What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-10 compared with 2023-11-03 · 205 added, 289 removed, 394 unchanged (56% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

2024 December 31,

3 unchanged sentences

Short-term investment — related party 6,618 5,452

Prepaid expenses and other current assets 19,214 2,697

Prepaid expenses 4,203 19,057

Other current assets 2,728 2,254

Total current assets 217,654 142,976

7 unchanged sentences

Accounts payable $ 10,078 $ 19,537

$ 14,124 $ 4,332

Accrued expenses and other current liabilities (1)

14,023 10,688

Accrued settlement payment — related party — 13,500

Operating lease liability 6,751 9,276

2 unchanged sentences

Non current deferred tax liability 134 —

Research and development funding liability 6,000 —

Total liabilities 67,617 60,780

3 unchanged sentences

775,000,000 shares authorized;

97,324,301 and 97,209,213 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

120,021,274 and 97,377,121 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 780,950 624,414

3 unchanged sentences

Total liabilities and stockholders’ equity $ 311,383 $ 193,851

(1) Includes related party amount of $ 0.1 million as of September 30, 2023.

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

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except share and per share amounts) 2024 2023

Collaboration revenue $ 591 $ —

Operating expenses:

4 unchanged sentences

Loss from operations ( 48,341 ) ( 40,033 )

Other income (expense):

Other income:

Change in fair value of short-term investment — related party 1,166 ( 1,701 )

Other income, net 1,548 2,135

Total other income (expense), net 643 2,517 3,980 ( 5,442 )

Total other income, net 2,714 434

Net loss before income taxes ( 45,627 ) ( 39,599 )

(Provision for) benefit from income taxes ( 134 ) 202

Net loss $ ( 50,708 ) $ ( 29,350 ) $ ( 132,490 ) $ ( 82,538 )

Cumulative dividend on preferred stock — ( 6,362 ) — ( 18,879 )

Net loss attributable to common stockholders $ ( 45,761 ) $ ( 39,397 )

5 unchanged sentences

Comprehensive loss $ ( 45,841 ) $ ( 39,218 )

(1) Includes related party amount of $ 0.1 million and $ 0.8 million for the three and nine months ended September 30, 2023, respectively.

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

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

9 unchanged sentences

Balance as of December 31, 2023 97,377,121 $ 2 $ 624,414 $ ( 15 ) $ ( 491,330 ) $ 133,071

Issuance of common stock from public offering, net of issuance costs of $ 8.9 million

22,560,001 — 132,055 — — 132,055

Issuance of pre-funded warrants, net of issuance costs of $ 1.2 million

— — 18,800 — — 18,800

Issuances of common under ESPP 74,488 — 436 — — 436

Issuance of common stock upon exercise of stock options 9,664 — 36 — — 36

3 unchanged sentences

Balance as of March 31, 2024 120,021,274 $ 2 $ 780,950 $ ( 95 ) $ ( 537,091 ) $ 243,766

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

Issuance of common stock upon exercise of stock options 54,386 — 227 — — 227

Stock-based compensation expense — — 4,217 — — 4,217

Change in unrealized loss on investments, net of tax — — — 119 — 119

Net loss — — — — ( 50,708 ) ( 50,708 )

Balance as of September 30, 2023 97,324,301 $ 2 $ 619,791 $ ( 149 ) $ ( 425,687 ) $ 193,957

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’ DEFICIT

Redeemable Convertible Preferred Stock Convertible Preferred Stock Common Stock Additional

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Additional

Capital Accumulated Other

3 unchanged sentences

Stockholders'

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

(in thousands, except share amounts) Shares Amount

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

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 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 — 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 )

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

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

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

Net loss — — — — — — — — ( 29,350 ) ( 29,350 )

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

Balance as of September 30, 2022 115,761,842 $ 196,157 45,658,957 $ 199,643 33,559,912 $ — $ 31,272 $ ( 454 ) $ ( 253,914 ) $ ( 223,096 )

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

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.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(in thousands) 2024 2023

8 unchanged sentences

Deferred income taxes 134 ( 202 )

Loss on disposal of property and equipment — 8

Changes in operating assets and liabilities:

2 unchanged sentences

Accrued expenses and other current liabilities ( 4,475 ) ( 4,046 )

Accrued settlement payment — related party ( 13,500 ) —

Lease liabilities ( 3,462 ) ( 2,781 )

4 unchanged sentences

Purchases of property and equipment ( 2,324 ) ( 1,999 )

Payments of security deposits ( 170 ) ( 664 )

Net cash used in investing activities ( 37,032 ) ( 12,665 )

Cash flows provided by (used in) financing activities:

Cash flows provided by financing activities:

Proceeds from follow-on offering, net of issuance costs 132,055 —

Proceeds from issuance of pre-funded warrants, net of issuance costs 18,800 —

Proceeds from research and development funding liability 6,000 —

Proceeds from ESPP offerings 436 —

Net proceeds from stock option exercises 36 68

Payments of deferred offering costs — ( 2,642 )

Net cash provided by (used in) financing activities 461 ( 2,579 )

Net cash provided by financing activities 157,327 68

Net change in cash, cash equivalents, and restricted cash 52,588 ( 54,158 )

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(in thousands) 2024 2023

1 unchanged sentence

Right-of-use assets obtained in exchange for new operating lease liabilities $ 44,935 $ —

Decrease in right-of-use assets due to lease termination $ 6,100 $ —

Supplemental disclosure of non-cash investing and financing activities:

Purchases of property and equipment included in accounts payable and accrued expenses $ 833 $ 2,603

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

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

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

2 unchanged sentences

Nature of the Business and Basis of Presentation

Prime Medicine, Inc., together with its consolidated subsidiary (the “Company”) is a biotechnology company committed to deliver genetic therapies to address diseases by deploying gene editing technology, Prime Editing.

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

With the theoretical potential to repair approximately 90 percent of known disease-causing genetic mutations across many organs and cell types, medicines based on Prime Editing, if approved, could offer a one-time curative genetic therapeutic option to a broad set of patients.

Prime Medicine, Inc., together with its consolidated subsidiary (the “Company”) is a biotechnology company committed to delivering a new class of differentiated one-time curative genetic therapies to address the widest spectrum of diseases.

The Company is deploying Prime Editing technology, which it believe is a versatile, precise, and efficient gene editing technology.

The Company was incorporated in the State of Delaware in September 2019.

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.

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.

Its principal offices are in Cambridge, Massachusetts.

Liquidity and Capital Resources

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.

Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization.

These efforts require significant amounts of additional capital, adequate personnel and infrastructure.

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

In connection with 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.

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

To date, the Company has funded its operations primarily with proceeds from sales of preferred stock and from public offerings of its common stock.

In February 2024, the Company issued and sold 22,560,001 shares of its common stock, including 3,360,000 shares pursuant to the exercise of the underwriters’ option to purchase additional shares, at a price to the public of $ 6.25 per share.

Further, in lieu of common stock to certain investors, the Company sold pre-funded warrants to purchase 3,200,005 shares of common stock at a public offering price of $ 6.24999 per pre-funded warrant, which represents the per share public offering price of each share of common stock less the $ 0.00001 per share exercise price for each pre-funded warrant.

As a result of the offering, the Company received approximately $ 150.9 million in net proceeds, after deducting underwriting discounts, commissions and estimated offering costs of $ 10.1 million.

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.

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, 2023, the Company had an accumulated deficit of $ 425.7 million.

Since its inception, the Company has incurred substantial losses and, as of March 31, 2024, the Company had an accumulated deficit of $ 537.1 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 September 30, 2023 of $ 165.3 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.

The Company expects that its cash, cash equivalents, and investments as of March 31, 2024 of $ 210.7 million will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these financial statements.

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

Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.

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

The inability to raise capital as and when needed would have a negative impact on the Company’s financial condition and its ability to pursue its business strategy.

The Company may be unable to raise additional capital or enter into such other agreements when needed on favorable terms or at all.

The inability to raise capital as and when needed would have a

negative impact on the Company’s financial condition and its ability to pursue its business strategy.

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

6 unchanged sentences

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

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

The results for the three and nine months ended September 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 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, 2024, the results of its operations for the three months ended March 31, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2024 and 2023, and its cash flows for the three months ended March 31, 2024 and 2023.

The financial data and other information disclosed in these notes related to the three months ended March 31, 2024 and 2023 are also unaudited.

The results for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period.

The condensed consolidated balance sheet data as of December 31, 2023 was derived from our audited financial statements, but does not include all disclosures required by U.S.

2 unchanged sentences

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, 2023, and notes thereto, included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 1, 2024.

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

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

Use of Estimates

1 unchanged sentence

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.

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.

Management assesses warrants under ASC 480, Distinguishing Liabilities from Equity to determine whether they should be classified as equity or liability.

If the classification is determined to be equity, proceeds received for the warrants are recorded as an increase to additional paid-in capital in the condensed consolidated balance sheets.

If classified as a liability, the Company records the warrant as a liability on its consolidated balance sheet and remeasures this liability to fair value at each reporting date and recognizes changes in the fair value of the warrant

liability as a component of other expense in the condensed consolidated statements of operations and comprehensive loss.

Recently Issued Accounting Pronouncements Not Yet Adopted

2 unchanged sentences

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 September 30, 2023:

As of March 31, 2024:

(in thousands) Level 1 Level 2 Level 3 Total

2 unchanged sentences

Treasury and government securities — 35,854 — 35,854

Corporate debt securities — 9,932 — 9,932

Short-term investments:

Treasury and government securities — 74,656 — 74,656

Corporate debt securities — 35,287 — 35,287

Related party short-term investment:

6 unchanged sentences

Short-term investment:

Treasury securities — 98,467 — 98,467

Treasury and government securities — 74,639 — 74,639

Related party short-term investment:

Beam equity securities 5,452 — — 5,452

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

Total cash equivalents and investments $ 5,452 $ 98,848 $ — $ 104,300

The Company classifies its U.S.

5 unchanged sentences

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

As of September 30, 2023:

As of March 31, 2024:

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

1 unchanged sentence

Treasury and government securities $ 74,697 $ — $ ( 41 ) $ 74,656

Corporate debt securities 35,329 — ( 42 ) 35,287

Total short-term investments in debt securities $ 110,026 $ — $ ( 83 ) $ 109,943

5 unchanged sentences

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

(in thousands) September 30,

(in thousands) March 31,

2024 December 31,

1 unchanged sentence

Marketable securities in unrealized loss positions consisted of the following:

As of September 30, 2023:

As of March 31, 2024:

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

1 unchanged sentence

Treasury and government securities 15 $ 72,156 $ ( 41 )

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 September 30, 2023 related to these investments.

Corporate debt securities 19 $ 35,287 $ ( 42 )

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

1 unchanged sentence

Property and equipment, net consisted of the following:

(in thousands) September 30,

(in thousands) March 31,

2024 December 31,

9 unchanged sentences

Depreciation expense related to property and equipment is as follows:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2024 2023

2 unchanged sentences

Accrued expenses and other current liabilities consisted of the following:

(in thousands) September 30,

(in thousands) March 31,

2024 December 31,

1 unchanged sentence

Accrued employee compensation and benefits $ 3,062 $ 8,270

Accrued professional fees 4,963 2,162

Lab-related supplies and services 2,441 1,962

Accrued license fee – related party

Accrued professional fees 1,138 2,273

Other 971 1,605

Total accrued expenses and other current liabilities $ 7,612 $ 14,110

The Company leases office and laboratory space under various non-cancelable operating leases.

The Company’s significant lease agreements are disclosed in Note 9, Leases , in the audited consolidated financial statements for the year ended December 31, 2023, and notes thereto, included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 1, 2024.

Since the date of those financial statements, there have been no changes to the Company’s significant agreements except as described below.

60 First Street, Cambridge, Massachusetts Lease

In November 2021, the Company entered into a lease for three floors of office and laboratory space in Cambridge, Massachusetts, with rent commencing in March 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 initial non-cancelable term of the lease of ten years , and the Company has an option to extend the lease for an additional period of ten years with the rent during the extension term being the then fair market rent.

The Company secured the lease with a $ 13.1 million security deposit, which was recorded as restricted cash on the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.

Accounting Considerations

The Company determined that the lease contained three separate lease components each of which represents a right of use that the Company can benefit from on its own and none which are neither highly dependent nor highly related to each other.

The Company allocated the consideration among the three lease components based on their relative fair market value.

In accordance with ASC 842, Leases, the lease commenced for one of the lease components in March 2024 and the Company recorded a right-of-use asset of $ 44.9 million, and a corresponding lease liability of $ 33.6 million on the lease commencement date;

this includes a reclass of $ 11.3 million from prepaid expenses to right-of-use asset related to build out costs which were determined to be owned by the lessor.

As the exercise of the option to extend the lease term was not reasonably certain, the Company will recognize lease expense for this lease component through February 2034.

The lease commencement for the other two lease components is expected to occur in 2025.

Any consideration paid to lease components for which the lease has not commenced are recorded as prepaid expense on the condensed consolidated balance sheets.

The table below reconciles the undiscounted future annual lease payments to the total operating lease liabilities recorded in the condensed consolidated balance sheet as of March 31, 2024 :

(in thousands) Undiscounted

Undiscounted lease payments:

Remaining in 2024 $ 5,868

Thereafter 118,079

Total undiscounted lease payments 205,535

payments related to leases not commenced ( 129,866 )

imputed interest ( 31,876 )

Total operating lease liability $ 43,793

Stockholder’s Equity

Under the Company’s Third Amended and Restated of Certificate of Incorporation, the Company’s common stock had a par value of $ 0.0001 and each share of common stock entitles the holder to one vote 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 (the “Board of Directors”).

As previously discussed, in February 2024, the Company issued and sold 22,560,001 shares of its common stock, including 3,360,000 shares pursuant to the exercise of the underwriters’ option to purchase additional shares, at a price to the public of $ 6.25 per share.

Pre-funded Warrants

As discussed in Note 1, Nature of the Business and Basis of Presentation , in February 2024, the Company sold pre-funded warrants to purchase 3,200,005 shares of common stock at a public offering price of $ 6.24999 per pre-funded warrant, which represents the per share public offering price of each share of common stock less the $ 0.00001 per share exercise price for each pre-funded warrant.

Subject to certain requirements, the pre-funded

warrants can be exercised by the holder at anytime.

As of March 31, 2024, there have not been any exercises of the pre-funded warrants.

The pre-funded warrants meet the definition of an equity instrument under ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity , and funds received were recorded as an increase in additional paid-in capital in the condensed consolidated balance sheets.

Funds received upon exercise of warrants will be recorded as common stock in the condensed consolidated balance sheets as the exercise price represents the par value of the underlying common stock.

At-The-Market Equity Program

In November 2023, the Company entered into Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC, acting as the Company’s agent and/or principal (the “Sales Agent”), with respect to an “at the market offering” program under which the Company may, from time to time, at its sole discretion, issue and sell shares of its common stock having an aggregate offering price of up to $ 300.0 million through the Sales Agent.

As of March 31, 2024, there have been no sales of common stock pursuant to the Sales Agreement.

Stock-Based Compensation

3 unchanged sentences

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

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.

In October 2022, in connection with the closing of the Company’s initial public offering (“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 was declared effective by the SEC.

On February 9, 2022, the Board of Directors adopted, and on October 10, 2022, the Company’s stockholders approved, the 2022 Stock Option and Incentive Plan (the “2022 Plan”), which became effective on October 18, 2022.

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

3 unchanged sentences

On January 1, 2023, the annual increase resulted in an additional 4,868,856 shares authorized being added to the 2022 Plan.

As of September 30, 2023, the Company had 16,734,122 shares reserved under the 2022 Plan and the 2019 Plan, and 8,808,586 shares available for issuance under the 2022 Plan.

As of March 31, 2024, the Company had 21,290,494 shares reserved under the 2022 Plan and the 2019 Plan, and 9,088,040 shares available for issuance under the 2022 ESPP.

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 was declared effective by the SEC.

On February 9, 2022, the Board of Directors adopted, and on October 10, 2022, the Company’s stockholders approved, the 2022 Employee Stock Purchase Plan (the “2022 ESPP”), which became effective on October 18, 2022.

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 September 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 nine months ended September 30, 2023 related to the 2022 ESPP.

There was no annual increase for the 2022 ESPP on January 1, 2024.

As of March 31, 2024, the Company had 1,868,212 shares available for issuance under the 2022 Plan.

During the three months ended March 31, 2024, the Company issued 74,488 shares of the Company’s common stock under the 2022 ESPP.

Stock Options

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

The following table summarizes the Company’s stock option activity for the three months ended March 31, 2024:

Number of Shares Weighted-Average Exercise Price

3 unchanged sentences

Cancelled or forfeited ( 139,885 ) 11.59

Outstanding at September 30, 2023 7,513,806 $ 9.77

Options vested and exercisable at September 30, 2023 1,926,941 $ 6.49

Options vested and expected to vest at September 30, 2023 7,513,806 $ 9.77

As of September 30, 2023, there was $ 44.0 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 2.9 years.

Outstanding at March 31, 2024 11,390,724 $ 9.24

Options vested and exercisable at March 31, 2024 2,838,246 $ 7.64

Options vested and expected to vest at March 31, 2024 11,390,724 $ 9.24

As of March 31, 2024, there was $ 57.5 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 2.8 years.

Performance-Based Stock Options

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

The following table summarizes the Company’s performance-based stock option activity for the three months ended March 31, 2024:

Number of Shares Weighted-Average

1 unchanged sentence

Outstanding at December 31, 2023 411,730 $ 6.65

Granted 400,000 8.32

Exercised — —

Cancelled or forfeited — —

Outstanding at September 30, 2023 411,730 $ 6.65

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

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

Outstanding at March 31, 2024 811,730 $ 7.47

Vested and exercisable at March 31, 2024 131,882 $ 5.34

As of March 31, 2024, there was $ 4.7 million of total unrecognized compensation cost related to performance-based stock options.

Restricted Common Stock Awards

2 unchanged sentences

Time-Based Restricted Common Stock

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

The following table summarizes the Company’s time-based restricted common stock activity for the three months ended March 31, 2024 :

Number of Shares Weighted-Average Grant-Date Fair Value

2 unchanged sentences

Repurchased — —

Outstanding at September 30, 2023 1,262,000 $ 0.16

As of September 30, 2023, there was $ 0.2 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 March 31, 2024 573,394 $ 0.19

As of March 31, 2024, there was $ 0.1 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 0.5 years.

Performance-Based Restricted Common Stock

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

The following table summarizes the Company’s performance-based restricted common stock activity for the three months ended March 31, 2024 :

Number of Shares Weighted-Average Grant-Date Fair Value

1 unchanged sentence

Repurchased — —

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

As of September 30, 2023, there was $ 0.3 million of total unrecognized compensation cost related to unvested performance-based restricted common stock.

Outstanding at March 31, 2024 3,832,769 $ 0.07

As of March 31, 2024, there was $ 0.3 million of total unrecognized compensation cost related to unvested performance-based restricted common stock.

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023

3 unchanged sentences

Total stock-based compensation expense $ 5,209 $ 1,681

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 table below reconciles the undiscounted future annual lease payments to the total operating lease liabilities recorded in the condensed consolidated balance sheet as of September 30, 2023 :

(in thousands) Undiscounted

Undiscounted lease payments:

Remaining in 2023 $ 3,649

Total undiscounted lease payments 18,224

imputed interest ( 1,183 )

Total operating lease liability $ 17,041

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 September 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 September 30, 2023, and the table above excludes any amounts related to this lease.

As of September 30, 2023, the Company determined that it is reasonably certain to exercise its option to terminate one of its leases.

This option allows the Company to terminate its lease by providing an advanced notice to the lessor.

This determination and the subsequent reassessment of the lease resulted in a $ 6.1 million deduction of the Company’s operating lease liability and its operating lease right-of-use asset on the condensed consolidated balance sheet as of September 30, 2023.

Further, the above table includes the reduction in lease payments resulting from the reasonably certain lease termination.

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 except as otherwise described herein.

Significant Agreements

The Company’s significant agreements are disclosed in Note 11, License and Collaboration Agreements , in the audited consolidated financial statements for the year ended December 31, 2023, and notes thereto, included in the

Company’s Annual Report on Form 10-K that was filed with the SEC on March 1, 2024.

Since the date of those financial statements, there have been no changes to the Company’s significant agreements.

Net Loss per Share

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except share and per share amounts) 2024 2023

Net loss $ ( 50,708 ) $ ( 29,350 ) $ ( 132,490 ) $ ( 82,538 )

Cumulative dividend on preferred stock — ( 6,362 ) — ( 18,879 )

Net loss attributable to common stockholders $ ( 45,761 ) $ ( 39,397 )

5 unchanged sentences

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,

As of March 31,

Anti-dilutive common stock equivalents:

1 unchanged sentence

Unvested restricted common stock 4,406,163 7,530,495

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

Total anti-dilutive common stock equivalents:

1 unchanged sentence

Related Party Transactions

Founder Consulting Services

For both the three months ended September 30, 2023 and 2022, the Company made payments of $ 37,500 in each period, and for the nine months ended September 30, 2023 and 2022, the Company made payments of $ 112,500 in each period to one of the co-founder stockholders for scientific consulting and other expenses.

As of September 30, 2023, $ 12,500 was included within accounts payable, and, as of December 31, 2022, there were no amounts included within accounts payable.

Consulting Agreement with David Liu

Pursuant to a consulting agreement with David Liu, for the three months ended March 31, 2024 and 2023, the Company made payments of $ 37,500 in each period for scientific consulting and other expenses.

As of March 31, 2024 and December 31, 2023, there were no amounts included within accounts payable or accrued expenses.

Myeloid Therapeutics

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

(“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.

The Company provided notice to Myeloid of its intent to terminate the Myeloid Collaboration Agreement during the second quarter of 2023, which termination is now effective.

As of September 30, 2023, there was $ 0.1 million in

accounts payable, and, as of December 31, 2022, there was $ 0.3 million included within accrued expenses and other current liabilities related to license fees.

In December 2021, the Company and Myeloid entered into the Myeloid Collaboration Agreement and Myeloid Subscription Agreement during which time the Company and Myeloid had one common board member, who is also an affiliate of Newpath, one of the Company’s holders of common stock.

In 2023, the Company terminated the Myeloid Collaboration Agreement.

In January 2024, the Company and Myeloid entered into a settlement agreement resolving two arbitration proceedings, which are described in Note 10, Licenses and Collaboration Agreements.

Under the terms of the settlement agreement, the parties agreed to resolve and settle all disputes between the parties and release all claims between them relating to the License Agreement and the arbitrations in exchange for the Company's payment to Myeloid of $ 13.5 million, certain mutual covenants, and other consideration.

The settlement was accrued on the

Company’s consolidated balance sheet as of December 31, 2023 and paid during the three months ended March 31, 2024.

As of March 31, 2024, there were no amounts included within accounts payable or accrued expenses.

Advisory Services Agreement with Jeffrey Marrazzo

In February 2024, the Company entered into an advisory services agreement (“Marrazzo Agreement”) with Jeffrey Marrazzo, a member of the Board of Directors.

Under the Marrazzo Agreement, Mr.

Marrazzo agreed to provide certain professional services to the Company separate from and in addition to his service as a Board member.

For his services, the Company agreed to pay Mr.

Marrazzo an annual fee of $ 50,000 per year in addition to the grant of an option to purchase 250,000 shares of the Company's common stock, which has a grant date fair value of $ 1.5 million.

The term of the Marrazzo Agreement runs through February 2025 and may be terminated or extended by mutual written agreement.

If the Company terminates the Marrazzo Agreement without "Cause," the administrator of the 2022 Plan will accelerate the vesting of the option such that the pro rata portion of the option will vest and be immediately exercisable.

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

1 unchanged sentence

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 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.

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 and conditions 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 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 are deploying Prime Editing technology, which we believe is a versatile, precise, and efficient gene editing technology.

To maximize the potential of our Prime Editing technology, we have built a diversified portfolio of investigational therapeutic programs organized around core areas of focus:

hematology and immunology, liver, lung, ocular, and neuromuscular.

We are advancing additional programs as potential partnership opportunities.

Chronic granulomatous disease is our most advanced blood program, and we have designated PM359 as our development candidate.

In April 2024, we announced that the U.S.

Food and Drug Administration cleared our investigational new drug application for PM359 for the treatment of chronic granulomatous disease, enabling us to initiate our global Phase 1/2 clinical trial in the United States.

The Phase 1/2 clinical trial is a multinational, first-in-human trial designed to assess the safety, biological activity and preliminary efficacy of PM359 in adult and pediatric study participants.

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.

4 unchanged sentences

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 Broad License Agreement;

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

• personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation for employees engaged in manufacturing, research and development functions;

3 unchanged sentences

• facilities, depreciation and other expenses related to research and development activities, which include direct or allocated expenses for rent and maintenance of facilities, and utilities;

Upfront and milestone payments made are accrued for and expensed when the achievement of the milestone is probable up to the point of regulatory approval.

Milestone payments made upon regulatory approval will be capitalized and amortized over the remaining useful life of the related product.

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

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

We expense all research and development costs in the periods in which they are incurred.

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

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.

Upfront and milestone payments made are accrued for and expensed when the achievement of the milestone is probable up to the point of regulatory approval.

Milestone payments made upon regulatory approval will be capitalized and amortized over the remaining useful life of the related product.

We expect our research and development expenses to continue to increase substantially for the foreseeable future with our planned 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.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and personnel-related costs, including stock-based compensation, for our personnel in executive, legal, finance and accounting, human resources and other administrative functions.

General and administrative expenses consist of salaries and personnel-related costs, including stock-based compensation, for our personnel in executive, legal, finance and accounting, human resources and other administrative functions.

General and administrative expenses also include legal fees relating to patents and corporate matters;

7 unchanged sentences

Other Income (Expense)

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

Other income (expense), net primarily consists of interest and other income earned on our short-term investments and 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, 2023.

Results of Operations

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

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

Three Months Ended

September 30,

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

Operating expenses:

Research and development $ 40,967 $ 25,047 $ 15,920

General and administrative 10,492 6,608 3,884

Total operating expenses 51,459 31,655 19,804

Loss from operations (51,459) (31,655) (19,804)

Other income (expense):

Change in fair value of short-term investment — related party (1,579) 1,789 (3,368)

Other income, net 2,222 728 1,494

Total other income (expense), net 643 2,517 (1,874)

Net loss before income taxes (50,816) (29,138) (21,678)

(Provision for) benefit from income taxes 108 (212) 320

Net loss $ (50,708) $ (29,350) $ (21,358)

Results of Operations — Comparison of the Three Months Ended March 31, 2024 and 2023

Operating Expenses

1 unchanged sentence

Three Months Ended

September 30,

(in thousands) 2024 2023 Change

Research and development expenses:

Lab supplies $ 18,183 $ 9,390 $ 8,793

Personnel expenses $ 15,007 $ 11,194 $ 3,813

Lab supplies 11,619 10,864 755

Facility related and other 7,334 5,304 2,030

Professional and consultant fees 1,868 543 1,325

License, intellectual property fees, and other 1,675 1,875 (200)

Professional and consultant fees 1,592 1,643 (51)

Clinical expense 547 — 547

Total research and development expenses $ 37,774 $ 30,880 $ 6,894

The $15.9 million increase in research and development expense for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 was primarily driven by:

• $8.8 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;

• $4.9 million increase in personnel expense, including an increase in stock-based compensation expense of $1.3 million, and $1.3 million increase in professional and consultant fees, both driven by our increased headcount as we continue to build out our research and development function;

• $1.3 million increase in facility-related expense primarily due to the expansion and build out of our office and laboratory space.

The $6.9 million increase in research and development expense for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 was primarily driven by:

• $3.8 million increase in personnel expense, including an increase in stock-based compensation expense of $1.6 million, driven by our increased headcount as we continue to build out our research and development function;

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

General and Administrative Expenses

Three Months Ended

September 30,

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

(in thousands) 2024 2023 Change

General and administrative expenses:

3 unchanged sentences

Total general and administrative expenses $ 11,158 $ 9,153 $ 2,005

The $3.9 million increase in general and administrative expense for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 is primarily driven by:

• $1.7 million increase in personnel expenses and $1.1 million increase in professional and consultant fees, both driven by growth in personnel as we operate as a public company and to support our growing research and development function;

• $1.1 million increase in facility related expenses primarily due to the expansion and build out of our office space.

The $2.0 million increase in general and administrative expense for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 is primarily driven by $2.8 million increase in personnel expense, including an increase in stock-based compensation expense of $2.0 million, 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

September 30,

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

Other income (expense):

Change in fair value of short-term investment — related party $ (1,579) $ 1,789 $ (3,368)

Other income, net 2,222 728 1,494

Total other income (expense), net $ 643 $ 2,517 $ (1,874)

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

Comparison of the Nine Months Ended September 30, 2023 and 2022

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

Nine Months Ended

September 30,

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

Operating expenses:

Research and development $ 106,446 $ 57,664 $ 48,782

General and administrative 30,303 20,194 10,109

Total operating expenses 136,749 77,858 58,891

Loss from operations (136,749) (77,858) (58,891)

Other income (expense):

Change in fair value of short-term investment — related party (3,017) (6,419) 3,402

Other income, net 6,997 977 6,020

Total other income (expense), net 3,980 (5,442) 9,422

Net loss before income taxes (132,769) (83,300) (49,469)

(Provision for) benefit from income taxes 279 762 (483)

Net loss $ (132,490) $ (82,538) $ (49,952)

Operating Expenses

Research and Development Expenses

Nine Months Ended

September 30,

(in thousands) 2024 2023 Change

Research and development expenses:

Lab supplies $ 42,095 $ 19,321 $ 22,774

Personnel expenses 37,036 21,383 15,653

Facility related and other 17,485 11,122 6,363

Professional and consultant fees 4,945 1,263 3,682

License, intellectual property fees, and other 4,885 4,575 310

Total research and development expenses $ 106,446 $ 57,664 $ 48,782

The $48.8 million increase in research and development expense for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 was primarily driven by:

• $22.8 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;

• $15.7 million increase in personnel expense, including an increase in stock-based compensation expense of $3.0 million, and $3.7 million increase in professional and consultant fees, both driven by our increased headcount as we continue to build out our research and development function;

• $6.4 million increase in facility-related expense primarily due to the expansion and build out of our office and laboratory space.

General and Administrative Expenses

Nine Months Ended

September 30,

(in thousands) 2023 2022 Change

General and administrative expenses:

Professional and consultant fees $ 11,869 $ 8,219 $ 3,650

Personnel expenses 12,117 8,711 3,406

Facility related and other 6,317 3,264 3,053

Total general and administrative expenses $ 30,303 $ 20,194 $ 10,109

The $10.1 million increase in general and administrative expense for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 is primarily driven by:

• $3.7 million increase in professional and consultant fees and $3.4 million increase in personnel expenses, which includes an increase in stock-based compensation expense of $2.6 million, both driven by growth in personnel as we operate as a public company and to support our growing research and development function;

• $3.1 million increase in facility related expenses primarily due to the expansion and build out of our office space.

Other Income (Expense)

Nine Months Ended

September 30,

(in thousands) 2023 2022 Change

Other income (expense):

Other income:

Change in fair value of short-term investment — related party $ 1,166 $ (1,701) $ 2,867

Other income, net 1,548 2,135 (587)

Total other income (expense), net $ 3,980 $ (5,442) $ 9,422

Total other income, net $ 2,714 $ 434 $ 2,280

Change in Fair Value of Related Party Short-Term Investment

1 unchanged sentence

Other Income, Net

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

Other income, net for the three months ended March 31, 2024 primarily consists of interest income from the Company’s short-term investments.

Liquidity and Capital Resources

2 unchanged sentences

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 sales of preferred stock and from our initial public offering.

As of September 30, 2023, we had cash, cash equivalents, and investments of $165.3 million, excluding our restricted cash, or $178.8 million, including restricted cash.

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

As of March 31, 2024, we had cash, cash equivalents, and investments of $210.7 million, excluding our restricted cash, or $224.2 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

(in thousands) 2024 2023

2 unchanged sentences

Net cash used in investing activities (37,032) (12,665)

Net cash provided by (used in) financing activities 461 (2,579)

Net cash provided by financing activities 157,327 68

Net change in cash, cash equivalents, and restricted cash $ 52,588 $ (54,158)

Operating Activities

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

Net cash used in operating activities for the three months ended March 31, 2024 was driven primarily by the following uses of cash:

• $45.8 million net loss;

• $9.0 million change in prepaid and other current assets;

• $8.9 million change in lease liabilities.

These were offset by:

• $22.7 million of non-cash amounts included in net loss, which primarily consisted of stock-based compensation expense, non-cash lease expense, depreciation and amortization expense, and change in fair value of short-term investment — related party;

• $13.5 million change in accrued settlement payment — related party;

• $5.9 million change in accounts payable;

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

• $4.5 million change in accrued expenses and other current liabilities;

• $3.5 million change in lease liabilities;

• $2.8 million change in prepaid and other current assets.

These were offset by $8.2 million of non-cash amounts included in net loss, which primarily consisted of stock-based compensation expense, non-cash lease expense, depreciation and amortization expense, and change in fair value of short-term investment — related party.

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;

2 unchanged sentences

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

These were offset by:

• $18.0 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;

• $2.0 million change in accounts payable.

These were offset by $6.5 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.

Investing Activities

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

Net cash used in investing activities for the three months ended March 31, 2024 was driven primarily by the following uses of cash:

• $34.7 million of purchases of marketable securities, net of maturities;

• $2.3 million of purchases of property and equipment.

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

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

• $10.7 million of purchases of marketable securities, net of maturities;

1 unchanged sentence

Financing Activities

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

Net cash provided by financing activities for the three months ended March 31, 2024 was driven primarily by the following:

• $132.1 million of Proceeds from issuances of common stock in the our February 2024 public offering;

• $18.8 million of proceeds from issuance of pre-funded warrants contemporaneous with our February 2024 public offering;

• $6.0 million of proceeds received under our agreement with Cystic Fibrosis Foundation.

Funding Requirements

3 unchanged sentences

In addition, if we obtain regulatory approval for any product candidates, we expect to incur significant expenses related to product sales, marketing, and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators.

Further, we have incurred, and expect to continue to incur, costs associated with operating as a public company.

have incurred, and expect to continue to incur, costs associated with operating as a public company.

The timing and amount of our operating expenditures will depend largely on the factors set out above.

For more information, refer to the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, 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 through the end of 2024.

We believe our existing cash, cash equivalents, and investments will be sufficient to fund our operating expenses and capital expenditure requirements into the third quarter of 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.

7 unchanged sentences

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.

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.

5 unchanged sentences

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 nine months ended September 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.

During the three months ended March 31, 2024, except for the minimum lease 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, 2023.

Critical Accounting Policies and Significant Judgments and Estimates

4 unchanged sentences

Actual results may differ from these estimates.

During the nine months ended September 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.

During the three months ended March 31, 2024, 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, 2023.

Recently Issued and Adopted Accounting Pronouncements

2 unchanged sentences

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.

1 unchanged sentence

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