What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-10 · 197 added, 103 removed, 496 unchanged (38% 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,

2024 December 31,

15 unchanged sentences

Accrued expenses and other current liabilities (1)

10,895 14,110

Accrued settlement payment — related party — 13,500

2 unchanged sentences

Operating lease liability, net of current 36,367 4,357

Non current deferred tax liability 134 —

Research and development funding liability 6,000 —

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775,000,000 shares authorized;

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

120,030,813 and 97,377,121 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 789,076 624,414

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

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

7 unchanged sentences

Other income:

Accretion (amortization) of investments 1,486 1,964 2,316 2,782

Interest income 611 635 1,287 1,910

Change in fair value of short-term investment — related party ( 1,925 ) 263 ( 759 ) ( 1,438 )

2 unchanged sentences

Net loss before income taxes ( 55,461 ) ( 42,354 ) ( 101,088 ) ( 81,953 )

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

Benefit (provision for) from income taxes 134 ( 31 ) — 171

Net loss attributable to common stockholders $ ( 55,327 ) $ ( 42,385 ) $ ( 101,088 ) $ ( 81,782 )

5 unchanged sentences

Comprehensive loss $ ( 55,303 ) $ ( 42,448 ) $ ( 101,144 ) $ ( 81,666 )

(1) Includes related party amount of $ 0.3 million for the three months 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.

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

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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 9,539 — 35 — — 35

Stock-based compensation expense — — 8,091 — — 8,091

Change in unrealized loss on investments, net of tax — — — 24 — 24

Net loss — — — — ( 55,327 ) ( 55,327 )

Balance as of June 30, 2024 120,030,813 $ 2 $ 789,076 $ ( 71 ) $ ( 592,418 ) $ 196,589

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

14 unchanged sentences

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.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in thousands) 2024 2023

15 unchanged sentences

Net cash used in operating activities ( 113,198 ) ( 82,382 )

Cash flows used in investing activities:

Cash flows (used in) provided by investing activities:

Maturities of investments 110,000 65,000

1 unchanged sentence

Purchases of property and equipment ( 4,226 ) ( 3,975 )

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

Payments of security deposits — ( 170 )

Net cash (used in) provided by investing activities ( 30,138 ) 15,196

Cash flows provided by financing activities:

15 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in thousands) 2024 2023

8 unchanged sentences

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

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

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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.

Since its inception, the Company has incurred substantial losses and, as of June 30, 2024, the Company had an accumulated deficit of $ 592.4 million.

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

As of June 30, 2024, the Company maintains cash, cash equivalents, and investments of $ 162.9 million.

Going Concern

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern , ("ASC 205-40") the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date on which this Quarterly Report on Form 10-Q is filed.

Based on the Company's cash, cash equivalents, short-term investments, and related party short-term investments as of June 30, 2024, the Company's current and forecasted level of operations, and its forecasted cash flows, the Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, and to generate profitable operations in the future.

Management plans to provide for the Company’s capital requirements through financing or other transactions, and selling shares under the Company's “at the market offering” program.

There can be no assurance that the Company will be able to raise additional capital to fund operations with terms acceptable to the Company, or at all.

Because certain elements of management’s plans to mitigate the conditions that raised substantial doubt about the Company’s ability to continue as a going concern are outside of the Company’s control, including the ability to raise capital through an equity or other financing, those elements cannot be considered probable according to ASC 205-40, and therefore cannot be considered in the evaluation of mitigating factors.

As a result, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for 12 months from the date these condensed consolidated financial statements are issued.

The condensed consolidated financial statements as of June 30, 2024 have been prepared under the assumption that the Company will continue as a going concern for the next 12 months and that contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business.

The Company’s ability to continue as a going concern is dependent upon its uncertain ability to obtain additional capital, reduce expenditures and/or execute on its business plan.

These condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Risks and Uncertainties

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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, 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 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.

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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 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.

3 unchanged sentences

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

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

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

The accompanying condensed consolidated financial statements of Prime Medicine, Inc.

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, 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 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, 2024, the results of its operations for the three and six months ended June 30, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2024 and 2023, and its cash flows for the six months ended June 30, 2024 and 2023.

The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2024 and 2023 are also unaudited.

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

These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2023, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2024.

Change in Presentation

As of June 30, 2024, the Company disaggregated “Other income, net” on the condensed consolidated statements of operations and comprehensive loss into “Accretion (amortization) of investments,” “Interest income,” and “Other income, net”.

This presentation has been conformed for all periods presented and had no impact on previously reported results.

Summary of Significant Accounting Policies

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

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

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

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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.

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

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

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

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires all public entities, including public entities with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance.

In addition, this guidance requires disclosures of significant segment expenses and other segment items as well as incremental qualitative disclosures.

This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods after December 15, 2024, with retrospective application required, and early adoption permitted.

The Company is currently in the process of evaluating the effects of this guidance on its related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires enhanced income tax disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations.

This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently in the process of evaluating the impact of this pronouncement on its related disclosures.

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

Fair Value Measurements and Investments

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

As of March 31, 2024:

As of June 30, 2024:

(in thousands) Level 1 Level 2 Level 3 Total

1 unchanged sentence

Money market funds $ — $ 55,106 $ — $ 55,106

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

Corporate debt securities — 9,932 — 9,932

Short-term investments:

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The fair value of the Company’s U.S.

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

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

Treasury securities.

1 unchanged sentence

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

As of March 31, 2024:

As of June 30, 2024:

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

9 unchanged sentences

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

(in thousands) March 31,

(in thousands) June 30,

2024 December 31,

1 unchanged sentence

Marketable securities in unrealized loss positions consisted of the following:

As of March 31, 2024:

As of June 30, 2024:

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

2 unchanged sentences

Corporate debt securities 19 $ 33,725 $ ( 28 )

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, 2024 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.

1 unchanged sentence

Property and equipment, net consisted of the following:

(in thousands) March 31,

(in thousands) June 30,

2024 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) 2024 2023 2024 2023

2 unchanged sentences

Accrued expenses and other current liabilities consisted of the following:

(in thousands) March 31,

(in thousands) June 30,

2024 December 31,

1 unchanged sentence

Accrued employee compensation and benefits $ 4,986 $ 8,270

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

Accrued professional fees 3,836 2,273

Lab-related supplies and services 1,101 1,962

Other 972 1,605

5 unchanged sentences

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.

Subsequent to the initial non-cancelable term of the lease of ten years , 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 June 30, 2024 and December 31, 2023.

Accounting Considerations

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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 :

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 June 30, 2024:

(in thousands) Undiscounted

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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.

Under the Company’s Third Amended and Restated of Certificate of Incorporation, as amended, 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”).

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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.

Subject to certain requirements, the pre-funded warrants can be exercised by the holder at anytime.

As of June 30, 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.

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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.

As of June 30, 2024, there have been no sales of common stock pursuant to the Sales Agreement.

Stock-Based Compensation

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

As of June 30, 2024, the Company had 21,530,955 shares reserved under the 2022 Plan and the 2019 Plan, and 8,846,990 shares available for issuance under the 2022 Plan.

2022 Employee Stock Purchase Plan

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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.

As of June 30, 2024, the Company had 1,868,212 shares available for issuance under the 2022 Plan.

During the six months ended June 30, 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 three months ended March 31, 2024:

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2024:

Number of Shares Weighted-Average Exercise Price

3 unchanged sentences

Cancelled or forfeited ( 268,635 ) 11.34

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.

Outstanding at June 30, 2024 11,622,235 $ 9.17

Options vested and exercisable at June 30, 2024 3,682,315 $ 8.44

Options vested and expected to vest at June 30, 2024 11,622,235 $ 9.17

As of June 30, 2024, there was $ 52.6 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 2.6 years.

Performance-Based Stock Options

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

The following table summarizes the Company’s performance-based stock option activity for the six months ended June 30, 2024:

Number of Shares Weighted-Average

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Cancelled or forfeited — —

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.

Outstanding at June 30, 2024 1,061,730 $ 7.31

Vested and exercisable at June 30, 2024 385,208 $ 6.72

As of June 30, 2024, there was $ 4.0 million of total unrecognized compensation cost related to performance-based stock options.

Restricted Common Stock Awards

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Time-Based Restricted Common Stock

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

The following table summarizes the Company’s time-based restricted common stock activity for the six months ended June 30, 2024 :

Number of Shares Weighted-Average Grant-Date Fair Value

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Repurchased ( 4,423 ) 0.34

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.

Outstanding at June 30, 2024 257,334 $ 0.23

As of June 30, 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 0.4 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, 2024 :

The following table summarizes the Company’s performance-based restricted common stock activity for the six months ended June 30, 2024 :

Number of Shares Weighted-Average Grant-Date Fair Value

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

Vested ( 360,226 ) 0.18

Repurchased — —

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.

Outstanding at June 30, 2024 3,472,543 $ 0.06

As of June 30, 2024, there was $ 0.2 million of total unrecognized compensation cost related to unvested performance-based restricted common stock.

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

4 unchanged sentences

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.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

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

2 unchanged sentences

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.46 ) $ ( 0.47 ) $ ( 0.90 ) $ ( 0.91 )

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

The weighted-average number of common shares outstanding used in the basic and diluted net loss per share calculations includes the weighted-average effect of pre-funded warrants sold by the Company to purchase 3,200,005 shares of the Company's common stock.

The shares of common stock underlying the pre-funded warrants are considered outstanding for the purposes of computing earnings per share, because the shares may be issued for little or no consideration, they are fully vested, and the pre-funded warrants are immediately exercisable upon their issuance date.

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

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

1 unchanged sentence

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:

5 unchanged sentences

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.

Pursuant to a Consulting Agreement dated September 13, 2019 (as may be amended, restated or otherwise modified from time to time in accordance with its terms, the “Consulting Agreement”), between the Company and David Liu, for the three months ended June 30, 2024 and 2023, the Company made payments of $ 37,500 in each period, and for the six months ended June 30, 2024 and 2023, the Company made payments of $ 75,000 in each period for scientific consulting and other expenses.

As of June 30, 2024 and December 31, 2023, there were no amounts included within accounts payable or accrued expenses.

On July 31, 2024, the Company and David Liu entered into a Second Amendment to the Consulting Agreement, which terminates the Consulting Agreement, effective September 1, 2024.

The Consulting Agreement will be terminated in order for Dr.

Liu to comply with his obligations as an investigator of Howard Hughes Medical

The decision to terminate the Consulting Agreement was not the result of any dispute or disagreement with the Company or the Board of Directors on any matter relating to the operations, policies, or practices of the Company.

Myeloid Therapeutics

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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.

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 , in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 1, 2024.

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.

The settlement was accrued on the Company’s consolidated balance sheet as of December 31, 2023 and paid during the six months ended June 30, 2024.

As of June 30, 2024, there were no amounts included within accounts payable or accrued expenses.

Advisory Services Agreement with Jeffrey Marrazzo

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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.

Chronic granulomatous disease is our most advanced blood program, and we are advancing PM359 as our candidate in the treatment of this 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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• personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation for employees engaged in manufacturing, research and development functions;

• expenses incurred in connection with continuing our current research programs and preclinical development of any product candidates we may identify, including under agreements with third parties, such as consultants and contractors;

• the cost of developing and validating our manufacturing process for use in our preclinical studies and future clinical trials;

• expenses incurred in connection with continuing our current research programs and preclinical and clinical development of any product candidates we may identify, including under agreements with third parties, such as consultants and contractors;

• the cost of developing and validating our manufacturing process for use in our preclinical and clinical studies;

• laboratory supplies and research materials;

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(“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 March 31, 2024 and 2023

Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

Operating Expenses

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Total research and development expenses $ 43,071 $ 34,599 $ 8,472

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;

The $8.5 million increase in research and development expense for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 was primarily driven by:

• $5.3 million increase in facility-related expense primarily due to the expansion and build out of our laboratory space;

• $3.6 million increase in personnel expense, including an increase in stock-based compensation expense of $2.1 million, driven by our increased headcount as we continue to build out our research and development function;

• $1.7 million increase in clinical expenses related to PM359, our candidate to treat chronic granulomatous disease.

These were offset by a $1.7 million decrease in lab supplies driven by fewer programs being in the preclinical stage in 2024.

General and Administrative Expenses

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General and administrative expenses:

Personnel expenses $ 5,884 $ 3,065 $ 2,819

Professional and consultant fees $ 2,821 $ 4,242 $ (1,421)

Personnel expenses 6,956 4,144 2,812

Facility related and other 2,824 2,272 552

Total general and administrative expenses $ 12,601 $ 10,658 $ 1,943

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.

The $1.9 million increase in general and administrative expense for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 is primarily driven by $2.8 million increase in personnel expense, including an increase in stock-based compensation expense of $2.5 million, driven by growth in personnel as we operate as a public company and to support our growing research and development function.

This was offset by a $1.4 million decrease in professional and consultant fees for legal services.

Other Income (Expense)

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Other income:

Accretion (amortization) of investments $ 1,486 $ 1,964 $ (478)

Interest income 611 635 (24)

Change in fair value of short-term investment — related party (1,925) 263 (2,188)

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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.

Comparison of the Six Months Ended June 30, 2024 and 2023

Operating Expenses

Research and Development Expenses

Six Months Ended

(in thousands) 2024 2023 Change

Research and development expenses:

Personnel expenses $ 31,205 $ 23,790 $ 7,415

Lab supplies 23,009 23,912 (903)

Facility related and other 18,636 11,325 7,311

License, intellectual property fees, and other 2,925 3,375 (450)

Professional and consultant fees 2,873 3,077 (204)

Clinical expense 2,197 — 2,197

Total research and development expenses $ 80,845 $ 65,479 $ 15,366

The $15.4 million increase in research and development expense for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was primarily driven by:

• $7.3 million increase in facility-related expense primarily due to the expansion and build out of our laboratory space;

• $7.4 million increase in personnel expense, including an increase in stock-based compensation expense of $3.6 million, driven by our increased headcount as we continue to build out our research and development function;

• $2.2 million increase in clinical expenses related to PM359, our candidate to treat chronic granulomatous disease.

General and Administrative Expenses

Six Months Ended

(in thousands) 2024 2023 Change

General and administrative expenses:

Personnel expenses $ 12,840 $ 7,209 $ 5,631

Professional and consultant fees 5,931 8,211 (2,280)

Facility related and other 4,988 4,391 597

Total general and administrative expenses $ 23,759 $ 19,811 $ 3,948

The $3.9 million increase in general and administrative expense for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 is primarily driven by $5.6 million increase in personnel expense, including an increase in stock-based compensation expense of $4.4 million, driven by growth in personnel as we operate as a public company and to support our growing research and development function.

This was offset by a $2.3 million decrease in professional and consultant fees for legal services.

Other Income (Expense)

Six Months Ended

(in thousands) 2024 2023 Change

Other income:

Accretion (amortization) of investments $ 2,316 $ 2,782 $ (466)

Interest income 1,287 1,910 (623)

Change in fair value of short-term investment — related party (759) (1,438) 679

Other income, net 81 83 (2)

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

Total other income, net $ 2,925 $ 3,337 $ (412)

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 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.

As of June 30, 2024, we had cash, cash equivalents, and investments of $162.9 million, excluding our restricted cash, or $176.4 million, including restricted cash.

Going Concern

Since our inception, we have incurred substantial losses.

As of June 30, 2024, we had an accumulated deficit of $592.4 million and we expect to generate operating losses and negative operating cash flows for the foreseeable future.

As stated above, as of June 30, 2024, we maintained cash, cash equivalents, short-term investments, and related party short-term investments of $162.9 million.

In accordance with ASC 205-40, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date on which this Quarterly Report on Form 10-Q is filed.

Based on the our cash, cash equivalents, short-term investments, and related party short-term investments as of June 30, 2024, our current and forecasted level of operations and forecasted cash flows, our ability to continue as a going concern is dependent upon our ability to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due, and to generate profitable operations in the future.

Management plans to provide for capital

requirements through financing or other transactions, and selling shares under our “at the market offering” program.

There can be no assurance that we will be able to raise additional capital to fund operations with terms acceptable to us, or at all.

Because certain elements of our plans to mitigate the conditions that raised substantial doubt about our ability to continue as a going concern are outside of our control, including the ability to raise capital through an equity or other financing, those elements cannot be considered probable according to ASC 205-40, and therefore cannot be considered in the evaluation of mitigating factors.

As a result, we concluded that substantial doubt exists about our ability to continue as a going concern for 12 months from the date these condensed consolidated financial statements are issued.

The condensed consolidated financial statements as of June 30, 2024 have been prepared under the assumption that we will continue as a going concern for the next 12 months and that contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business.

Our ability to continue as a going concern is dependent upon our uncertain ability to obtain additional capital, reduce expenditures and/or execute on its business plan.

These condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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

Three Months Ended

Six Months Ended

(in thousands) 2024 2023

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Net cash used in operating activities $ (113,198) $ (82,382)

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

Net cash (used in) provided by investing activities (30,138) 15,196

Net cash provided by financing activities 157,362 143

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Operating Activities

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

Net cash used in operating activities for the six months ended June 30, 2024 was driven primarily by the following uses of cash:

• $101.1 million net loss;

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• $9.2 million change in accounts payable;

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

• $5.7 million change in lease liabilities;

• $3.9 million change in accrued expenses and other current liabilities;

• $2.5 million change in prepaid and other current assets.

These were offset by $22.8 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:

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 $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.

• $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 change in fair value of short-term investment — related party, non-cash lease expense, and stock-based compensation expense;

• $1.1 million change in accounts payable.

Investing Activities

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

Net cash used in investing activities for the six months ended June 30, 2024 was driven primarily by the following uses of cash:

• $25.9 million of purchases of marketable securities, net of maturities;

• $4.2 million of purchases of property and equipment.

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;

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

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

• $4.0 million of purchases of property and equipment.

Financing Activities

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

Net cash provided by financing activities for the six months ended June 30, 2024 was driven primarily by the following:

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

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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.

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

Further, we 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 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.

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 the second 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.

We expect that we will require additional funding to:

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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, 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.

During the six months ended June 30, 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

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.

apparent from other sources.

We evaluate our estimates and assumptions on an ongoing basis.

Actual results may differ from these estimates.

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.

During the six months ended June 30, 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

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, Summary of Significant Accounting Policies , to our audited financial statements for the year ended December 31, 2023, and notes thereto, included in the Company’s Annual Report on Form 10-K.

Emerging Growth Company Status

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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