LENZ Therapeutics (LENZ) Q4 2024 Earnings Call March 19, 2025 04:30 PM ET Company Participants Dan Chevallard - CFOEvert Schimmelpennink - President, CEO, Secretary & DirectorShawn Olsson - Chief Commercial OfficerYigal Nochomovitz - DirectorMarc Goodman - Senior MD - NeuroscienceDenis Reznik - Senior Equity Research Associate Conference Call Participants Joseph Catanzaro - Director & Senior Equity AnalystStacy Ku - AnalystJason Gerberry - AnalystLachlan Hanbury-Brown - Biotech Equity Research AnalystMatthe ...

Financial Performance - LENZ Therapeutics reported cash, cash equivalents, and marketable securities of $209.1 million as of December 31, 2024, expected to fund operations until post-launch positive operating cash flow[9]. - Research and Development (R&D) expenses decreased to $5.9 million for Q4 2024, down from $19.5 million in Q4 2023, and totaled $29.8 million for the year, compared to $59.5 million in 2023[10]. - Selling, General and Administrative (SG&A) expenses increased to $9.4 million for Q4 2024, up from $5.5 million in Q4 2023, and totaled $28.8 million for the year, compared to $12.9 million in 2023[11]. - Net loss for Q4 2024 was $12.7 million, or $0.46 per share, compared to a net loss of $23.7 million, or $12.04 per share in Q4 2023; for the year, net loss was $49.8 million, or $2.34 per share, compared to $70.0 million, or $35.71 per share in 2023[12]. - Total operating expenses for the year ended December 31, 2024, were $58.6 million, down from $72.4 million in 2023[21]. - Total stockholders' equity increased to $204.1 million as of December 31, 2024, compared to a deficit of $92.7 million in 2023[19]. Product Development and Approval - The FDA has set a PDUFA target action date of August 8, 2025, for the New Drug Application (NDA) of LNZ100, a treatment for presbyopia[4]. - The NDA submission for LNZ100 is supported by positive data from the pivotal Phase 3 CLARITY study, which showed 74% of patients achieving three-lines or greater improvement in Best Corrected Distance Visual Acuity (BCDVA) at near[7]. Commercial Strategy - The company has advanced its commercial planning for LNZ100, with over 2 million digital campaign impressions targeting more than 30,000 Eye Care Professionals (ECPs)[5]. - LENZ Therapeutics will host a Commercial Day on April 15, 2025, to discuss commercialization strategies and progress towards the potential approval of LNZ100[8].

Core Viewpoint - LENZ Therapeutics is progressing towards the potential approval and commercial launch of LNZ100, an aceclidine-based eye drop for treating presbyopia, with a PDUFA target action date set for August 8, 2025 [1][4]. Company Developments - The FDA has accepted the New Drug Application (NDA) for LNZ100, which is aimed at a market of approximately 1.8 billion people globally and 128 million in the U.S. [4]. - The company has completed a mid-cycle review with the FDA, indicating no significant review issues and no plans for an Advisory Committee Meeting [4]. - LENZ Therapeutics has initiated production to support the potential commercial launch of LNZ100 following the positive outcomes from the Phase 3 CLARITY study [3][4]. Financial Highlights - As of December 31, 2024, the company reported cash, cash equivalents, and marketable securities totaling $209.1 million, which is expected to fund operations until post-launch positive operating cash flow [9]. - Research and Development (R&D) expenses decreased significantly to $5.9 million for Q4 2024 from $19.5 million in Q4 2023, and for the full year, R&D expenses were $29.8 million compared to $59.5 million in 2023 [10]. - Selling, General and Administrative (SG&A) expenses increased to $9.4 million for Q4 2024 from $5.5 million in Q4 2023, reflecting growth in personnel and pre-commercial marketing efforts [11]. Market Strategy - The company is advancing its commercial planning in preparation for the potential approval of LNZ100, with a focus on increasing awareness among Eye Care Professionals (ECPs) through digital campaigns [5]. - A Commercial Day event is scheduled for April 15, 2025, to discuss commercialization strategies and updates regarding LNZ100 [8]. Clinical Data - Positive topline data from a Phase 3 study in China showed that LNZ100 achieved significant improvements in near vision without compromising distance vision, with 74% of patients experiencing a three-line or greater improvement [6][7].

Core Viewpoint - LENZ Therapeutics is preparing to report its fourth quarter and full year 2024 financial results and recent corporate highlights on March 19, 2025 [1] Company Overview - LENZ Therapeutics is a pre-commercial biopharmaceutical company focused on developing and commercializing the first and only aceclidine-based eye drop for improving near vision in presbyopia patients [3] - The product candidate, LNZ100, is a preservative-free, single-use, once-daily eye drop containing aceclidine [3] - LNZ100 was evaluated in the Phase 3 CLARITY study as a potential therapy for presbyopia, which affects approximately 1.8 billion people globally and 128 million people in the United States [3] - The FDA has set a Prescription Drug User Fee Act (PDUFA) target action date of August 8, 2025, for LNZ100 [3] - The company aims to provide an ideal pharmaceutical solution for presbyopia that enhances vision for "all eyes, all day" [3] - LENZ Therapeutics is headquartered in San Diego, California [3]

Core Insights - LENZ Therapeutics is hosting a Commercial Day to discuss the commercialization strategy and progress towards the potential approval of LNZ100 for presbyopia treatment on April 15, 2025 [1][2] Company Overview - LENZ Therapeutics is a pre-commercial biopharmaceutical company focused on developing the first aceclidine-based eye drop for improving near vision in presbyopia patients [4] - LNZ100 is a preservative-free, single-use, once-daily eye drop containing aceclidine, evaluated in the Phase 3 CLARITY study [4] - The condition of presbyopia affects approximately 1.8 billion people globally and 128 million in the United States [4] - The FDA has set a Prescription Drug User Fee Act (PDUFA) target action date of August 8, 2025, for LNZ100 [4] Event Details - The Commercial Day will feature management presentations on commercialization strategies, supply chain readiness, and insights from Key Opinion Leaders and Eye Care Professionals [2] - A live audio webcast of the event will be available on the LENZ Therapeutics website, with a replay accessible for 12 months [3]

Core Viewpoint - LENZ Therapeutics, Inc. (LENZ) has experienced a bearish price trend recently, losing 5.3% over the past week, but the formation of a hammer chart pattern suggests a potential trend reversal as buying interest may be increasing [1] Technical Analysis - The hammer chart pattern indicates a possible bottom formation, suggesting that selling pressure may be subsiding, which could lead to a trend reversal [1] - A hammer pattern typically forms during a downtrend when the stock opens lower, makes a new low, but then closes near or slightly above the opening price, indicating that bears may be losing control [2] Fundamental Analysis - There has been a positive trend in earnings estimate revisions for LENZ, with the consensus EPS estimate increasing by 33.6% over the last 30 days, indicating strong agreement among analysts about the company's potential for better earnings [3] - LENZ currently holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which historically outperform the market [3] - The Zacks Rank serves as a timing indicator, suggesting that LENZ's prospects are beginning to improve, further supporting the case for a potential trend reversal [3]

Company Overview - LENZ Therapeutics, Inc. is a pre-commercial biopharmaceutical company focused on developing and commercializing the first and only aceclidine-based eye drop aimed at improving near vision in individuals with presbyopia [5] - The product candidate, LNZ100, is a preservative-free, single-use, once-daily eye drop containing aceclidine, which has been evaluated in the Phase 3 CLARITY study [5] - Presbyopia affects an estimated 1.8 billion people globally, including 128 million in the United States [5] - The FDA has set a Prescription Drug User Fee Act (PDUFA) target action date of August 8, 2025, for LNZ100 [5] Upcoming Investor Conferences - Company management will participate in the Jefferies London Healthcare Conference from November 19th to November 21st, 2024, with one-on-one meetings scheduled [1] - Management is scheduled for a fireside chat at the Piper Sandler 36th Annual Healthcare Conference on December 3rd, 2024, at 3:30 PM ET, along with one-on-one meetings [2] - At the 7th Annual Evercore HealthCONx Conference on December 4th, 2024, management will also participate in a fireside chat at 7:30 AM ET and one-on-one meetings [2] - Management will take part in a panel discussion titled "Eyes Wide Open on Ophthalmology" at the Citi 2024 Global Healthcare Conference on December 5th, 2024, at 1:45 PM ET, along with one-on-one meetings [3] Webcast Information - A live audio webcast of the Piper Sandler Healthcare Conference fireside chat will be available on the LENZ Therapeutics website, with a replay accessible for 12 months following the event [4]

Company Overview - LENZ Therapeutics, Inc. currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 2 (Buy), suggesting a favorable outlook compared to the market [3] Price Performance - Over the past week, LENZ shares have increased by 3.37%, while the Zacks Medical - Biomedical and Genetics industry has decreased by 0.75% [5] - In the last month, LENZ's price has risen by 41.93%, significantly outperforming the industry's 2.78% [5] - Over the past quarter, LENZ shares have surged by 54.15%, and they have increased by 114.17% over the last year, compared to the S&P 500's gains of 13.08% and 38.58%, respectively [6] Trading Volume - LENZ's average 20-day trading volume is 177,779 shares, which serves as a baseline for price-to-volume analysis [7] Earnings Outlook - In the past two months, 4 earnings estimates for LENZ have been revised upwards, while none have been revised downwards, leading to an increase in the consensus estimate from -$2.29 to -$2.09 [9] - For the next fiscal year, 5 estimates have moved upwards with no downward revisions during the same period [9]

Financial Data and Key Metrics Changes - The company ended Q3 2024 with approximately $217.2 million in cash, cash equivalents, and marketable securities, which is expected to fund operations until post-launch positive cash flow [45] - Total operating expenses for Q3 2024 were approximately $12.9 million, a decrease from $19.9 million in the same period in 2023 [46] - Q3 2024 cash burn, net of interest income, was approximately $9 million, down from $14.4 million in Q2 2024 [46] - Net loss per share was $0.38 in Q3 2024, compared to $9.62 in Q3 2023, reflecting a significant reduction in losses [51][53] Business Line Data and Key Metrics Changes - Total R&D expenses decreased to $6.5 million in Q3 2024 from $17 million in Q3 2023, reflecting a shift in focus towards pre-approval manufacturing activities [48] - SG&A expenses increased to $6.5 million in Q3 2024 from $2.9 million in Q3 2023, driven by increases in commercial headcount and pre-commercial planning activities [48] Market Data and Key Metrics Changes - Presbyopia impacts an estimated 128 million people in the U.S., representing a significant market opportunity [26] - The company aims to provide access to an estimated 400 million presbyopes in China, highlighting the global potential of LNZ100 [22] Company Strategy and Development Direction - The company is transitioning from a late-stage clinical development biopharmaceutical company to a pre-commercial company, focusing on the potential approval and launch of LNZ100 [8][23] - The commercial strategy is based on three pillars: ensuring doctors recommend the product, encouraging consumers to request it by name, and ensuring ease of product access [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the upcoming FDA approval and the potential launch of LNZ100, which is expected to be the first aceclidine-based eye drop for presbyopia [55] - The company is preparing for a potential commercial launch in the U.S. as early as Q4 2025, following the PDUFA date of August 8, 2025 [19][19] Other Important Information - The FDA accepted the NDA for LNZ100, with a PDUFA target action date set for August 8, 2025 [9][17] - The company has completed a $30 million PIPE financing, strengthening its balance sheet [44] Q&A Session Summary Question: Were the survey conclusions consistent among optometrists and ophthalmologists? - Management confirmed that the feedback across the two groups was consistent, reflecting the 80/20 split in the survey [58] Question: What level of investment in social media and influencers is expected for the launch? - The company plans to invest significantly in direct-to-consumer strategies, including influencer campaigns, to maximize market potential [61] Question: Where is the product manufactured? - Manufacturing is set up at both U.S. and European facilities, ensuring commercial scale production [60] Question: What incentives do optometrists have to recommend the product? - The product provides an ideal solution for presbyopia, which is a significant market need, thus incentivizing recommendations [66] Question: How does the company expect the launch to compare to VUITY? - Management anticipates a strong launch, leveraging lessons learned from VUITY's initial success and subsequent challenges [66][90] Question: What is the timeline for approval in China? - The company is not guiding on the timeline for approval in China but is optimistic about the market potential [83] Question: How will the company target specific presbyopic groups? - The company plans to focus on contact lens wearers, individuals who have had refractive surgery, and those who visit med spas [108] Question: When will the sales force be fully operational? - The sales force is being built out ahead of the PDUFA date, with key hires already in place [114]

Product Development - LENZ's lead product candidate LNZ100 demonstrated a robust product profile with 71% and 91% of participants achieving three- and two-lines or greater improvement in near vision at 30 minutes in the Phase 3 CLARITY study[98]. - The FDA assigned a PDUFA target action date of August 8, 2025, for LNZ100, with a potential commercial launch as early as Q4 2025 if approved[104]. - LNZ100 has patent protection until 2039 in the U.S., supported by a strong intellectual property portfolio[98]. - LNZ100 achieved statistically significant improvements in distance vision, with 41% of participants showing at least one-line improvement[100]. - The CORXEL License Agreement allows for potential milestone payments of up to $95.0 million and tiered royalties on net sales of LNZ100 in Greater China[102]. Financial Performance - LENZ incurred an accumulated deficit of $132.4 million as of September 30, 2024, primarily due to research and development costs and administrative expenses[100]. - The company incurred net losses of $10.2 million and $18.9 million for Q3 2024 and 2023, respectively[118]. - Cash used in operating activities for the nine months ended September 30, 2024 was $50.3 million, compared to $39.4 million for the same period in 2023[123]. - Cash provided by financing activities for the nine months ended September 30, 2024 was $198.9 million, compared to $82.6 million for the same period in 2023[125]. - Other income, net for Q3 2024 was $2.7 million, compared to $1.0 million for Q3 2023, driven by an increase in interest income of $1.7 million[112]. - Other income, net for the nine months ended September 30, 2024 was $6.3 million, compared to $1.2 million for the same period in 2023, primarily due to an increase in interest income of $4.6 million[116]. Expenses - Research and development costs decreased in 2024 compared to 2023 due to the completion of Phase 3 CLARITY trials, while selling, general, and administrative expenses are expected to increase as the company builds its commercial infrastructure[103]. - Research and development expenses decreased by $10.6 million, or 62%, to $6.5 million for Q3 2024 compared to $17.0 million for Q3 2023[111]. - Selling, general and administrative expenses increased by $3.6 million, or 127%, to $6.5 million for Q3 2024 compared to $2.9 million for Q3 2023[112]. - For the nine months ended September 30, 2024, research and development expenses decreased by $16.0 million, or 40%, to $23.9 million compared to $40.0 million for the same period in 2023[114]. - Selling, general and administrative expenses for the nine months ended September 30, 2024 increased by $12.0 million, or 160%, to $19.5 million compared to $7.5 million for the same period in 2023[115]. Cash Position - As of September 30, 2024, LENZ had $217.2 million in cash, cash equivalents, restricted cash, and marketable securities, which is expected to support operations until positive cash flow post-commercial launch[100]. - As of September 30, 2024, the company had $217.2 million in cash, cash equivalents, restricted cash, and marketable securities[118]. Financing Activities - The company completed a PIPE financing in July 2024, raising $30.0 million through the sale of 1,578,947 shares of common stock at $19.00 per share[104]. - The company anticipates incurring significant expenses related to regulatory approval and commercialization efforts for LNZ100, which may require additional financing if revenue generation is delayed[100]. Company Classification and Future Outlook - The company is classified as an emerging growth company under the JOBS Act and may remain so until December 31, 2026[135]. - The company has total annual gross revenue of less than $100 million for the fiscal year ended December 31, 2023[135]. - The market value of the company's stock held by non-affiliates was less than $700 million as of June 30, 2024[135]. - The company does not anticipate paying dividends in the future, having historically paid none except for a special dividend prior to the Merger[134]. - The company intends to rely on exemptions from certain public company disclosure requirements while remaining an emerging growth company[135]. Accounting and Valuation - The company uses the Black-Scholes option pricing model to estimate the fair value of equity awards, which is influenced by various assumptions[132]. - The company has not experienced material changes to its financial statements due to revisions in estimates historically[130]. - The Series A Warrants became exercisable into shares of common stock upon completion of the Merger and are no longer remeasured at each reporting date[131]. - The expected term for options granted to employees is calculated using the simplified method due to insufficient historical exercise data[134]. - The company will continue to apply its current process for estimating expected volatility until sufficient historical information becomes available[134].