# Beam Therapeutics Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Beam Therapeutics Inc.](/companies/beam.md) (CIK 1745999)
- Form: 10-Q
- Filed: 2023-11-08
- Accepted by EDGAR: Nov 8, 2023, 07:30 ET
- Period: 2023-09-30
- Accession: 0000950170-23-060683
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1745999/000095017023060683/beam-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1745999/000095017023060683/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $17.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $61.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $100.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-01-01 to 2023-09-30 | $297.3m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$108.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$309.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$96.1m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$275.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$1.22 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | −$3.63 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$1.22 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$3.63 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 79,024,647 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 75,902,612 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$284.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $30.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-30 | $169.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $1.04bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $1.29bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $220.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $511.6m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $778.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 74,932 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve important risks, uncertainties and assumptions. Some of the numbers included herein have been rounded for the convenience of presentation. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed in “Risk Factors” in Part II, Item 1A. and elsewhere in this Quarterly Report on Form 10-Q, and in the “Risk Factors Summary” and Part I “Item 1A. Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, or the 2022 Form 10-K.*

### Overview

We are a biotechnology company committed to establishing the leading, fully integrated platform for precision genetic medicines. Our vision is to provide life-long cures to patients suffering from serious diseases. To achieve this vision, we have assembled a platform that includes a suite of gene editing and delivery technologies and are establishing internal manufacturing capabilities. Our suite of gene editing technologies is anchored by our proprietary base editing technology, which potentially enables a differentiated class of precision genetic medicines that target a single base in the genome without making a double-stranded break in the DNA.

We are advancing our base editing technology across three disease-area portfolios: hematology, immunology/oncology and genetic diseases. We are also pursuing a suite of both clinically validated and novel delivery modalities, depending on tissue type, including both *ex vivo* approaches in our hematology and immunology-oncology portfolios as well as *in vivo* approaches across our programs. In connection with the portfolio prioritization and strategic restructuring we announced in October 2023, our near-term research and platform investments are focused on specific applications leveraging our *in vivo* editing capabilities in the liver targeting both rare genetic and common disorders, as well as select opportunities in hematology and immunology/oncology.

The elegance of the base editing approach combined with a tissue specific delivery modality provides the basis for a targeted efficient, precise, and highly versatile gene editing system, capable of gene correction, gene modification, gene silencing or gene activation, and/or multiplex editing of several genes simultaneously. We are currently advancing a broad, diversified portfolio of base editing programs against distinct editing targets, utilizing the full range of our development capabilities. Furthermore, in addition to our portfolio, we are also pursuing an innovative, platform-based business model with the goal of further expanding our access to new technologies in genetic medicine and increasing the reach of our programs to more patients. Overall, we are seeking to build the leading integrated platform for precision genetic medicine, which may have broad therapeutic applicability and the potential to transform the field of precision genetic medicines.

### Hematology: Ex Vivo HSCs

Aligned with our portfolio prioritization and strategic restructuring, we intend to prioritize development of our *ex vivo* and *in vivo* sickle cell disease programs, including BEAM-101, our Engineered Stem Cell Antibody Paired Evasion, or ESCAPE, improved conditioning strategy, and *in vivo* delivery to hematopoietic stem cells program. We are advancing hematology base editing programs in which hematopoietic stem cells, or HSCs, are collected from a patient, edited using electroporation, a clinically validated technology for the delivery of therapeutic constructs into harvested cells, and then infused back into the patient following a myeloablative conditioning regimen, such as treatment with busulfan, the standard of care in HSC transplantation today. Once reinfused, the HSCs begin repopulating a portion of the bone marrow in a process known as engraftment. The engrafted, edited HSCs give rise to progenitor cell types with the corrected gene sequences. We plan to deploy this *ex vivo* approach in our BEAM-101 (sickle cell disease and beta thalassemia) and ESCAPE base editing programs.

We are pursuing a long-term, staged development strategy for our base editing approach to treat hematological diseases that consists of advancing our *ex vivo* program, BEAM-101, in Wave 1, improving patient conditioning regimens in Wave 2, and enabling *in vivo* base editing with delivery directly into HSCs of patients via lipid nanoparticles, or LNPs, in Wave 3. We believe this suite of technologies – base editing, improved conditioning and *in vivo* delivery for editing HSCs – can maximize the potential applicability of our sickle cell disease programs to patients as well as create a platform for the treatment of many other severe genetic blood disorders.

### Wave 1: Ex Vivo Base Editing via Autologous Transplant with BEAM-101

We are using base editing to pursue the development of BEAM-101 for the treatment of sickle cell disease and beta-thalassemia.

#### BEAM-101: Recreating naturally-occurring protective mutations to activate fetal hemoglobin

BEAM-101 is a patient-specific, autologous HSC investigational therapy designed to offer a potentially best-in-class profile, incorporating base edits that are intended to mimic single nucleotide polymorphisms seen in individuals with HPFH. BEAM-101 aims to alleviate the effects of sickle cell disease or beta-thalassemia by increasing fetal hemoglobin, which is expected to increase functional hemoglobin production and, in the case of sickle cell disease, inhibit hemoglobin S polymerization. We are continuing to consent patients in our Phase 1/2 clinical trial designed to assess the safety and efficacy of BEAM-101 for the treatment of sickle cell disease, which we refer to as our BEACON trial. The initial patients are moving in parallel through the screening, transfusion and mobilization activities required to enable treatment with BEAM-101. Under the trial protocol, treatment with BEAM-101 (in which the edited cell product is delivered in a bone marrow transplant) will occur on a sequential basis for a sentinel cohort of three patients, and then will be delivered in parallel for all subsequent patients. We anticipate that currently consented patients are sufficient to both fill the sentinel cohort and to initiate the expansion cohort of the trial. We will continue adding additional patients to the BEACON trial through the end of year and beyond, with a total target of 45 treated patients. The clinical trial is designed to initially include patients ages 18 to 35 with severe sickle cell disease who have received prior treatment with at least one disease-modifying agent with inadequate response or intolerance. Following mobilization, conditioning and treatment with BEAM-101, patients will be assessed for safety and tolerability, with safety endpoints including neutrophil and platelet engraftment. Patients will also be assessed for efficacy, with efficacy endpoints including the change from baseline in severe vaso-occlusive events, transfusion requirements, hemoglobin F levels, and quality of life assessments. We expect to dose the first clinical trial patient with BEAM-101 by the end of 2023 and plan to report data from multiple patients from the BEACON trial in 2024.

### Wave 2: Improved Conditioning

In parallel with Wave 1 development, we also aim to improve the transplant conditioning regimen for sickle cell disease patients undergoing HSC transplantation, or HSCT, reducing toxicity challenges associated with HSCT standard of care. Conditioning is a critical component necessary to prepare a patient’s body to receive the *ex vivo* edited cells that must engraft in the patient’s bone marrow in order to be effective. However, today’s conditioning regimens rely on nonspecific chemotherapy or radiation, which are associated with significant toxicities. As a potential alternative to genotoxic conditioning regimens in HSCT, we are advancing our ESCAPE program. ESCAPE conditioning regimens could potentially be paired with BEAM-101 or BEAM-102, an alternative base editing approach for sickle cell disease, which is designed to directly correct the causative sickle mutation at position 6 of the beta globin gene by creating the naturally occurring HbG or “Makassar” variant of hemoglobin, as well as other base editing programs in hematology.

#### ESCAPE: Improved Conditioning for HSCT in sickle cell disease

ESCAPE aims to avoid toxicity challenges associated with currently available conditioning regimens for patients with sickle cell disease and beta-thalassemia ahead of autologous HSCT. ESCAPE may also have applications in other diseases of the blood and immune system where HSCT could deliver potential benefits but has been limited by toxicities associated with current standard of care conditioning regimens. In December 2022, we presented preclinical data at the 2022 American Society of Hematology Annual Meeting and Exposition, or ASH, on our ESCAPE-1 and ESCAPE-2 programs. ESCAPE-1 consists of multiplex base edited HSCs that include a therapeutic edit for sickle cell disease at the HGB1/2 gene and an additional edit at CD117. ESCAPE-2 consists of multiplex base-edited HSCs that include a therapeutic HbG-Makassar edit and an edit in CD117, which is compatible with the conditioning mAb used in ESCAPE-1. We plan to continue to invest significantly in the advancement of our ESCAPE platform.

### Wave 3: In Vivo Base Editing via HSC-targeted LNPs

We are also exploring the potential for *in vivo* base editing programs for sickle cell disease, in which base editors would be delivered to the patient through an infusion of LNPs targeted to HSCs, eliminating the need for transplantation altogether. This approach could provide a more accessible option for patients, particularly in regions where *ex vivo* treatment is challenging.

### Genetic Diseases: In vivo LNPs

LNPs are a clinically validated technology for delivery of nucleic acid payloads to the liver. LNPs are multi-component particles that encapsulate the base editor mRNA and one or more guides and protect them from degradation while in an external environment, enabling the transient delivery of the base editor *in vivo*. Multiple third-party clinical trials have demonstrated the effective delivery of silencing RNA to the liver using LNPs. Because only one dose of a base editing therapy may be needed in a course of treatment, LNPs are a suitable delivery modality that we believe is unlikely to face the complications seen with chronic use of LNPs, such as those observed when delivering oligonucleotides or mRNA for gene therapy. All of the components of the LNP, as well as the mRNA encoding the base editor, are well-defined and can be manufactured synthetically, providing the opportunity for scalable manufacturing. We are currently using LNPs to advance our programs for genetic liver diseases, including alpha-1 antitrypsin deficiency, or AATD, glycogen storage disease 1a, or GSDIa, and Hepatitis B Virus, or HBV, infection. We are also advancing certain additional *in vivo* liver editing programs through lead optimization.

### BEAM-302: In Vivo LNP liver-targeting for AATD

As part of our recently announced portfolio prioritization and strategic restructuring, we are also prioritizing our development of BEAM-302, a liver-targeting LNP formulation of base editing reagents designed to offer a one-time treatment to genetically correct the E342K point mutation (PiZZ genotype) responsible for a severe form of AATD. AATD is an inherited genetic disorder that can cause early onset emphysema and liver disease. The most severe form of AATD arises when a patient has a point mutation in both copies of the SERPINA1 gene at amino acid 342 position (E342K, also known as the PiZ mutation or the “Z” allele). This point mutation causes Alpha-1 antitrypsin, or AAT, to misfold, accumulating inside liver cells rather than being secreted, resulting in very low levels (10%-15%) of circulating AAT. As a consequence, the lung is left unprotected from neutrophil elastase, resulting in progressive, destructive changes in the lung, such as emphysema, which can result in the need for lung transplants. The mutant AAT protein also accumulates in the liver, causing liver inflammation and cirrhosis, which can ultimately cause liver failure or cancer requiring patients to undergo a liver transplant. It is estimated that approximately 60,000 individuals in the United States have two copies of the Z allele. There are currently no curative treatments for patients with AATD.

With the high efficiency and precision of our base editors, we aim to utilize our ABEs to enable the programmable conversion of A-to-T and G-to-C base pairs and precisely correct the E342K point mutation back to the wild type sequence. In 2020, we showed the ability to directly correct the mutation causing AATD, providing both *in vitro* and *in vivo* preclinical proof-of-concept for base editing to correct this disease.

In November 2022, we announced BEAM-302 as a development candidate as a treatment for AATD. In September 2023, we reported preclinical data demonstrating the ability of BEAM-302 to increase levels of corrected AAT and reduce mutant PiZ AAT in multiple *in vivo* rodent disease models. In the first quarter of 2024, we plan to submit a regulatory application for BEAM-302 for authorization to initiate clinical trials outside of the U.S. for the program.

### BEAM-301: In Vivo LNP liver-targeting for GSDIa

BEAM-301 is a liver-targeting LNP formulation of base editing reagents designed to correct the R83C mutation, the most prevalent disease-causing mutation for, and the mutation which results in the most severe form of, GSDIa. GSDIa is an autosomal recessive disorder caused by mutations in the G6PC gene that disrupts a key enzyme, G6Pase, critical for maintaining glucose homeostasis. Inhibition of G6Pase activity results in low fasting blood glucose levels that can result in seizures and be fatal. Patients with this mutation typically require ongoing corn starch administration, without which they may enter into hypoglycemic shock within one to three hours. Our approach to treating patients with GSDIa is to apply base editing via LNP delivery to repair the two most prevalent mutations that cause the disease, R83C and Q347X. It is estimated that these two point mutations account for 900 and 500 patients, respectively, in the United States, representing approximately 59% of all GSDIa patients in the United States.

In November 2022, we announced that we had initiated IND-enabling studies for BEAM-301. In October 2023, we presented new preclinical data demonstrating the ability of BEAM-301 to directly correct the R83C mutation. These data showed that a single dose of BEAM-301 restored clinically meaningful endpoints in *in vivo* rodent disease models out to at least one year. In the first half of 2024, we plan to submit an IND application for BEAM-301 for authorization to initiate an initial clinical trial for the program at a select number of sites in the United States.

### Immunology/Oncology: Ex vivo T cell therapies

The starting material for our multiplex-edited allogeneic CAR-T cell products is white blood cells from a healthy donor, which are collected using a standard blood bank procedure known as leukapheresis. Using a single electroporation, we introduce the base editor as mRNA, and the guides encoding the target sequences. The edited cells are subsequently transduced with a lentivirus expressing the CAR. Once the T cells have been engineered, they are expanded and frozen. After the patient is lymphodepleted, the multiplex-edited, allogeneic cell product is infused.

We believe base editing is a powerful tool to simultaneously multiplex edit many genes without the unintended on-target effects that can result from simultaneous editing with nucleases through the creation of double-stranded breaks. The ability to create a large number of multiplex edits in T cells could endow CAR-T cells and other cell therapies with combinations of features that have the potential to dramatically enhance their therapeutic potential in treating hematological or solid tumors. The initial indications that we plan to target with these product candidates are relapsed, refractory T-cell acute lymphoblastic leukemia /T cell lymphoblastic lymphoma, or T-ALL/T-LL, and Acute Myeloid Leukemia, or AML. We believe that our approach has the potential to produce higher response rates and deeper remissions than existing approaches.

### BEAM-201: Universal CD7-targeting CAR-T cells

BEAM-201 is a development candidate comprised of T cells derived from healthy donors that are simultaneously edited at TRAC, CD7, CD52 and PDCD1 and then transduced with a lentivirus encoding for an anti-CD7 chimeric antigen receptor, or CAR, that is designed to create allogeneic CD7 targeting CAR-T cells, resistant to both fratricide and immunosuppression. At the end of June 2022, we submitted an IND to the FDA for BEAM-201 for the treatment of relapsed, refractory T-ALL/T-LL, a severe disease affecting children and adults, and potentially other CD7+ malignancies. In December 2022, we received clearance from the FDA for our IND for BEAM-201. We have initiated a first-in-human Phase 1/2 clinical trial designed to evaluate the safety and efficacy of BEAM-201 in patients with relapsed/refractory T-ALL/T-LL. Multiple clinical trial sites are open for enrollment in the BEAM-201 trial and the first BEAM-201 trial patient was dosed in August 2023. Pursuant to our portfolio prioritization and strategic restructuring initiatives, we now plan to generate a focused clinical dataset for BEAM-201 solely for the treatment of T-ALL and seek potential partnership for this and other potential *ex vivo* CAR-T programs, including our ongoing research into creating next-generation allogeneic cell therapies with multiplex base editing. We expect to present data from the first cohort from the BEAM-201 clinical trial by the end of 2024. Key safety endpoints for the trial include treatment-emergent and treatment-related adverse events, and key efficacy endpoints include proportion of patients with complete or partial responses, proportion eligible for HSC transplant and proportion achieving minimal residual disease negative status. We believe that BEAM-201 is the first quadruple-edited, allogeneic CAR-T cell investigational therapy in clinical-stage development.

### Hepatitis B Virus

HBV causes serious liver infection that can become chronic, increasing the risk of developing life-threatening health issues like cirrhosis, liver failure or liver cancer. Chronic HBV infection is characterized by the persistence of covalently closed circular DNA, or cccDNA, a unique DNA structure that forms in response to HBV infection in the nuclei of liver cells. Additionally, the HBV DNA can integrate into the human genome becoming a source of hepatitis B surface antigen, or HBsAg. While currently available treatments can manage HBV replication, they do not clear cccDNA from the infected liver cells. This inability to prevent HBV infection rebound from cccDNA is a key challenge to curing HBV. In September 2022, we presented preclinical data that demonstrated the potential of our multiplex base editors to reduce viral markers, including HBsAg expression, and prevent viral rebound of HBV in *in vivo* models. In October 2023, consistent with our refocused strategic priorities, we announced our decision to stop development of, and explore partnership opportunities for, our HBV program.

### Stargardt disease

In alignment with our refocused strategic priorities, we have completed our research and are exploring partnership opportunities for our base editing program for Stargardt disease, a progressive macular degeneration disease.

### Manufacturing

To realize the full potential of base editors as a differentiated class of medicines and to enable our parallel investment strategy in multiple delivery modalities, we are building customized and integrated capabilities across discovery, manufacturing, and preclinical and clinical development. Due to the critical importance of high-quality manufacturing and control of production timing and know-how, we have established our own manufacturing facility, which provides us the flexibility to manufacture a variety of different product modalities. We believe this investment will maximize the value of our portfolio and capabilities, the probability of technical success of our programs, and the speed at which we can provide potentially life-long cures to patients.

We have a 100,000 square foot manufacturing facility in Research Triangle Park, North Carolina intended to support a broad range of clinical programs. The facility became operational in the first quarter of 2023, and we initiated cGMP operations in late 2023. The facility is designed to support manufacturing for our *ex vivo* cell therapy programs in hematology and oncology and *in vivo* non-viral delivery programs for liver diseases, with the capability to scale-up to support potential commercial supply. For our initial waves of clinical trials, we expect to use CMOs with relevant manufacturing experience in genetic medicines alongside our internal manufacturing capabilities.

### Collaborations

We believe our collection of base editing, gene editing and delivery technologies has significant potential across a broad array of genetic diseases. To fully realize this potential, we have established and plan to continue to seek out innovative collaborations, licenses, and strategic alliances with pioneering companies and with leading academic and research institutions. Additionally, we have and intend to continue to pursue relationships that potentially allow us to accelerate our preclinical research and development efforts. We believe these relationships will allow us to aggressively pursue our vision of maximizing the potential of base editing to provide life-long cures for patients suffering from serious diseases.

### Pfizer

In December 2021, we entered into a four-year research collaboration agreement with Pfizer Inc., or Pfizer, focused on *in vivo* base editing programs for three targets for rare genetic diseases of the liver, muscle and central nervous system. Under the terms of the agreement, we will conduct all research activities through development candidate selection for three pre-specified, undisclosed targets, which are not included in our existing programs. Pfizer may opt in to exclusive, worldwide licenses to each development candidate, after which it will be responsible for all development activities, as well as potential regulatory approvals and commercialization, for each such development candidate. We have a right to opt in, at the end of Phase 1/2 clinical trials, upon the payment of an option exercise fee, to a global co-development and co-commercialization agreement with respect to one program licensed under the collaboration pursuant to which we and Pfizer would share net profits as well as development and commercialization costs in a 35%/65% ratio (Beam/Pfizer).

### Apellis Pharmaceuticals

In June 2021, we entered into a research collaboration agreement, or the Apellis Agreement, with Apellis Pharmaceuticals, Inc., or Apellis, focused on the use of our base editing technology to discover new treatments for complement system-driven diseases. Under the terms of the Apellis Agreement, we will conduct preclinical research on six base editing programs that target specific genes within the complement system in various organs, including the eye, liver, and brain. Apellis has an exclusive option to license any or all of the six programs and will assume responsibility for subsequent development. We may elect to enter into a 50-50 U.S. co-development and co-commercialization agreement with Apellis with respect to one program licensed under the collaboration.

### Verve Therapeutics

In April 2019, we entered into a collaboration and license agreement, or the Verve Agreement, with Verve Therapeutics, Inc., or Verve, a company focused on gene editing for cardiovascular disease treatments, and in July 2022, we and Verve amended the Verve Agreement. Under the terms of the Verve Agreement, as amended, we granted Verve exclusive worldwide licenses under certain of our editing technologies for human therapeutic applications against a total of three liver-mediated, cardiovascular disease targets, including use of our base editing technology for each of these targets and use of certain of our gene editing technology for two of such targets. In exchange, we received shares of Verve common stock. In October 2023, we entered into a transfer and delegation agreement, or the Transfer Agreement, with Eli Lilly and Company, or Lilly, pursuant to which Lilly acquired certain assets and other rights under the Verve Agreement, including our opt-in rights to co-develop and co-commercialize each of Verve’s base editing programs for cardiovascular disease, which consist of programs targeting PCSK9, ANGPTL3 and an undisclosed liver-mediated, cardiovascular target. In addition, Lilly acquired the right to receive any future milestone or royalty payments payable to us under the Verve Agreement. Under the terms of the Transfer Agreement, we received a $200.0 million payment and are eligible to receive up to $350.0 million in potential future development-stage payments upon the completion of certain clinical, regulatory and alliance events. In October 2023, we also entered into a Stock Purchase Agreement, or the Purchase Agreement, with Lilly providing for the sale and issuance of 2,004,811 shares, or the Shares, of our common stock to Lilly at a price of $24.94 per share, which was equal to a 15% premium to the volume-weighted average share price of our common stock over the 30 trading days prior to the date of the Purchase Agreement, for an aggregate purchase price of approximately $50 million. The Purchase Agreement contains customary representations, warranties and covenants of each party. Pursuant to the terms of the Purchase Agreement, Lilly has agreed not to, and to cause its affiliates not to, sell or transfer any of the Shares for a period of nine months following the date of issuance of the Shares, subject to specified conditions and exceptions.

### Sana Biotechnology

In October 2021, we entered into an option and license agreement, or the Sana Agreement, with Sana Biotechnology, Inc., or Sana, pursuant to which we granted Sana non-exclusive research and development and commercial rights to our CRISPR Cas12b technology to perform nuclease editing for certain *ex vivo* engineered cell therapy programs. Under the terms of the Sana Agreement, licensed products include certain specified allogeneic T cell and stem cell-derived products directed at specified genetic targets, with certain limited rights for Sana to add and substitute such products and targets. The Sana Agreement excludes the grant of any Beam-controlled rights to perform base editing. In January 2023, Sana announced that the FDA has cleared its IND application to initiate a first-in-human study of SC291, its CD19-targeted allogeneic CAR-T cell therapy, in patients with various B-cell malignancies. In connection with this IND clearance, Sana made an immaterial milestone payment to us under the Sana Agreement.

### Orbital Therapeutics

In September 2022, we entered into a license and research collaboration agreement, or the Orbital Agreement, with Orbital, pursuant to which each of us granted the other licenses to certain technology controlled during the three years after entry into the Orbital Agreement that are necessary or reasonably useful for the non-viral delivery or the design or manufacture of RNA for the prevention, treatment or diagnosis of human disease. Our license to Orbital is for all fields other than our exclusive field and also excludes the targets and substantially all of the indications that are the subject of our existing programs. Our exclusive field consists of all products and biologics that function in the process of gene editing or conditioning for use in cell transplantation, or that act in combination with any such products or biologics. Orbital’s license to us is for all fields other than Orbital’s exclusive field. Orbital’s exclusive field consists of products and biologics that function as vaccines and also of therapeutic proteins, other than therapeutic proteins (i) that use gene editing, (ii) for use in conditioning, (iii) for use in regenerative medicine, (iv) for use as a CAR immune therapy, including CAR-T, CAR-NK and CAR-macrophage compositions, (v) for use as a t-cell receptor therapy or (vi) that modulate certain immune responses. The licenses are exclusive in each party’s exclusive field for three years and non-exclusive in those fields thereafter. We and Orbital agreed that for a period of three years after entry into the Orbital Agreement, subject to limited exceptions, we would not research, develop and commercialize, or grant licenses to research, develop and commercialize, products or biologics within the other party’s exclusive field.

### Institute of Molecular and Clinical Ophthalmology Basel

In July 2020, we announced a research collaboration with the Institute of Molecular and Clinical Ophthalmology Basel, or IOB. Founded in 2018 by a consortium that includes Novartis, the University Hospital of Basel and the University of Basel, IOB is a leader in basic and translational research aimed at treating impaired vision and blindness. Clinical scientists at IOB have also helped to develop better ways to measure how vision is impacted by Stargardt disease.

In alignment with our refocused strategic priorities, we are winding down activities under the agreement with IOB, and are exploring partnership opportunities related to Stargardt disease research conducted under the agreement.

### Acquisitions

In February 2021, we acquired Guide for upfront consideration in an aggregate amount of $120.0 million, excluding customary purchase price adjustments, in shares of our common stock, based upon the volume-weighted average price of the common stock over the ten trading-day period ending on February 19, 2021. In addition, Guide’s former stockholders and option holders are eligible to receive up to an additional $100.0 million in technology milestone payments and $220.0 million in product milestone payments, payable in our common stock.

### Critical accounting policies and significant judgments and estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. The preparation of our financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies are those policies which require the most significant judgments and estimates in the preparation of our condensed consolidated financial statements. We have determined that our most critical accounting policies are those relating to stock-based compensation, variable interest entities, fair value measurements, and leases. There have been no significant changes to our existing critical accounting policies and significant judgments and estimates discussed in the 2022 Form 10-K.

### Financial operations overview

### General

We were founded in January 2017 and began operations in July 2017. Since our inception, we have devoted substantially all of our resources to building our base editing platform and advancing development of our portfolio of programs, establishing and protecting our intellectual property, conducting research and development activities, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations. To date, we have financed our operations primarily through the sales of our redeemable convertible preferred stock, proceeds from offerings of our common stock and payments received under collaboration and license agreements.

We are an early-stage company, and all of our programs are at a preclinical or early clinical stage of development. To date, we have not generated any revenue from product sales and do not expect to generate revenue from the sale of products for the foreseeable future. Our revenue to date has been primarily derived from license and collaboration agreements with partners. Since inception we have incurred significant operating losses. Our net losses for the nine months ended September 30, 2023 and 2022 were $275.3 million and $250.7 million, respectively. As of September 30, 2023, we had an accumulated deficit of $1.3 billion. We expect to continue to incur significant expenses and increasing operating losses in connection with ongoing development activities related to our internal programs and collaborations as we continue our preclinical and clinical development of product candidates; advance additional product candidates toward clinical development; operate our cGMP facility in North Carolina; further develop our base editing platform; continue to make investments in delivery technology for our base editors, including the LNP technology we acquired through our acquisition of Guide; conduct research activities as we seek to discover and develop additional product candidates; maintain, expand, enforce, defend and protect our intellectual property portfolio; and continue to hire research and development, clinical, technical operations and commercial personnel. In addition, we expect to continue to incur the costs associated with operating as a public company.

As a result of these anticipated expenditures, we will need to raise additional capital to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We can give no assurance that we will be able to secure such additional sources of capital to support our operations, or, if such capital is available to us, that such additional capital will be sufficient to meet our needs for the short or long term.

### Revenue Recognition

In April 2019, we entered into the Verve Agreement with Verve, a company focused on gene editing for cardiovascular disease treatments. In June 2021, we entered into the Apellis Agreement with Apellis, focused on the use of our base editing technology to discover new treatments for complement system-driven diseases. In October 2021, we entered into the Sana Agreement with Sana, pursuant to which we granted Sana non-exclusive research and development and commercial rights to our CRISPR Cas12b technology to perform nuclease editing for certain *ex vivo* engineered cell therapy programs. In December 2021, we entered into the Pfizer Agreement with Pfizer, focused on *in vivo* base editing programs for three targets for rare genetic diseases of the liver, muscle and central nervous system. In September 2022, we entered into the Orbital Agreement with Orbital, a newly formed entity focused on advancing non-viral delivery and RNA technologies.

We have not generated any revenue to date from product sales and do not expect to do so in the near future. During the nine months ended September 30, 2023 and 2022, we recognized $61.5 million and $40.9 million of license and collaboration revenue, respectively.

### Research and development expenses

Research and development expenses consist of costs incurred in performing research and development activities, which include:

- Expenses incurred in connection with our clinical trials, including contract research organization costs and costs related to study preparation;
- the cost of manufacturing materials for use in our preclinical studies, IND-enabling studies and clinical trials;
- expenses incurred in connection with investments in delivery technology for our base editors, including the LNP technology we acquired through our acquisition of Guide;
- expenses incurred in connection with the discovery and preclinical development of our research programs, including under agreements with third parties, such as consultants, contractors and contract research organizations;
- personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation for employees engaged in research and development functions;
- the cost to obtain licenses to intellectual property, such as those with Harvard University, or Harvard, The Broad Institute, Inc., or Broad Institute, Editas Medicine, Inc., or Editas, and Bio Palette Co., Ltd., or Bio Palette, and related future payments should certain success, development and regulatory milestones be achieved;
- expenses incurred in connection with the building of our base editing platform;
- expenses incurred in connection with regulatory filings;
- laboratory supplies and research materials; and
- facilities, depreciation and other expenses which include direct and allocated expenses.

Our external research and development expenses support our various preclinical and clinical programs. Our internal research and development expenses consist of employee-related expenses, facility-related expenses, and other indirect research and development expenses incurred in support of overall research and development. We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the benefits are consumed.

In the early phases of development, our research and development costs are often devoted to product platform and proof-of-concept preclinical studies that are not necessarily allocable to a specific target.

We expect that our research and development expenses will increase substantially as we advance our programs through their planned preclinical and clinical development.

### General and administrative expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, intellectual property, business development and administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel, and direct and allocated facility related expenses and other operating costs.

We anticipate that our general and administrative expenses will increase in the future to support our increased research and development activities. We also expect to continue to incur costs associated with being a public company and maintaining controls over financial reporting, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC requirements, director and officer insurance costs, and investor and public relations costs.

### Other income and expenses

Other income and expenses consist of the following items:

- *Change in fair value of derivative liabilities* consists primarily of remeasurement gains or losses associated with changes in success payment liabilities associated with our license agreement with Harvard, dated as of June 27, 2017, as amended, or the Harvard License Agreement, and the license agreement with The Broad Institute, as amended, dated as of May 9, 2018, or the Broad License Agreement.
- *Change in fair value of non-controlling equity investments* consists of mark-to-market adjustments related to our investments in corporate equity securities.
- *Change in fair value of contingent consideration liabilities* consists of remeasurement gains or losses associated with changes in the technology and product contingent consideration liabilities related to the acquisition of Guide.
- *Interest and other income (expense)*, consists primarily of interest income, as well as interest expense related to our equipment financings.

### Results of operations

### Comparison of the three months ended September 30, 2023 and 2022

The following table summarizes our results of operations (in thousands):

|  | Three Months Ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| License and collaboration revenue | $17,193 | $15,799 | $1,394 |
| Operating expenses: |  |  |  |
| Research and development | 100,050 | 85,287 | 14,763 |
| General and administrative | 25,410 | 21,815 | 3,595 |
| Total operating expenses | 125,460 | 107,102 | 18,358 |
| Loss from operations | (108,267) | (91,303) | (16,964) |
| Other income (expense): |  |  |  |
| Change in fair value of derivative liabilities | 4,700 | (4,900) | 9,600 |
| Change in fair value of non-controlling equity investments | (11,221) | 10,431 | (21,652) |
| Change in fair value of contingent consideration liabilities | 6,002 | (875) | 6,877 |
| Interest and other income (expense), net | 12,698 | 4,982 | 7,716 |
| Total other income (expense) | 12,179 | 9,638 | 2,541 |
| Net loss before income taxes | (96,088) | (81,665) | (14,423) |
| Provision for income taxes | — | (2,410) | 2,410 |
| Loss from equity method investment | — | (25,500) | 25,500 |
| Net loss | $(96,088) | $(109,575) | $13,487 |

#### License and collaboration revenue

License and collaboration revenue was $17.2 million and $15.8 million for the three months ended September 30, 2023 and 2022, respectively. License and collaboration revenue represents revenue recorded under each of the Pfizer, Apellis, Verve, and Orbital Agreements.

#### Research and development expenses

Research and development expenses were $100.1 million and $85.3 million for the three months ended September 30, 2023 and 2022, respectively. The following table summarizes our research and development expenses for the three months ended September 30, 2023 and 2022 (in thousands):

|  | Three Months Ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| External research and development expenses | $40,329 | $33,227 | $7,102 |
| Employee related expenses | 26,219 | 23,610 | 2,609 |
| Facility and IT related expenses | 17,366 | 14,183 | 3,183 |
| Stock-based compensation expense | 15,230 | 13,860 | 1,370 |
| Other expenses | 906 | 407 | 499 |
| Total research and development expenses | $100,050 | $85,287 | $14,763 |

The increase of $14.8 million was primarily due to the following:

- A $7.1 million increase in external research and development expenses driven by a $10.1 million increase in outsourced services, due primarily to IND-enabling studies for BEAM-302 and BEAM-301, clinical expenses for BEAM-101 and BEAM-201 and manufacturing operations for product and other research materials. Partially offsetting the rise in external research and development expenses is a decrease of $3.0 million in lab supplies partially driven by the initiation of clinical studies for BEAM-201 and the deprioritization of BEAM-102;
- An increase of $2.6 million of employee related expenses and $3.2 million of facility and IT related costs, including depreciation. These increases were due to the growth in the number of research and development employees from 420 at September 30, 2022 to 439 at September 30, 2023, and their related activities, as well as the expense allocated to research and development related to our leased facilities;
- An increase of $1.4 million in stock-based compensation from additional stock options and restricted stock units granted due to the increase in the number of research and development employees and issuance of annual equity awards to existing employees; and
- An increase in other expenses of $0.5 million, due to milestones achieved in connection with the dosing of the first patient in the BEAM-201 clinical trial during the three months ended September 30, 2023.

#### General and administrative expenses

General and administrative expenses were $25.4 million and $21.8 million for the three months ended September 30, 2023 and 2022, respectively. The increase of $3.6 million was primarily due to the following:

- An increase of $2.3 million in stock-based compensation from the issuance of annual equity awards to existing employees; and
- An increase of $2.0 million in personnel and facility related costs due to the increase in general and administrative employees and the expense allocated to general and administrative expenses related to our leased facilities.
- The above increases were partially offset by decreases in other expenses of $0.7 million primarily driven by lower legal and insurance expenses during the three months ended September 30, 2023.

#### Change in fair value of derivative liabilities

During the three months ended September 30, 2023 and 2022, we recorded $4.7 million of other income and $4.9 million of other expense, respectively, related to the change in fair value of success payment liabilities due to changes in the price of our common stock over the related periods. A portion of the success payment obligations were paid in June 2021; the remaining success payment obligations are still outstanding as of September 30, 2023 and will continue to be revalued at each reporting period.

#### Change in fair value of non-controlling equity investments

During the three months ended September 30, 2023 and 2022, we recorded $11.2 million of other expense and $10.4 million of other income, respectively, as a result of changes in the fair value of our investment in Verve and Prime common stock.

#### Change in fair value of contingent consideration liabilities

During the three months ended September 30, 2023 and 2022, we recorded $6.0 million of other income and $0.9 million of other expense, respectively, related to the change in fair value of the Guide technology and product contingent consideration liabilities.

#### Interest and other income (expense), net

Interest and other income (expense), net was $12.7 million and $5.0 million of net income for the three months ended September 30, 2023 and 2022, respectively. The change was primarily due to increases in interest income driven by increased market rates.

#### Provision for income taxes

We did not record any tax provision or benefit for the three months ended September 30, 2023. We recorded an income tax provision of $2.4 million for the three months ended September 30, 2022. The provision was primarily attributable to the recognition of revenue for tax purposes under the collaboration agreements with Apellis and Pfizer, which were deferred in 2021 for tax purposes as well as the requirement under the Tax Cuts and Jobs Act of 2017 for taxpayers to capitalize and amortize research and development expenditures over five or fifteen years.

#### Loss from equity method investment

We record our share of gains or losses from Orbital on a quarterly basis. For the three months ended September 30, 2022, we recorded a loss from equity method investment of $25.5 million in association with a basis difference attributable to Orbital’s in-process research and development with no alternative future use, which was immediately expensed as of the date of this investment. As of September 30, 2022, the investment was written down to zero. There was no gain or loss from equity method investment recognized during the nine months ended September 30, 2023 as the our investment is zero and there is no commitment to fund any losses of Orbital. See Notes 2 and 8 to our condensed consolidated financial statements for more information regarding the equity method of accounting.

### Comparison of the nine months ended September 30, 2023 and 2022

The following table summarizes our results of operations (in thousands):

|  | Nine Months Ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| License and collaboration revenue | $61,517 | $40,883 | $20,634 |
| Operating expenses: |  |  |  |
| Research and development | 297,304 | 225,253 | 72,051 |
| General and administrative | 73,556 | 65,124 | 8,432 |
| Total operating expenses | 370,860 | 290,377 | 80,483 |
| Loss from operations | (309,343) | (249,494) | (59,849) |
| Other income (expense): |  |  |  |
| Change in fair value of derivative liabilities | 9,400 | 20,900 | (11,500) |
| Change in fair value of non-controlling equity investments | (17,870) | (1,378) | (16,492) |
| Change in fair value of contingent consideration liabilities | 7,877 | (543) | 8,420 |
| Interest and other income (expense), net | 34,612 | 7,686 | 26,926 |
| Total other income (expense) | 34,019 | 26,665 | 7,354 |
| Net loss before income taxes | (275,324) | (222,829) | (52,495) |
| Provision for income taxes | — | (2,410) | 2,410 |
| Loss from equity method investment | — | (25,500) | 25,500 |
| Net loss | $(275,324) | $(250,739) | $(24,585) |

#### License and collaboration revenue

License and collaboration revenue was $61.5 million and $40.9 million for the nine months ended September 30, 2023 and 2022, respectively. License and collaboration revenue represents revenue recorded under each of the Pfizer, Apellis, Verve, and Orbital Agreements.

#### Research and development expenses

Research and development expenses were $297.3 million and $225.3 million for the nine months ended September 30, 2023 and 2022, respectively. The following table summarizes our research and development expenses for the nine months ended September 30, 2023 and 2022 (in thousands):

|  | Nine Months Ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| External research and development expenses | $118,048 | $80,004 | $38,044 |
| Employee related expenses | 81,144 | 64,177 | 16,967 |
| Facility and IT related expenses | 50,911 | 38,829 | 12,082 |
| Stock-based compensation expense | 44,973 | 38,581 | 6,392 |
| Other expenses | 2,228 | 3,662 | (1,434) |
| Total research and development expenses | $297,304 | $225,253 | $72,051 |

31

The increase of $72.1 million was primarily due to the following:

- A $38.0 million increase in external research and development expenses driven by a $36.6 million increase in outsourced services, due primarily to manufacturing and clinical expenses for BEAM-101 and BEAM-201, IND-enabling studies and assay development for BEAM-302 and BEAM-301, manufacturing operations and animal studies conducted to further our LNP platform. Also contributing to the rise in external research and development expenses is an increase of $1.4 million in lab supplies due to the growth in research and development employees and continued investment in platform and discovery efforts;
- An increase of $17.0 million of employee related expenses and $12.1 million of facility and IT related costs, including depreciation. These increases were due to the growth in the number of research and development employees from 420 at September 30, 2022 to 439 at September 30, 2023, and their related activities, as well as the expense allocated to research and development related to our leased facilities; and
- An increase of $6.4 million in stock-based compensation from additional stock options and restricted stock units granted due to the increase in the number of research and development employees and issuance of annual equity awards to existing employees.
- The above increases were partially offset by a net decrease in other expenses of $1.4 million, primarily driven by lower sublicense expenses during the nine months ended September 30, 2023 related to our collaborations.

As a result of our portfolio prioritization and strategic restructuring, we expect our research and development expense to remain primarily unchanged over the next twelve months, as increasing costs related to continued and expected clinical-stage development of our lead product candidates are offset by decreases in spend on our preclinical research and development programs.

#### General and administrative expenses

General and administrative expenses were $73.6 million and $65.1 million for the nine months ended September 30, 2023 and 2022, respectively. The increase of $8.4 million was primarily due to the following:

- An increase of $7.8 million in stock-based compensation from the issuance of annual equity awards to existing employees; and
- An increase of $5.5 million in personnel and facility related costs due to the increase in general and administrative employees and the expense allocated to general and administrative expenses related to our leased facilities.
- The above increases were partially offset by a decrease in other expenses of $4.9 million primarily due to lower legal and insurance expense during the nine months ended September 30, 2023.

#### Change in fair value of derivative liabilities

During the nine months ended September 30, 2023 and 2022, we recorded $9.4 million and $20.9 million of other income, respectively, related to the change in fair value of success payment liabilities due to a decrease in the price of our common stock over the related periods. A portion of the success payment obligations were paid in June 2021; the remaining success payment obligations are still outstanding as of September 30, 2023 and will continue to be revalued at each reporting period.

#### Change in fair value of non-controlling equity investments

During the nine months ended September 30, 2023 and 2022, we recorded $17.9 million and $1.4 million of other expense, respectively, as a result of changes in the fair value of our investment in Verve and Prime common stock.

#### Change in fair value of contingent consideration liabilities

During the nine months ended September 30, 2023 and 2022, we recorded $7.9 million of other income and $0.5 million of other expense, respectively, related to the change in fair value of the Guide technology and product contingent consideration liabilities.

#### Interest and other income (expense), net

Interest and other income (expense), net was $34.6 million and $7.7 million of net income for the nine months ended September 30, 2023 and 2022, respectively. The change was primarily due to increases in interest income driven by increased market rates.

#### Provision for income taxes

We did not record any tax provision or benefit for the nine months ended September 30, 2023. We recorded an income tax provision of $2.4 million for the nine months ended September 30, 2022. The provision was primarily attributable to the recognition of revenue for tax purposes under the collaboration agreements with Apellis and Pfizer, which were deferred in 2021 for tax purposes as well as the requirement under the Tax Cuts and Jobs Act of 2017 for taxpayers to capitalize and amortize research and development expenditures over five or fifteen years.

#### Loss from equity method investment

We record our share of gains or losses from Orbital on a quarterly basis. For the three months ended September 30, 2022, we recorded a loss from equity method investment of $25.5 million in association with a basis difference attributable to Orbital’s in-process research and development with no alternative future use, which was immediately expensed as of the date of this investment. As of September 30, 2022, the investment was written down to zero. There was no gain or loss from equity method investment recognized during the nine months ended September 30, 2023 as our investment is zero and there is no commitment to fund any losses of Orbital. See Notes 2 and 8 to our condensed consolidated financial statements for more information regarding the equity method of accounting.

### Liquidity and capital resources

Since our inception in January 2017, we have not generated any revenue from product sales, have generated only limited license and collaboration revenue from our license and collaboration agreements, and have incurred significant operating losses and negative cash flows from our operations. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical and the clinical development of our product candidates.

To date, we have funded our operations primarily through equity offerings.

In April 2021, we filed a universal shelf registration statement on Form S-3 with the SEC, or the 2021 Shelf, to register for sale an indeterminate amount of our common stock, preferred stock, debt securities, warrants and/or units, which we may issue and sell in one or more offerings, which became effective upon filing with the SEC (File No. 333-254946).

In April 2021, we entered into an at the market, or ATM, sales agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, pursuant to which we were entitled to offer and sell, from time to time at prevailing market prices, shares of our common stock having aggregate gross proceeds of up to $300.0 million. We 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. Between April and July 2021, we sold 2,908,009 shares of our common stock under the Sales Agreement at an average price of $103.16 per share for aggregate gross proceeds of $300.0 million, before deducting commissions and offering expenses payable by us.

In July 2021 and May 2023, we and Jefferies entered into amendments to the Sales Agreement to provide for increases in the aggregate offering amount under the Sales Agreement, such that as of May 10, 2023, we may offer and sell shares of common stock having an aggregate offering price of up to an additional $800.0 million. As of September 30, 2023, we have sold 10,860,992 additional shares of our common stock under the amended Sales Agreement at an average price of $51.93 per share for aggregate gross proceeds of $564.0 million, before deducting commissions and offering expenses payable by us.

In June 2021, we entered into the Apellis Agreement, which is focused on the use of certain of our base editing technology to discover new treatments for complement system-driven diseases. Pursuant to the Apellis Agreement, we received an upfront payment of $50.0 million in July 2021 and an additional $25.0 million payment on the one-year anniversary of the effective date of the Apellis Agreement, which was in June 2022.

In December 2021, we entered into the Pfizer Agreement, which is focused on in vivo base editing programs for three targets for rare genetic diseases of the liver, muscle and central nervous system. Under the terms of the Pfizer Agreement, we will conduct all research activities through development candidate selection for three undisclosed targets, which are not included in our existing programs. Pursuant to the Pfizer Agreement, we received an upfront payment of $300.0 million in January 2022.

In October 2023, we entered into the Transfer Agreement with Lilly, pursuant to which Lilly acquired certain assets and other rights under the Verve Agreement. Pursuant to the terms of the Transfer Agreement, we received a $200.0 million payment and are eligible to receive up to $350.0 million in potential future development-stage payments upon the completion of certain clinical, regulatory and alliance events. In October 2023, we and Lilly also entered into the Purchase Agreement, providing for the sale and issuance of the Shares at a price of $24.94 per share, for an aggregate purchase price of approximately $50.0 million.

As of September 30, 2023, we had $1.0 billion in cash, cash equivalents, and marketable securities, which does not include the payments we received from Lilly in connection with the Transfer Agreement and Purchase Agreement.

We are required to make success payments to Harvard and Broad Institute based on increases in the per share fair market value of our common stock. The amounts due may be settled in cash or shares of our common stock, at our discretion. In May 2021, the first success payment measurements occurred and success payments to Harvard and Broad Institute were calculated to be $15.0 million and $15.0 million, respectively. We elected to make each payment in shares of our common stock and issued 174,825 shares to each of Harvard and Broad Institute to settle these liabilities in June 2021. We may additionally owe Harvard and Broad Institute success payments of up to an additional $90.0 million each.

We have not yet commercialized any of our product candidates, and we do not expect to generate revenue from the sale of our product candidates for the foreseeable future. We anticipate that we may need to raise additional capital in order to continue to fund our research and development, including our planned preclinical studies and clinical trials, maintaining and operating a commercial-scale cGMP manufacturing facility, and new product development, as well as to fund our general operations. As necessary, we will seek to raise additional capital through various potential sources, such as equity and debt financings or through corporate collaboration and license agreements. We can give no assurances that we will be able to secure such additional sources of capital to support our operations, or, if such funds are available to us, that such additional financing will be sufficient to meet our needs.

### Cash flows

The following table summarizes our sources and uses of cash (in thousands):

|  | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $(284,268) | $91,718 |
| Net cash provided by (used in) investing activities | (26,259) | (574,775) |
| Net cash provided by (used in) financing activities | 242,735 | 79,578 |
| Net change in cash, cash equivalents and restricted cash | $(67,792) | $(403,479) |

#### Operating activities

Net cash used in operating activities for the nine months ended September 30, 2023 was $284.3 million, consisting of our net loss of $275.3 million, a decrease in deferred revenue of $60.0 million, decreases in accounts payable of $5.8 million, accrued expenses and other liabilities of $2.7 million, increases in prepaid expenses and other current assets of $10.0 million, and a decrease in operating lease liabilities totaling $7.2 million. In addition, we recorded noncash items consisting of amortization of investment premiums of $22.4 million, and decreases in the fair value of derivative liabilities of $9.4 million and the fair value of contingent consideration liabilities of $7.9 million, respectively.

These uses of cash were partially offset by noncash items consisting of stock-based compensation expense of $76.0 million, decreases in the fair value of non-controlling equity investments of $17.9 million, depreciation and amortization expense of $14.7 million and changes in operating lease right-of-use (ROU) assets of $7.1 million.

Net cash provided by operating activities for the nine months ended September 30, 2022 was $91.7 million, consisting primarily of the collection of collaboration receivables of $300.0 million related to the Pfizer Agreement and an increase in operating lease liabilities totaling $13.5 million, as well as noncash items consisting of stock-based compensation expense of $61.8 million, a loss from an equity method investment of $25.5 million, depreciation and amortization expense of $10.2 million, changes in operating lease ROU assets of $6.2 million, a decrease in the fair value of a non-controlling equity investment of $1.4 million, and an increase in the fair value of contingent consideration liabilities of $0.5 million. These sources of cash were partially offset by our net loss of $250.7 million, decreases in accrued expenses and other liabilities of $25.4 million, a decrease in deferred revenue of $15.9 million, net of the $25.0 million First Anniversary Payment collected from Apellis during the nine months ended September 30, 2022, an increase in prepaid expenses and other current assets of $7.2 million, decreases in other long-term liabilities of $2.5 million and accounts payable of $0.5 million, and noncash items including decreases in the fair value of derivative liabilities of $20.9 million, as well as amortization of investment premiums of $4.3 million.

#### Investing activities

For the nine months ended September 30, 2023, cash used in investing activities consisted of purchases of property and equipment of $30.1 million, partially offset by the net maturities of marketable securities of $3.9 million.

For the nine months ended September 30, 2022, cash used in investing activities consisted primarily of the net purchases of marketable securities of $534.1 million, and purchases of property and equipment of $40.7 million.

#### Financing activities

Net cash provided by financing activities for the nine months ended September 30, 2023 consisted of net proceeds from equity offerings of $236.6 million, $5.4 million of proceeds from the exercise of stock options, and $3.0 million of proceeds from the issuance of common stock under our Employee Stock Purchase Plan, offset in part by repayments of equipment financing liabilities of $1.6 million and payment of equity offering costs of $0.6 million.

Net cash provided by financing activities for the nine months ended September 30, 2022 consisted primarily of net proceeds from equity offerings of $76.4 million, $3.1 million of proceeds from the issuance of common stock under our Employee Stock Purchase Plan, and $2.0 million of proceeds from the exercise of stock options, offset in part by repayments of equipment financing liabilities of $1.7 million and equity offering costs of $0.1 million.

### Funding requirements

We expect our operating expenses to remain primarily unchanged over the next twelve months as a result of our portfolio prioritization and strategic restructuring, as we expect increasing costs related to continued and expected clinical-stage development of our lead product candidates to be offset by decreases in spend on our preclinical research and development.

Our future operating expenses depend on a number of factors, including the extent to which we undertake the following activities:

- advance clinical trials of our product candidates;
- continue our research programs and our preclinical development of product candidates from our research programs;
- seek to identify additional research programs and additional product candidates;
- initiate preclinical studies and clinical trials for additional product candidates we identify and develop;
- maintain and operate a commercial-scale cGMP manufacturing facility;
- maintain, expand, enforce, defend, and protect our intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio;
- seek marketing approvals for any of our product candidates that successfully complete clinical trials;
- establish a sales, marketing, and distribution infrastructure to commercialize any medicines for which we may obtain marketing approval;
- further develop our base editing platform;
- continue to hire additional personnel including research and development, clinical and commercial personnel;
- add operational, financial, and management information systems and personnel, including personnel to support our product development; and
- acquire or in-license products, intellectual property, medicines and technologies;

We expect that our cash, cash equivalents and marketable securities at September 30, 2023 will enable us to fund our current and planned operating expenses and capital expenditures for at least the next 12 months from the date of issuance of our accompanying condensed consolidated financial statements. We have based these estimates on assumptions that may prove to be imprecise, and we may exhaust our available capital resources sooner that we currently expect. Because of the numerous risks and uncertainties associated with the development our programs, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.

Our future funding requirements will depend on many factors including:

- the cost of continuing to build our base editing platform;
- the costs of acquiring licenses for the delivery modalities that will be used with our product candidates;
- the scope, progress, results, and costs of discovery, preclinical development, laboratory testing, manufacturing and clinical trials for the product candidates we may develop;
- the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights, and defending intellectual property-related claims;
- the costs, timing, and outcome of regulatory review of the product candidates we develop;
- the costs of future activities, including product sales, medical affairs, marketing, manufacturing, distribution, coverage and reimbursement for any product candidates for which we receive regulatory approval;
- the success of our license agreements and our collaborations;
- our ability to establish and maintain additional collaborations on favorable terms, if at all;
- the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements we are a party to or may become a party to, including our agreement with Guide;
- the payment of success liabilities to Harvard and Broad Institute pursuant to the respective terms of the Harvard License Agreement and the Broad Institute License Agreement, should we choose to pay in cash;
- the extent to which we acquire or in-license products, intellectual property, and technologies;
- the actual savings or benefits we realize from our recent portfolio prioritization and strategic restructuring;
- the costs of obtaining, operating and expanding our manufacturing capacity; and
- the impact on our business of macro-economic conditions, as well as the prevailing level of macro-economic, business, and operational uncertainty, including as a result of geopolitical events or other global or regional events.

A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements. We do not have any committed external source of capital. We have historically relied on equity issuances to fund our capital needs and will likely rely on equity issuances in the future. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

If we raise capital through additional collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates, or we may have to grant licenses on terms that may not be favorable to us. If we are unable to raise additional capital through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or, if approved, future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. We can give no assurance that we will be able to secure such additional sources of funds to support our operations, or, if such funds are available to us, that such additional funding will be sufficient to meet our needs.

### Contractual obligations

We enter into contracts in the normal course of business with contract research organizations and other vendors to assist in the performance of our research and development activities and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts and not included in our calculations of contractual obligations and commitments.

We lease certain assets under noncancelable operating and finance leases. The leases relate primarily to office space and laboratory space in addition to equipment. As of September 30, 2023, aggregate future minimum commitments under these office and laboratory leases and equipment leases are $252.4 million and $0.8 million, respectively, of which $6.3 million will be payable in 2023. These minimum lease payments exclude our share of the facility operating expenses, real-estate taxes and other costs that are reimbursable to the landlord under the leases.

During the nine months ended September 30, 2023, there were no material changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2022 Form 10-K.

## Market risk

As filed, 2,121 characters.

We are exposed to market risk related to changes in interest rates. As of September 30, 2023, we had cash, cash equivalents, and marketable securities of $1.0 billion, which consisted of cash, money market funds, commercial paper and corporate and government securities. Our cash and cash equivalents are primarily maintained in accounts with multiple financial institutions in the United States. At times, we may maintain cash and cash equivalent balances in excess of Federal Deposit Insurance Corporation limits. We do not believe that we are subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments are in short-term marketable securities. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, we believe an immediate 10% change in interest rates would not have a material effect on the fair market value of our investment portfolio. We have the ability to hold our investments until maturity, and therefore, we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a change in market interest rates on our investment portfolio.

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we do contract with vendors that are located outside of the United States and may be subject to fluctuations in foreign currency rates. We may enter into additional contracts with vendors located outside of the United States in the future, which may increase our foreign currency exchange risk.

Inflation generally affects us by increasing our cost of labor and research, manufacturing and development costs. We believe that inflation has not had a material effect on our financial statements included elsewhere in this Quarterly Report on Form 10-Q. However, our operations may be adversely affected by inflation in the future.

## Controls and procedures

As filed, 2,359 characters.

#### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to a company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of September 30, 2023, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level.

#### Changes in Internal Control over Financial Reporting

We continuously seek to improve the efficiency and effectiveness of our internal controls. This results in refinements to processes throughout our company. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 37,575 characters.

*Investing in our common stock involves a high degree of risk. For a detailed discussion of the risks that affect our business. Please refer to the sections titled “Risk Factors Summary” and “Item 1A. Risk Factors” in the 2022 Form 10-K.*

*The risk factors set forth below represent new risk factors or those containing changes to the similarly titled risk factor included in “Item 1.A Risk Factors” of the 2022 Form 10-K.*

***The intellectual property landscape around gene editing technology, including base editing and delivery technology, 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 and development efforts.***

The field of gene editing, especially in the area of base editing technology, is still in its infancy, and no such product candidates have reached the market. Due to the intense research and development that is taking place by several companies, including us and our competitors, in this field and in the field of delivery technology, the intellectual property landscape is evolving and in flux, and it may remain uncertain for the coming years. There may be significant intellectual property related litigation and proceedings relating to our owned and in-licensed, and other third party, intellectual property and proprietary rights in the future.

Our commercial success depends upon our ability and the ability of our collaborators and licensors to develop, manufacture, market, and sell any product candidates that we may develop and use our proprietary technologies without infringing, misappropriating, or otherwise violating the intellectual property and proprietary rights of third parties. The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights as well as administrative proceedings for challenging patents, including interference, derivation, *inter partes* review, post grant review, and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions. We may be subject to and may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our base editing platform technology, delivery platform technology and any product candidates we may develop, including interference proceedings, post-grant review, *inter partes* review, and derivation proceedings before the USPTO and similar proceedings in foreign jurisdictions such as oppositions before the EPO. Numerous U.S. and foreign issued patents and pending patent applications that are owned by third parties exist in the fields in which we are developing our product candidates and they may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit.

As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our base editing platform technology, delivery platform technology and product candidates may give rise to claims of infringement of the patent rights of others. Moreover, it is not always clear to industry participants, including us, which patents cover various types of therapies, products or their methods of use or manufacture. We are aware of certain third-party patents and patent applications that, if issued, may be construed to cover our base editing technology, delivery technology and product candidates. There may also be third-party patents of which we are currently unaware with claims to technologies, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents.

Numerous third-party U.S. and foreign issued patents and pending patent applications exist in the fields in which we are developing product candidates. Our product candidates make use of CRISPR-based technology, which is a field that is highly active for patent filings. The extensive patent filings related to CRISPR and Cas make it difficult for us to assess the full extent of relevant patents and pending applications that may cover our base editing platform technology and product candidates and their use or manufacture. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our base editing platform technology and product candidates. For example, we are aware of a patent portfolio that is co-owned by the University of California, University of Vienna and Emmanuelle Charpentier, or the University of California Portfolio, which contains multiple patents and pending applications directed to gene editing. The University of California portfolio includes, for example, U.S. Patent Nos. 10,266,850; 10,227,611; 10,000,772; 10,113,167; 10,301,651; 10,308,961; 10,337,029; 10,351,878; 10,407,697; 10,358,659; 10,358,658; 10,385,360; 10,400,253; 10,421,980; 10,415,061; 10,428,352; 10,443,076; 10,487,341; 10,513,712; 10,519,467; 10,526,619; 10,533,190; 10,550,407; 10,563,227; 10,570,419; 10,577,631; 10,597,680; 10,612,045; 10,626,419; 10,640,791; 10,669,560; 10,676,759; 10,752,920; 10,774,344; 10,793,878; 10,900,054; 10,982,230; 10,982,231; 10,988,780; 10,988,782; 11,001,863; 11,008,589; 11,008,590; 11,028,412; 11,186,849; 11,242,543; 11,274,318; 11,293,034; 11,332,761; 11,401,532,;11,473,108; 11,479,794; 11,549,127; 11,634,730; 11,674,159, which are expected to expire around March 2033, excluding any additional term for patent term adjustment, or PTA, or patent term extension, or PTE, and any disclaimed term for terminal disclaimers. The University of California portfolio also includes numerous additional pending patent applications. If these patent applications issue as patents, they are expected to expire around March 2033, excluding any PTA, PTE, and any disclaimed term for terminal disclaimers. As discussed above, certain applications in the University of California Portfolio are currently subject to U.S. Interference No. 106,115 with certain U.S. patents and one U.S. patent application that are co-owned by the Boston Licensing Parties to which we have an option under the Editas License Agreement. Although we have an option to exclusively license certain patents and patent applications directed to Cas9 and Cas12a from Editas, who in turn has licensed such patents from various academic institutions including Broad Institute, we do not currently have a license to such patents and patent applications. Certain members of the University of California Portfolio are being opposed in Europe by multiple parties. For example, the EPO Opposition Division has initiated opposition proceedings against European Patent Nos. EP2,800,811 B1, and EP3,241,902 B1and EP3,401,400 B1, which are estimated to expire in March 2033 (excluding any patent term adjustments or extensions).

The opposition procedure before the EPO allows one or more third parties to challenge the validity of a granted European patent within nine months after grant date of the European patent. Opposition proceedings may involve issues including, but not limited to, priority, patentability of the claims involved, and procedural formalities related to the filing of the patent application. As a result of the opposition proceedings, the Opposition Division can revoke a patent, maintain the patent as granted, or maintain the patent in an amended form. Most of the claims of European patent EP-2,800,811 B1 were maintained without amendment by the Opposition Division, but this decision is being appealed. In April 2021, the claims of European patent EP3,241,902 B1 were revoked in their entirety, and that decision is not being appealed. In February 2022, the claims of European patent EP3,401,400 B1 were maintained in amended form by the Opposition Division, and this decision is being appealed. If these patents are maintained by the Opposition Division with claims similar to those that are currently opposed, our ability to commercialize our product candidates may be adversely affected if we do not obtain a license to these patents. We may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be nonexclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, we may be unable to commercialize our base editing platform technology or product candidates or such commercialization efforts may be significantly delayed, which could in turn significantly harm our business.

Numerous other patents and patent applications have been filed by other third parties directed to gene editing, guide nucleic acids, PAM sequence variants, split inteins, Cas12b or gene editing in the context of immune therapy or chimeric antigen receptors.

Because of the large number of patents issued and patent applications filed in our field, third parties may allege they have patent rights encompassing our product candidates, technologies or methods. Third parties may assert that we are employing their proprietary technology without authorization and may file patent infringement claims or lawsuit against us, and if we are found to infringe such third-party patents, we may be required to pay damages, cease commercialization of the infringing technology, or obtain a license from such third parties, which may not be available on commercially reasonable terms or at all.

Our ability to commercialize our product candidates in the United States and abroad may be adversely affected if we cannot obtain a license on commercially reasonable terms to relevant third-party patents that cover our product candidates, delivery platform technology or base editing platform technology. Even if we believe third-party intellectual property claims are without merit, there is no assurance that a court would find in our favor on questions of infringement, validity, enforceability, or priority. A court of competent jurisdiction could hold that these third-party patents are valid, enforceable, and infringed, which could materially and adversely affect our ability to commercialize any product candidates we may develop and any other product candidates or technologies covered by the asserted third-party patents. In order to successfully challenge the validity of any such U.S. patent in federal court, we would need to overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. If we are found to infringe a third party’s intellectual property rights, and we are unsuccessful in demonstrating that such patents are invalid or unenforceable, we could be required to obtain a license from such third party to continue developing, manufacturing, and marketing any product candidates we may develop and our technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, we may be unable to commercialize our base editing platform technology, delivery platform technology or product candidates or such commercialization efforts may be significantly delayed, which could in turn significantly harm our business. We also could be forced, including by court order, to cease developing, manufacturing, and commercializing the infringing technology or product candidates. In addition, we could be found liable for significant monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar material adverse effect on our business, financial condition, results of operations, and prospects.

Defense of third-party claims of infringement of misappropriation, or violation of intellectual property rights involves substantial litigation expense and would be a substantial diversion of management and employee time and resources from our business. Some third parties may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations or could otherwise have a material adverse effect on our business, financial condition, results of operations and prospects. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Any of the foregoing events could have a material adverse effect on our business, financial condition, results of operations and prospects.

***We contract with third parties for the manufacture and supply of materials for our research programs, preclinical studies and clinical trial and expect to continue to do so for at least a portion of our future research programs, preclinical studies and clinical trials and for commercialization of any product candidates that we may develop. This reliance on third parties increases the risk that we will not have sufficient quantities of such materials, product candidates, or any medicines that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts.***

We currently rely on third-parties for the manufacture and supply of materials for preclinical studies and clinical trials, and may continue to do so for at least a portion of our future research programs, preclinical studies, clinical testing and for commercial supply of any product candidates that we may develop and for which we or our collaborators obtain marketing approval. We do not have a long-term supply agreement with any of the third-party suppliers, and we purchase our required supply on an order-by-order basis.

While we have built a manufacturing facility designed to support manufacturing for our *ex vivo* cell therapy programs in hematology and oncology and *in vivo* non-viral delivery programs for liver diseases in Research Triangle Park, North Carolina, we cannot be certain that we will be able to maintain cGMP compliance, expand our internal manufacturing capacity, or meet the planned manufacturing needs of our programs.

We may be unable to establish long-term supply agreements with third-party suppliers or to do so on acceptable terms. Even if we are able to establish long-term supply agreements with third-parties, reliance on third-parties entails additional risks, including:

- the possible breach of the manufacturing or supply agreement by the third party;
- the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us;
- reliance on the third party for regulatory compliance, quality assurance, safety, and pharmacovigilance and related reporting; and
- the possible inability of third-party suppliers to supply and/or transport materials, components and products to us in a timely manner as a result of disruptions to the global supply chain in connection with the COVID-19 pandemic or other factors.

Third-party suppliers may not be able to comply with cGMP regulations or other regulatory requirements outside the United States. Our failure, or the failure of third-party suppliers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocations, seizures or recalls of product candidates or medicines, operating restrictions, and criminal prosecutions, any of which could significantly and adversely affect supplies of our medicines and harm our business, financial condition, results of operations, and prospects.

For example, we rely on various CROs to obtain non-human primates, or NHPs, for use in preclinical development work, including for BEAM-301 and BEAM-302. In February 2023, Charles River Laboratories, or Charles River, one of our primary suppliers of NHPs, announced it received a subpoena from the United States Department of Justice with respect to its importation of NHPs from Cambodia. Charles River further announced that it has voluntarily suspended NHP shipments from Cambodia at this time. While we believe we currently have access to a supply of NHPs adequate for conducting our IND-enabling studies for BEAM-301 and BEAM-302, such supply may nevertheless be adversely affected by supply chain limitations. If we are unable to secure adequate supply of NHPs from Charles River or other CROs, or the shortage of NHPs causes the price of NHPs to rise substantially, certain of our preclinical development efforts will be delayed, and the cost of conducting discovery projects and preclinical development activities may substantially increase. Such delays or cost increases could materially adversely affect our discovery and preclinical development activities and our business.

Any medicines that we develop may compete with other product candidates and products for access to manufacturing facilities or supplies. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing drug components and drug product necessary for gene editing. Any performance failure on the part of our existing or future suppliers could delay preclinical or clinical development or marketing approval. We do not currently have arrangements in place for redundant supply of all drug components and drug products necessary for our gene editing product candidates. If any one of our current contract manufacturers or suppliers cannot perform as agreed, we may be required to replace that manufacturer or supplier. Although we believe that there are several potential alternative suppliers to support any product candidates we may develop, we may incur added costs and delays in identifying and qualifying any such replacement.

Our current and anticipated future dependence upon others for the manufacture of any product candidates we may develop may adversely affect our future profit margins and our ability to commercialize any medicines that receive marketing approval on a timely and competitive basis.

***If we experience delays or difficulties in the enrollment or treatment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.***

We or our collaborators may not be able to initiate or continue clinical trials for any product candidates we identify or develop if we are unable to locate, enroll, and treat a sufficient number of eligible patients in these trials as required by the FDA, the EMA or other analogous regulatory authorities outside the United States, or as needed to provide appropriate statistical power for a given trial. Enrollment may be particularly challenging for some of the rare genetically defined diseases we are targeting in our most advanced programs, as well as for some of our product candidates for pediatric populations, due to a number of factors, including small patient populations as well as screening and testing requirements that limit patient eligibility. In addition, if patients are unwilling to participate in our base editing trials because of negative publicity from adverse events related to the biotechnology, gene therapy, or gene editing fields, competitive clinical trials for similar patient populations, clinical trials in competing products, or for other reasons, the timeline for recruiting patients, conducting studies, and obtaining regulatory approval of any product candidates we may develop may be delayed. Moreover, some of our competitors currently and may in the future have ongoing clinical trials for product candidates that treat the same indications as product candidates we are developing and may develop in the future, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates. Treatment of enrolled patients may also be delayed or prevented due to a number of factors, including the complexity of our trials. For example, our BEACON clinical trial requires patients to undergo mobilization procedures to harvest stem cells for editing and transplant. Patients have in the past and may in the future require multiple rounds of mobilization, which would delay treatment. Furthermore, due to the requirement to include sentinel cohorts and staggered treatment protocols in certain of our trials, such as our BEACON trial, any delay in treating one patient may cause delays in treating others.

Clinical trial patient enrollment and treatment is also affected by other factors, including:

- severity of the disease under investigation;
- size of the patient population and process for identifying patients;
- design of the trial protocol;
- availability and efficacy of approved medications for the disease under investigation;
- availability of genetic testing for potential patients;
- ability to obtain and maintain patient informed consent;
- risk that enrolled patients will drop out before completion of the trial;
- eligibility and exclusion criteria for the trial in question;
- perceived risks and benefits of the product candidate under trial;
- perceived risks and benefits of base editing as a therapeutic approach;
- efforts to facilitate timely enrollment in clinical trials;
- patient referral practices of physicians;
- ability to monitor patients adequately during and after treatment; and
- proximity and availability of clinical trial sites for prospective patients, especially for those conditions which have small patient pools.

Our ability to successfully initiate, enroll, and complete a clinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including:

- difficulty in establishing or managing relationships with contract research organizations, or CROs, and physicians;
- different standards for the conduct of clinical trials;
- different standard-of-care for patients with a particular disease;
- difficulty in locating qualified local consultants, physicians, and partners; and
- potential burden of complying with a variety of foreign laws, medical standards, and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatment and of gene editing technologies.

Enrollment or treatment delays in our clinical trials may result in increased development costs for any product candidates we may develop, which would cause the value of our company to decline and limit our ability to obtain additional financing. If we or our collaborators have difficulty enrolling or treating a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit, or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business, financial condition, results of operations, and prospects.

***We will need substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay, reduce, or eliminate our research and product development programs or future commercialization efforts.***

While we have recently taken steps to decrease our operating expenses, particularly with respect to research and development activities, these expenses have increased substantially in the past and may increase again as we expand clinical trials of, and seek marketing approval for, product candidates. In addition, if we obtain marketing approval for any product candidates we may develop, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution to the extent that such sales, marketing, manufacturing, and distribution are not the responsibility of a collaborator. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. We have recently delayed, reduced and eliminated certain research and product development programs to support potential near-term value drivers and long-term growth. If in the future we are unable to raise capital when needed or on attractive terms, we may again be forced to delay, reduce, or eliminate programs or curtail commercialization efforts.

As of September 30, 2023 our cash, cash equivalents, and marketable securities were $1.0 billion. We believe that our existing cash, cash equivalents, and marketable securities will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months. However, our operating plan may change as a result of factors currently unknown to us, and we may need to seek additional funding sooner than planned. Our future capital requirements will depend on many factors, including:

- the cost of continuing to build our platform;
- the costs of acquiring licenses for the delivery modalities that will be used with our product candidates;
- the scope, progress, results, and costs of discovery, preclinical development, laboratory testing, manufacturing, and clinical trials for the product candidates we may develop;
- the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights, and defending intellectual property-related claims;
- the costs, timing, and outcome of regulatory review of the product candidates we may develop;
- the costs of future activities, including product sales, medical affairs, marketing, manufacturing, distribution, coverage and reimbursement for any product candidates for which we receive regulatory approval to commercialize;
- the success of our license agreements and our collaborations;
- our ability to establish and maintain additional license agreements and collaborations on favorable terms, if at all;
- the achievement of milestones or occurrence of other developments that trigger payments under any additional license agreements or collaboration agreements we obtain;
- the extent to which we acquire or in-license products, intellectual property and technologies;
- the costs of operating as a public company; and
- the costs of building, maintaining and expanding our internal manufacturing capacity.

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive, and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, even if we successfully identify and develop product candidates and those product candidates are approved, we may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of medicines that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.

Any additional fundraising efforts may divert the attention of our management from their day-to-day activities, which may adversely affect our ability to develop and, if approved, commercialize our product candidates. We cannot be certain that additional funding will be available to us on acceptable terms, or at all. We have no committed source of additional capital and, if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us on a timely basis, we may have to significantly delay, scale back or discontinue the development or, if approved, commercialization of our product candidates or other research and development initiatives. Our current and any future license agreements and collaboration agreements may also be terminated if we are unable to meet the payment or other obligations under the agreements. We could be required to seek collaborators for product candidates we may develop at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to product candidates we may develop in markets where we otherwise would seek to pursue development or commercialization ourselves.

If we are unable to obtain funding on a timely basis, we may also be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations. Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline.

***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.***

Because we have limited financial, scientific and managerial resources, we focus on research programs and product candidates that we identify for specific indications among many potential options. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable medicines. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing, or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. For example, in October 2023, we implemented a strategic restructuring to prioritize development of our *ex vivo* and *in vivo* sickle cell disease programs, including BEAM-101, our ESCAPE conditioning strategy, and *in vivo* delivery to hematopoietic stem cells program, as well as our *in vivo* base editor BEAM-302 in development for the treatment of alpha-1 antitrypsin deficiency. We also announced plans to explore partnership opportunities for continued development of select programs, including BEAM-201 and other potential *ex vivo* CAR-T therapies. While we may identify new collaboration partners who can progress some of these programs, we may not be successful in doing so in a timely manner, on acceptable terms or at all. We may otherwise fail to raise sufficient additional capital in order to progress these programs ourselves or we may determine, for internal resource allocation purposes or for other reasons, to abandon development of these programs. As a result, we could miss valuable opportunities to capitalize on the potential of the programs. We may also allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a collaboration or that does not prove to have viable commercial opportunities. Any failure to use our financial and human resources efficiently could harm our business and operations.

***If we fail to achieve the cost savings and benefits expected of our portfolio prioritization and strategic restructuring, our business prospects and our financial condition may be adversely affected. Further, the prioritization and restructuring could result in disruptions to our business.***

In October 2023, we announced a portfolio prioritization and strategic restructuring intended to support potential near-term value drivers and long-term growth. The actual savings or benefits from the prioritization and restructuring may be less than expected or substantially less than expected. The restructuring activities may also result in a loss of continuity, accumulated knowledge and inefficiency. In addition, internal prioritization and restructuring can require a significant amount of time and focus from management and other employees, which may divert attention from operations. Further, the prioritization and restructuring may result in unexpected expenses or liabilities and/or write-offs. If the prioritization and restructuring fails to achieve some or all of the expected cost-savings and benefits, our cash resources may not last as long as estimated and our business, results of operations and financial condition could be materially and adversely affected.

***Our future success depends on our ability to retain our Chief Executive Officer, President and other key executives and to attract, retain, and motivate qualified personnel.***

We are highly dependent on John Evans, our Chief Executive Officer, and Dr. Giuseppe Ciaramella, our President, as well as the other principal members of our management and scientific teams. Mr. Evans, Dr. Ciaramella and such other principal members are employed “at will,” meaning we or they may terminate their employment at any time. We do not maintain “key person” insurance for any of our executives or other employees. The loss of the services of any of these persons could impede the achievement of our research, development, and commercialization objectives.

Recruiting and retaining qualified scientific, clinical, manufacturing, and sales and marketing personnel will also be critical to our success. Our recently announced portfolio prioritization and strategic restructuring will result in the loss of personnel with deep institutional or technical knowledge. Further, the transition could potentially disrupt our operations and relationships with employees, suppliers and partners due to added costs, operational inefficiencies, decreased employee morale and productivity and increased turnover. Furthermore, these personnel changes may increase our dependency on the other members of our leadership team and other employees that remain with us, who are not contractually obligated to remain employed with us and may leave at any time. Any such departure could be particularly disruptive and, to the extent we experience additional turnover, competition for top talent is high such that we may be delayed in identifying and hiring candidates that meet our requirements. Our competitors may seek to use these transitions and the related potential disruptions to gain a competitive advantage over us. There is currently a shortage of highly qualified personnel in our industry, which is likely to continue. Additionally, this shortage of highly qualified personnel is particularly acute in the area where we are located.

We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors, including our scientific co-founders, may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. The inability to recruit, or loss of services of certain executives, key employees, consultants, or advisors, may impede the progress of our research, development, and commercialization objectives and have a material adverse effect on our business, financial condition, results of operations, and prospects.

Filed Nov 8, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-060683. Last ingested by Listed: Nov 3, 2026, 08:58 ET. No prices; not investment advice.