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Item 1. Financial Statements

2023-08-07 compared with 2023-05-11 · 181 added, 118 removed, 463 unchanged (39% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(in thousands, except share and per share amounts) June 30,

2023 December 31,

23 unchanged sentences

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

97,269,915 and 97,209,213 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 615,347 609,849

3 unchanged sentences

Total liabilities and stockholders’ equity $ 280,865 $ 360,314

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

(1) Includes related party amount of $ 0.3 million as of June 30, 2023 and December 31, 2022.

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

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

10 unchanged sentences

Net loss before income taxes ( 42,354 ) ( 29,790 ) ( 81,953 ) ( 54,162 )

Benefit from income taxes ( 202 ) ( 532 )

(Provision for) benefit from income taxes ( 31 ) 442 171 974

Net loss $ ( 42,385 ) $ ( 29,348 ) $ ( 81,782 ) $ ( 53,188 )

7 unchanged sentences

Comprehensive loss $ ( 42,448 ) $ ( 29,466 ) $ ( 81,666 ) $ ( 53,311 )

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

(1) Includes related party amount of $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2023, respectively.

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

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

Issuance of common stock upon exercise of stock options 42,106 — 166 — — 166

Stock-based compensation expense — — 3,583 — — 3,583

Change in unrealized loss on investments, net of tax — — — ( 63 ) — ( 63 )

Net loss — — — — ( 42,385 ) ( 42,385 )

Balance as of June 30, 2023 97,269,915 $ 2 $ 615,347 $ ( 268 ) $ ( 374,979 ) $ 240,102

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

14 unchanged sentences

Balance as of March 31, 2022 115,761,842 196,157 45,658,957 199,643 33,515,385 — 28,305 ( 32 ) ( 195,216 ) ( 166,943 )

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

Stock-based compensation expense — — — — — — 1,346 — — 1,346

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

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

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

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2023 2022

3 unchanged sentences

Non cash lease expense 6,304 4,222

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

Stock-based compensation expense 5,264 2,468

Depreciation expense 2,170 723

Change in fair value of short-term investment — related party 1,438 8,208

Amortization of premiums and discount on short-term investments ( 1,403 ) 249

Deferred income taxes ( 171 ) ( 974 )

Non cash other income (expense) — —

Changes in operating assets and liabilities:

4 unchanged sentences

Net cash used in operating activities ( 82,382 ) ( 71,016 )

Cash flows (used in) provided by investing activities:

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

Purchases of investments ( 45,666 ) —

Cash flows provided by (used in) investing activities:

Maturities of investments 65,000 62,000

Purchases of investments ( 45,659 ) ( 74,744 )

Purchases of property and equipment ( 3,975 ) ( 6,490 )

Payments of security deposits ( 170 ) ( 664 )

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

Net cash provided by (used in) investing activities 15,196 ( 19,898 )

Cash flows provided by (used in) financing activities:

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2023 2022

Supplemental cash flow information:

Right-of-use assets obtained in exchange for new operating lease liabilities $ 3,265 $ 28,573

Supplemental disclosure of non-cash investing and financing activities:

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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 March 31, 2023, the Company had an accumulated deficit of $ 332.6 million.

Since its inception, the Company has incurred substantial losses and as of June 30, 2023, the Company had an accumulated deficit of $ 375.0 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 expects that its cash, cash equivalents, and investments as of June 30, 2023 of $ 207.6 million will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these financial statements.

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

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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 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 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 June 30, 2023, the results of its operations for the three and six months ended June 30, 2023 and 2022, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2023 and 2022, and its cash flows for the six months ended June 30, 2023 and 2022.

The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2023 and 2022 are also unaudited.

The results for the three and six months ended June 30, 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.

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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:

As of June 30, 2023:

(in thousands) Level 1 Level 2 Level 3 Total

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

As of March 31, 2023:

As of June 30, 2023:

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

1 unchanged sentence

Treasury bills and government securities $ 80,920 $ — $ ( 275 ) $ 80,645

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

Total short-term investments in debt securities $ 80,920 $ — $ ( 275 ) $ 80,645

As of December 31, 2022:

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

Total short-term investments in debt securities $ 98,851 $ — $ ( 384 ) $ 98,467

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

(in thousands) March 31,

(in thousands) June 30,

2023 December 31,

1 unchanged sentence

Marketable securities in unrealized loss positions consisted of the following:

As of March 31, 2023:

As of June 30, 2023:

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

1 unchanged sentence

Treasury bills and government securities 26 $ 80,645 $ ( 275 )

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) March 31,

(in thousands) June 30,

2023 December 31,

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Depreciation expense related to property and equipment is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

2 unchanged sentences

Accrued expenses and other current liabilities consisted of the following:

(in thousands) March 31,

(in thousands) June 30,

2023 December 31,

Accrued expenses and other current liabilities

Accrued employee compensation and benefits $ 4,460 $ 6,529

Accrued professional fees 3,514 2,162

Lab-related supplies and services 693 1,219

Accrued employee compensation and benefits 2,237 6,529

Accrued license fee – related party

Other 806 449

Total accrued expenses and other current liabilities $ 9,723 $ 10,688

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

Stock-Based Compensation

9 unchanged sentences

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.

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.

The number of shares reserved and available for issuance under the 2022 Plan increased on January 1, 2023 and will 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.

As of June 30, 2023, the Company had 16,788,508 shares reserved under the 2022 Plan and the 2019 Plan, and 9,172,130 shares available for issuance under the 2022 Plan.

2022 Employee Stock Purchase Plan

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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.

As of June 30, 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 six months ended June 30, 2023 related to the 2022 ESPP.

Stock Options

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

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2023:

Number of Shares Weighted-Average Exercise Price

3 unchanged sentences

Cancelled or forfeited ( 193,234 ) 8.36

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.

Outstanding at June 30, 2023 7,204,648 $ 9.48

Options vested and exercisable at June 30, 2023 1,528,964 $ 5.64

Options vested and expected to vest at June 30, 2023 7,204,648 $ 9.48

As of June 30, 2023, there was $ 44.3 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 3.0 years.

Performance-Based Stock Options

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

The following table summarizes the Company’s performance-based stock option activity for the six months ended June 30, 2023:

Number of Shares Weighted-Average

3 unchanged sentences

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.

Outstanding at June 30, 2023 411,730 $ 6.65

Vested and exercisable at June 30, 2023 121,160 $ 5.11

As of June 30, 2023, there was $ 2.3 million of total unrecognized compensation cost related to performance-based stock options.

Restricted Common Stock Awards

2 unchanged sentences

Time-Based Restricted Common Stocks

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

The following table summarizes the Company’s time-based restricted common stock activity for the six months ended June 30, 2023 :

Number of Shares Weighted-Average Grant-Date Fair Value

2 unchanged sentences

Repurchased — —

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.

Outstanding at June 30, 2023 2,308,037 $ 0.12

As of June 30, 2023, there was $ 0.3 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 0.8 years.

Performance-Based Restricted Common Stock

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

The following table summarizes the Company’s performance-based restricted common stock activity for the six months ended June 30, 2023 :

Number of Shares Weighted-Average Grant-Date Fair Value

1 unchanged sentence

Repurchased — —

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.

Outstanding at June 30, 2023 3,832,769 $ 0.07

As of June 30, 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:

Three Months Ended March 31,

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 condensed consolidated statements of operations and comprehensive loss:

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

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Total stock-based compensation expense $ 3,583 $ 1,345 $ 5,264 $ 2,468

In April 2023, the Company entered into an amendment to its operating lease (the “Amended Lease”) for additional office and laboratory space at 21 Erie Street, Cambridge, Massachusetts.

The Amended Lease is subject to fixed-rate rent escalations.

The 23-month lease term of the Amended Lease, over which the Company is obligated to pay approximately $ 3.7 million, commenced in April 2023.

Upon the commencement of the Amended Lease, the Company recorded a lease liability and a right-of-use asset of $ 3.3 million.

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:

Future annual lease payments under non-cancelable operating leases as of June 30, 2023 w ere as follows:

(in thousands) Undiscounted

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Total operating lease liability $ 25,442

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 is expected to occur in 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 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.

The Company is party to a lease for office and laboratory space at 60 First Street, Cambridge, Massachusetts, with the rent commencement date expected to occur in the first quarter of 2024, subject to any credits pursuant to the terms of the lease.

Also subject to any credits pursuant to the terms of the lease, the Company expects to pay up to approximately $ 208.7 million over the ten -year lease term .

As of June 30, 2023, the lease has not commenced in accordance with ASC 842, Leases ;

accordingly, the operating lease liabilities and operating lease right-of-use assets on the condensed consolidated balance sheet through June 30, 2023, and the table above, exclude any amounts related to this lease.

License and Collaboration Agreements

The Company’s significant license agreements are disclosed in Note 11, 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 .

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

Net Loss per Share

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

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

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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 March 31,

As of June 30,

Anti-dilutive common stock equivalents:

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

Stock Options to purchase common stock 7,325,808 3,593,533

Unvested restricted common stock 6,140,806 11,995,985

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

3 unchanged sentences

Founder Consulting Services

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.

For both the three months ended June 30, 2023 and 2022, the Company made payments of $ 37,500 in each period, and for the six months ended June 30, 2023 and 2022, the Company made payments of $ 75,000 in each period to one of the co-founder stockholders for scientific consulting and other expenses.

As of June 30, 2023 and December 31, 2022, there were no amounts included within accounts payable.

Myeloid Therapeutics

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

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

(“Myeloid”) entered into the 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.

The Company provided notice to Myeloid of its intent to terminate the Myeloid Collaboration Agreement during the second quarter of 2023.

As of June 30, 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

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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.

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

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

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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.

These include repeat expansion diseases and conditions where expansion of pathological DNA repeats results in serious disease.

• “Blue sky” indications:

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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.

This category may overlap with other strategic indication categories, where most of our disclosed indications could 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.

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These expenses include:

• 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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Other Income (Expense)

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.

Other income (expense), net primarily consists of the change in the fair value of our short-term investment in Beam Therapeutics Inc.

(“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 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,

Comparison of the Three Months Ended June 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended June 30, 2023 and 2022:

Three Months Ended June 30,

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

1 unchanged sentence

Research and development $ 34,599 $ 18,940 $ 15,659

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

General and administrative 10,658 7,365 3,293

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Net loss before income taxes (42,354) (29,790) (12,564)

Benefit from income taxes (202) (532) 330

(Provision for) benefit from income taxes (31) 442 (473)

Net loss $ (42,385) $ (29,348) $ (13,037)

1 unchanged sentence

Research and Development Expenses

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands) 2023 2022 Change

Research and development expenses:

Personnel related (inc.

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

Lab supplies $ 13,048 $ 5,940 $ 7,108

Personnel expenses 12,596 7,481 5,115

Facility related and other 6,021 3,836 2,185

2 unchanged sentences

Total research and development expenses $ 34,599 $ 18,940 $ 15,659

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.

The $15.7 million increase in research and development expense for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 was primarily driven by:

• $7.1 million increase in lab supplies expense due to continued discovery efforts and expansion of our research and development activities, including ongoing IND-enabling activities, and increased personnel in our R&D function;

• $5.1 million increase in personnel expense, including an increase in stock-based compensation expense of $1.3 million, and $1.0 million increase in professional and consultant fees, both driven by our increased headcount as we continue to build out our research and development function;

• $2.2 million increase in facility-related expense primarily due to the expansion and build out of our office and laboratory space.

General and Administrative Expenses

Three Months Ended March 31,

Three Months Ended June 30,

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

1 unchanged sentence

Professional and consultant fees $ 4,241 $ 2,783 $ 1,458

Personnel related (inc.

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

Personnel expenses 4,144 3,020 1,124

Facility related and other 2,272 1,562 710

Total general and administrative expenses $ 10,657 $ 7,365 $ 3,292

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.

The $3.3 million increase in general and administrative expense for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 is primarily driven by $1.5 million increase in professional and consultant fees and $1.1 million increase in personnel expenses, both driven by growth in personnel as we operate as a public company and to support our growing research and development function.

Other Income (Expense)

Three Months Ended March 31,

Three Months Ended June 30,

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

6 unchanged sentences

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.

Other income, net for the three months ended June 30, 2023 primarily consists of interest income from the Company’s short-term investments.

Comparison of the Six Months Ended June 30, 2023 and 2022

The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

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

Operating expenses:

Research and development $ 65,479 $ 32,617 $ 32,862

General and administrative 19,811 13,586 6,225

Total operating expenses 85,290 46,203 39,087

Loss from operations (85,290) (46,203) (39,087)

Other income (expense):

Change in fair value of short-term investment — related party (1,438) (8,208) 6,770

Other income, net 4,775 249 4,526

Total other income (expense), net 3,337 (7,959) 11,296

Net loss before income taxes (81,953) (54,162) (27,791)

(Provision for) benefit from income taxes 171 974 (803)

Net loss $ (81,782) $ (53,188) $ (28,594)

Operating Expenses

Research and Development Expenses

Six Months Ended June 30,

(in thousands) 2023 2022 Change

Research and development expenses:

Lab supplies $ 23,912 $ 9,932 $ 13,980

Personnel expenses 23,790 13,034 10,756

Facility related and other 11,325 6,301 5,024

License, intellectual property fees, and other 3,375 2,630 745

Professional and consultant fees 3,077 720 2,357

Total research and development expenses $ 65,479 $ 32,617 $ 32,862

The $32.9 million increase in research and development expense for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 was primarily driven by:

• $14.0 million increase in lab supplies expense due to continued discovery efforts and expansion of our research and development activities, including ongoing IND-enabling activities, and increased personnel in our R&D function;

• $10.8 million increase in personnel expense, including an increase in stock-based compensation expense of $1.7 million, and $2.4 million increase in professional and consultant fees, both driven by our increased headcount as we continue to build out our research and development function;

• $5.0 million increase in facility-related expense primarily due to the expansion and build out of our office and laboratory space.

General and Administrative Expenses

Six Months Ended June 30,

(in thousands) 2023 2022 Change

General and administrative expenses:

Professional and consultant fees $ 8,210 $ 5,701 $ 2,509

Personnel expenses 7,209 5,456 1,753

Facility related and other 4,391 2,429 1,962

Total general and administrative expenses $ 19,810 $ 13,586 $ 6,224

The $6.2 million increase in general and administrative expense for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 is primarily driven by:

• $2.5 million increase in professional and consultant fees and $1.8 million increase in personnel expenses, which includes an increase in stock-based compensation expense of $1.1 million, both driven by growth in personnel as we operate as a public company and to support our growing research and development function;

• $2.0 million increase in facility related expenses primarily due to the expansion and build out of our office space.

Other Income (Expense)

Six Months Ended June 30,

(in thousands) 2023 2022 Change

Other income (expense):

Change in fair value of short-term investment — related party $ (1,438) $ (8,208) $ 6,770

Other income, net 4,775 249 4,526

Total other income (expense), net $ 3,337 $ (7,959) $ 11,296

Change in Fair Value of Related Party Short-Term Investment

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 six months ended June 30, 2023 primarily consists of interest income from the Company’s short-term investments.

Liquidity and Capital Resources

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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.

As of June 30, 2023, we had cash, cash equivalents, and investments of $207.6 million, excluding our restricted cash, or $221.1 million, including restricted cash.

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

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2023 2022

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Net cash used in operating activities $ (82,382) $ (71,016)

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

Net cash provided by (used in) investing activities 15,196 (19,898)

Net cash provided by (used in) financing activities 143 (1,896)

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Operating Activities

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

Net cash used in operating activities for the six months ended June 30, 2023 was driven primarily by the following uses of cash:

• $81.8 million net loss;

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

• $6.6 million change in lease liabilities;

• $5.3 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:

• $3.4 million change in accrued expenses and other current liabilities.

These were offset by:

• $13.6 million of non-cash amounts included in net loss, which primarily consisted of non-cash lease expense, stock-based compensation expense, change in fair value of short-term investment — related party, and depreciation and amortization expense;

• $1.1 million change in accounts payable.

Net cash used in operating activities for the six months ended June 30, 2022 was driven primarily by the following uses of cash:

• $53.2 million net loss;

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Investing 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:

Net cash provided by investing activities for the six months ended June 30, 2023 was driven primarily by the following uses of cash:

• $19.3 million of maturities of marketable securities, net of purchases;

• $4.0 million of purchases of property and equipment.

Net cash used in investing activities for the six months ended June 30, 2022 was driven primarily by the following:

• $12.7 million of purchases of marketable securities, net of maturities;

• $6.5 million of purchases of property and equipment.

Financing Activities

Net cash used in financing activities for the three months ended March 31, 2022 was driven primarily by payment of deferred financing costs.

Net cash used in financing activities for the six months ended June 30, 2022 was driven by payment of deferred financing costs related to our IPO.

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” 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.

For more information, refer to the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, and the “Risk Factors” section of subsequent Quarterly Reports on Form 10-Q.

We believe our existing cash, cash equivalents, and 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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Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of private and public equity offerings, debt financings, additional collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect your rights as a common stockholder.

To the extent that we raise additional capital

through the sale of equity or convertible debt securities, ownership interest may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect your rights as a common stockholder.

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.

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.

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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.

During the six months ended June 30, 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

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.

The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses incurred during the reporting periods.

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses incurred during the reporting periods.

We base our estimates on historical experience, known trends and events, and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities recorded revenues and expenses that are not readily apparent from other sources.

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Actual results may differ from these estimates.

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.

During the six months ended June 30, 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

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The Jumpstart Our Business Startups Act of 2012 permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.

We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different

application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

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.

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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