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Item 1. Financial Statements

2024-11-12 compared with 2024-08-08 · 294 added, 145 removed, 548 unchanged (44% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

2024 December 31,

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Short-term investment — related party 4,908 5,452

Collaboration receivable — related party 55,000 —

Prepaid expenses 6,006 19,057

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Accrued settlement payment — related party — 13,500

Deferred revenue — related party 9,280 —

Operating lease liability 4,484 9,276

Total current liabilities 37,877 56,423

Deferred revenue, net of current — related party 62,639 —

Operating lease liability, net of current 36,764 4,357

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775,000,000 shares authorized;

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

131,160,842 and 97,377,121 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 834,417 624,414

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

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Net loss before income taxes ( 52,518 ) ( 50,816 ) ( 153,606 ) ( 132,769 )

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

Benefit from income taxes — 108 — 279

Net loss attributable to common stockholders $ ( 52,518 ) $ ( 50,708 ) $ ( 153,606 ) $ ( 132,490 )

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Comprehensive loss $ ( 52,426 ) $ ( 50,589 ) $ ( 153,570 ) $ ( 132,255 )

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

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

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

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— — 18,800 — — 18,800

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

Issuances of common stock under the employee stock purchase plan 74,488 — 436 — — 436

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

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

Issue of common stock under the Securities Purchase Agreement to BMS — related party (Note 9) 11,006,163 — 38,081 — — 38,081

Issuances of common stock under the employee stock purchase plan 115,021 — 401 — — 401

Issuance of common stock upon exercise of stock options 8,845 — 32 — — 32

Stock-based compensation expense — — 6,827 — — 6,827

Change in unrealized loss on investments, net of tax — — — 92 — 92

Net loss — — — — ( 52,518 ) ( 52,518 )

Balance as of September 30, 2024 131,160,842 $ 2 $ 834,417 $ 21 $ ( 644,936 ) $ 189,504

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

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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.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2024 2023

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Changes in operating assets and liabilities:

Collaboration receivable — related party ( 55,000 ) —

Prepaid expenses and other current assets ( 9,466 ) ( 9,040 )

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

Deferred revenue — related party 71,919 —

Lease liabilities ( 6,007 ) ( 8,869 )

Net cash used in operating activities ( 139,110 ) ( 121,548 )

Cash flows (used in) provided by investing activities:

Cash flows provided by (used in) investing activities:

Maturities of investments 171,300 85,021

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Purchases of property and equipment ( 5,503 ) ( 6,884 )

Payments of security deposits — ( 170 )

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

Return (payments) of security deposits 724 ( 170 )

Net cash provided by (used in) investing activities 20,204 ( 22,574 )

Cash flows provided by financing activities:

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

Proceeds from issuance of common under the BMS Securities Purchase Agreement — related party 38,081 —

Proceeds from research and development funding liability 6,000 —

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Cash, cash equivalents, and restricted cash at end of period $ 132,039 $ 57,455

Reconciliation of cash, cash equivalents and restricted cash:

Cash, cash equivalents, and restricted cash at end of period $ 69,096 $ 134,073

restricted cash 13,496 13,496

Total cash, and cash equivalents $ 55,600 $ 120,577

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2024 2023

Reconciliation of cash, cash equivalents and restricted cash:

Cash, cash equivalents, and restricted cash at end of period $ 132,039 $ 57,455

restricted cash 14,062 13,496

Total cash, and cash equivalents $ 117,977 $ 43,959

Supplemental cash flow information:

Right-of-use assets obtained in exchange for new operating lease liabilities $ 44,935 $ 3,265

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

Supplemental disclosure of non-cash investing and financing activities:

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Nature of the Business and Basis of Presentation

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 believes is a versatile, precise, and efficient gene editing technology.

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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.

On September 28, 2024 (the “Effective Date”), the Company entered into a Research Collaboration and License Agreement (the “BMS Collaboration Agreement”) with Juno Therapeutics, Inc., a wholly-owned subsidiary of the Bristol-Myers Squibb Company (“BMS”).

Additionally, on the Effective Date, the Company entered into a Securities Purchase Agreement (the “BMS Purchase Agreement”) with BMS, pursuant which the Company agreed to sell and issue shares of its common stock to BMS.

The BMS Collaboration Agreement and the BMS Purchase Agreement are discussed in greater detail in Note 9, Significant Agreements .

Under the BMS Collaboration Agreement, the Company received the $ 55.0 million equity investment in September 2024 and the $ 55.0 million upfront payment in October 2024.

Since its inception, the Company has incurred substantial losses and, as of September 30, 2024, the Company had an accumulated deficit of $ 644.9 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.

The Company expects that its cash, cash equivalents, and investments of $ 175.5 million as of September 30, 2024, along with the $ 55.0 million upfront payment received from BMS in October 2024 discussed above, will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these financial statements.

Risks and Uncertainties

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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.

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.

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are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of 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 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, 2024, the results of its operations for the three and nine months ended September 30, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2024 and 2023, and its cash flows for the nine months ended September 30, 2024 and 2023.

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

The results for the three and nine months ended September 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.

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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.

For the three and nine months ended September 30, 2024, “Other income, net” as presented on the condensed consolidated statements of operations and comprehensive loss was disaggregated into “Accretion (amortization) of investments,” “Interest income,” and “Other income, net”.

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

Summary of Significant Accounting Policies

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

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

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.

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Actual results may differ materially from those estimates or assumptions.

Revenue recognition

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers , (“ASC 606”).

This standard applies to all contracts with customers, except for contracts that are within the scope of other standards.

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

The Company enters into collaboration and licensing agreements with partners, which are within the scope of ASC 606, under which it may exclusively license rights to research, develop, manufacture, and commercialize product candidates to third parties.

The terms of these arrangements typically include payment to the Company of one or more of the following:

(1) non-refundable, upfront fees;

(2) equity investment;

(3) reimbursement of certain costs;

(4) customer option fees for additional goods or services;

(5) development milestone payments;

(6) regulatory milestone payments;

(7) commercial milestone payments;

and (8) royalties on net sales of licensed products.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the following steps:

(i) identification of the promised goods or services in the contract;

(ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations;

and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

As part of the accounting for these arrangements, the Company must use its judgment to determine:

(a) the number of performance obligations based on the determination under step (ii) above;

(b) the transaction price under step (iii) above;

(c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above;

and (d) the contract term and pattern of satisfaction of the performance obligations under step (v) above.

The Company uses judgment to determine whether milestones or other variable consideration, except for royalties, should be included in the transaction price as described further below.

The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Amounts due to the Company for satisfying the revenue recognition criteria or that are contractually due based upon the terms of the collaboration agreements are recorded as collaboration receivable in the Company’s condensed consolidated balance sheet.

Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in the Company’s condensed consolidated balance sheets.

Deferred revenue expected to be recognized as revenue within 12 months following the balance sheet date are classified as current deferred revenue.

Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current.

Milestone payments

At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved

until those approvals are received.

The Company evaluates factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the particular milestone in making this assessment.

There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur.

At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

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

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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 .

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , which requires more detailed information about specified categories of expenses included in certain expense captions presented on the face of the income statement.

This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact this ASU will have on its disclosures.

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 June 30, 2024:

As of September 30, 2024:

(in thousands) Level 1 Level 2 Level 3 Total

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Money market funds $ — $ 59,329 $ — $ 59,329

Corporate debt securities — 995 — 995

Short-term investments:

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

The Company classifies its U.S.

Treasury securities as short-term based on each instrument’s underlying contractual maturity date.

The Company classifies its investments as short-term based on each instrument’s underlying contractual maturity date.

The fair value of the Company’s 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 and government 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.

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

As of June 30, 2024:

As of September 30, 2024:

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

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

(in thousands) June 30,

(in thousands) September 30,

2024 December 31,

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Marketable securities in unrealized loss positions consisted of the following:

As of June 30, 2024:

As of September 30, 2024:

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

Investments in continuous loss position for less than 12 months:

Treasury and government securities 16 $ 68,849 $ ( 42 )

Corporate debt securities 2 $ 3,995 $ —

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 June 30, 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.

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Property and equipment, net consisted of the following:

(in thousands) June 30,

(in thousands) September 30,

2024 December 31,

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Depreciation expense related to property and equipment is as follows:

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

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

(in thousands) 2024 2023 2024 2023

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Accrued expenses and other current liabilities consisted of the following:

(in thousands) June 30,

(in thousands) September 30,

2024 December 31,

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Accrued professional fees 5,575 2,273

Accrued license fee

Lab-related supplies and services 296 1,962

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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.

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 September 30, 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.

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 neither of which are highly dependent nor highly related to each other.

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

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.

As the exercise of the option to extend the lease term is 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 June 30, 2024:

Arsenal Street, Watertown, Massachusetts Leases

In August 2024, the Company entered into the third amendment to its existing lease for approximately 16,000 square feet of combined laboratory and office space at 480 Arsenal Street (the “480 Arsenal Amendment”).

In September 2024, the Company entered into a new lease for approximately 48,500 square feet of combined laboratory and office

space at 500 Arsenal Street (the “500 Arsenal Lease”).

The landlords of the spaces at 480 Arsenal Street and 500 Arsenal Street are affiliates.

The 480 Arsenal Amendment provides the Company with an additional 9,400 square feet of combined laboratory and office space (the “Expansion Space”) at no additional cost and also provides an early termination date for the existing space and the Expansion Space as the later of:

1) the date occurring 150 days after the lease commencement of 500 Arsenal Lease, or 2) 30 days after substantial completion, as defined in the 500 Arsenal Lease, of tenant improvements at 500 Arsenal Street.

If the 500 Arsenal Lease is terminated prior to its lease commencement such that the lease commencement never occurs, the Company will begin paying lease payments on the Expansion Space at the current rate for its existing space at 480 Arsenal Street and the early termination provisions of the 480 Arsenal Amendment become null and void.

The 500 Arsenal Lease term is expected to commence in December 2024 with a base term of 11 months.

Subsequent to the base term, the Company has an option to extend the lease through August 2028.

The Company secured the lease with a $ 0.6 million security deposit, which was recorded as restricted cash on the condensed consolidated balance sheets as of September 30, 2024.

The 500 Arsenal Lease also provides a tenant improvement allowance of $ 2.4 million and an additional tenant improvement allowance of $ 1.2 million, which the Company would be obligated to repay to the landlord.

Accounting Considerations

As the 480 Arsenal Amendment and the 500 Arsenal Lease meet the criteria for combining contracts under ASC 842, the Company determined that both 480 Arsenal Amendment and the 500 Arsenal Lease are modifications to its existing lease at 480 Arsenal Street.

Within the combined contract the Company identified two 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 the other.

The Company allocated the consideration under the combined contract among the two lease components based on their relative fair market value.

In calculating the allocable consideration and the fair market value of each lease component, the Company determined it is probable that it will exercise the option to extend the lease term provided under the 500 Arsenal Lease.

In accordance with ASC 842, the Company possessed the ability to control and derive the economic benefit for its leased space at 480 Arsenal on the effective date of the modification.

Therefore, on the effective date, the Company recorded a right-of-use asset and a corresponding lease liability, neither of which were materially different from the existing right-of-use asset and lease liability as of the modification date.

For accounting purposes, the lease commencement for 500 Arsenal is expected to occur in the first quarter of 2025.

Consideration paid for this lease component is recorded as prepaid expense on the condensed consolidated balance sheets and is not recognized until lease commences.

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, 2024:

(in thousands) Undiscounted

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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.

In September 2024, the Company entered into the BMS Purchase Agreement pursuant to which the Company issued, and BMS purchased, in an unregistered offering (the “Offering”), 11,006,163 shares (the “Shares”) of the Company’s common stock for an aggregate purchase price of $ 55.0 million pursuant to the terms and conditions thereof.

The BMS Purchase Agreement includes lock-up restrictions with respect to the Shares.

Pursuant to the terms of the BMS Purchase Agreement, BMS has agreed not to, directly or indirectly, sell or transfer any of the Shares until September 30, 2027 subject to specified conditions and exceptions.

In addition, the Company agreed, among other things, to file with the Securities and Exchange Commission a registration statement covering the resale of the Shares and to use commercially reasonable efforts to cause such registration statement to become effective on or prior to ninety (90) calendar days after closing.

Please refer to Note 9, Significant Agreements , for additional discussion of the BMS Collaboration Agreement.

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 June 30, 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 any time.

As of September 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.

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.

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

As of September 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 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.

As of September 30, 2024, the Company had 21,522,110 shares reserved under the 2022 Plan and the 2019 Plan, and 8,783,976 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 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.

As of September 30, 2024, the Company had 1,753,191 shares available for issuance under the 2022 Plan.

During the nine months ended September 30, 2024, the Company issued 189,509 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 six months ended June 30, 2024:

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

Number of Shares Weighted-Average Exercise Price

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Cancelled or forfeited ( 372,121 ) 11.02

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.

Outstanding at September 30, 2024 11,676,404 $ 9.10

Options vested and exercisable at September 30, 2024 4,335,142 $ 8.63

Options vested and expected to vest at September 30, 2024 11,676,404 $ 9.10

As of September 30, 2024, there was $ 46.7 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 2.4 years.

Performance-Based Stock Options

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

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

Number of Shares Weighted-Average

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Cancelled or forfeited — —

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.

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

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

As of September 30, 2024, there was $ 3.2 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 six months ended June 30, 2024 :

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

Number of Shares Weighted-Average Grant-Date Fair Value

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Repurchased ( 4,423 ) 0.34

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.

Outstanding at September 30, 2024 92,719 $ 0.32

Performance-Based Restricted Common Stock

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

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

Number of Shares Weighted-Average Grant-Date Fair Value

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Repurchased — —

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.

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

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

Stock-Based Compensation

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

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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.

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

Bristol-Myers Squibb — Related Party

On September 28, 2024 the Company entered into the BMS Collaboration Agreement with Juno Therapeutics, Inc., a wholly-owned subsidiary of BMS.

Under the terms of the BMS Collaboration Agreement, the Company granted to BMS an exclusive worldwide license to certain Prime Editing technology for developing, manufacturing and commercializing ex vivo T-cell therapeutic products directed to select targets.

Additionally, on the Effective Date, the Company entered into the BMS Purchase Agreement with BMS, pursuant which the Company agreed to sell and issue shares of its common stock to BMS.

Research Collaboration and License Agreement

Pursuant to the BMS Collaboration Agreement, the Company will design Prime Editing reagents to be used by BMS to develop, manufacture and commercialize ex vivo T-cell therapeutic products directed to specific targets selected by BMS.

Under the BMS Collaboration Agreement, the Company will receive a $ 55.0 million upfront payment, which is recorded as collaboration receivable — related party on the condensed consolidated balance sheets as of September 30, 2024 , and received a $ 55.0 million equity investment from BMS (as described below).

The Company is also eligible to receive more than $ 3.5 billion in milestones, including up to $ 185 million in preclinical milestones, up to $ 1.2 billion in development milestones, and up to $ 2.1 billion in commercialization milestones, along with royalties on net sales.

Unless earlier terminated, the term of the BMS Collaboration Agreement continues until expiration of the last royalty term for the applicable product in the applicable country.

The BMS Collaboration Agreement is subject to customary termination provisions, including termination by a party for the other party’s uncured, material breach.

Stock Purchase Agreement

On the Effective Date, the Company entered into the BMS Purchase Agreement with BMS, pursuant to which the Company agreed to issue and sell, and BMS agreed to purchase, in the Offering, 11,006,163 Shares of the Company’s Common Stock for an aggregate purchase price of $ 55.0 million pursuant to the terms and conditions thereof.

The BMS Collaboration Agreement and Stock Purchase Agreement were accounted for as a combined contract.

The fair value of the Common Stock were recorded at their fair value as permanent equity as of September 30, 2024 .

BMS Collaboration Agreement Accounting

The Company assessed the BMS Collaboration Agreement and concluded that BMS is a customer.

The Company identified the following promises under the contract:

(i) a license to develop, manufacture and commercialize the ex vivo T-cell therapeutic products to select targets, (ii) obligation to perform research services, (iii) participation in various committees, (iv) technology transfer services, and (v) regulatory support services.

The Company assessed the promised goods and services to determine if they are distinct.

Based on this assessment, the Company determined that BMS cannot benefit from the promised goods and services separately from the others as they are highly interrelated and interdependent and therefore not distinct.

Accordingly, the promised goods and services represent one combined performance obligation and the entire transaction price will be allocated to that single combined performance obligation.

At contract inception, the transaction price was determined to be $ 72.0 million, which represents the aggregate of the upfront nonrefundable payment for the BMS Collaboration Agreement and the premium paid by BMS on its equity investment in the Company.

Development milestones were fully constrained.

The Company recognizes the portion of the transaction price as the single performance obligation is satisfied, using an input method, in proportion to costs incurred to date as compared to total costs incurred and expected to be incurred in the future to satisfy the underlying obligation.

The transfer of control occurs over this period and, in management’s judgment, is the best measure of progress towards satisfying the performance obligation.

Cost to perform the Company’s obligations

under the BMS Collaboration Agreement will be recognized as research and development expenses in the period incurred.

As of September 30, 2024, no revenue has been recognized under the BMS Collaboration Agreement and the full transaction price is recorded as deferred revenue and deferred revenue, net of current on the Company’s condensed consolidated balance sheets.

Supplemental information related to the BMS Collaboration Agreement consisted of the following as of September 30, 2024 (in thousands):

Collaboration receivable — related party $ 55,000

Deferred revenue — related party 9,280

Deferred revenue, net of current — related party 62,639

Amendment No.

4 to The Broad Institute License Agreement

In connection with the BMS Collaboration Agreement, the Company entered into a Letter Agreement (the “Amendment”) with The Broad Institute, Inc.

(“Broad”) on September 27, 2024, which amends that certain license agreement by and between the Company and Broad, dated as of September 26, 2019 (as amended, the “Broad-Prime License Agreement”), to modify certain obligations of Company and rights of Broad in relation to the BMS Collaboration Agreement as a sublicense under the Broad-Prime License Agreement.

The Amendment, among other things, modifies the royalty and certain commercial milestones that the Company is obligated to pay to Broad on net sales of products under the BMS Collaboration Agreement.

Except as expressly stated in the Amendment, all other terms and provisions of the Broad-Prime License Agreement shall remain in full force and effect.

Amounts due to Broad as a result of the BMS Collaboration Agreement are recorded as accrued expenses on the condensed consolidated balance sheet as of September 30, 2024.

Net Loss per Share

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

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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.

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

In periods in which the Company reports a net loss available to common stockholders, diluted net loss

per share available to common stockholders is the same as basic net loss per share available to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

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

As of June 30,

As of September 30,

Anti-dilutive common stock equivalents:

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Consulting Agreement with David Liu

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.

Pursuant to a Consulting Agreement dated September 13, 2019, as amended on October 22, 2021 and July 31, 2024 (as amended, the “Consulting Agreement”), between the Company and David Liu, for the three months ended September 30, 2024 and 2023, the Company made payments of $ 25,000 and $ 37,500 , respectively, in each period, and for the nine months ended September 30, 2024 and 2023, the Company made payments of $ 100,000 and $ 112,500 , respectively, in each period for scientific consulting and other expenses.

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

The Consulting Agreement terminated on September 1, 2024.

Myeloid Therapeutics

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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 six months ended June 30, 2024.

As of June 30, 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 nine months ended September 30, 2024.

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

Advisory Services Agreement with Jeffrey Marrazzo

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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.

Bristol-Myers Squibb

In September 2024, t he Company and BMS, a related party, entered into the BMS Collaboration Agreement and the BMS Purchase Agreement.

BMS is a related party due to its share of ownership of the Company.

The Company recognized the following amounts related to BMS (in thousands):

Collaboration receivable — related party $ 55,000

Deferred revenue — related party 9,280

Deferred revenue, net of current — related party 62,639

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

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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 a biotechnology company committed to delivering a new class of differentiated one-time curative genetic therapies.

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.

In September 2024, we announced that we are strategically focusing our pipeline on a set of high value programs, each targeting a disease with well-understood biology and a clearly defined clinical development and regulatory path, and each expected to provide the foundation for expansion into additional opportunities.

This diversified portfolio of high value, investigational therapeutic programs is organized around our core areas of focus:

hematology, immunology and oncology, liver, and lung.

We are advancing additional programs as potential partnership opportunities.

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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.

BMS Collaboration Agreement

In September 2024, we entered into the Research Collaboration and License Agreement (the “BMS Collaboration Agreement”) with Juno Therapeutics, Inc., a wholly-owned subsidiary of Bristol-Myers Squibb Company (“BMS”), pursuant to which we granted to BMS an exclusive worldwide license to certain Prime Editing technology for developing, manufacturing and commercializing ex vivo T-cell therapeutic products directed to select targets.

Under the terms of the BMS Collaboration Agreement, we will design optimized Prime Editor reagents for a select number of targets, including reagents that use our Prime Assisted Site-Specific Integrase Gene Editing (“PASSIGE”) technology.

BMS will be responsible for development, manufacturing and commercialization of the ex vivo T-Cell therapeutic products, with support from us in gene editing strategy and reagent development.

We will receive a $55.0 million upfront payment and have received a $55 million equity investment from BMS.

We are also eligible to receive more than $3.5 billion in milestones, including up to $185 million in preclinical milestones, up to $1.2 billion in development milestones, and more than $2.1 billion in commercialization milestones, along with royalties on net sales.

See Note 9, Significant Agreements , to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Components of Our Results of Operations

Operating Expenses

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products for the foreseeable future.

Our revenues to date have been generated through research collaboration and license agreements.

We recognize revenue over the expected performance period under each agreement.

We expect that our revenue for the next several years will be derived primarily from our current collaboration agreements and any additional collaborations that we may enter into in the future.

To date, we have not received any royalties under any of our existing collaboration agreements.

Research and Development Expenses

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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 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;

General and administrative expenses also include legal fees relating to patents and

corporate matters;

professional fees paid for accounting, auditing, consulting and tax service;

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Results of Operations

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

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

Operating Expenses

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Three Months Ended

September 30,

(in thousands) 2024 2023 Change

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Total research and development expenses $ 40,340 $ 40,967 $ (627)

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:

The $0.6 million decrease in research and development expense for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily driven by an $8.5 million decrease in lab supplies purchases of materials for our ongoing Phase 1 clinical trial in Q3 2023.

This was offset by:

• $3.9 million increase in license fees for amounts due to the Broad resulting from the BMS Collaboration Agreement;

• $1.7 million increase in personnel expense, primarily due to an increase in non-cash stock-based compensation expense of $0.8 million;

• $1.6 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

Three Months Ended

September 30,

(in thousands) 2024 2023 Change

General and administrative expenses:

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

Personnel expenses $ 7,433 $ 4,908 $ 2,525

Professional and consultant fees 4,198 3,659 539

Facility related and other 2,470 1,926 544

Total general and administrative expenses $ 14,101 $ 10,493 $ 3,608

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.

The $3.6 million increase in general and administrative expense for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 is primarily driven by a $2.5 million increase in personnel expense, a majority of which was an increase in non-cash stock-based compensation expense of $1.9 million.

Other Income (Expense)

Three Months Ended

September 30,

(in thousands) 2024 2023 Change

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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

Comparison of the Nine Months Ended September 30, 2024 and 2023

Operating Expenses

Research and Development Expenses

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2024 2023 Change

7 unchanged sentences

Total research and development expenses $ 121,185 $ 106,446 $ 14,739

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:

The $14.7 million increase in research and development expense for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 was primarily driven by:

• $9.1 million increase in personnel expense, including an increase in non-cash stock-based compensation expense of $4.4 million, driven by our increased headcount of our research and development function;

• $8.9 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;

• $3.5 million increase in license fees for amounts due to the Broad resulting from the BMS Collaboration Agreement;

• $2.9 million increase in clinical expenses related to PM359, our candidate to treat chronic granulomatous disease.

This was offset by a $9.4 million decrease in lab supplies due to purchases of materials for our ongoing Phase 1 clinical trial in Q3 2023.

General and Administrative Expenses

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2024 2023 Change

4 unchanged sentences

Total general and administrative expenses $ 37,860 $ 30,303 $ 7,557

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.

The $7.6 million increase in general and administrative expense for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 is primarily driven by:

• $8.2 million increase in personnel expense, a majority of which was an increase in non-cash stock-based compensation expense of $6.3 million;

• $1.1 million increase in facility related and other primarily related to the ongoing build out of our facility at 60 First Street.

This was offset by a $1.7 million decrease in professional and consultant fees for legal services.

Other Income (Expense)

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2024 2023 Change

5 unchanged sentences

Total other income, net $ 4,639 $ 3,980 $ 659

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.

Liquidity and Capital Resources

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

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

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.

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

As of September 30, 2024, we had cash, cash equivalents, and investments of $175.5 million, excluding our restricted cash, or $189.6 million, including restricted cash.

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

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2024 2023

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Net cash used in operating activities $ (139,110) $ (121,548)

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

Net cash provided by (used in) investing activities 20,204 (22,574)

Net cash provided by financing activities 195,875 461

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Operating Activities

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

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

• $153.6 million net loss;

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

• $9.5 million change in prepaid and other current assets;

• $7.7 million change in accounts payable;

• $6.0 million change in lease liabilities.

These were offset by:

• $32.3 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;

• $71.9 million change in deferred revenue from consideration received from BMS in September 2024;

• $2.0 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 six months ended June 30, 2023 was driven primarily by the following uses of cash:

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

• $132.5 million net loss;

• $6.6 million change in lease liabilities;

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

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

• $8.9 million change in lease liabilities.

These were offset by:

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Investing Activities

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

Net cash provided by investing activities for the nine months ended September 30, 2024 was driven primarily by the following $25.0 million of maturities of marketable securities, net of purchases, offset by $5.5 million of purchases of property and equipment.

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

• $15.5 million of purchases of marketable securities, net of maturities;

• $6.9 million of purchases of property and equipment.

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 six months ended June 30, 2024 was driven primarily by the following:

Net cash provided by financing activities for the nine months ended September 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;

• $38.1 million of proceeds from issuance of common stock to BMS in September 2024;

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

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We do not expect to generate revenue from product sales unless and until we successfully complete preclinical and clinical development of, receive regulatory approval for, and commercialize a product candidate and we do not know when, or if at all, that will occur.

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and studies and initiate clinical trials.

We expect our expenses to increase in connection with our ongoing activities, particularly as we advance the preclinical activities and studies and initiate clinical trials.

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.

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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 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 believe our existing cash, cash equivalents, and investments, along with the upfront payment of $55.0 million received from BMS in October 2024, will be sufficient to fund our operating expenses and capital expenditure requirements into the first half of 2026.

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 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.

During the nine months ended September 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

5 unchanged sentences

Actual results may differ from these estimates.

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.

During the nine months ended September 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 our Annual Report on Form 10-K.

Emerging Growth Company Status

4 unchanged sentences

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