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l

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 31, 2022

OR

 

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

For the transition period from ____________ to ____________

Commission File Number: 001-40489

 

VERVE THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

82-4800132

(State or other jurisdiction of

incorporation or organization)

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

 

 

500 Technology Square, Suite 901

Cambridge, Massachusetts

02139

(Address of principal executive offices)

(Zip Code)

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

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.001 per share

 

VERV

 

Nasdaq Global Select Market

 

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

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

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

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

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

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

As of May 5, 2022, the registrant had 48,661,446 shares of common stock, par value $0.001 per share, outstanding.

 

 

 


 

FORWARD-LOOKING STATEMENTS

 

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

 

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

the initiation, timing, progress and results of our research and development programs, preclinical studies and clinical trials, including the timing of our submissions of investigational new drug applications, or INDs, and clinical trial applications to regulatory authorities;
the impact of the ongoing COVID-19 pandemic and our response to the pandemic;
our estimates regarding expenses, future revenue, capital requirements, need for additional financing and the period over which we believe our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements;
the timing of and our ability to submit applications for and obtain and maintain regulatory approvals for our current and future product candidates;
the potential therapeutic attributes and advantages of our current and future product candidates;
our expectations about the translatability of non-human primates results into humans;
our plans to develop and, if approved, subsequently commercialize any product candidates we may develop;
the rate and degree of market acceptance and clinical utility of our products, if approved;
our estimates regarding the addressable patient population and potential market opportunity for our current and future product candidates;
our commercialization, marketing and manufacturing capabilities and strategy;
our expectations regarding our ability to obtain and maintain intellectual property protection;
our ability to identify additional products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;
the impact of government laws and regulations;
our competitive position and expectations regarding developments and projections relating to our competitors and any competing therapies that are or become available;
developments relating to our competitors and our industry;
our ability to establish and maintain collaborations or obtain additional funding; and
our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act.

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

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

 


 

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

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

 

 


 

 

RISK FACTOR SUMMARY

 

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

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

We will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts;
Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability;
We are very early in our development efforts, and we have not yet completed IND-enabling studies or initiated clinical development of any product candidate. As a result, we expect it will be many years before we commercialize any product candidate, if ever. If we are unable to advance our current or future product candidates into and through clinical trials, obtain marketing approval and ultimately commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed;
Gene editing, including base editing, is a novel technology in a rapidly evolving field that is not yet clinically validated as being safe and efficacious for human therapeutic use. The approaches we are taking to discover and develop novel therapeutics are unproven and may never lead to marketable products. We are focusing our research and development efforts on gene editing using base editing technology, but other gene editing technologies may be discovered that provide significant advantages over base editing and we may not be able to access or use those technologies, which could materially harm our business;
The outcome of preclinical studies and earlier-stage clinical trials may not be predictive of future results or the success of later preclinical studies and clinical trials;
If any of the product candidates we may develop, or the delivery modes we rely on to administer them, cause serious adverse events, undesirable side effects or unexpected characteristics, such events, side effects or characteristics could delay or prevent regulatory approval of the product candidates, limit the commercial potential or result in significant negative consequences following any potential marketing approval;
Adverse public perception of genetic medicines, and gene editing and base editing in particular, may negatively impact regulatory approval of, and/or demand for, our potential products;
Genetic medicines are complex and difficult to manufacture. We could experience delays in satisfying regulatory authorities or production problems that result in delays in our development programs, limit the supply of our product candidates we may develop, or otherwise harm our business;
We rely, and expect to continue to rely, on third parties to conduct some or all aspects of our product manufacturing, research and preclinical and clinical testing, and these third parties may not perform satisfactorily;
We have entered into collaborations, and may enter into additional collaborations, with third parties for the research, development, manufacture and commercialization of programs or product candidates. If these collaborations are not successful, our business could be adversely affected;
If we or our licensors are unable to obtain, maintain, defend and enforce patent rights that cover our gene editing technology and product candidates or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully develop and commercialize our technology and product candidates may be adversely affected;
If we fail to comply with our obligations in our intellectual property license arrangements with third parties, or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that are important to our business;
The intellectual property landscape around genome editing technology, including base editing, is highly dynamic, and third parties may initiate legal proceedings alleging that we are infringing, misappropriating, or otherwise violating their

 


 

intellectual property rights, the outcome of which would be uncertain and may prevent, delay or otherwise interfere with our product discovery, development and commercialization efforts;
We face substantial competition, which may result in others discovering, developing or commercializing products before us or more successfully than we do; and
The ongoing COVID-19 pandemic may affect our ability to initiate and complete preclinical studies, delay the initiation of future clinical trials, disrupt regulatory activities or have other adverse effects on our business and operations. In addition, this pandemic has adversely impacted economies worldwide, which could result in adverse effects on our business, operations and ability to raise capital.

 

 


 

 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

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

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

28

 

 

 

PART II.

OTHER INFORMATION

29

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

90

Item 6.

Exhibits

91

Signatures

92

 

 

 


 

Part I ─ Financial Information

Item 1. Financial Statements

Verve Therapeutics, Inc.

Condensed consolidated balance sheets

 

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

 

March 31,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

91,420

 

 

$

64,330

 

Marketable securities

 

 

231,879

 

 

 

296,112

 

Prepaid expenses and other current assets

 

 

5,531

 

 

 

6,686

 

Total current assets

 

 

328,830

 

 

 

367,128

 

Property and equipment, net

 

 

11,132

 

 

 

7,224

 

Restricted cash

 

 

5,237

 

 

 

5,237

 

Operating lease right-of-use assets

 

 

1,340

 

 

 

1,839

 

Other long term assets

 

 

2,702

 

 

 

2,696

 

Total assets

 

$

349,241

 

 

$

384,124

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,438

 

 

$

7,077

 

Accrued expenses

 

 

10,933

 

 

 

12,992

 

Operating lease obligations, current portion

 

 

1,432

 

 

 

1,955

 

Total current liabilities

 

 

14,803

 

 

 

22,024

 

Success payment liability

 

 

2,694

 

 

 

4,371

 

Other long term liabilities

 

 

354

 

 

 

377

 

Total liabilities

 

 

17,851

 

 

 

26,772

 

Commitments and contingencies (See Note 7 and Note 8)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 shares authorized, 48,655,241 and 48,511,735 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

 

49

 

 

 

49

 

Additional paid-in capital

 

 

549,089

 

 

 

544,381

 

Accumulated other comprehensive loss

 

 

(732

)

 

 

(228

)

Accumulated deficit

 

 

(217,016

)

 

 

(186,850

)

Total stockholders’ equity

 

 

331,390

 

 

 

357,352

 

Total liabilities and stockholders’ equity

 

$

349,241

 

 

$

384,124

 

 

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

1


 

Verve Therapeutics, Inc.

Condensed consolidated statements of operations and comprehensive loss

 

 

 

Three months ended March 31,

 

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

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

24,490

 

 

$

11,345

 

General and administrative

 

 

7,435

 

 

 

2,716

 

Total operating expenses

 

 

31,925

 

 

 

14,061

 

Loss from operations

 

 

(31,925

)

 

 

(14,061

)

Other income:

 

 

 

 

 

 

Change in fair value of antidilution rights liability

 

 

-

 

 

 

396

 

Change in fair value of success payment liability

 

 

1,677

 

 

 

382

 

Interest and other income, net

 

 

82

 

 

 

20

 

Total other income, net

 

 

1,759

 

 

 

798

 

Net loss

 

$

(30,166

)

 

$

(13,263

)

Net loss per common share attributable to common stockholders, basic and diluted

 

$

(0.62

)

 

$

(4.99

)

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

 

 

48,571,214

 

 

 

2,656,278

 

Comprehensive Loss:

 

 

 

 

 

 

Net loss

 

$

(30,166

)

 

$

(13,263

)

Other comprehensive loss:

 

 

 

 

 

 

Unrealized loss on marketable securities

 

 

(504

)

 

 

(1

)

Comprehensive loss

 

$

(30,670

)

 

$

(13,264

)

 

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

2


 

Verve Therapeutics, Inc.

Condensed consolidated statements of convertible preferred stock and stockholders’ equity (deficit)

 

 

 

Convertible preferred stock

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share amounts)
(unaudited)

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional
paid-in
capital

 

 

Accumulated
other
comprehensive
income (loss)

 

 

Accumulated
deficit

 

 

Total
stockholders’
equity (deficit)

 

Balance at December 31, 2020

 

 

179,519,032

 

 

$

125,160

 

 

 

2,585,789

 

 

$

3

 

 

$

2,616

 

 

$

8

 

 

$

(66,536

)

 

$

(63,909

)

Issuance of Series B convertible preferred stock,
   net of issuance costs of $
241

 

 

77,163,022

 

 

 

93,759

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted common stock

 

 

 

 

 

 

 

 

134,409

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

 

 

 

 

 

 

48,745

 

 

 

 

 

 

72

 

 

 

 

 

 

 

 

 

72

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

670

 

 

 

 

 

 

 

 

 

670

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,263

)

 

 

(13,263

)

Balance at March 31, 2021

 

 

256,682,054

 

 

$

218,919

 

 

 

2,768,943

 

 

$

3

 

 

$

3,358

 

 

$

7

 

 

$

(79,799

)

 

$

(76,431

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

 

 

$

 

 

 

48,511,735

 

 

$

49

 

 

$

544,381

 

 

$

(228

)

 

$

(186,850

)

 

$

357,352

 

Exercise of stock options

 

 

 

 

 

 

 

 

143,506

 

 

 

 

 

 

505

 

 

 

 

 

 

 

 

 

505

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(504

)

 

 

 

 

 

(504

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,203

 

 

 

 

 

 

 

 

 

4,203

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,166

)

 

 

(30,166

)

Balance at March 31, 2022

 

 

 

 

$

 

 

 

48,655,241

 

 

$

49

 

 

$

549,089

 

 

$

(732

)

 

$

(217,016

)

 

$

331,390

 

 

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

3


 

Verve Therapeutics, Inc.

Condensed consolidated statements of cash flows

 

 

 

Three months ended March 31,

 

(unaudited, in thousands)

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(30,166

)

 

$

(13,263

)

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

 

 

 

 

 

 

Depreciation

 

 

514

 

 

 

294

 

Non-cash lease expense

 

 

499

 

 

 

418

 

Amortization of premium on marketable securities

 

 

730

 

 

 

208

 

Stock-based compensation

 

 

4,203

 

 

 

670

 

Change in fair value of antidilution rights

 

 

 

 

 

(396

)

Change in fair value of success payments liabilities

 

 

(1,677

)

 

 

(382

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

1,149

 

 

 

(1,128

)

Accounts payable

 

 

(5,105

)

 

 

1,928

 

Accrued expenses and other liabilities

 

 

(3,131

)

 

 

(3,047

)

Operating lease liabilities

 

 

(523

)

 

 

(443

)

Net cash used in operating activities

 

 

(33,507

)

 

 

(15,141

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,908

)

 

 

(1,070

)

Purchases of marketable securities

 

 

 

 

 

(11,176

)

Maturities of marketable securities

 

 

63,000

 

 

 

23,960

 

Net cash provided by investing activities

 

 

60,092

 

 

 

11,714

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of Series B convertible preferred stock, net

 

 

 

 

 

93,759

 

Proceeds from exercise of stock options

 

 

505

 

 

 

72

 

Net cash provided by financing activities

 

 

505

 

 

 

93,831

 

Increase in cash, cash equivalents and restricted cash

 

 

27,090

 

 

 

90,404

 

Cash, cash equivalents and restricted cash—beginning of period

 

 

69,567

 

 

 

9,456

 

Cash, cash equivalents and restricted cash—end of period

 

$

96,657

 

 

$

99,860

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

Property and equipment additions included in accounts payable and accrued expenses

 

$

2,017

 

 

$

528

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

 

 

$

462

 

 

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

4


 

Verve Therapeutics, Inc.

Notes to condensed consolidated financial statements (unaudited)

1. Nature of the business and basis of presentation

Organization

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

Liquidity and capital resources

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

On June 21, 2021, the Company completed its initial public offering, or IPO, in which the Company issued and sold 16,141,157 shares of its common stock, including 2,105,368 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $19.00 per share, for aggregate gross proceeds of $306.7 million. The Company received approximately $281.6 million in net proceeds after deducting underwriting discounts and offering expenses payable by the Company. In connection with the IPO, all outstanding shares of convertible preferred stock converted into 27,720,923 shares of the Company’s common stock.

In connection with the Company's IPO, the Company effected a one-for-9.2595 reverse stock split of the Company’s issued and outstanding common stock. Accordingly, all shares of common stock and per share amounts, as well as the conversion ratio of the Company’s outstanding convertible preferred stock, for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the reverse stock split, including reclassification of par and additional paid-in capital amounts as a result of the reverse stock split.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company expects that its cash, cash equivalents and marketable securities of $323.3 million as of March 31, 2022 will be sufficient to fund its operations and capital expenditure requirements beyond the next 12 months from the date of issuance of these financial statements. The Company will need additional financing to support its continuing operations and pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed could have a negative impact on the Company’s financial condition and its ability to pursue its business strategy. The Company will need to generate significant revenue to achieve profitability, and it may never do so.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in

5


 

financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of the Company’s management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of March 31, 2022, the results of its operations and other comprehensive loss for the three months ended March 31, 2022 and 2021, convertible preferred stock and stockholders’ equity for the three months ended March 31, 2022 and 2021 and cash flows for the three months ended March 31, 2022 and 2021. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 2022 are not necessarily indicative of the results for the year ending December 31, 2022, or for any future period. These interim financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2022.

2. Summary of significant accounting policies

The Company's significant accounting policies are disclosed in Note 2, "Summary of significant accounting policies," in the audited consolidated financial statements for the year ended December 31, 2021, and notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2022. Since the date of those financial statements, there have been no changes to its significant accounting policies.

Cash, cash equivalents and restricted cash

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

 

 

 

March 31,

 

 

March 31,

 

(in thousands)

 

2022

 

 

2021

 

Cash and cash equivalents

 

$

91,420

 

 

$

99,397

 

Restricted cash

 

 

5,237

 

 

 

463

 

Total cash, cash equivalents and restricted cash

 

$

96,657

 

 

$

99,860

 

Recently adopted accounting pronouncements

During the quarter ended September 30, 2021, the Company early adopted ASC Topic 842, “Leases” (“ASC 842”) using the revised modified retrospective approach as of January 1, 2021. The unaudited interim condensed consolidated financial statements for the three months ended March 31, 2021 have been retroactively adjusted to reflect the adoption of ASC 842, including retroactive adjustments to the unaudited interim condensed consolidated statement of cash flows and certain additional footnote disclosures as included herein. The adoption of ASC 842 had no material impact to the Company’s unaudited condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2021.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on specific facts and circumstances, the existence of an identified asset(s), if any, and the Company’s control over the use of the identified asset(s), if applicable. The lease liability is measured at the present value of future lease payments, discounted using the discount rate as of the lease commencement date. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the incremental borrowing rate, which is the rate incurred to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. The Company recognizes a corresponding lease right of use (“ROU”) asset, initially measured as the amount of lease liability, adjusted for any initial lease costs or lease payments made before or at the commencement of the lease, and reduced by any lease incentives.

The Company’s leases consist of only operating leases. Operating leases are recognized on the balance sheet as ROU lease assets, lease liabilities current and lease liabilities non-current. Fixed rents are included in the calculation of the lease balances while certain variable costs paid for certain operating and pass-through costs are excluded. Lease expense is recognized over the expected term on a straight-line basis.

 

6


 

3. Marketable securities

Marketable securities by security type consisted of the following:

 

 

 

March 31, 2022

 

(in thousands)

 

Amortized
cost

 

 

Gross
unrealized
gains

 

 

Gross
unrealized
losses

 

 

Fair
value

 

U.S. treasury bills and notes

 

$

218,875

 

 

$

 

 

$

(711

)

 

$

218,164

 

U.S. agency securities

 

 

13,736

 

 

 

 

 

 

(21

)

 

 

13,715

 

Total

 

$

232,611

 

 

$

 

 

$

(732

)

 

$

231,879

 

 

 

 

December 31, 2021

 

(in thousands)

 

Amortized
cost

 

 

Gross
unrealized
gains

 

 

Gross
unrealized
losses

 

 

Fair
value

 

U.S. treasury bills and notes

 

$

277,559

 

 

$

 

 

$

(218

)

 

$

277,341

 

U.S. agency securities

 

 

18,781

 

 

 

 

 

 

(10

)

 

 

18,771

 

Total

 

$

296,340

 

 

$

 

 

$

(228

)

 

$

296,112

 

 

The remaining contractual maturities of all marketable securities were less than one year as of March 31, 2022 and December 31, 2021.

4. Property and equipment, net

Property and equipment, net, consist of the following:

 

(in thousands)

 

March 31, 2022

 

 

December 31, 2021

 

Lab equipment

 

$

11,814

 

 

$

8,567

 

Leasehold improvements

 

 

266

 

 

 

266

 

Furniture and fixtures

 

 

1,451

 

 

 

566

 

Computer equipment

 

 

448

 

 

 

158

 

Total property and equipment

 

 

13,979

 

 

 

9,557

 

Less accumulated depreciation

 

 

(2,847

)

 

 

(2,333

)

Property and equipment, net

 

$

11,132

 

 

$

7,224

 

 

Depreciation expense for the three months ended March 31, 2022 and 2021 was $0.5 million and $0.3 million, respectively.

5. fair value of financial instruments

The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds, marketable securities, and a derivative liability (success payment liability) pursuant to our license agreements with the President and Fellows of Harvard College, or Harvard, and The Broad Institute, Inc., or Broad, which license agreements are referred to herein as the Harvard/Broad License Agreement and Broad License Agreement.

The following tables set forth the fair value of the Company’s financial instruments by level within the fair value hierarchy:

 

 

 

As of March 31, 2022

 

(in thousands)

 

Fair
value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

65,035

 

 

$

65,035

 

 

$

 

 

$

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury bills and notes

 

 

218,164

 

 

 

 

 

 

218,164

 

 

 

 

U.S. agency securities

 

 

13,715

 

 

 

 

 

 

13,715

 

 

 

 

Total assets

 

$

296,914

 

 

$

65,035

 

 

$

231,879

 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Success payment liability

 

 

2,694

 

 

 

 

 

 

 

 

 

2,694

 

Total liabilities

 

$

2,694

 

 

$

 

 

$

 

 

$

2,694

 

 

7


 

 

 

 

 

As of December 31, 2021

 

(in thousands)

 

Fair
value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

58,127

 

 

$

58,127

 

 

$

 

 

$

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury bills and notes

 

 

277,341