Verve Therapeutics(US:VERV)2022-11-07 12:33PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Verve Therapeutics' unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, along with notes detailing key accounting policies and recent financial activities Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $277,019 | $64,330 | | Marketable securities | $273,691 | $296,112 | | Total current assets | $561,630 | $367,128 | | Total assets | $673,355 | $384,124 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $29,018 | $22,024 | | Total liabilities | $125,412 | $26,772 | | Total stockholders' equity | $547,943 | $357,352 | | Total liabilities and stockholders' equity | $673,355 | $384,124 | Condensed Consolidated Statements of Operations and Comprehensive Loss Statement of Operations Highlights (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Collaboration revenue | $929 | $0 | | Research and development | $92,811 | $42,263 | | General and administrative | $26,095 | $12,264 | | Loss from operations | ($117,977) | ($54,527) | | Net loss | ($116,302) | ($88,977) | | Net loss per common share | ($2.26) | ($4.52) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Nine Months Ended September 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($89,440) | ($49,837) | | Net cash provided by (used in) investing activities | $12,358 | ($182,113) | | Net cash provided by financing activities | $289,358 | $375,865 | | Increase in cash, cash equivalents and restricted cash | $212,276 | $143,915 | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail the company's accounting policies and financial activities, including the Vertex collaboration, recent financing through a follow-on offering and ATM program, and ongoing license and lease obligations - In July 2022, Verve entered into a strategic collaboration with Vertex Pharmaceuticals, receiving a $25.0 million upfront payment and a $35.0 million equity investment through a private placement3132102 - The company completed a follow-on public offering in July 2022, raising net proceeds of approximately $242.9 million33118 - An Open Market Sale Agreement (ATM offering) was established in July 2022, and as of September 30, 2022, the company had sold shares for aggregate net proceeds of $7.3 million3435 - As of September 30, 2022, the company's cash, cash equivalents, and marketable securities of $550.7 million are expected to be sufficient to fund operations beyond the next 12 months36 - The company recognized its first-ever revenue of $0.9 million during the three and nine months ended September 30, 2022, related to research services performed under the Vertex Agreement111 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The MD&A section provides management's perspective on the company's financial condition and results of operations, detailing business developments, including the heart-1 clinical trial and FDA clinical hold, analyzing increased R&D and G&A expenses, and reviewing liquidity and capital resources Recent Developments This section outlines key recent developments, including the initiation of the heart-1 clinical trial for VERVE-101, the subsequent FDA clinical hold in the U.S., and progress on the VERVE-201 program - The first patient was dosed with VERVE-101 in the heart-1 clinical trial in July 2022, with enrollment ongoing in New Zealand and the United Kingdom154 - On November 4, 2022, the FDA placed the company's Investigational New Drug (IND) application for VERVE-101 on a clinical hold in the United States155 - The company plans to report initial safety and pharmacodynamic data for the dose-escalation portion of the heart-1 study in the second half of 2023157 - VERVE-201, targeting the ANGPTL3 gene, has initiated IND-enabling studies and will utilize a proprietary GalNAc-LNP delivery technology to enable uptake in the liver of HoFH patients158159160 Results of Operations Comparison of Operating Expenses (in thousands) | Expense Category | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $35,197 | $17,495 | $17,702 | | General and administrative | $9,592 | $6,007 | $3,585 | | Total operating expenses | $44,789 | $23,502 | $21,287 | - The $17.7 million increase in R&D expenses for Q3 2022 compared to Q3 2021 was primarily driven by a $6.8 million increase in personnel-related costs due to higher headcount, a $2.8 million increase in preclinical study costs, and a $0.9 million increase in clinical trial costs for the heart-1 trial189191 Comparison of Nine-Month Operating Results (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $929 | $0 | $929 | | Research and development | $92,811 | $42,263 | $50,548 | | General and administrative | $26,095 | $12,264 | $13,831 | | Net loss | ($116,302) | ($88,977) | ($27,325) | Liquidity and Capital Resources - As of September 30, 2022, the company had $550.7 million in cash, cash equivalents, and marketable securities203 - Management believes that existing cash, cash equivalents, and marketable securities will be sufficient to fund operating expenses and capital expenditure requirements into the second half of 2025217 - For the nine months ended September 30, 2022, net cash used in operating activities was $89.4 million, while net cash provided by financing activities was $289.4 million, primarily from stock offerings and the Vertex private placement209210214 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, primarily interest rate risk on its cash and marketable securities, and notes no significant foreign currency or inflation risk - The company's primary market risk is related to changes in interest rates on its cash, cash equivalents ($277.0 million), and marketable securities ($273.7 million)240 - Due to the short-term maturities and low-risk profile of its investments, management believes a 10% change in interest rates would not materially affect their fair market value240 - The company is not currently exposed to significant foreign currency exchange risk or inflation risk241242 Item 4. Controls and Procedures This section addresses the company's disclosure controls and internal control over financial reporting, concluding their effectiveness and noting no material changes during the quarter - Based on an evaluation as of September 30, 2022, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective244 - There were no changes in internal control over financial reporting during the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls246 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company states that it is not currently a party to any material legal proceedings - As of the filing date, Verve Therapeutics is not a party to any material legal proceedings248 Item 1A. Risk Factors This section comprehensively outlines the company's risks, including a history of losses, the early stage of development, the FDA clinical hold on VERVE-101, the unproven nature of gene editing technology, reliance on third parties, and intense competition - The company has a history of significant losses, with a net loss of $116.3 million for the nine months ended September 30, 2022, and expects to incur losses for the foreseeable future, requiring substantial additional funding250257 - A significant risk is the FDA's clinical hold on the IND application for VERVE-101 in the United States, which could delay or prevent the initiation of the U.S. clinical trial and impair the ability to obtain FDA approval293 - The company's approach using gene editing, particularly base editing, is a novel and largely unproven technology that is not yet clinically validated as safe and efficacious for human therapeutic use277 - The company relies on third parties for manufacturing, research, and clinical testing, which reduces control and introduces risks of delays, non-performance, and supply chain disruptions335340 - Verve faces substantial competition from major pharmaceutical and biotech companies with approved products or candidates in development for cardiovascular disease, including those targeting PCSK9 and ANGPTL3442444445 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered equity sales during the period and confirms that the net proceeds from the June 2021 IPO remain unused and invested in short-term instruments - The company received net proceeds of $281.6 million from its Initial Public Offering (IPO) in June 2021586 - As of September 30, 2022, the company had not used any of the net proceeds from the IPO, which are invested in money market funds and short-term investments586 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, material agreements like the Amended Beam Agreement and Vertex Agreement, and CEO/CFO certifications - Key agreements filed as exhibits include the Amended and Restated Collaboration and License Agreement with Beam Therapeutics, Inc. and the Strategic Collaboration and License Agreement with Vertex Pharmaceuticals Incorporated588