Vor(VOR) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The company presents its unaudited condensed consolidated financial statements for Q1 2022 and Q1 2021 Condensed Consolidated Balance Sheets Total assets decreased to $234.3 million while total liabilities increased to $39.8 million as of Q1 2022 Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $90,042 | $119,801 | | Marketable securities | $91,575 | $87,668 | | Total Assets | $234,269 | $242,590 | | Total current liabilities | $18,145 | $10,153 | | Total Liabilities | $39,822 | $26,327 | | Total Stockholders' Equity | $194,447 | $216,263 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company's net loss increased to $22.7 million in Q1 2022, driven by higher R&D and G&A expenses Statement of Operations Highlights (in thousands, except per share data) | Operating Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Research and development | $15,280 | $8,941 | | General and administrative | $7,520 | $4,789 | | Total operating expenses | $22,800 | $13,730 | | Loss from operations | $(22,800) | $(13,730) | | Net loss | $(22,737) | $(13,723) | | Net loss per share, basic and diluted | $(0.61) | $(0.67) | Condensed Consolidated Statements of Cash Flows Net cash used in operations increased to $22.9 million in Q1 2022, reflecting a higher net loss Cash Flow Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(22,904) | $(17,649) | | Net cash used in investing activities | $(7,055) | $(1,171) | | Net cash provided by financing activities | $200 | $232,848 | | Net (decrease) increase in cash | $(29,759) | $214,028 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail key accounting policies, cash sufficiency, stock compensation, and significant new lease agreements - The company is a clinical-stage cell and genome engineering company focused on treating hematological malignancies and anticipates incurring significant operating losses for the next several years[26][28] - Management believes existing cash, cash equivalents, and marketable securities of $181.6 million are sufficient to fund operations for at least one year[28][65] - The company entered into two lease amendments for its Cambridge facility, involving $8.4 million and $21.9 million in total fixed rent payments[49][50][51] Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Research and development | $796 | $449 | | General and administrative | $950 | $442 | | Total | $1,746 | $891 | Management's Discussion and Analysis of Financial Condition and Results of Operations The company discusses its clinical programs, financial results, and capital resources, including its funding runway - The company is a clinical-stage cell and genome engineering company focused on treating blood cancers by engineering hematopoietic stem cells (HSCs)[59] - The lead product candidate, VOR33, is in a Phase 1/2a trial, with initial clinical data anticipated in H2 2022[60] - The company plans to submit an IND for its VCAR33 ALLO program in the first half of 2023[61] - As of March 31, 2022, the company had $181.6 million in cash, cash equivalents, and marketable securities, expected to fund operations into Q4 2023[65] - In March 2022, the company filed a $350.0 million universal shelf registration and a $125.0 million at-the-market (ATM) facility[86] Results of Operations Operating expenses increased to $22.8 million in Q1 2022, driven by higher personnel and external R&D costs Comparison of Operating Results (in thousands) | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $15,280 | $8,941 | $6,339 | | General and administrative | $7,520 | $4,789 | $2,731 | | Total operating expenses | $22,800 | $13,730 | $9,070 | | Net loss | $(22,737) | $(13,723) | $(9,014) | - The $6.4 million increase in R&D expenses was primarily due to a $2.5 million rise in external costs, a $2.7 million increase in personnel costs, and a $0.6 million increase in facilities expenses[82] - The $2.7 million increase in G&A expenses was driven by a $1.7 million rise in personnel costs, a $0.5 million increase in professional fees, and a $0.5 million increase in facilities expenses[83] Liquidity and Capital Resources The company has funded operations primarily through equity sales and established new financing facilities in March 2022 - The company has funded operations with $344.0 million in net proceeds from equity and debt financings as of March 31, 2022[85] - Net cash used in operating activities increased by $5.3 million year-over-year, primarily due to higher operating expenses related to advancing VOR33 and increased personnel costs[96] - Net cash used in investing activities was $7.1 million in Q1 2022, consisting of $5.1 million for marketable securities and $2.0 million for property and equipment[97] - Net cash provided by financing activities was only $0.2 million in Q1 2022 from stock option exercises, compared to $232.8 million in Q1 2021 which included IPO proceeds[98] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity, which is considered immaterial - Primary market risk exposure is to interest rate changes affecting cash equivalents and marketable securities, but the impact is considered immaterial due to their short-term maturities[102] - The company has no outstanding debt as of March 31, 2022, and therefore no related interest rate risk[103] - Foreign currency exchange risk and inflation are not considered to have a material effect on the company's financial statements[104][105] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the end of the quarter - Based on an evaluation as of March 31, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[107] - There were no material changes in internal control over financial reporting during the quarter ended March 31, 2022[108] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings - As of the report date, the company is not a party to any material legal proceedings[110] Risk Factors The company faces numerous risks related to its financial position, clinical development, and intellectual property - The company has a history of significant net losses ($22.7M for Q1 2022) and expects to incur losses for the foreseeable future[112] - The company is substantially dependent on the success of its two most advanced product candidates, VOR33 and VCAR33 ALLO[135] - Engineered hematopoietic stem cells (eHSCs) are a novel, unproven technology that is not yet clinically validated[131] - The company is highly dependent on intellectual property licensed from third parties like Columbia University and the National Cancer Institute (NCI)[255][256] - The COVID-19 pandemic has caused delays in the VOR33 Phase 1/2a clinical trial and could continue to disrupt operations[342] Risks Related to Financial Position and Capital Needs The company has a history of net losses and will require substantial additional funding to continue operations - The company has incurred significant net losses since inception, with an accumulated deficit of $152.9 million as of March 31, 2022[112] - Substantial additional funding is required, as existing cash of $181.6 million is expected to fund operations only into Q4 2023[115][116] - The company's limited operating history and lack of commercial products make it difficult to evaluate its future viability[124] Risks Related to Discovery, Development, Manufacturing and Commercialization The company's novel technology, reliance on lead candidates, and complex manufacturing present significant risks - eHSCs are a novel technology not yet clinically validated, and the company's approach is unproven and faces numerous development challenges[131] - Product candidates could cause serious adverse events, such as off-target gene alterations, which could delay or prevent regulatory approval[141][143] - Developing VOR33 for use with an approved therapy like Mylotarg presents complexities, and prospects could be harmed if Mylotarg is withdrawn from the market[157] - Manufacturing of eHSCs and CAR-T therapies is complex, susceptible to product loss, and difficult to scale[192][193] Risks Related to Regulatory Review The company faces an uncertain regulatory landscape for its novel genome engineering technology - Clinical trials may fail to demonstrate safety and efficacy, and positive preclinical results are not predictive of clinical success[210][212] - The regulatory landscape for genome engineering technology is novel and uncertain, which could lengthen the review process and increase costs[219][220][222] - Regulators may not consider the proposed clinical trial endpoints to be clinically meaningful for a novel therapy like VOR33[225] - Difficulties in enrolling patients in clinical trials for rare diseases could increase development costs and delay or prevent regulatory approvals[229] Risks Related to Third-Party Relationships The business model relies heavily on third-party CROs and manufacturers, including single-source suppliers - The company relies on third parties like CROs to conduct clinical trials, reducing control over the process[236][238] - The company relies on third-party manufacturers, including single-source suppliers, increasing the risk of supply shortages and cost issues[241][242] - Future collaborations are important for development and commercialization but pose risks such as loss of control and potential disputes[246][247] Risks Related to Intellectual Property The company depends on licensed IP and faces a complex landscape for technologies like CRISPR-Cas9 - The company is highly dependent on exclusive licenses from Columbia University and the National Cancer Institute; termination would severely harm the business[255][256][257] - The company will need to acquire licenses for key technologies like CRISPR-Cas9, for which the IP landscape is complex and unsettled[283][284] - Third parties may claim infringement, which could lead to costly litigation and block commercialization[288][289] - Some in-licensed IP was discovered via government funding and may be subject to federal regulations, including "march-in" rights[294] Risks Related to Regulatory and Legal Compliance The company faces extensive compliance risks from healthcare laws, reform efforts, and international regulations - Even if approved, products will be subject to continual and extensive regulation, including potential marketing restrictions and post-marketing study requirements[311] - Relationships with healthcare providers are subject to complex anti-kickback, fraud and abuse laws with severe penalties for violations[322][323] - Healthcare reform efforts could increase costs, affect pricing, and reduce demand for the company's products[327][328][329] - International operations are subject to laws like the Foreign Corrupt Practices Act (FCPA) and stringent data privacy laws[334][338] Risks Related to COVID-19, Operations, and IT The COVID-19 pandemic, talent retention, growth management, and IT security pose operational challenges - The COVID-19 pandemic has caused delays in clinical trial enrollment for VOR33 and may continue to adversely affect operations[340][342] - The company is highly dependent on its key executives and faces intense competition for qualified personnel[344][345] - The company expects to expand its operations, which may strain resources and lead to operational mistakes if not managed effectively[347][348] - Internal and third-party computer systems are vulnerable to security breaches, which could disrupt development and compromise sensitive data[350] Risks Related to Common Stock Ownership Common stock ownership risks include price volatility, insider control, and reduced disclosure requirements - The market price of the common stock is likely to be volatile, and an active trading market may not be sustained[353][354] - Insiders hold a substantial amount of common stock, giving them significant influence and potentially preventing a change of control[360] - The company's status as an "emerging growth company" allows it to rely on reduced disclosure requirements[364][366] - The company does not expect to pay dividends for the foreseeable future, so stockholders must rely on capital appreciation[371] Unregistered Sales of Equity Securities and Use of Proceeds The company details the use of its $186.3 million in net proceeds from its February 2021 IPO - The company closed its IPO on February 9, 2021, receiving net proceeds of approximately $186.3 million[379][380] - As of March 31, 2022, $4.0 million of the IPO net proceeds have been used to fund development programs and for general corporate purposes[381] - In January 2022, the company repurchased 7,660 shares of unvested common stock from a former employee[384] Exhibits This section lists exhibits filed with the report, including an ATM agreement and required officer certifications - Lists exhibits filed with the report, including an Open Market Sale Agreement with Jefferies LLC, CEO/CFO certifications, and XBRL data files[386]