10-Q 1 verv-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-40489

 

VERVE THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

82-4800132

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

 

201 Brookline Avenue, Suite 601

Boston, Massachusetts

02215

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 603-0070

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.001 per share

 

VERV

 

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of May 2, 2024, the registrant had 83,965,493 shares of common stock, par value $0.001 per share, outstanding.

 

 

 


 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or the negative of these words or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:

the timing, progress and conduct of our Heart-2 clinical trial, a Phase 1b clinical trial of VERVE-102, including statements regarding the timing of enrollment and the period during which data from such clinical trial will become available, and our Heart-1 clinical trial, a Phase 1b clinical trial of VERVE-101, including statements regarding next steps for the Heart-1 trial;
the initiation, timing, progress and results of our research and development programs, preclinical studies and clinical trials, including the timing of our submissions of investigational new drug applications and clinical trial applications to regulatory authorities, and the timing of initiation of our planned clinical trial of VERVE-201;
our estimates regarding expenses, future revenue, capital requirements, need for additional financing and the period over which we believe our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements;
the timing of and our ability to submit applications for and obtain and maintain regulatory approvals for our current and future product candidates;
the potential therapeutic attributes and advantages of our current and future product candidates;
our expectations about the translatability of results from studies in non-human primates into clinical trials in humans;
our plans to develop and, if approved, subsequently commercialize any product candidates we may develop;
the rate and degree of market acceptance and clinical utility of our products, if approved;
our estimates regarding the addressable patient population and potential market opportunity for our current and future product candidates;
our commercialization, marketing and manufacturing capabilities and strategy;
our expectations regarding our ability to obtain and maintain intellectual property protection;
our ability to identify additional products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;
the impact of government laws and regulations;
our competitive position and expectations regarding developments and projections relating to our competitors and any competing therapies that are or become available;
developments relating to our competitors and our industry;
our ability to establish and maintain collaborations, including our collaborations with Eli Lilly and Company and Vertex Pharmaceuticals Incorporated; and
the potential impact of public health epidemics or pandemics and of global economic developments, including fluctuations in inflation and interest rates, on our business, operations, strategy and goals.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to our other filings with the Securities and Exchange Commission completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form

 


 

10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Except where the context otherwise requires or where otherwise indicated, the terms “we,” “us,” “our,” “our company,” “the company,” and “our business” in this Quarterly Report on Form 10-Q refer to Verve Therapeutics, Inc. and its consolidated subsidiary.

 

 


 

 

RISK FACTOR SUMMARY

 

Our business is subject to a number of risks of which you should be aware before making an investment decision. Below we summarize what we believe to be the principal risks facing our business, in addition to the risks described more fully in Item 1A, “Risk Factors” of Part II of this Quarterly Report on Form 10-Q and other information included in this report. The risks and uncertainties described below are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also impair our business operations.

If any of the following risks occurs, our business, financial condition and results of operations and future growth prospects could be materially and adversely affected, and the actual outcomes of matters as to which forward-looking statements are made in this report could be materially different from those anticipated in such forward-looking statements:

We will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts;
Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability;
We are early in our development efforts and have not yet completed a clinical trial. As a result, we expect it will be many years before we commercialize any product candidate, if ever. If we are unable to advance our current or future product candidates into and through clinical trials, obtain marketing approval and ultimately commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed;
In vivo gene editing, including base editing, is a novel technology in a rapidly evolving field that is not yet clinically validated as being safe and efficacious for human therapeutic use. The approaches we are taking to discover and develop novel therapeutics are unproven and may never lead to marketable products. We are focusing our research and development efforts for our lead product candidates on gene editing using base editing technology, but other gene editing technologies may be discovered that provide significant advantages over base editing and we may not be able to access or use those technologies, which could materially harm our business;
We are also seeking to discover and develop new gene editing technologies and may not be successful in doing so;
The outcome of preclinical studies and earlier-stage clinical trials may not be predictive of future results or the success of later preclinical studies and clinical trials and interim, preliminary or top-line data from our clinical trials may materially change as participant enrollment continues, more participant data become available and audit and verification procedures are conducted. As a result, interim, preliminary or top-line data from a clinical trial should be viewed with caution until the final data are available;
If we experience delays or difficulties in the enrollment of patients in our clinical trials, our clinical trials could experience significant delays and our receipt of necessary regulatory approvals could be delayed or prevented;
If any of the product candidates we develop, or the delivery modes we rely on to administer them, including lipid nanoparticles, cause serious adverse events, undesirable side effects or unexpected characteristics, such adverse events, side effects or characteristics could require us to abandon or limit development of the product candidates, delay or prevent regulatory approval of the product candidates, limit the commercial potential of our product candidates or result in significant negative consequences following any potential marketing approval;
Adverse public perception of genetic medicines, and gene editing and base editing in particular, may negatively impact demand for our potential products and increased regulatory scrutiny of genetic medicines may adversely affect our ability to obtain regulatory approvals for our product candidates;
Genetic medicines are complex and difficult to manufacture. We could experience delays in satisfying regulatory authorities or production problems that result in delays in our development programs, limit the supply of our product candidates we may develop, or otherwise harm our business;
We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success;
We rely, and expect to continue to rely, on third parties to conduct some or all aspects of our product manufacturing, research and preclinical and clinical testing, and these third parties may not perform satisfactorily;
We have entered into collaborations, and may enter into additional collaborations, with third parties for the research, development, manufacture and commercialization of programs or product candidates. Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner, or at all. If these collaborations are not successful, our business could be adversely affected;
If we or our licensors are unable to obtain, maintain, defend and enforce patent rights that cover our gene editing technology and product candidates or if the scope of the patent protection obtained is not sufficiently broad, our

 


 

competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully develop and commercialize our technology and product candidates may be adversely affected;
If we fail to comply with our obligations in our intellectual property license arrangements with third parties, or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that are important to our business;
The intellectual property landscape around genome editing technology, including base editing and delivery, is highly dynamic, and third parties may initiate legal proceedings alleging that we are infringing, misappropriating, or otherwise violating their intellectual property rights, the outcome of which would be uncertain and may prevent, delay or otherwise interfere with our product discovery, development and commercialization efforts; and
We face substantial competition, which may result in others discovering, developing or commercializing products before us or more successfully than we do. The market with respect to new products for the treatment of cardiovascular disease, for which the standard of care is well established, is particularly competitive.

 

 


 

 

Table of Contents

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

Condensed Consolidated Balance Sheets

1

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

Condensed Consolidated Statements of Stockholders’ Equity

3

Condensed Consolidated Statements of Cash Flows

4

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22

Item 4.

Controls and Procedures

23

 

 

 

PART II.

OTHER INFORMATION

24

Item 1.

Legal Proceedings

24

Item 1A.

Risk Factors

24

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

87

Item 5.

Other Information

87

Item 6.

Exhibits

88

Signatures

89

 

 

 


 

Part I ─ Financial Information

Item 1. Financial Statements

Verve Therapeutics, Inc.

Condensed consolidated balance sheets

 

(in thousands, except share and per share amounts)
(unaudited)

 

March 31,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

144,200

 

 

$

206,180

 

Marketable securities

 

 

462,167

 

 

 

417,770

 

Collaboration receivable

 

 

5,767

 

 

 

5,897

 

Prepaid expenses and other current assets

 

 

8,192

 

 

 

8,102

 

Total current assets

 

 

620,326

 

 

 

637,949

 

Property and equipment, net

 

 

21,024

 

 

 

22,505

 

Restricted cash

 

 

4,774

 

 

 

4,774

 

Operating lease right-of-use assets

 

 

83,527

 

 

 

85,295

 

Other long term assets

 

 

2,706

 

 

 

2,165

 

Total assets

 

$

732,357

 

 

$

752,688

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,049

 

 

$

6,636

 

Accrued expenses

 

 

16,552

 

 

 

20,178

 

Deferred revenue, current

 

 

1,473

 

 

 

 

Lease liability, current portion

 

 

10,220

 

 

 

10,192

 

Total current liabilities

 

 

31,294

 

 

 

37,006

 

Long term lease liability

 

 

63,454

 

 

 

64,715

 

Success payment liability

 

 

2,642

 

 

 

2,720

 

Deferred revenue, non-current

 

 

51,733

 

 

 

48,556

 

Other long term liabilities

 

 

165

 

 

 

189

 

Total liabilities

 

 

149,288

 

 

 

153,186

 

Commitments and contingencies (See Note 7 and Note 8)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 shares authorized, 83,819,862 and 81,969,693 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

84

 

 

 

82

 

Additional paid-in capital

 

 

1,176,526

 

 

 

1,143,453

 

Accumulated other comprehensive income (loss)

 

 

(500

)

 

 

272

 

Accumulated deficit

 

 

(593,041

)

 

 

(544,305

)

Total stockholders’ equity

 

 

583,069

 

 

 

599,502

 

Total liabilities and stockholders’ equity

 

$

732,357

 

 

$

752,688

 

 

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

1


 

Verve Therapeutics, Inc.

Condensed consolidated statements of operations and comprehensive loss

 

 

 

Three months ended March 31,

 

(in thousands, except share and per share amounts)
(unaudited)

 

2024

 

 

2023

 

Collaboration revenue

 

$

5,695

 

 

$

1,404

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

48,376

 

 

 

47,110

 

General and administrative

 

 

14,163

 

 

 

12,553

 

Total operating expenses

 

 

62,539

 

 

 

59,663

 

Loss from operations

 

 

(56,844

)

 

 

(58,259

)

Other income:

 

 

 

 

 

 

Change in fair value of success payment liability

 

 

78

 

 

 

738

 

Interest and other income, net

 

 

8,136

 

 

 

5,546

 

Total other income, net

 

 

8,214

 

 

 

6,284

 

Loss before provision for income taxes

 

 

(48,630

)

 

 

(51,975

)

Provision for income taxes

 

 

(106

)

 

 

-

 

Net loss

 

$

(48,736

)

 

$

(51,975

)

Net loss per common share, basic and diluted

 

$

(0.59

)

 

$

(0.84

)

Weighted-average common shares used in net loss per share, basic and diluted

 

 

83,132,960

 

 

 

61,787,403

 

Comprehensive Loss:

 

 

 

 

 

 

Net loss

 

$

(48,736

)

 

$

(51,975

)

Other comprehensive (loss) gain:

 

 

 

 

 

 

Unrealized (loss) gain on marketable securities

 

 

(772

)

 

 

457

 

Comprehensive loss

 

$

(49,508

)

 

$

(51,518

)

 

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

2


 

Verve Therapeutics, Inc.

Condensed consolidated statements of stockholders’ equity

 

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share amounts)
(unaudited)

 

Shares

 

 

Amount

 

 

Additional
paid-in
capital

 

 

Accumulated
other
comprehensive
income (loss)

 

 

Accumulated
deficit

 

 

Total
stockholders’
equity

 

Balance at December 31, 2022

 

 

61,730,816

 

 

$

62

 

 

$

895,801

 

 

$

(694

)

 

$

(344,237

)

 

$

550,932

 

Exercise of stock options

 

 

29,010

 

 

 

 

 

 

116

 

 

 

 

 

 

 

 

 

116

 

Issuance of common stock from At-the-Market offering, net of issuance costs of $126

 

 

103,184

 

 

 

 

 

 

1,922

 

 

 

 

 

 

 

 

 

1,922

 

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

457

 

 

 

 

 

 

457

 

Stock-based compensation

 

 

 

 

 

 

 

 

8,024

 

 

 

 

 

 

 

 

 

8,024

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(51,975

)

 

 

(51,975

)

Balance at March 31, 2023

 

 

61,863,010

 

 

$

62

 

 

$

905,863

 

 

$

(237

)

 

$

(396,212

)

 

$

509,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2023

 

 

81,969,693

 

 

$

82

 

 

$

1,143,453

 

 

$

272

 

 

$

(544,305

)

 

$

599,502

 

Exercise of stock options

 

 

76,044

 

 

 

 

 

 

301

 

 

 

 

 

 

 

 

 

301

 

Vesting of restricted stock units

 

 

7,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock from At-the-Market offering, net of issuance costs of $747

 

 

1,766,835

 

 

 

2

 

 

 

22,431

 

 

 

 

 

 

 

 

 

22,433

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

(772

)

 

 

 

 

 

(772

)

Stock-based compensation

 

 

 

 

 

 

 

 

10,341

 

 

 

 

 

 

 

 

 

10,341

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(48,736

)

 

 

(48,736

)

Balance at March 31, 2024

 

 

83,819,862

 

 

$

84

 

 

$

1,176,526

 

 

$

(500

)

 

$

(593,041

)

 

$

583,069

 

 

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

3


 

Verve Therapeutics, Inc.

Condensed consolidated statements of cash flows

 

 

 

Three months ended March 31,

 

(unaudited, in thousands)

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(48,736

)

 

$

(51,975

)

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

 

 

 

 

 

 

Depreciation

 

 

1,632

 

 

 

1,127

 

Non-cash lease expense

 

 

1,768

 

 

 

1,632

 

Net amortization of premium (accretion of discount) on marketable securities

 

 

(3,967

)

 

 

(3,855

)

Stock-based compensation

 

 

10,341

 

 

 

8,024

 

Change in fair value of success payments liabilities

 

 

(78

)

 

 

(738

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Collaboration receivable

 

 

168

 

 

 

1,404

 

Prepaid expenses and other assets

 

 

(672

)

 

 

(2,353

)

Accounts payable

 

 

(3,306

)

 

 

1,485

 

Accrued expenses and other liabilities

 

 

(3,649

)

 

 

(2,283

)

Operating lease liabilities

 

 

(1,234

)

 

 

(1,564

)

Deferred revenue

 

 

4,651

 

 

 

-

 

Net cash used in operating activities

 

 

(43,082

)

 

 

(49,096

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(433

)

 

 

(3,375

)

Purchases of marketable securities

 

 

(164,190

)

 

 

(133,755

)

Maturities of marketable securities

 

 

122,991

 

 

 

152,522

 

Net cash (used in) provided by investing activities

 

 

(41,632

)

 

 

15,392

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

22,484

 

 

 

1,987

 

Proceeds from exercise of stock options

 

 

301

 

 

 

116

 

Payment of equity offering costs

 

 

(51

)

 

 

(65

)

Net cash provided by financing activities

 

 

22,734

 

 

 

2,038

 

Decrease in cash, cash equivalents and restricted cash

 

 

(61,980

)

 

 

(31,666

)

Cash, cash equivalents and restricted cash—beginning of period

 

 

210,954

 

 

 

120,236

 

Cash, cash equivalents and restricted cash—end of period

 

$

148,974

 

 

$

88,570

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

Property and equipment additions included in accounts payable and accrued expenses

 

$

545

 

 

$

1,657

 

 

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

4


 

Verve Therapeutics, Inc.

Notes to condensed consolidated financial statements (unaudited)

1. Nature of the business and basis of presentation

Organization

Verve Therapeutics, Inc. (the “Company” or “Verve”) is a clinical-stage genetic medicines company pioneering a new approach to the care of cardiovascular disease, transforming treatment from chronic management to single-course gene editing medicines. The Company was incorporated on March 9, 2018 as Endcadia, Inc., a Delaware corporation, and began operations shortly thereafter. In January 2019, the Company amended its certificate of incorporation to change its name to Verve Therapeutics, Inc. The Company’s principal offices are located in Boston, Massachusetts.

Liquidity and capital resources

Since its inception, the Company has devoted its efforts principally to research and development and raising capital. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure 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.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company expects that its cash, cash equivalents and marketable securities of $606.4 million as of March 31, 2024 will be sufficient to fund its operations and capital expenditure requirements beyond the next 12 months from the date of issuance of these financial statements. The Company will need additional financing to support its continuing operations and pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed could 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.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). 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 Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of March 31, 2024, the results of its operations and other comprehensive loss for the three months ended March 31, 2024 and 2023, stockholders’ equity for the three months ended March 31, 2024 and 2023 and cash flows for the three months ended March 31, 2024 and 2023. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 2024 are not necessarily indicative of the results for the year ending December 31, 2024, or for any future period. These interim financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2023, and the notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2024.

5


 

2. Summary of significant accounting policies

The Company's significant accounting policies are disclosed in Note 2, "Summary of significant accounting policies," in the audited consolidated financial statements for the year ended December 31, 2023, and notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2024. Since the date of those financial statements, there have been no changes to the Company's significant accounting policies.

Cash, cash equivalents and restricted cash

Restricted cash represents collateral provided for letters of credit issued as security deposits in connection with the Company’s leases of its corporate facilities. A reconciliation of the cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheet that sum to the total of the same amounts shown in the condensed consolidated statement of cash flows is as follows:

 

 

 

March 31,

 

 

March 31,

 

(in thousands)

 

2024

 

 

2023

 

Cash and cash equivalents

 

$

144,200

 

 

$

83,746

 

Restricted cash

 

 

4,774

 

 

 

4,824

 

Total cash, cash equivalents and restricted cash

 

$

148,974

 

 

$

88,570

 

 

3. Marketable securities

Marketable securities by security type consisted of the following:

 

 

March 31, 2024

 

(in thousands)

 

Amortized
cost

 

 

Gross
unrealized
gains

 

 

Gross
unrealized
losses

 

 

Fair
value

 

U.S. treasury bills and notes

 

$

217,458

 

 

$

 

 

$

(266

)

 

$

217,192

 

U.S. agency securities

 

 

245,209

 

 

 

33

 

 

 

(267

)

 

 

244,975

 

Total

 

$

462,667

 

 

$

33

 

 

$

(533

)

 

$

462,167

 

 

 

December 31, 2023

 

(in thousands)

 

Amortized
cost

 

 

Gross
unrealized
gains

 

 

Gross
unrealized
losses

 

 

Fair
value

 

U.S. treasury bills and notes

 

$

147,978

 

 

$

144

 

 

$

(15

)

 

$

148,107

 

U.S. agency securities

 

 

269,520

 

 

 

277

 

 

 

(134

)

 

 

269,663

 

Total

 

$

417,498

 

 

$

421

 

 

$

(149

)

 

$

417,770

 

 

The remaining contractual maturities of all marketable securities were less than 21 months as of March 31, 2024 and 24 months as of December 31, 2023.The gross unrealized losses on the Company’s marketable securities of $0.5 million and $0.1 million as of March 31, 2024 and December 31, 2023, respectively, were caused by interest rate increases which resulted in the decrease in market value of these securities. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company did not consider those marketable securities to be impaired at March 31, 2024 or December 31, 2023. None of the Company’s marketable securities have been in a continuous unrealized loss position for 12 months or greater as of March 31, 2024 or December 31, 2023.

6


 

4. Property and equipment, net

Property and equipment, net, consisted of the following:

 

(in thousands)

 

March 31, 2024

 

 

December 31, 2023

 

Lab equipment

 

$

29,002

 

 

$

28,851

 

Leasehold improvements

 

 

726

 

 

 

726

 

Furniture and fixtures

 

 

2,323

 

 

 

2,323

 

Computer equipment

 

 

997

 

 

 

997

 

Total property and equipment

 

 

33,048

 

 

 

32,897

 

Less accumulated depreciation

 

 

(12,024

)

 

 

(10,392

)

Property and equipment, net

 

$

21,024

 

 

$

22,505

 

 

The following table summarizes depreciation expense incurred:

 

 

Three months ended March 31,

 

(in thousands)

 

2024

 

 

2023

 

Depreciation expense

 

$

1,632

 

 

$

1,127

 

 

5. fair value of financial instruments

The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds, marketable securities, and a derivative liability (success payment liability) pursuant to the Company's license agreement with the President and Fellows of Harvard College ("Harvard") and The Broad Institute, Inc. ("Broad"), which license agreement is referred to herein as the Harvard/Broad License Agreement. The following tables set forth the fair value of the Company’s financial instruments by level within the fair value hierarchy:

 

 

 

As of March 31, 2024

 

(in thousands)

 

Fair
value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

83,801

 

 

$

83,801

 

 

$

 

 

$

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury bills and notes

 

 

217,192

 

 

 

 

 

 

217,192

 

 

 

 

U.S. agency securities

 

 

244,975

 

 

 

 

 

 

244,975

 

 

 

 

Total assets

 

$

545,968

 

 

$

83,801

 

 

$

462,167

 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Success payment liability

 

$

2,642

 

 

$

 

 

$

 

 

$

2,642

 

Total liabilities

 

$

2,642

 

 

$

 

 

$

 

 

$

2,642

 

 

 

 

As of December 31, 2023

 

(in thousands)

 

Fair
value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

120,987

 

 

$

120,987

 

 

$

 

 

$

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury bills and notes

 

 

148,107

 

 

 

 

 

 

148,107

 

 

 

 

U.S. agency securities

 

 

269,663

 

 

 

 

 

 

269,663

 

 

 

 

Total assets

 

$

538,757

 

 

$

120,987

 

 

$

417,770

 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Success payment liability

 

$

2,720

 

 

$

 

 

$

 

 

$

2,720

 

Total liabilities

 

$

2,720

 

 

$

 

 

$

 

 

$

2,720

 

 

Cash Equivalents—Cash equivalents of $83.8 million and $121.0 million as of March 31, 2024 and December 31, 2023, respectively, consisted of money market funds and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

Marketable Securities—The Company measures its marketable securities at fair value on a recurring basis and classifies those instruments within Level 2 of the fair value hierarchy. Marketable securities are classified within Level 2 of

7


 

the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.

Success Payment LiabilityThe Company is obligated to pay to Harvard and Broad tiered success payments in the event its average market capitalization exceeds specified thresholds for a specified period of time ascending from a mid-ten digit dollar amount to $10.0 billion, or sale of the Company for consideration in excess of those thresholds. In the event of a change of control or a sale of the Company, the Company is required to pay success payments in cash within a specified period following such event. Otherwise, the success payments may be settled at the Company’s option in either cash or shares of its common stock, or a combination of cash and shares of its common stock. The maximum aggregate success payments that could be payable by the Company is $31.3 million.

The success payment liability is stated at fair value and is considered Level 3 because its fair value measurement is based, in part, on significant inputs not observed in the market. The Company used a Monte Carlo simulation model, which models the value of the liability based on several key variables, including probability of event occurrence, timing of event occurrence, as well as the value of the Company’s common stock.

The Company remeasured the liability at fair value with corresponding decreases of $0.1 million and $0.7 million recorded to other income for the three months ended March 31, 2024 and 2023, respectively.

The primary inputs used in valuing the success payment liability at March 31, 2024 and December 31, 2023 were as follows:

 

 

 

At
March 31,
2024

 

 

At
December 31,
2023

 

Fair value of common stock (per share)

 

$

13.28

 

 

$

13.94

 

Equity volatility

 

 

83

%

 

 

83

%

 

The reconciliation of change in the fair value of financial instruments based on Level 3 inputs for the three months ended March 31, 2024 is as follows:

 

(in thousands)

 

Success
payment
liability

 

Balance at December 31, 2023

 

$

2,720

 

Change in fair value

 

 

(78

)

Balance at March 31, 2024

 

$

2,642

 

 

The reconciliation of change in the fair value of financial instruments based on Level 3 inputs for the three months ended March 31, 2023 is as follows:

 

(in thousands)

 

Success
payment
liability

 

Balance at December 31, 2022

 

$

2,885

 

Change in fair value

 

 

(738

)

Balance at March 31, 2023

 

$

2,147

 

 

6. Accrued expenses

Accrued expenses consisted of the following:

(in thousands)

 

March 31,
2024

 

 

December 31,
2023

 

Employee compensation and related benefits

 

$

5,617

 

 

$

12,342

 

Accrued external research and development expenses

 

 

7,909

 

 

 

4,856

 

Professional fees

 

 

2,127

 

 

 

1,492

 

License and milestone payments

 

 

 

 

 

500

 

Other

 

 

899

 

 

 

988

 

Total

 

$

16,552

 

 

$

20,178

 

 

8


 

7. Leases

The Company’s operating lease activity is comprised of non-cancelable facility leases for office and laboratory space in Boston, Massachusetts.

The Company has also entered into multiple contract research and contract manufacturing service agreements with third parties which contain embedded leases within the scope of ASC Topic 842, “Leases”. The embedded leases are considered short term leases, as the contractual terms are 12 months or less. Accordingly, no lease liability or right of use asset has been recorded, and the Company has recognized $1.9 million and $0.2 million of short term lease costs associated with the embedded leases during the three months ended March 31, 2024 and 2023, respectively.

The components of operating lease cost were as follows:

 

 

Three months ended March 31,

 

(in thousands)

 

2024

 

 

2023

 

Operating lease costs

 

$

3,234

 

 

$

3,222

 

Variable lease costs

 

 

1,057

 

 

 

879

 

Total

 

$

4,291

 

 

$

4,101

 

Supplemental cash flow information related to operating leases was as follows:

 

 

Three months ended March 31,

 

(in thousands)

 

2024

 

 

2023

 

Cash paid for amounts included in the measurements of lease liabilities:

 

 

 

 

 

 

Operating cash flows related to operating leases

 

$

2,641

 

 

$

3,148

 

As of March 31, 2024, the Company’s operating leases were measured using a weighted-average incremental borrowing rate of 7.89% over a weighted-average remaining lease term of 8.8 years.

Future minimum commitments under non-cancellable leases as of March 31, 2024 were as follows:

Years ending December 31,

 

Amount

 

 

 

(in thousands)

 

Remainder of 2024

 

$

7,948

 

2025

 

 

10,895

 

2026

 

 

11,210

 

2027

 

 

11,534

 

2028

 

 

11,868

 

Thereafter

 

 

49,881

 

Total lease payments

 

$

103,336

 

Less: interest

 

 

(29,662

)

Present value of operating lease liabilities

 

$

73,674

 

 

8. License agreements

The Company's significant license agreements are disclosed in Note 8, "License agreements," to the audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2024. Since the date of those financial statements, there have been no changes to its license agreements.

9. Collaboration and license agreements

 

The Company's significant collaboration and license agreements are disclosed in Note 9, "Collaboration and license agreements," to the audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2024. Since the date of those financial statements, there have been no changes to its collaboration and license agreements, except as noted below.

Vertex agreement

 

9


 

In July 2022, the Company entered into a Strategic Collaboration and License Agreement (the “Vertex Agreement”) with Vertex Pharmaceuticals Incorporated (“Vertex”) for an exclusive, four-year worldwide research collaboration focused on developing in vivo gene editing candidates toward an undisclosed target for the treatment of a single liver disease.

 

During the three months ended March 31, 2024 and 2023, the Company recognized $3.0 million and $1.4 million of revenue, respectively, associated with the Vertex Agreement related to research services performed during the period. As of March 31, 2024, the Company has recorded $20.0 million as non-current deferred revenue. Costs incurred relating to the Company’s collaboration programs under the Vertex Agreement consist of internal and external research costs, which primarily include: salaries and benefits, and preclinical research studies. These costs are included in research and development expenses in the Company’s condensed consolidated statements of operations during the three months ended March 31, 2024 and March 31, 2023.

 

Lilly agreement

 

In June 2023, the Company entered into a Research and Collaboration Agreement (the “Lilly Agreement”) with Eli Lilly and Company ("Lilly") for an exclusive, five-year worldwide research collaboration initially focused on advancing the Company’s discovery-stage in vivo gene editing lipoprotein(a) program.

In the three months ended March 31, 2024, the Company achieved a research and development milestone under the Lilly Agreement which triggered a $5.0 million payment that was received in the same period. Upon achievement of the milestone, the Company updated the transaction price and allocated the $5.0 million milestone to the research and development activities under the Lilly Agreement (the “Lilly Research Services”). During the three months ended March 31, 2024, the Company recorded a cumulative catch-up of $0.2 million for the portion of the milestone that was satisfied in prior periods.

During the three months ended March 31, 2024, the Company recognized $2.7 million of revenue associated with the Lilly Agreement related to the Lilly Research Services performed during the period, inclusive of the cumulative catch-up related to the milestone achieved in March 2024. As of March 31, 2024, the Company has recorded $31.7 million of long-term deferred revenue and $1.5 million of short-term deferred revenue, of which $28.5 million related to the unexercised material rights and the remaining $4.7 million related to the Lilly Research Services and will be recognized over the period of service.

Costs incurred relating to the Company’s collaboration programs under the Lilly Agreement consist of internal and external research costs, which primarily include: salaries and benefits, and preclinical research studies. These costs are included in research and development expenses in the Company’s consolidated statements of operations during the three months ended March 31, 2024.

10. Common stock

In July 2022, the Company entered into an Open Market Sale Agreement (the "Sales Agreement") with Jefferies LLC ("Jefferies") as the agent pursuant to which the Company is entitled to offer and sell, from time to time at prevailing market prices, shares of the Company’s common stock. The Company agreed to pay Jefferies a commission of up to 3.0% of the aggregate gross sale proceeds of any shares sold by Jefferies under the Sales Agreement. During the three months ended March 31, 2024, the Company sold 1,766,835 shares of its common stock under the Sales Agreement for aggregate net proceeds of $22.4 million, after deducting commissions and offering expenses payable by the Company. As of March 31, 2024, the Company sold 4,547,688 shares of its common stock under the Sales Agreement for aggregate net proceeds of $86.0 million, after deducting commissions and offering expenses payable by the Company.

In July 2023, in connection with the execution of the Lilly Agreement, the Company and Lilly also entered into the Lilly Stock Purchase Agreement, pursuant to which the Company sold 1,552,795 shares of common stock to Lilly at a price of $19.32 per share, for an aggregate purchase price of $30.0 million.

In December 2023, the Company completed a follow-on public offering of common stock, pursuant to which the Company issued and sold 14,375,000 shares of its common stock, including 1,875,000 shares of its common stock sold pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $10.00 per share. The Company received net proceeds of approximately $134.7 million after deducting underwriting discounts and offering expenses of approximately $9.0 million.

In December 2023, the Company also completed a private placement pursuant to a stock purchase agreement with Lilly for the sale and issuance of 2,296,317 shares of common stock at a purchase price of $10.00 per share for an aggregate purchase price of $23.0 million.

10


 

11. Stock-based compensation

The 2018 Equity Incentive Plan (the “2018 Plan”), adopted by the board of directors in August 2018 provided for the grant of qualified incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units to the Company’s employees, officers, directors, advisors, and outside consultants for the issuance or purchase of shares of the Company’s common stock. The maximum number of shares of common stock that were authorized for issuance under the 2018 Plan was 6,885,653.

In June 2021, the Company's board of directors adopted, and the Company's stockholders approved, the 2021 Stock Incentive Plan (the “2021 Plan”), which became effective on June 16, 2021. The 2021 Plan provides for the grant of incentive stock options and nonstatutory stock options, stock appreciation rights, restricted and unrestricted stock and stock units, performance awards, and other share-based awards to the Company's employees, directors, advisors and outside consultants. The shares reserved for issuance pursuant to the 2021 Plan are subject to an annual increase through January 1, 2031.

On January 1, 2024, 4,098,485 shares of the Company's common stock were added to the amount reserved for issuance under the 2021 Plan. As of March 31, 2024, the Company had reserved 14,242,655 shares of the Company's common stock for issuance of stock options, restricted stock, and restricted stock units, of which 3,731,207 remained available for future grant under the 2021 Plan. Upon effectiveness of the 2021 Plan, the Company ceased granting additional awards under the 2018 Plan.

In February 2024, the board of directors adopted the 2024 Inducement Stock Incentive Plan (the “Inducement Plan”). The Inducement Plan provides for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards to persons who (a) were not previously an employee or director or (b) are commencing employment with the Company following a bona fide period of non-employment, in either case, as an inducement material to such person’s entry into employment with the Company and in accordance with the requirements of the Nasdaq Stock Market Rule 5635(c)(4). As of March 31, 2024, the Company had reserved 4,000,000 shares of the Company’s common stock for issuance of nonstatutory stock options and restricted stock unit awards, of which 3,846,700 remained available for future grant under the Inducement Plan.

Stock-based compensation expense recorded in the Company's condensed consolidated statements of operations and comprehensive loss is as follows:

 

 

 

Three months ended March 31,

 

(in thousands)

 

2024

 

 

2023

 

Research and development

 

$

5,625

 

 

$

4,489

 

General and administrative

 

 

4,716

 

 

 

3,535

 

Total stock-based compensation expense

 

$

10,341

 

 

$

8,024

 

 

Stock options

The following table provides a summary of stock option activity during the three months ended March 31, 2024:

 

 

 

Number of
options

 

 

Weighted
average
exercise
price per
share

 

 

Weighted
average
remaining
contractual
life (in years)

 

 

Aggregate
intrinsic
value
(2)
(in thousands)

 

Outstanding at December 31, 2023

 

 

9,924,878

 

 

$

16.98

 

 

 

 

 

 

 

Granted

 

 

2,639,100

 

 

 

12.76

 

 

 

 

 

 

 

Exercised

 

 

(76,044

)

 

 

3.95

 

 

 

 

 

 

 

Forfeited

 

 

(140,987

)

 

 

22.03

 

 

 

 

 

 

 

Outstanding at March 31, 2024

 

 

12,346,947

 

 

$

16.10

 

 

 

8.1

 

 

$

34,374

 

Exercisable at March 31, 2024

 

 

5,412,030

 

 

$

13.77

 

 

 

6.9

 

 

$

28,776

 

Expected to vest after March 31, 2024(1)

 

 

6,934,917

 

 

$

17.91

 

 

 

9.0

 

 

$

5,598

 

 

(1)
This represents the number of unvested options outstanding as of March 31, 2024 that are expected to vest in the future.
(2)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were in the money as of March 31, 2024.

As of March 31, 2024, there was $82.4 million of unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.8 years.

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Restricted stock units

During the three months ended March 31, 2024, the Company granted 1,179,470 restricted stock units under the 2021 Plan and Inducement Plan. These restricted stock units vest annually over a four-year period.

A summary of the status of and change in unvested restricted stock units as of March 31, 2024 was as follows:

 

 

 

Shares

 

 

Weighted-
average grant
date fair
value per share

 

Unvested restricted stock units as of December 31, 2023

 

 

964,511

 

 

$

19.92

 

Restricted stock units granted

 

 

1,179,470

 

 

$

12.78

 

Restricted stock units vested

 

 

(7,290

)

 

$

32.86

 

Restricted stock units forfeited

 

 

(33,033

)

 

$

19.80

 

Unvested restricted stock units as of March 31, 2024

 

 

2,103,658

 

 

$

15.88

 

 

As of March 31, 2024, there was $28.9 million of unrecognized stock-based compensation expense related to restricted stock units that are expected to vest. These costs are expected to be recognized over a weighted-average remaining vesting period of approximately 3.5 years.

2021 Amended and Restated Employee Stock Purchase Plan

In June 2021, the board of directors adopted, and the Company's stockholders approved, the 2021 Employee Stock Purchase Plan, (the "ESPP"), as amended and restated, which became effective on June 16, 2021. The shares reserved for issuance pursuant to the ESPP are subject to an annual increase through January 1, 2031. On January 1, 2024, 819,697 shares of common stock were added to the amount reserved for sale under the ESPP. As of March 31, 2024, 2,096,889 shares remained available for issuance under the ESPP.

12. Net loss per share

 

The Company’s potential dilutive securities, which include unvested restricted stock units and common stock options, have been excluded from the computation of diluted net loss per share as the effects would be anti-dilutive. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share for the period indicated because including them would have had an anti-dilutive effect:

 

 

 

As of March 31,

 

 

 

2024

 

 

2023

 

Unvested restricted stock units