Vor Biopharma Inc.: Form 10-Q for the period ended Mar 31, 2025

You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section titled “Risk Factors” in our 2024 Annual Report and in other reports we have filed or may file with the SEC, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

Vor Bio is a clinical-stage company harnessing the power of cell and genome engineering to develop potentially transformative therapies in acute myeloid leukemia (“AML”), a devastating disease with few treatment options. AML is the most common type of acute leukemia in adults and one of the deadliest and most aggressive blood cancers, affecting approximately 20,000 newly diagnosed patients each year in the United States.

On May 8, 2025, we announced that we are winding down our clinical and manufacturing operations, including our ongoing clinical trials, and conducting a process to explore strategic alternatives to maximize shareholder value, including, among other alternatives, a potential sale or licensing of our assets, an in-license arrangement, sale of the company, business combination, merger or other strategic action. In conjunction with this strategic process, we also announced a reduction of our workforce by 147 full-time employees, or approximately 95% of our then-current employee base. The reduction of workforce is expected to result in approximately $10.9 million in severance costs and such costs are primarily expected to be incurred in the second quarter of 2025. We estimate we will incur additional costs related to our wind down activities, including but not limited to impairment charges, losses on disposals of assets, contract termination costs and other incremental expenses as a result of the strategic process. The amount of such charges and costs could be material to our results of operations and financial condition. The exact amounts and timing of recognition of such charges and costs is not yet known.

We have incurred significant operating losses since inception, including net losses of $32.5 million for the three months ended March 31, 2025 and $116.9 million for the year ended December 31, 2024. As of March 31, 2025, we had an accumulated deficit of $489.5 million.

As of March 31, 2025, we had cash, cash equivalents and marketable securities of $60.0 million. We do not expect that our cash, cash equivalents and marketable securities at March 31, 2025 will enable us to fund our operations beyond one year from the date that these condensed consolidated financial statements are issued.

Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of our condensed consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, costs, and expenses, and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates, if any, will be reflected in the condensed consolidated financial statements prospectively from the date of change in estimates. There have been no material changes to our critical accounting estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report.

Financial Operations Overview

Revenue

We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products in the near future, if at all. If our development efforts for any product candidates that we may in-license as part of our strategic review process are successful and result in marketing approval, or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such agreements.

Expenses

Research and Development Expenses

Research and development expenses consist primarily of external and internal expenses incurred in connection with our research and development activities, including our drug discovery efforts and the development of our product candidates. External expenses include:

• research and development expenses incurred under agreements with clinical research organizations (“CROs”) and other scientific development services;
• costs of consultants, including their fees and related travel expenses;
• costs related to compliance with quality and regulatory requirements;
• costs of laboratory supplies and acquiring and developing preclinical and clinical trial materials, including expenses associated with our clinical manufacturing organizations (“CMOs”); and
• payments made under third party licensing agreements.

Internal expenses include:

• personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation expenses, for employees involved in research and development activities; and
• facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent, insurance, and other internal operating costs, and internal manufacturing expenses.

We expense research and development costs as incurred. We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated financial statements as prepaid expenses or accrued research and development expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized, even when there is no alternative future use for the research and development. The capitalized amounts are expensed as the related goods are delivered or the services are performed.

A significant portion of our research and development costs have been external costs, which we track by program.

Research and development activities have been central to our business model, prior to our decision to wind down clinical and manufacturing operations in May 2025. We generally expect that our research and development expenses will decrease significantly as we wind down these operations. We may also incur other charges or cash expenditures due to events that may occur as a result of, or associated with, our wind down of clinical and manufacturing operations and review of strategic alternatives. The exact amounts of the charges and costs that we expect to incur, and the timing thereof, are currently unknown and such costs and charges could be material to our results of operation and financial condition.

The successful development of our product candidates or any product candidates that we may in-license as part of our strategic review in the future is highly uncertain. Therefore, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development and commercialization of any of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of our product candidates, if approved. This is due to the numerous risks and uncertainties associated with developing product candidates, many of which are outside of our control, including the uncertainty of successfully completing clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; the timing, receipt and terms of any regulatory approvals from applicable regulatory authorities; establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; government regulation and regulatory guidance; obtaining, maintaining, defending and enforcing intellectual property rights; launching commercial sales of product candidates, if approved; and the availability of funding sufficient for foreseeable and unforeseeable operating expenses and capital expenditure requirements. Any changes in the outcome of any of these variables could mean a significant change in the costs and timing associated with the development of our product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related costs, including salaries, bonuses, benefits and stock-based compensation expenses for employees involved in our executive, finance, corporate, business development and administrative functions, as well as expenses for outside professional services, including legal, audit, accounting and tax-related services and other consulting fees, facility-related expenses, which include depreciation costs and other allocated expenses for rent and maintenance of facilities, insurance costs, recruiting costs, travel expenses and other general administrative expenses.

We generally expect that our general and administrative expenses will decrease significantly as we wind down our clinical and manufacturing operations, including through the implementation of our workforce reduction in May 2025. However, we may also incur other charges or cash expenditures due to events that may occur as a result of, or associated with, our wind down of clinical and manufacturing operations and review of strategic alternatives. The exact amounts of the charges and costs that we expect to incur, and the timing thereof, are currently unknown and such costs and charges could be material to our results of operation and financial condition.

Other Income

Interest Income

Interest income consists of interest income earned on our cash, cash equivalents, restricted cash equivalents and marketable securities held in financial institutions.

Results of Operations

Comparison of Three Months Ended March 31, 2025 and 2024

The following table summarizes our results of operations for the periods indicated (amounts in thousands):

Research and Development Expenses

The following table summarizes our research and development expenses incurred for the periods indicated (amounts in thousands):

Research and development expenses were $26.7 million for the three months ended March 31, 2025, compared to $24.3 million for the three months ended March 31, 2024. The increase of $2.4 million was primarily due to an increase in clinical trial costs to support our trem-cel and VCAR33 programs as well as an increase in lab supplies and consumables.

General and Administrative Expenses

General and administrative expenses were $6.6 million for the three months ended March 31, 2025, compared to $8.0 million for the three months ended March 31, 2024. The decrease of $1.4 million was primarily due to a decrease in stock-based compensation expense and personnel costs.

Other Income

Other income decreased by $0.7 million during the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease in other income was due to decreases in interest earned from our cash, cash equivalents, restricted cash equivalents and marketable securities as we held lower balances of cash, cash equivalents and marketable securities during the 2025 period.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have not recognized any revenue and have incurred operating losses and negative cash flows from our operations. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all. We have funded our operations primarily through the sale of equity securities and have received aggregate net proceeds from financing transactions of approximately $517.1 million as of March 31, 2025.

On March 20, 2025, we filed a universal shelf registration statement (the “Shelf Registration Statement”), to provide for aggregate offerings of up to $350.0 million of common stock, preferred stock, debt securities, warrants or any combination thereof. As of March 31, 2025, $350.0 million remains available under this Shelf Registration Statement, including $119.7 million reserved for at-the market offerings discussed below.

However, as of the date of filing our Shelf Registration Statement, our public float was less than $75 million. As a result, we are subject to the limitations of General Instruction I.B.6 to Form S-3 until such time as our public float exceeds $75 million, which means we only have the capacity to sell shares up to one-third of our public float under shelf registration statements in any twelve-month period. We will remain constrained by the limitations of General Instruction I.B.6 to Form S-3 until such time as our public float exceeds $75 million, at which time the number of securities we may sell under a Form S-3 registration statement will no longer be constrained by the limitations of General Instruction I.B.6 to Form S-3.

At-the-Market Sales Agreement

In December 2022, we entered into a Sales Agreement with Stifel, Nicolaus & Company, Incorporated (“Stifel”) as the agent (the "Stifel ATM Facility"). Pursuant to the Stifel ATM Facility, we may offer and sell shares of common stock with an aggregate value of up to $125.0 million, subject to our filing a prospectus supplement to the base prospectus included in our Shelf Registration Statement covering the offer and sale of shares of our common stock pursuant to the Stifel ATM Facility and subject to the limitations of General Instruction I.B.6 of Form S-3. We will pay Stifel a commission of up to 3.0% of the gross proceeds of any common stock sold through Stifel. We did not sell any shares of our common stock under the Stifel ATM Facility during the three months ended March 31, 2025. As of March 31, 2025, $119.7 million remained available to be sold under the Stifel ATM Facility.

Cash Requirements

As of March 31, 2025, we had cash, cash equivalents and marketable securities of $60.0 million. Depending on the outcome of our strategic review process, we may need to raise substantial additional capital to fund our future operations. However, we cannot guarantee that we will be able to obtain sufficient additional funding or that if we do obtain additional funding, that such funding will be obtainable on terms satisfactory to us.

Based on our current business plan and current capital resources, management has concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of 12 months from the date of issuance of the accompanying condensed consolidated financial statements. The accompanying financial statements have been prepared on a going concern basis and do not include any adjustments to the carrying amounts and classification of assets and liabilities that may be necessary if we were unable to continue as a going concern.

We expect our expenses to decrease substantially in connection with the wind down of our clinical and manufacturing operations. However, we may incur substantial additional expenses and other charges as we conduct our strategic alternatives review and evaluate and seek to consummate strategic transactions to maximize shareholder value.

If we are successful in consummating a strategic transaction that enables us to continue to develop our current or new product candidates, we will require substantial additional funding to expand our operations, hire additional personnel, initiate and successfully complete preclinical studies and clinical trials, obtain marketing approval and generate revenue from sales of our product candidates, if approved, and protect our intellectual property. We would expect to finance our operations through the public or private sale of our equity, government or private party grants, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. Because of the uncertain outcome of our strategic review process and the numerous risks and uncertainties associated with product development, we cannot predict the timing or amount of our future expenses, and there is no assurance that we will ever be profitable or generate positive cash flow from operating activities.

If, for any reason, we utilize our capital resources more quickly than anticipated or are unable to obtain additional funding on a timely basis and/or complete a strategic transaction, we may be required to further revise our business plan and strategy or cease operations. This may limit the strategic options available to us. As a result, our business, financial condition, and results of operations could be materially affected.

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.

Cash Flows

The following table provides information regarding our cash flows for the periods presented (in thousands):

Operating Activities

Net cash used in operating activities was $31.1 million for the three months ended March 31, 2025, reflecting a net loss of $32.5 million and net cash used of $2.6 million for operating assets and liabilities, which were partially offset by non-cash charges of $4.1 million. The non-cash charges primarily consisted of stock-based compensation expense of $1.9 million, non-cash lease expense of $1.3 million and depreciation expense of $0.8 million.

Net cash used in operating activities was $30.5 million for the three months ended March 31, 2024, reflecting a net loss of $30.8 million and net cash used of $4.1 million for operating assets and liabilities, which were partially offset by non-cash charges of $4.5 million. The non-cash charges primarily consisted of stock-based compensation expense of $3.1 million, non-cash lease expense of $1.2 million and depreciation expense of $0.9 million, partially offset by $0.8 million of non-cash interest earned on marketable securities.

The $0.6 million increase in net cash used in operating activities for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily due to an increase in research and development expenses and decrease in stock-based compensation, partially offset by differences in the timing of payments for costs incurred during each respective period.

Investing Activities

Net cash used in investing activities was $0.2 million for the three months ended March 31, 2025, which consisted primarily of purchases of $0.2 million of property and equipment. Net cash provided by investing activities was $44.0 million for the three months ended March 31, 2024, which consisted of proceeds of $54.0 million from the maturity of marketable securities, partially offset by purchases of $9.9 million of marketable securities and $0.1 million of property and equipment.

Financing Activities

Net cash used in financing activities was $0.6 million for the three months ended March 31, 2025, which consisted of $0.5 million of issuance costs related to the December 2024 private placement and $0.1 million of taxes paid related to net share settlement of equity awards. Net cash provided by financing activities was $0.1 million for the three months ended March 31, 2024, which consisted of proceeds from the issuance of common stock under the Stifel ATM Facility of $0.3 million, partially offset by $0.2 million of taxes paid related to net share settlement of equity awards.

Contractual Obligations and Other Commitments

Contractual obligations relate to future minimum lease payments for existing non-cancellable leases primarily relating to corporate office and laboratory real estate, with terms expiring through February 2030. During the three months ended March 31, 2025, there were no significant changes in contractual obligations and commitments from that described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Other Commitments” in our 2024 Annual Report.

Other commitments include license and collaboration agreements we have entered into with certain parties. Such arrangements require ongoing payments, including payments upon the achievement of certain development, regulatory and commercial milestones, receipt of sublicense income, as well as royalties on commercial sales. Payments under these arrangements are expensed as incurred.

We also have agreements with certain vendors for various services, including services related to clinical operations and support, which we are not contractually able to terminate for convenience and avoid any and all future obligations to the vendors. Under such agreements, we are contractually obligated to make certain payments to vendors to reimburse them for their unrecoverable outlays incurred prior to cancellation. The exact amounts of such obligations are dependent on the timing of termination and the exact terms of the relevant agreement and cannot be reasonably estimated. We do not include these payments in this summary as they are not fixed and estimable.

As discussed within Note 13, Subsequent Events, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, on May 5, 2025, the Company’s board of directors approved the wind down of our clinical and manufacturing operations. As a result, our existing contractual obligations and commitments may be renegotiated, amended or altered as we wind down operations and explore strategic alternatives to maximize shareholder value. The estimated impact of such activities was described within our Current Report on Form 8-K filed on May 8, 2025.

Recent Accounting Pronouncements

There are no new significant recent accounting pronouncements which may materially impact our financial statements.

We are a smaller reporting company as defined by Item 10 of Regulation S-K and are not required to provide the information otherwise required under this item.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief 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. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (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 the 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. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our 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 March 31, 2025, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures as of such date were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

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 March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. Except as set forth below, there have been no material changes to the risk factors disclosed in “Part I. Item 1A. Risk Factors” in our 2024 Annual Report.

If we fail to satisfy all applicable requirements of Nasdaq and it determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock and the market price of our common stock could decrease.

To maintain the listing of our common stock on Nasdaq, we are required to meet certain listing requirements, including a minimum closing bid price of $1.00 per share. On April 22, 2025, we received notice from Nasdaq that we are no longer in compliance with Nasdaq’s Listing Rule 5450(a)(1) because the closing bid price of our common stock had fallen below $1.00 per share for 30 consecutive days. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have an initial period of 180 calendar days, or until October 20, 2025 (the “Compliance Date”), to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for a minimum of 10 consecutive business days before the Compliance Date.

If our common stock does not achieve compliance by the Compliance Date, we may be eligible for an additional 180-day period to regain compliance if we apply to transfer the listing of our common stock to the Nasdaq Capital Market. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards, with the exception of the bid price requirement, and provide written notice to Nasdaq of our intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

There can be no assurance that we will maintain compliance with the requirements for listing our common stock on Nasdaq. If we are unable to satisfy the Nasdaq criteria for continued listing, our common stock would be subject to delisting. A delisting of our common stock could negatively impact us by, among other things, (i) reducing the liquidity and market price of our common stock; (ii) reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; (iii) decreasing the amount of news and analyst coverage of us; (iv) limiting our ability to issue additional securities or obtain additional financing in the future; (v) limiting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets; and (vi) impairing our ability to provide equity incentives to our employees. In addition, delisting from Nasdaq may negatively impact our reputation and, consequently, our business.

Our strategic review and workforce reduction may not achieve our intended outcomes.

In May 2025, we announced the initiation of a process to explore a range of strategic alternatives aimed at maximizing both near- and long-term shareholder value, which could include, among other alternatives, a potential sale or licensing of assets, a sale of the Company, a business combination, a merger or other strategic action. We expect to devote substantial time and resources to exploring strategic alternatives we believe may drive shareholder value. Despite devoting significant efforts to identify and evaluate potential strategic alternatives, there can be no assurance that this strategic review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all. We have not set a timetable for completion of this strategic review process, and our Board of Directors has not approved a definitive course of action beyond the wind-down of our clinical and manufacturing operations and the exploration of strategic alternatives. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions will be pursued, successfully consummated or lead to increased shareholder value.

In connection with the strategic review, we also implemented certain actions to reduce operational and workforce expenses that are no longer deemed core to our ongoing operations in order to extend our capital resources, including the wind down of our clinical and manufacturing operations. We may experience unforeseen delays or other challenges in implementing these changes, which could adversely impact our timelines and operations and, ultimately, our ability to develop product candidates for potential commercialization. The workforce reduction may result in unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond the intended number of employees, decreased morale among our remaining employees, and the risk that we may not achieve the anticipated benefits of the reduction in force. Furthermore, we may undertake further similar cost-saving initiatives in the future, which may include additional restructuring or workforce reductions. These types of cost-reduction activities can be complex and result in unintended consequences and costs, which could adversely impact our business. In addition, we estimate we will incur additional costs related to our wind down activities, including but not limited to impairment charges, losses on disposals of assets, contract termination costs and other incremental expenses as a result of the strategic process. The amount of such charges and costs could be material to our results of operations and financial condition. The exact amounts and timing of recognition of such charges and costs is not yet known.