UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2023

OR

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

For the transition period from _____ to ______

Commission File Number: 001-40532

GRAPHITE BIO, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	84-4867570
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
611 Gateway Blvd, Suite 120 South San Francisco, CA	94080
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 484-0886

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.00001 per share	GRPH	The Nasdaq Global Market

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

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

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

As of November 9, 2023, the registrant had 57,996,481 shares of common stock, $0.00001 par value per share, outstanding.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”), including its section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Forward-looking statements in this Form 10-Q may include, but are not limited to, statements about:

•our plans and expectations regarding strategic alternatives that could significantly impact our future operations and financial position, and the timing and success of such process;

•the therapeutic potential of any product candidates, and the disease indications for which we intend to develop any product candidates;

•estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for or ability to obtain additional funding before we can expect to generate any revenue from product sales;

•our ability to establish or maintain licenses, collaborations, partnerships or strategic relationships;

•our ability to create and maintain a pipeline of product candidates;

•our ability to advance any product candidate into, and successfully complete clinical trials;

•our ability to obtain and maintain intellectual property protection for our current and future product candidates, the duration of such protection and our ability to operate our business without infringing on the intellectual property rights of others;

•other implementation and effects of the restructuring initiative that we announced in February 2023, our subsequent reductions in force in July and August 2023, and any future restructuring plans that we may pursue;

•our expectations regarding use of our cash, cash equivalents and investments in marketable securities;

•our financial performance;

•our ability to retain and recruit key personnel;

•our competitive position and development of and projections relating to our competitors or our industry;

•the impact of laws and regulations in the United States and foreign countries on various aspects of our operations, including our regulatory and clinical strategy;

•the impact of global economic and market conditions, a continued and prolonged public health emergency such as the COVID-19 pandemic, and wars and armed conflicts, on various aspects of our business, results of operations and financial condition; and

•our expectations regarding the time during which we will be an emerging growth company under the JOBS Act.

In some cases, forward-looking statements can be identified by terminology such as “will,” “may,” “should,” “could,” “expects,” “intends,” “plans,” “aims,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section entitled “Risk Factors” and elsewhere in this Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those expressed or implied by the forward-looking statements. No forward-looking statement is a promise or a guarantee of future performance.

The forward-looking statements in this Form 10-Q represent our views as of the date of this Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Form 10-Q.

This Form 10-Q may include statistical and other industry and market data that we obtained from industry publications and research, surveys, and studies conducted by third parties. Industry publications and third-party research, surveys, and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We have not independently verified the information contained in such sources.

We use various trademarks and trade names in our business, including without limitation our corporate name and logo. All other trademarks or trade names referred to in this Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Form 10-Q may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Balance Sheets	1
	Condensed Statements of Operations and Comprehensive Loss	2
	Condensed Statements of Stockholders’ Equity	3
	Condensed Statements of Cash Flows	5
	Notes to Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II.	OTHER INFORMATION	37
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39
Signatures		40

i

Graphite Bio, Inc.

Condensed Balance Sheets

(in thousands, except share and per share data)

(unaudited)

	September 30,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	182,988		$	47,730
Investments in marketable securities, current		50,998			220,499
Assets held for sale		20			—
Prepaid expenses and other current assets		4,777			7,136
Total current assets		238,783			275,365
Restricted cash		1,716			1,716
Investments in marketable securities, non-current		—			15,322
Property and equipment, net		12,534			22,630
Operating lease right-of-use assets		13,195			5,580
Other assets		—			1,289
Total assets	$	266,228		$	321,902
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,753		$	2,608
Accrued compensation		1,899			3,799
Accrued research costs		30			720
Accrued expenses and other current liabilities		3,416			1,871
Operating lease liabilities, current		3,439			4,045
Total current liabilities		12,537			13,043
Operating lease liabilities, non-current		49,672			1,749
Other long- term liabilities		—			10,819
Total liabilities		62,209			25,611
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.00001 par value, 10,000,000 shares authorized as of September 30, 2023 and December 31, 2022; and no shares issued and outstanding as of September 30, 2023 and December 31, 2022		—			—
Common stock, $0.00001 par value, 300,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 57,971,910 and 58,221,760 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		1			1
Additional paid-in capital		548,249			539,741
Accumulated other comprehensive loss		(95	)		(1,048	)
Accumulated deficit		(344,136	)		(242,403	)
Total stockholders’ equity		204,019			296,291
Total liabilities and stockholders’ equity	$	266,228		$	321,902

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

1

Graphite Bio, Inc.

Condensed Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	2,384		$	18,302		$	32,136		$	54,325
General and administrative		11,294			7,852			26,372			24,563
Restructuring and impairment costs		11,349			—			51,128			—
Total operating expenses		25,027			26,154			109,636			78,888
Loss from operations		(25,027	)		(26,154	)		(109,636	)		(78,888	)
Other income (expense), net:
Interest income, net		2,955			1,472			8,387			2,435
Loss on disposal of assets		—			—			(71	)		—
Other income (expense), net:		(413	)		—			(413	)		—
Total other income, net		2,542			1,472			7,903			2,435
Net loss	$	(22,485	)	$	(24,682	)	$	(101,733	)	$	(76,453	)
Unrealized gain (loss) on investments in marketable securities		176			(563	)		953			(1,596	)
Comprehensive loss	$	(22,309	)	$	(25,245	)	$	(100,780	)	$	(78,049	)
Net loss per share attributable to common stockholders—basic and diluted	$	(0.39	)	$	(0.45	)	$	(1.79	)	$	(1.40	)
Weighted-average shares used in computing net loss per share—basic and diluted		57,257,241			55,206,139			56,748,995			54,591,593

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

2

Graphite Bio, Inc.

Condensed Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

								Accumulated
	Common					Additional		Other						Total
	Stock					Paid-In		Comprehensive			Accumulated			Stockholders’
	Shares			Amount		Capital		Loss			Deficit			Equity
Balance at December 31, 2022		58,221,760		$	1	$	539,741	$	(1,048	)	$	(242,403	)	$	296,291
Vesting of early exercised shares		—			—		25		—			—			25
Repurchase of unvested early exercised shares		(26,942	)		—		—		—			—			—
Stock-based compensation expense		—			—		3,263		—			—			3,263
Unrealized gain on investments in marketable securities		—			—		—		579			—			579
Net loss		—			—		—		—			(23,934	)		(23,934	)
Balance at March 31, 2023		58,194,818		$	1	$	543,029	$	(469	)	$	(266,337	)	$	276,224
Common stock issued upon exercise of options		55,047			—		18		—			—			18
Common stock issued under ESPP		65,222			—		157		—			—			157
Vesting of early exercised shares		—			—		18		—			—			18
Repurchase of founders' shares		(152,694	)		—		—		—			—			—
Repurchase of unvested early exercised shares		(173,120	)		—		—		—			—			—
Stock-based compensation expense		—			—		2,845		—			—			2,845
Unrealized gain on investments in marketable securities		—			—		—		198			—			198
Net loss		—			—		—		—			(55,314	)		(55,314	)
Balance at June 30, 2023		57,989,273		$	1	$	546,067	$	(271	)	$	(321,651	)	$	224,146
Common stock issued upon exercise of options		10,367			—		16		—			—			16
Vesting of early exercised shares		—			—		5		—			—			5
Repurchase of unvested early exercised shares		(27,730	)		—		—		—			—			—
Stock-based compensation expense		—			—		2,161		—			—			2,161
Unrealized gain on investments in marketable securities		—			—		—		176			—			176
Net loss		—			—		—		—			(22,485	)		(22,485	)
Balance at September 30, 2023		57,971,910		$	1	$	548,249	$	(95	)	$	(344,136	)	$	204,019

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

3

Graphite Bio, Inc.

Condensed Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

								Accumulated
	Common					Additional		Other						Total
	Stock					Paid-In		Comprehensive			Accumulated			Stockholders’
	Shares			Amount		Capital		Loss			Deficit			Equity
Balance at December 31, 2021		58,010,823		$	1	$	525,400	$	—		$	(141,351	)	$	384,050
Stock-based compensation expense		—			—		3,342		—			—			3,342
Vesting of early exercised shares		—			—		51		—			—			51
Unrealized loss on investments in marketable securities		—			—		—		(309	)		—			(309	)
Net loss		—			—		—		—			(25,835	)		(25,835	)
Balance at March 31, 2022		58,010,823		$	1	$	528,793	$	(309	)	$	(167,186	)	$	361,299
Common stock issued upon exercise of options		43,945			—		13		—			—			13
Common stock issued under ESPP		207,137			—		414		—			—			414
Vesting of early exercised shares		—			—		30		—			—			30
Repurchase of unvested early exercised stock options		(50,713	)		—		—		—			—
Stock-based compensation expense		—			—		3,360		—			—			3,360
Unrealized loss on investments in marketable securities		—			—		—		(724	)		—			(724	)
Net loss		—			—		—		—			(25,936	)		(25,936	)
Balance at June 30, 2022		58,211,192		$	1	$	532,610	$	(1,033	)	$	(193,122	)	$	338,456
Common stock issued upon exercise of options		17,000			—		5		—			—			5
Vesting of early exercised shares		—			—		27		—			—			27
Repurchase of unvested early exercised stock options		(78,875	)		—		—		—			—			—
Stock-based compensation expense		—			—		3,210		—			—			3,210
Unrealized loss on investments in marketable securities		—			—		—		(563	)		—			(563	)
Net loss		—			—		—		—			(24,682	)		(24,682	)
Balance at September 30, 2022		58,149,317		$	1	$	535,852	$	(1,596	)	$	(217,804	)	$	316,453

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

4

Graphite Bio, Inc.

Condensed Statements of Cash Flows

(in thousands)

(unaudited)

	Nine Months Ended
	September 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(101,733	)	$	(76,453	)
Adjustments to reconcile net loss to net cash used in operating activities:
Net amortization of premiums and discounts on investments in marketable securities		(3,422	)		(479	)
Depreciation and amortization		2,265			1,670
Non-cash lease expense		3,860			4,454
Stock-based compensation expense