted common stock activity for the three months ended March 31, 2023 :

Number of Shares Weighted-Average Grant-Date Fair Value

Unvested restricted common stock at December 31, 2021 10,801,361 $ 0.10

Outstanding at December 31, 2022 5,015,034 $ 0.10

Vested ( 1,317,308 ) 0.08

Repurchased — —

Unvested restricted common stock at September 30, 2022 6,404,723 $ 0.04

The aggregate fair value of restricted common stock that vested during the nine months ended September 30, 2022 was $ 0.4 million.

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2022, there was $ 0.4 million of total unrecognized compensation cost related to unvested ti me-based restricted common stock which the Company expects to recognize over a weighted-average period of 1.3 years.

Outstanding at March 31, 2023 3,697,726 $ 0.11

As of March 31, 2023, there was $ 0.4 million of total unrecognized compensation cost related to unvested ti me-based restricted common stock which the Company expects to recognize over a weighted-average period of 0.9 years.

Performance-Based Restricted Common Stock

The Company has also granted performance‑based restricted common stock to certain executive officers and key persons of the Company with terms that allow the grantees to vest in a specific number of shares based upon the achievement of performance‑based milestones.

The Company granted 3,472,545 shares of performance-based restricted common stock to a co-founder of the Company in 2019, which will vest upon on the dosing of first patient in a Phase II or later-stage clinical trial or FDA approval of compound.

The Company granted 694,679 and 385,998 shares of performance-based restricted common stock to certain executive officers in the years ended December 31, 2020 and 2021, respectively.

These awards vest in three equal installments upon the achievements of (i) proof of concept in lead indication (which was achieved in May 2022), (ii) IND acceptance and (iii) consummation of the Company’s IPO.

Share‑based compensation expense associated with the performance-based restricted common stock is recognized if the performance condition is considered probable of achievement using the Company’s best estimates of the time to vesting for the achievement of the performance‑based milestones.

Each reporting period, the Company updates its assessment of the probability that the performance-based milestones will be achieved.

As of December 31, 2020 and 2021, the Company has concluded it was not probable that these performance conditions related to performance-based restricted common stock would be achieved, and as a result no compensation expense related to the performance-based restricted common stock has been recorded.

As of September 30, 2022, the Company has concluded that the proof of concept in a lead indication was achieved in May 2022, but it was not probable that the remaining performance conditions related to performance-based restricted common stock would be achieved.

As a result, compensation expense of $ 0.1 million was recorded for the milestone achieved, and no compensation expense related to the remaining performance-based restricted common stock has been recorded.

The fair value of the restricted common stock was based on the fair market value of the Company’s common stock on the date of grant.

The following table summarizes the Company’s performance-based restricted common stock activity since December 31, 2021:

The following table summarizes the Company’s performance-based restricted common stock activity for the three months ended March 31, 2023 :

Number of Shares Weighted-Average Grant-Date Fair Value

Unvested restricted common stock at December 31, 2021 4,553,223 $ 0.10

Vested ( 360,226 ) 0.19

Outstanding at December 31, 2022 3,832,769 $ 0.07

Repurchased — —

Unvested restricted common stock at September 30, 2022 4,192,997 $ 0.10

As of September 30, 2022, there was $ 0.3 million of total unrecognized compensation cost related to unvested performance-based restricted common stock.

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Outstanding at March 31, 2023 3,832,769 $ 0.07

As of March 31, 2023, there was $ 0.3 million of total unrecognized compensation cost related to unvested performance-based restricted common stock.

Stock-Based Compensation

The following table below summarizes the classification of the Company’s stock-based compensation expense related to stock options and restricted common stock awards in the consolidated statements of operations and comprehensive loss (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

General and administrative $ 467 $ 130 $ 1,288 $ 172

Three Months Ended March 31,

(in thousands) 2023 2022

Stock-based compensation expense:

Research and development $ 1,170 $ 758

$ 1,417 $ 339 $ 3,885 $ 639

Our building leases are comprised of office and laboratory space under non-cancelable operating leases.

These lease agreements have remaining lease terms of five years and contain various clauses for renewal at our option.

The renewal options were not included in the calculation of the operating lease assets and the operating lease liabilities as the renewal options are not reasonably certain of being exercised.

The lease agreements do not contain residual value guarantees.

Summary of lease costs

The following table contains a summary of the lease costs and other information pertaining to the Company’s operating leases for the three and nine months ended September 30, 2022 and 2021.

In connection with the Arsenal Street Sublease, the Company recorded operating sublease income of $ 0.1 million and $ 0.2 million, respectively for the three and nine months ended September 30, 2022 in other income (expense), net in the condensed consolidated statements of operations.

The Company was not relieved of its primary obligation under the operating lease as a result of the sublease.

Future annual lease payments under non-cancelable operating leases as of September 30, 2022 w ere as follows (in thousands):

Remaining 2022 $ 2,415

Total future minimum lease payments 33,820

General and administrative 511 365

Total stock-based compensation expense $ 1,681 $ 1,123

The Company’s building leases consist of office and laboratory space under non-cancelable operating leases.

Future annual lease payments under non-cancelable operating leases as of March 31, 2023 w ere as follows:

(in thousands) Undiscounted

Undiscounted lease payments:

Remaining in 2023 $ 8,845

Total undiscounted lease payments $ 27,639

imputed interest ( 1,675 )

The lease for office and laboratory space at 60 First Street, Cambridge , Massachusetts has not yet commenced and the expected date for which the Company obtains control of the space is currently uncertain but not expected to occur until the first half of 2023.

The Company currently expects rent to commence 11 months after taking possession of the space, with occupancy expected to begin in 2024, for which the Company will pay approximately $ 208.7 million over the ten-year lease term.

As the lease has not commenced as of September 30, 2022, the operating lease liabilities on the consolidated balance sheet through September 30, 2022 and the table above excludes any amounts related to this lease.

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

License and Collaboration Agreements

The Company's significant license agreements are disclosed in Note 10, "License and Collaboration Agreements," in the audited consolidated financial statements for the year ended December 31, 2021, and notes thereto, included in the Company’s final prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on October 21, 2022.

Since the date of those financial statements, there have been no changes to its license agreements, except as noted below.

The Company accounts for this Pledge as research and development expenses as it has access to certain data generated as a result of the Pledge.

For the year ended December 31, 2021, the Company recognized $ 5.0 million of research and development expense in connection with the Pledge.

For both the three and nine months ended September 30, 2022 and 2021, the Company recognized $ 1.3 million and $ 3.8 million, respectively, of research and development expense in connection with the Pledge.

Commitments and Contingencies

The Company’s commitments under its operating leases are described in Note 9.

Additionally, as part of the lease agreement the Company entered into in May 2022 for 480 Arsenal Street, the Company signed a participation rights agreement for up to $ 2.0 million, which allows the landlord or an affiliate or designee of the landlord to participate in any future issuance of equity at the same terms and pricing as other investors.

Since the right to participate is on the same terms and pricing afforded to other investors, the participation right is deemed to be at fair value with no separate accounting required.

With the completion of our IPO in October 2022, this agreement terminated.

Total operating lease liability $ 25,964

year lease term .

As the lease has not commenced as of March 31, 2023, the operating lease liabilities on the consolidated balance sheet through March 31, 2023 and the table above excludes any amounts related to this lease.

In April 2023, the Company entered into an amendment of its operating lease for office and laboratory space at 21 Erie Street, Cambridge, Massachusetts.

As the amendment was not in effect as of March 31, 2023, the above excludes any amounts related to this amendment.

License and Collaboration Agreements

The Company entered into various license and collaboration agreements under which it is obligated to make fixed and contingent payments (see Note 10).

The Company maintains a defined-contribution plan under Section 401(k) of the Internal Revenue Code of 1986 (the “401(k) Plan”).

The 401(k) Plan covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-t ax basis.

Matching contributions to the 401(k) Plan may be made at the discretion of management.

The Company is not required to make any matching contributions to the 401(k) Plan.

In July 2022, the Company announced a new company match for the 401(k) retirement plan beginning on July 1, 2022.

For the three and nine months ended September 30, 2022, the Company has contributed $ 0.1 million.

As of September 30, 2022, $ 0.3 million is included within accrued expenses.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties.

In addition, the Company has entered into indemnification agreements with all board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors.

The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited.

To date, the Company has not incurred any material costs as a result of such indemnifications.

The Company is not aware of any indemnification arrangements that could have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of September 30, 2022 and December 31, 2021.

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Legal Proceedings

From time to time, the Company may become involved in legal proceedings or other litigation relating to claims arising in the ordinary course of business.

The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated.

Significant judgment is required to determine both probability and estimated exposure amount.

Legal fees and other costs associated with such proceedings are expensed as incurred.

As of September 30, 2022 and December 31, 2021, the Company was not a party to any material legal proceedings or claims.

The Company’s significant license agreements are disclosed in Note 10, License and Collaboration Agreements , in the audited consolidated financial statements for the year ended December 31, 2022, and notes thereto, included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 9, 2023.

Since the date of those financial statements, there have been no changes to its license agreements .

Net Loss per Share

Basic and diluted net loss per common share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Basic and diluted net loss per common share attributable to common stockholders was calculated as follows:

Three Months Ended March 31,

(in thousands, except share and per share amounts) 2023 2022

Net loss $ ( 39,397 ) $ ( 23,840 )

Accretion of preferred stock to redemption value — — — ( 1,468 )

Cumulative dividend on preferred stock — ( 6,224 )

2 unchanged sentences

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.44 ) $ ( 1.58 )

Diluted net loss per share available to common shareholders was computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period.

For purposes of this calculation, preferred stock, unvested restricted stock and stock options to purchase common stock were considered common stock equivalents but had been excluded from the calculation of diluted net loss per share available to common shareholders as their effect was anti-dilutive.

In periods in which the Company reports a net loss available to common shareholders, diluted net loss per share available to common shareholders is the same as basic net loss per share available to common shareholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Diluted net loss per share available to common stockholders was computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period.

In periods in which the Company reports a net loss available to common stockholders, diluted net loss per share available to common stockholders is the same as basic net loss per share available to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

The following common stock equivalents were excluded from the calculation of diluted net loss per share applicable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

As of September 30, 2022

Convertible preferred stock (as converted to common stock) 51,923,758 51,923,764

Stock Options to purchase common stock 3,971,557 1,311,101

As of March 31,

Anti-dilutive common stock equivalents:

Unvested restricted common stock 7,530,495 13,750,034

Stock Options to purchase common stock 6,945,214 3,174,125

Convertible preferred stock (as converted to common stock) — 51,923,758

Total anti-dilutive common stock equivalents:

14,475,709 68,847,917

1 unchanged sentence

Founder Consulting Services

For both the three and nine months ended September 30, 2022 and 2021, the Company made payments of $ 37,500 and $ 0.1 million, respectively, to one of the Co-founder shareholders for scientific consulting and other expenses.

As of September 30, 2022 and December 31, 2021 , there were no amounts included within accounts payable.

PRIME MEDICINE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Beam Therapeutics

The Company and Beam Therapeutics, (“Beam”), are parties to the Beam Collaboration Agreement and the Beam Mutual Subscription Agreement and have a common founder and one common board member (see Note 10).

For the year ended December 31, 2021 , the Company made payments of $ 0.1 million to Beam for general and administrative service s pursuant to an agreement to receive certain interim management and startup services (see Note 10).

The agreement ended on March 31, 2021 and for the nine months ended September 30, 2021, the Company made payments of $ 0.1 million for such services.

Newpath Partners

In connection with the Series A and B Preferred Stock closings (see Note 6), the Company issued and sold 9,999,999 and 5,250,781 shares of Series A and B Preferred Stock, respectively, to Newpath Partners L.P.

(“Newpath”), which is an affiliate to one of the Company’s board members, for an aggregate purchase price of $ 10.0 million and $ 23.0 million, respectively.

For both the three months ended March 31, 2023 and 2022, the Company made payments of $ 37,500 and $ 37,500 , respectively, to one of the co-founder stockholders for scientific consulting and other expenses.

As of March 31, 2023 and December 31, 2022, there were no amounts included within accounts payable.

Myeloid Therapeutics

In December 2021, the Company and Myeloid entered into the Myeloid Collaboration Agreement and Myeloid Subscription Agreement (see Note 10).

The Company and Myeloid have one common board member, who is also an affiliate of Newpath, one of the Company’s holders of Series A and B Preferred Stock.

Subsequent Events

In October 2022, the Company completed its IPO of its common stock.

As a result of the IPO, the Company received $ 180.3 million in net proceeds, after deducting underwriting discounts, commissions and offering costs of $ 19.0 million.

Upon the closing of the IPO, 161,420,799 shares of outstanding convertible preferred stock were automatically converted into 51,923,758 shares of common stock, after the effect of the one-for-3.10880 reverse stock split, with the related carrying value of $ 395.8 million reclassified to common stock and additional paid-in capital.

Additionally, the performance vesting condition for 360,225 restricted stock units and 121,160 stock options issued under the 2019 Plan was deemed satisfied upon the effective date of the Company's registration statement on Form S-1 filed with the SEC in connection with the IPO.

The related compensation expense for these awards was approximately $ 1.0 million.

On February 9, 2022, the Company’s board of directors approved the third amended and restated certificate of incorporation, which was filed upon the closing of the IPO, on October 24, 2022, and which, among other things, increases the number of shares of common stock authorized for issuance from 293,258,790 to 775,000,000 shares of common stock.

In December 2021, the Company and Myeloid Therapeutics, Inc.

(“Myeloid”) are party to Myeloid Collaboration Agreement and Myeloid Subscription Agreement.

The Company and Myeloid have one common board member, who is also an affiliate of Newpath, one of the Company’s holders of its common stock.

As of March 31, 2023 and December 31, 2022, there was $ 0.3 million related to license fees included within accrued expenses and other current liabilities.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Some of the information contained in this discussion and analysis and set forth elsewhere in this Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, intentions and projections.

Our actual results could differ materially from those discussed in these forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this Quarterly Report on Form 10-Q.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 9, 2023.

As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, intentions, or projections, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those discussed in these forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022.

Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

We are a biotechnology company committed to delivering a new class of differentiated one-time curative genetic therapies to address the widest spectrum of diseases by deploying our Prime Editing technology, which we believe is a versatile, precise, efficient and broad gene editing technology.

Genetic mutations implicated in disease are diverse and can range from errors of a single base, known as point mutations, to errors that extend beyond a single base, such as insertions, deletions, duplications, or combinations thereof.

Other mutations can affect regulatory sequences that control the function of genes and can affect the function of larger biochemical and genetic pathways.

Furthermore, natural genetic variations, revealed by population-level genomic studies, are known to protect against or to increase risk of disease.

To maximize the impact of these genetic insights, we believe the ability to alter the human genome at the foundational level may confer the greatest therapeutic impact on human disease.

Since our inception in September 2019, we have devoted substantially all of our efforts on organizing and staffing our company, business planning, raising capital, research and development activities, developing our Prime Editing platform, building our intellectual property portfolio and providing general and administrative support for these operations.

Through September 30, 2022, we had received gross proceeds of $315.8 million from sales of preferred stock.

In October 2022, we completed our IPO and as a result, we received $180.3 million in net proceeds.

To date, we have financed our operations primarily with our initial public offering of common stock, or IPO, and proceeds from sales of preferred stock.

We have incurred significant operating losses since inception.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of any product candidates we may develop.

We generated net losses of $29.7 million, and $16.4 million for the three months ended September 30, 2022 and 2021, respectively and $82.5 million, and $102.5 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we had an accumulated deficit of $253.9 million.

We expect to continue to incur significant expenses for at least the next several years if and as we:

• continue our current research programs and preclinical development of any product candidates we identify;

• seek to identify additional research programs and product candidates;

• initiate preclinical studies and clinical trials for any product candidates we may identify;

• experience any delays or interruptions due to the ongoing COVID-19 pandemic, including delays in preclinical testing and clinical trials or interruptions in the supply chain for any future product candidates;

• further develop our in-licensed and company-owned gene editing platform, which we call our Prime Editing platform;

• maintain, expand, enforce, defend and protect our intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio;

• seek marketing approvals for any product candidates for which we successfully complete clinical trials;

• develop, maintain and enhance a sustainable, scalable, reproducible and transferable manufacturing process for the product candidates we may develop;

• ultimately establish a sales, marketing and distribution infrastructure to commercialize any therapies for which we may obtain marketing approval;

• hire additional research and development personnel;

• hire clinical and commercial personnel;

• add operational, financial and management information systems and personnel, including personnel to support our product development;

• acquire or in-license product candidates, intellectual property and technologies;

• establish and maintain collaborations;

• should we decide to do so, build and maintain a commercial-scale current Good Manufacturing Practices, or cGMP, manufacturing facility;

• operate as a public company.

We will not generate revenue from product sales unless and until we successfully initiate and complete clinical development and obtain regulatory approval for any product candidates.

If we obtain regulatory approval for any of our product candidates and do not enter into a commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, manufacturing, marketing, and distribution.

Further, following the completion of our IPO, we have incurred and expect to continue to incur costs associated with operating as a public company, including increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with being a public company.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of private and public equity offerings, debt financings, or other capital sources, which may include additional collaborations with other companies, marketing, distribution or licensing arrangements with third parties, or other strategic transactions.

We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all.

If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, reduce or eliminate the development and commercialization of any product candidates that we may identify or delay our pursuit of potential in-licenses or acquisitions.

Because of the numerous risks and uncertainties associated with product development, we are unable to accurately 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 product sales, we may not become profitable.

If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

In October 2022, we completed our IPO.

In connection with our IPO, we issued and sold 11,721,456 shares of our common stock, including 1,427,338 shares pursuant to the exercise of the underwriters’ option to purchase additional shares, at a price to the public of $17.00 per share.

As a result of the IPO, we received $180.3 million in net proceeds, after deducting underwriting discounts, commissions and offering costs of $19.0 million.

Based on our current operating plan, we believe that our existing cash and cash equivalents and short-term investments will be sufficient to fund our operating expenses and capital expenditure requirements into 2025.

Impact of COVID-19 on Our Operations

We are subject to a number of risks associated with the COVID-19 global pandemic, including potential delays associated with our ongoing preclinical studies and anticipated clinical trials.

COVID-19 may have an adverse impact on our operations, supply chains and distribution systems or those of our third-party vendors and collaborators, and increase expenses, including as a result of impacts associated with preventive and precautionary measures that are being taken, such as restrictions on travel and border crossings, quarantine policies and social distancing.

We and our third-party vendors and collaborators may experience disruptions in supply of items that are essential for our research and development activities.

We cannot predict the scope and severity of any economic recovery after the COVID-19 pandemic abates, including following any additional “waves” or other intensifying of the pandemic will have on our financial condition, operations and business plans.

License Agreements

Pledge to Broad Institute and Harvard

In February 2021, we committed to donate $5.0 million to Broad Institute and Harvard annually for 14 years, commencing in 2021, or the Pledge.

The Pledge is intended to be used for research and development related to new genome editing technologies, for example Prime Editing, improve on existing genome-editing technologies, identify delivery mechanisms for these technologies and apply these technologies to the understanding and treatment of rare genetic diseases.

We can terminate the Pledge at our discretion, subject to providing one year of funding from the date of termination.

In August 2022, we amended and restated the Pledge to clarify that the funds may be used by the laboratory of David Liu, who is a member of Broad Institute and a faculty member at Harvard.

During the nine months ended September 30, 2022, there were no other material changes to our license agreements described under Management’s Discussion and Analysis Overview which are included in the Company’s final prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on October 21, 2022.

We are a biotechnology company committed to delivering a new class of differentiated one-time curative genetic therapies to address the widest spectrum of diseases.

We are deploying Prime Editing technology, which we believe is a versatile, precise, efficient and broad gene editing technology designed to make only the right edit at the right position within a gene.

To maximize the potential of our Prime Editing technology to provide one-time curative genetic therapies to the broadest set of diseases possible, we have purposefully built a diversified portfolio of 18 investigational therapeutic programs organized around four strategic indication categories, each set of indications chosen to deliver a different strategic goal:

• Immediate target indications:

Deliberately chosen as potentially the fastest, most direct path to demonstrate technological success of Prime Editing in patients.

We are initially focusing on diseases of the blood via ex vivo delivery to hematopoietic stem cells and on diseases of the liver, the eye and the ear.

• Differentiation target indications:

Aimed to create therapeutics to address the underlying cause of severe genetic diseases with therapeutics that we believe could not have been created before, especially using other gene-editing approaches.

These include repeat expansion diseases, or diseases where expansion of pathological DNA repeats results in serious disease.

• “Blue sky” indications:

Intended to push new and innovative technological developments in Prime Editing and extend its application beyond rare genetic diseases and towards our goal of more broadly addressing human disease.

These programs remain in the early stages of conception and will become an increasing focus over the next few years.

• “March up the chromosome” approaches:

Represents opportunities to deliver upon our overarching vision to ultimately treat all patients with a disease and correct the full set of mutations in a particular gene.

This category overlaps with other strategic indication categories, where most of our disclosed indications across other categories have a plan that can accommodate expansion opportunities to address additional mutations in that disease.

We believe our Prime Editing programs are well-positioned to leverage the clinical, regulatory, and manufacturing advancements made to date across gene therapy, gene editing, and delivery modalities to accelerate progression to clinical trials and potential approval.

Components of Our Results of Operations

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These expenses include:

• the cost allocated to acquire in-process research and development, or IPR&D, with no alternative future use associated with asset acquisitions or transactions to license intellectual property, such as our Myeloid Agreement and Broad License Agreement;

• the cost allocated to acquire in-process research and development (“IPR&D”), with no alternative future use associated with asset acquisitions or transactions to license intellectual property, such as our Myeloid Agreement and Broad License Agreement;

• expenses incurred in connection with our Pledge to Broad Institute;

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Most of our research and development expenses have been related to early stage development activities.

We have not reported program costs because we have not historically tracked or recorded our research and development expenses on a program-by-program basis, as we do not currently have any product candidates.

In the future, external research and development costs for any individual product candidate will be tracked commencing upon product candidate nomination.

We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our platform and, as such, are not separately classified.

We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing any future product candidates, including investments in manufacturing, as we advance any product candidates we may identify and begin to conduct clinical trials.

The success of product candidates we may identify and develop will depend on many factors, including the following:

• timely and successful completion of preclinical studies, including toxicology studies, biodistribution studies and minimally efficacious dose studies in animals, where applicable;

• effective INDs or comparable foreign applications that allow commencement of our planned clinical trials or future clinical trials for any product candidates we may develop;

• successful enrollment and completion of clinical trials, including under the FDA’s current Good Clinical Practices, or GCPs, current Good Laboratory Practices, or GLPs, and any additional regulatory requirements from foreign regulatory authorities;

• positive results from our future clinical trials that support a finding of safety and effectiveness and an acceptable risk-benefit profile in the intended populations;

• receipt of marketing approvals from applicable regulatory authorities;

• establishment of arrangements through our own facilities or with third-party manufacturers for clinical supply and, where applicable, commercial manufacturing capabilities;

• establishment, maintenance, defense and enforcement of patent, trademark, trade secret and other intellectual property protection or regulatory exclusivity for any product candidates we may develop; and

• maintenance of a continued acceptable safety, tolerability and efficacy profile of any product candidates we may develop following approval.

Any changes in the outcome of any of these variables with respect to the development of product candidates that we may identify could mean a significant change in the costs and timing associated with the development of such candidates.

For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time to complete clinical development of that therapeutic candidate.

We may never obtain regulatory approval for any of our candidates, and, even if we do, drug commercialization takes several years and millions of dollars in development costs.

Following consummation of our IPO, certain bonuses became payable, and certain performance-based restricted stock awards and options to purchase common stock vested and the related compensation expense was approximately $0.8 million related to research and development expenses.

General and Administrative Expenses

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and facilities, depreciation and other general and administrative expenses, which include direct or allocated expenses for rent and maintenance of facilities and utilities.

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support development of product candidates and our continued research activities.

We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with being a public company.

We also expect to incur additional intellectual property-related expenses as we file patent applications to protect innovations arising from our research and development activities.

Following consummation of our IPO, certain performance-based restricted stock awards vested and the related compensation expense was approximately $0.2 million related to general and administrative expenses.

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support research and development activities;

increased accounting, legal, insurance, and investor and public relations costs as we continue to operate as a public company;

and additional intellectual property-related expenses as we file patent applications to protect innovations arising from our research and development activities.

Other Income (Expense)

Change in Fair Value of Preferred Stock Tranche Liability

Our Series A preferred stock purchase agreement obligated the Series A investors to participate in subsequent offerings of Series A preferred stock upon satisfaction of certain conditions, or the preferred stock tranche right.

The preferred stock tranche right was classified as a liability and initially recorded at fair value upon the issuance date of the right.

The liability was subsequently remeasured to fair value at each reporting date and immediately prior to being settled, and changes in fair value of the preferred stock tranche right liability were recognized as a component of other income (expense), net in our consolidated statements of operations and comprehensive loss.

In 2020, we closed the second tranche Series A preferred stock financing and in April 2021, we closed the third and fourth tranche Series A preferred stock financings, resulting in full settlement of the preferred stock tranche right, upon both of which we issued additional shares of Series A preferred stock.

Immediately prior to the issuance of such shares, the preferred stock tranche right liability was remeasured to fair value with the change in fair value recognized as a component of other income (expense), net.

As a result of the preferred stock tranche right settlement in April 2021, we will no longer recognize changes in the fair value of the preferred stock tranche liability in our consolidated statements of operations and comprehensive loss.

Change in Fair Value of Anti-Dilution Obligation

In connection with the Broad License Agreement, we entered into the Broad Subscription Agreement, in which we granted Broad Institute 623,529 shares of common stock, which represented a 5.0 percent of our then outstanding capital stock on a fully-diluted basis.

The Broad Subscription Agreement obligated us to issue additional shares of common stock to Broad Institute without additional consideration to maintain Broad Institute’s ownership of us at 5.0 percent on a fully-diluted basis, if at any time prior to the achievement of an equity financing up to $100.0 million, we issue additional securities that would cause Broad Institute shares of common stock to be less than 5.0 percent of our outstanding capital stock on a fully-diluted basis, which we refer to collectively as the Anti-Dilution Obligation.

We classified the Anti-Dilution Obligation as a liability on our consolidated balance sheet that we remeasured to fair value at each reporting date, and we recognized changes in the fair value of the liability associated with the Anti-Dilution Obligation as a component of other income (expense) in our consolidated statement of operations and comprehensive loss.

As a result of the achievement of $100.0 million in equity financing upon the fourth Series A preferred stock closing, we fully settled the Anti-Dilution Obligation and will no longer recognize changes in the fair value of the Anti-Dilution Obligation in our consolidated statements of operations and comprehensive loss.

Change in Fair Value of Related Party Short-Term Investment

In connection with the Beam Collaboration Agreement, Beam issued 200,307 shares of Beam common stock to us on October 6, 2020.

Our related party short-term investment is recorded at fair value based upon quoted market prices at each reporting date.

Unrealized and realized gains and losses on this investment subsequent to its initial recognition are recognized as a component of other income (expense) in the consolidated statements of operations and comprehensive loss.

Other Income (Expense), Net

Other income (expense), net consists of the change in the fair value of the shares we were entitled to receive from our related party Beam from the first anniversary of the Beam Collaboration Agreement through the date we received the shares from Beam, October 6, 2020.

In connection with the Beam Collaboration Agreement, Beam granted 200,307 shares of Beam common stock to us.

We were entitled to receive the shares of Beam upon the first anniversary of the Beam Collaboration Agreement in September 2020.

We received the shares of Beam on October 6, 2020.

The change in the fair value of the shares from September through our receipt on October 6, 2020 is included as other income (expense), net in the consolidated statements of operations and comprehensive loss.

As the shares were received on October 6, 2020, we no longer recognize changes in the fair value of the Beam shares we were entitled to receive.

For the three and nine months ended September 30, 2022 we recorded an income tax provision of $0.2 million and benefit of $0.8 million, respectively.

For the three and nine months ended September 30, 2021, we recorded income tax benefits of $2.4 million and $1.9 million, respectively.

These are a result of changes associated with the unrealized gains on investments.

We recorded a full valuation allowance of our net deferred tax assets as of December 31, 2021 and September 30, 2022, respectively, as we believed it was more likely than not we would not be able to utilize our deferred tax assets prior to their expiration.

Other income (expense), net primarily consists of the change in the fair value of our short-term investment in Beam, a related party, in connection with the Beam Collaboration Agreement, which is discussed in greater detail in Note 11, License and Collaboration Agreements , to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022.

Results of Operations

Comparison of the three months ended September 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended September 30, 2022 and 2021:

Three Months Ended September 30,

2022 2021 Change

(in thousands)

Comparison of the three months ended March 31, 2023 and 2022

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

(in thousands, except share and per share amounts) 2023 2022 Change

Operating expenses:

Research and development (1)

$ 30,880 $ 13,677 $ 17,203

General and administrative 9,153 6,221 2,932

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Other income (expense):

Change in fair value of related party short-term investment 1,789 (8,354) 10,143

Other income (expense), net (1)

Total other expense, net 2,517 (8,355) 10,872

Change in fair value of short-term investment — related party (1,701) (4,485) 2,784

Other income, net 2,135 11 2,124

Total other income (expense), net 434 (4,474) 4,908

Net loss before income taxes (39,599) (24,372) (15,227)

Provision for (benefit from) income taxes 212 (2,370) 2,582

Benefit from income taxes (202) (532) 330

Net loss $ (39,397) $ (23,840) $ (15,557)

(1) Includes no related party amounts for the three months ended September 30, 2022 and 2021, (see Note 13).

Operating Expenses

Research and Development Expenses

Three Months Ended September 30,

2022 2021 Change

(in thousands)

License, intellectual property fees and other $ 1,945 $ 1,279 $ 666

Personnel related (including stock-based compensation) 8,348 2,701 5,647

Three Months Ended March 31,

(in thousands) 2023 2022 Change

Research and development expenses:

Personnel related (inc.

stock-based compensation) $ 11,194 $ 5,553 $ 5,641

Lab supplies 10,864 3,992 6,872

Professional and consultant fees 543 122 421

Facility related and other 5,304 2,465 2,839

Total research and development expenses $ 25,047 $ 7,400 $ 17,647

Research and development expenses were $25.0 million for the three months ended September 30, 2022, compared to $7.4 million for the three months ended September 30, 2021.

The increase of $17.6 million was primarily due an increase of $7.7 million in lab supplies expense due to continued discovery efforts and expansion of our research and development activities, an increase of $5.6 million in personnel-related expense driven by increased new hires in research and development, and an increase of $3.2 million facility related expense primarily due to the expansion of our office and laboratory space through new facilities being leased.

General and Administrative Expenses

Three Months Ended September 30,

2022 2021 Change

(in thousands)

Personnel related (including stock-based compensation) $ 3,255 $ 1,132 $ 2,123

Professional and consultant fees 2,518 1,397 1,121

Facility related and other 835 498 337

Total general and administrative expenses $ 6,608 $ 3,027 $ 3,581

General and administrative expenses were $6.6 million for the three months ended September 30, 2022, compared to $3.0 million for the three months ended September 30, 2021.

The increase of $3.6 million was primarily due to an increase of $2.1 million in professional and consultant fees as we operate as a public company, an increase of $1.1 million of personnel-related expense primarily due to compensation related costs related to increased new hires to expand upon our administrative staff functions and an increase of $0.3 million of facility related expenses primarily due to newly signed office leases to support our expanded general and administrative staff.

Other Income (Expense)

Three Months Ended September 30,

2022 2021 Change

(in thousands)

Change in fair value of related party short-term investment $ 1,789 $ (8,354) $ 10,143

Other income (expense), net 728 (1) 729

Total other expense, net $ 2,517 $ (8,355) $ 10,872

Change in Fair Value of Related Party Short-Term Investment

The change in fair value of related party short-term investment increased by $10.1 million from the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

The decrease was primarily due to a $39.37 decrease in the stock price of the Beam stock from September 30, 2021 to September 30, 2022 as compared to the $20.25 increase in the per share value of Beam common stock used to determine the fair value of related party short-term investments from October 6, 2020, the date on which we received the Beam shares, to September 30, 2022.

Other Income (Expense), Net

The change in other income (expense), is due to interest income of $0.5 million, gain on marketable securities of $0.1 million and sublease income of $0.1 million.

Comparison of the Nine Months ended September 30, 2022 and 2021

The following table summarizes our results of operations for the nine months ended September 30, 2022 and 2021:

Nine Months Ended

September 30,

2022 2021 Change

(in thousands)

Operating expenses:

Research and development $ 57,664 $ 17,661 $ 40,003

General and administrative 20,194 6,737 13,457

Total operating expenses 77,858 24,398 53,460

Loss from operations (77,858) (24,398) (53,460)

Other income (expense):

Change in fair value of preferred stock tranche right liability — (74,319) 74,319

Change in fair value of anti-dilution obligation — (6,681) 6,681

Change in fair value of related party short-term investment (6,419) 1,075 (7,494)

Other income (expense), net (1)

Total other expense, net (5,442) (79,925) 74,483

Net loss before income taxes (83,300) (104,323) 21,023

Provision for (benefit) from income taxes (762) (1,867) 1,105

Net loss $ (82,538) $ (102,456) $ 19,918

(1) Includes related party amounts of zero and $(429) for the nine months ended September 30, 2022 and 2021, respectively (see Note 13).

Operating Expenses

Research and Development Expenses

Nine Months Ended

September 30,

2022 2021 Change

(in thousands)

License, intellectual property fees, and other 1,875 1,375 500

Personnel related (including stock-based compensation) 21,383 5,907 15,476

Lab supplies and services 19,321 3,619 15,702

Professional and consultant fees 1,643 292 1,351

Facility related and other 11,122 3,855 7,267

Total research and development expenses $ 30,880 $ 13,677 $ 17,203

Research and development expenses were $57.7 million for the nine months ended September 30, 2022, compared to $17.7 million for the nine months ended September 30, 2021.

The increase of $40.0 million was primarily due to an increase of $15.7 million in lab supplies and services expense due to continued discovery efforts and expansion of our research and development activities, an increase of $15.5 million in personnel-related expense driven by increased new hires in research and development, an increase of $7.3 million facility related expense primarily due to the expansion of our office and laboratory space through new facilities being leased, and an increase of $1.0 million in professional and consultant fees as we operate as a public company.

The $17.2 million increase in research and development expense for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 was primarily driven by:

• $6.9 million increase in lab supplies expense due to continued discovery efforts and expansion of our research and development activities;

• $5.6 million increase in personnel-related expense and $1.4 million increase in professional and consultant fees driven by the continued build out of our research and development function;

• $2.8 million increase in facility-related expense primarily due to the expansion of our office and laboratory space.

General and Administrative Expenses

Nine Months Ended

September 30,

2022 2021 Change

(in thousands)

Personnel related (including stock-based compensation) $ 8,711 $ 2,329 $ 6,382

Three Months Ended March 31,

(in thousands, except share and per share amounts) 2023 2022 Change

General and administrative expenses:

Professional and consultant fees $ 3,969 $ 2,918 $ 1,051

Personnel related (inc.

stock-based compensation) 3,065 2,436 629

Facility related and other 2,119 867 1,252

Total general and administrative expenses $ 9,153 $ 6,221 $ 2,932

General and administrative expenses were $20.2 million for the nine months ended September 30, 2022, compared to $6.7 million for the nine months ended September 30, 2021.

The increase of $13.5 million was primarily due to an increase of $6.4 million of personnel-related expense primarily due to compensation related costs related to increased new hires to support our expanding operations, $4.8 million in professional and consultant fees as we operate as a public company, and an increase of $2.3 million of facility and IT related expenses primarily due to newly signed office leases to support our expanded general and administrative staff.

The $2.9 million increase in general and administrative expense for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 is primarily driven by:

• $1.3 million increase in facility related expenses primarily due to newly signed office leases to support our expanded general and administrative staff;

• $1.1 million increase in professional and consultant fees as we operate as a public company and to support our research and development function.

Other Income (Expense)

Nine Months Ended

September 30,

2022 2021 Change

(in thousands)

Change in fair value of preferred stock tranche right liability $ — $ (74,319) $ 74,319

Change in fair value of anti-dilution obligation — (6,681) 6,681

Change in fair value of related party short-term investment (6,419) 1,075 (7,494)

Other income (expense), net 977 — 977

Total other expense, net $ (5,442) $ (79,925) $ 74,483

Change in Fair Value of Preferred Stock Tranche Right Liability

The change in fair value of the preferred stock tranche right liability increased by $74.3 million from the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The increase was primarily due to the preferred stock tranche right being settled in full upon the satisfaction of certain conditions in April 2021.

Change in Fair Value of Anti-Dilution Obligation

The change in fair value of the Anti-Dilution Obligation increased by $6.7 million from the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The decrease was primarily due to the settlement date in connection with the fourth Series A preferred stock closing in 2021, with no corresponding change in the nine months ended September 30, 2022.

Three Months Ended March 31,

(in thousands, except share and per share amounts) 2023 2022 Change

Other income (expense):

Change in fair value of short-term investment — related party $ (1,701) $ (4,485) $ 2,784

Other income, net 2,135 11 2,124

Total other income (expense), net $ 434 $ (4,474) $ 4,908

Change in Fair Value of Related Party Short-Term Investment

The change in fair value of related party short-term investment decreased by $7.5 million from the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The decrease was due to a $32.05 decrease in the stock price from December 31, 2021 to September 30, 2022, as compared to the $5.37 increase in the stock price of the Beam stock from December 31, 2020 to September 30, 2021.

Other Income (Expense), Net

The change in other income (expense), is due to interest income of $0.9 million, sublease income of $0.2 million, partially offset by loss on marketable securities of $0.1 million.

We recorded an income tax benefit of $0.8 million for the nine months ended September 30, 2022 and an income tax benefit of $1.9 million for the nine months ended September 30, 2021.

The change in fair value of related party short-term investment for each of the periods presented is a result of Beam’s stock price movement.

Other Income, net

Other income, net for the three months ended March 31, 2023 primarily consists of interest income on the Company’s short-term investments.

Liquidity and Capital Resources

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We have not yet commercialized any products and we do not expect to generate revenue from sales of products for several years, if at all.

To date, we have funded our operations primarily with proceeds from our IPO and the sale of our convertible preferred stock.

Through September 30, 2022, we had received gross proceeds of $315.8 million from sales of our preferred stock.

As of September 30, 2022, we had cash and cash equivalents and short-term investments of $146.7 million, excluding our restricted cash, or $160.2 million, including restricted cash.

To date, we have funded our operations primarily with proceeds from sales of preferred stock and from our initial public offering.

As of March 31, 2023, we had cash, cash equivalents, and investments of $249.5 million, excluding our restricted cash, or $263.0 million, including restricted cash.

The following table summarizes our sources and uses of cash for each of the periods presented:

Nine Months Ended

September 30,

Three Months Ended March 31,

(in thousands) 2023 2022

Net change in cash, cash equivalents and restricted cash:

Net cash used in operating activities $ (41,561) $ (50,793)

Net cash used in investing activities (33,409) (85,780)

Net cash (used in) provided by financing activities (2,579) 270,364

Net (decrease) increase in cash, cash equivalents and restricted cash $ (137,102) $ 163,689

Net cash (used in) provided by investing activities (12,665) 30,893

Net cash provided by (used in) financing activities 68 (1,272)

Net change in cash, cash equivalents, and restricted cash $ (54,158) $ (21,172)

Operating Activities

During the nine months ended September 30, 2022, operating activities used $101.1 million of cash, resulting primarily from our net loss of $82.5 million, non-cash rent expense of $7.0 million, change in the fair value of related party short-term investment of $6.4 million, stock-based compensation expense of $3.9 million, depreciation and amortization expense of $1.4 million, and a change in deferred income taxes of $0.8 million.

Net cash provided by changes in our operating assets and liabilities for the nine months ended September 30, 2022 was $36.6 million which primarily consisted of a decrease in accrued expenses and other current liabilities of $30.0 million and an increase in accounts payable of $2.0 million, partially offset by a decrease in lease liabilities of $7.6 million and an increase in prepaid expenses and other current assets of $1.1 million.

The decrease in accrued expenses and other current liabilities was primarily due to a $30.0 million payment that we made to Myeloid in January 2022 in connection with the Myeloid Agreement.

During the nine months ended September 30, 2021, operating activities used $20.9 million of cash, resulting primarily from our net loss of $102.5 million and a change in deferred income taxes of $1.9 million, partially offset by a change in the fair value of preferred stock tranche right liability of $74.3 million, a change in the fair value of anti-dilution obligation of $6.7 million, a change in the fair value of related party short-term investment of $1.1 million, non-cash rent expense of $2.9 million, stock-based compensation expense of $0.6 million, depreciation and amortization expense of $0.3 million.

Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2021 was $0.4 million which primarily consisted of an increase in accrued expenses and other current liabilities of $1.9 million and an increase in accounts payable of $1.1 million, partially offset by an increase in lease liabilities of $2.7 million.

Net cash used in operating activities for the three months ended March 31, 2023 was driven primarily by the following uses of cash:

• $39.4 million net loss;

• $4.0 million change in accrued expenses and other current liabilities;

• $2.8 million change in lease liabilities;

• $1.3 million change in prepaid and other current assets.

These were offset by $7.2 million of non-cash amounts included in net loss, which primarily consisted of non-cash lease expense, change in fair value of short-term investment — related party, stock-based compensation expense, and depreciation and amortization expense.

Net cash used in operating activities for the three months ended March 31, 2022 was driven primarily by the following uses of cash:

• $23.8 million net loss;

• $33.3 million change in accrued expenses and other current liabilities;

• $2.3 million change in lease liabilities.

These were offset by:

• $7.3 million of non-cash amounts included in net loss, which primarily consisted of change in fair value of short-term investment — related party, non-cash lease expense, and stock-based compensation expense;

• $1.0 million change in accounts payable.

Investing Activities

During the nine months ended September 30, 2022, net cash used in investing activities was $33.4 million, primarily consisting of purchases of short-term investments of $89.5 million, purchases of property and equipment of $11.3 million, and payments of security deposits of $0.7 million, partially offset by maturities of short-term investments of $68.0 million.

The purchases of equipment were primarily related to laboratory equipment purchases, which increased as we expanded our discovery and preclinical activities.

During the nine months ended September 30, 2021, net cash used in investing activities was $85.8 million, primarily consisting of purchases of short-term investments of $81.8 million, purchases of property and equipment of $3.8 million, and payments of security deposits of $0.2 million.

The purchases of equipment were primarily related to laboratory equipment purchases, which increased as we expanded our discovery and preclinical activities.

Net cash used in investing activities for the three months ended March 31, 2023 was driven primarily by the following uses of cash:

• $111.5 million of purchases of marketable securities, net of maturities;

• $2.0 million of purchases of property and equipment.

Net cash provided by investing activities for the three months ended March 31, 2022 was driven primarily by the following:

• $32.5 million of maturities of marketable securities, net of purchases;

• $1.7 million of purchases of property and equipment.

Financing Activities

During the nine months ended September 30, 2022, net cash used in financing activities was $2.6 million, primarily consisting of $2.6 million in payments of deferred offering costs.

During the nine months ended September 30, 2021, net cash provided by financing activities was $270.4 million, consisting of net cash proceeds received of $270.4 million from our issuance of Series A and B preferred stock in April 2021.

Net cash used in financing activities for the three months ended March 31, 2022 was driven primarily by payment of deferred financing costs.

Funding Requirements

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The timing and amount of our operating expenditures will depend largely on the factors set out above.

For more information, see “Risk Factors—Risks Related To Our Financial Position and Need for Additional Capital.”

We believe our existing cash and cash equivalents and short-term investments, including the net proceeds received in connection with our IPO, will be sufficient to fund our operating expenses and capital expenditure requirements into 2025.

For more information, see “Risk Factors—Risks Related To Our Financial Position and Need for Additional Capital” included in this Quarterly Report on Form 10-Q.

We believe our existing cash and cash equivalents and short-term investments will be sufficient to fund our operating expenses and capital expenditure requirements into 2025.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

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• further develop our Prime Editing platform;

and hire additional research, clinical and scientific personnel.

• hire additional research, clinical and scientific personnel.

If we receive regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize ourselves.

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Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise funds through collaborations, strategic alliances or marketing, or distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, any future revenue streams, research programs or product candidates or grant licenses on terms

that may not be favorable to us.

may not be favorable to us.

If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Other Commitments

As of September 30, 2022, we have future remaining operating lease payments of $33.8 million relating to leases we have recognized on our consolidated balance sheet, of which an aggregate $2.4 million is payable before December 31, 2022.

In addition, we have one lease that has been entered into but has not yet commenced, as of September 30, 2022, for which we expect to pay approximately $208.7 million over the 10 year lease term.

Refer to Note 9 – Leases to our condensed consolidated financial statements for more information on our lease obligations.

License and Collaboration Agreements

During the nine months ended September 30, 2022, there were no material changes to our license and collaboration agreements described under Management’s Discussion and Analysis of Contractual Obligations and Other Commitments which are included in the Company’s final prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on October 21, 2022.

We enter into contracts in the normal course of business with contract organizations and other vendors to assist in the performance of our research and development activities, and other services and products for operating purposes.

These contracts generally provide for termination on notice, and therefore are cancellable contracts and not included in the table of contractual obligations and commitments.

During the three months ended March 31, 2023, except for the minimum rental commitments disclosed in Note 7, Leases , to the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q, there were no significant changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022.

Critical Accounting Policies and Significant Judgments and Estimates

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Actual results may differ from these estimates.

During the nine months ended September 30, 2022, there were no material changes to our critical accounting policies and significant judgements described under Management’s Discussion and Analysis of Critical Accounting Policies and Significant Judgments and Estimates which are included in the Company’s final prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on October 21, 2022.

During the three months ended March 31, 2023, there were no material changes to our critical accounting policies and significant judgements described under Management’s Discussion and Analysis of Critical Accounting Policies and Significant Judgments and Estimates which are included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Recently Issued and Adopted Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our condensed consolidated financial statements.

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, Summary of Significant Accounting Policies , to our audited financial statements for the year ended December 31, 2022, and notes thereto, included in the Company’s Annual Report on Form 10-K.

Emerging Growth Company Status

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As a result of this election, our condensed consolidated financial statements may not be comparable to other public companies that comply with new or revised accounting pronouncements as of public company effective dates.

We may choose to

early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.

We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.

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

What changed 10-Q

Item 1. Financial Statements