Verve Therapeutics(VERV) - 2023 Q2 - Quarterly Report

Part I FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and related disclosures Item 1. Financial Statements The unaudited condensed consolidated financial statements for the period ended June 30, 2023, show a net loss of $54.0 million for the second quarter and $106.0 million for the six-month period, with total assets decreasing to $589.1 million Condensed Consolidated Balance Sheets The company's total assets decreased to $589.1 million as of June 30, 2023, from $679.2 million at December 31, 2022, primarily due to a reduction in cash and marketable securities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $70,042 | $115,412 | | Marketable securities | $392,434 | $439,396 | | Total current assets | $473,066 | $563,159 | | Total assets | $589,131 | $679,223 | | Total current liabilities | $33,031 | $35,095 | | Total liabilities | $123,909 | $128,291 | | Total stockholders' equity | $465,222 | $550,932 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the three months ended June 30, 2023, the company reported collaboration revenue of $2.1 million and a net loss of $54.0 million, driven by higher research and development expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $2,093 | $— | $3,497 | $— | | Research and development | $47,260 | $33,125 | $94,370 | $57,614 | | General and administrative | $13,416 | $9,067 | $25,969 | $16,503 | | Loss from operations | ($58,583) | ($42,192) | ($116,842) | ($74,117) | | Net loss | ($53,983) | ($40,946) | ($105,958) | ($71,112) | | Net loss per share | ($0.87) | ($0.84) | ($1.71) | ($1.46) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2023, net cash used in operating activities was $97.1 million, primarily due to a higher net loss, while investing activities provided $48.4 million Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($97,058) | ($60,265) | | Net cash provided by investing activities | $48,417 | $67,874 | | Net cash provided by financing activities | $3,271 | $950 | | (Decrease) / Increase in cash, cash equivalents and restricted cash | ($45,370) | $8,559 | Notes to Condensed Consolidated Financial Statements The notes detail significant events and accounting policies, including a new research and collaboration agreement with Eli Lilly and the company's cash runway projection - In June 2023, the company entered into a research collaboration and stock purchase agreement with Eli Lilly, which became effective in July 2023, providing a $30.0 million upfront payment and a $30.0 million equity investment in August 2023, with eligibility for up to $465 million in future milestones[28][29][91] - The company expects its cash, cash equivalents, and marketable securities of $462.5 million as of June 30, 2023, will be sufficient to fund operations and capital expenditures beyond the next 12 months[30] - During the three and six months ended June 30, 2023, the company recognized $2.1 million and $3.5 million of revenue, respectively, from research services performed under its collaboration agreement with Vertex[72] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on developing single-course gene editing medicines for cardiovascular disease, progress in clinical programs, increased net losses, and sufficient capital to fund operations into 2026 Clinical and Development Programs The company is advancing its lead candidate, VERVE-101, in the heart-1 Phase 1b clinical trial, with initial data expected in Q4 2023, while preclinical development continues for VERVE-102 and VERVE-201 - Initial safety, pharmacodynamic, PCSK9, and LDL-C data for the dose-escalation portion of the heart-1 clinical trial of VERVE-101 are expected in the fourth quarter of 2023[118] - The Investigational New Drug (IND) application for VERVE-101 in the United States remains on hold by the FDA, and the company expects to complete trial enrollment outside the U.S[119] - The company plans to initiate a Phase 1b clinical trial for VERVE-102 in H1 2024 and for VERVE-201 in H2 2024, subject to regulatory approval[120][121] Results of Operations For Q2 2023, collaboration revenue was $2.1 million, while R&D expenses increased by $14.1 million year-over-year to $47.3 million, leading to a widened net loss of $54.0 million Comparison of Results for Three Months Ended June 30 (in thousands) | Item | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $2,093 | $0 | $2,093 | | Research and development | $47,260 | $33,125 | $14,135 | | General and administrative | $13,416 | $9,067 | $4,349 | | Net loss | ($53,983) | ($40,946) | ($13,037) | - The $14.1 million increase in Q2 2023 R&D expenses was primarily driven by a $6.3 million rise in employee-related costs, a $6.6 million increase in manufacturing activities, and a $2.4 million increase in lab supplies[139][145] Liquidity and Capital Resources As of June 30, 2023, the company had $462.5 million in cash and marketable securities, supplemented by an additional $60 million from Eli Lilly, projecting sufficient capital into 2026 - The company had $462.5 million in cash, cash equivalents, and marketable securities as of June 30, 2023[153] - Including the $60 million received from Lilly in July and August 2023, the company projects its cash runway will extend into 2026[113][166] Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($97,058) | ($60,265) | | Net cash provided by investing activities | $48,417 | $67,874 | | Net cash provided by financing activities | $3,271 | $950 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is to interest rate changes affecting its $462.4 million in cash and marketable securities, with no significant foreign currency or inflation risk - The primary market risk is interest rate risk on cash, cash equivalents, and marketable securities totaling $462.4 million, where an immediate 10% change in interest rates is not expected to have a material effect[179] - The company is not currently exposed to significant foreign currency exchange risk or inflation risk[180][181] Item 4. Controls and Procedures As of June 30, 2023, the company's disclosure controls and procedures were deemed effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of June 30, 2023[183] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[184] Part II OTHER INFORMATION This section provides other important information, including legal proceedings, risk factors, and equity sales Item 1. Legal Proceedings The company reports 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 proceedings[186] Item 1A. Risk Factors This section outlines significant risks to the company's business, including financial position, early-stage development, reliance on third parties, intellectual property, and commercialization challenges Risks related to our financial position and need for additional capital The company has a history of significant operating losses and will require substantial additional funding to advance its product candidates, with an inability to raise capital potentially forcing delays or elimination of development programs - The company has incurred significant losses since inception, with a net loss of $106.0 million for the six months ended June 30, 2023, and an accumulated deficit of $450.2 million[188] - Substantial additional funding is required to continue operations, and failure to raise capital could force the company to delay, reduce, or eliminate product development programs[194] Risks related to discovery and development The company is in the very early stages of clinical development, with its first trial for VERVE-101 initiated in 2022, facing an FDA clinical hold and the unproven nature of gene editing technology - The company is in early-stage development, having only initiated its first clinical trial for VERVE-101 in July 2022, and its other programs are preclinical[208] - The FDA has placed the IND for VERVE-101 on hold in the U.S., requesting additional preclinical data on potency, germline editing risks, and off-target analyses, which may delay or prevent the trial from starting in the U.S[231] - Gene editing is a novel technology that is not yet clinically validated, with risks including potential off-target edits that could cause serious adverse events, and the permanence of edits means therapy cannot be withdrawn if side effects occur[214][255] Risks related to our dependence on third parties Verve relies heavily on third parties for critical functions, including contract manufacturing organizations and contract research organizations, which introduces risks of delays, quality issues, and supply chain disruptions, while the success of collaborations is not guaranteed - The company relies on third-party CMOs for manufacturing, which increases the risk of insufficient quantities, unacceptable cost or quality, and potential development delays[279] - The company depends on collaborations with partners like Beam, Acuitas, Novartis, Vertex, and Lilly, and the success of these collaborations is not guaranteed and depends on the collaborators' performance and strategic focus[286] Risks related to our intellectual property The company's success hinges on its ability to obtain, maintain, and defend its intellectual property, which is subject to in-licensed technology and a highly dynamic, litigious gene editing IP landscape - The company's rights to develop its technology are subject to licenses from third parties, including Beam, Harvard, and Broad, and failure to comply with license obligations could result in termination of these critical agreements[309][310] - The intellectual property landscape for CRISPR-based gene editing is highly dynamic and subject to ongoing interference proceedings and litigation, which could impact the validity and scope of the company's in-licensed patents[318][319][340] Risks related to commercialization Even if approved, the company's product candidates may not achieve market acceptance due to competition from well-established treatments and other novel therapies, and the company currently lacks sales, marketing, and distribution capabilities - The company faces substantial competition from established CVD treatments and other companies developing therapies targeting PCSK9 and ANGPTL3, including major pharmaceutical firms like Amgen, Sanofi, Novartis, and Regeneron[382][384][386] - The company has no sales, marketing, or distribution infrastructure and will need to build these capabilities or partner with third parties to commercialize any approved products[393] - Successful commercialization depends on obtaining favorable pricing, coverage, and reimbursement from government and private payors, which is uncertain and subject to downward pressure from healthcare reform initiatives[400][401] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period and confirmed that the $281.6 million net proceeds from its June 2021 IPO remain unused and invested - There were no unregistered sales of equity securities during the period[531] - As of June 30, 2023, the company had not used any of the $281.6 million in net proceeds from its June 2021 IPO, with the funds invested in money market funds and marketable securities[533] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including key agreements with Eli Lilly and Company and officer certifications - Key exhibits filed include the Research and Collaboration Agreement and the Stock Purchase Agreement with Eli Lilly and Company[535]