Vor(VOR) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Cash and investments reached $244.6 million by June 30, 2021, primarily from IPO and Series B financing, despite a $32.1 million net loss Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $169,516 | $48,539 | | Investments | $75,118 | $0 | | Total assets | $275,143 | $75,908 | | Total liabilities | $25,035 | $27,637 | | Total stockholders' equity (deficit) | $250,108 | $(59,065) | Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $12,970 | $5,975 | $21,911 | $12,146 | | General and administrative | $5,410 | $2,065 | $10,199 | $3,772 | | Loss from operations | $(18,380) | $(8,040) | $(32,110) | $(15,918) | | Net loss | $(18,370) | $(8,040) | $(32,093) | $(15,889) | | Net loss per share | $(0.50) | $(56.85) | $(1.13) | $(115.83) | Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | For the Six Months Ended June 30, 2021 | For the Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(34,214) | $(14,413) | | Net cash used in investing activities | $(77,212) | $(1,097) | | Net cash provided by financing activities | $232,403 | $81,954 | - On February 9, 2021, the company completed its IPO, selling 11,302,219 shares of common stock at $18.00 per share, resulting in net proceeds of approximately $186.3 million after deducting underwriting discounts and commissions[26] - Upon the IPO closing, all outstanding shares of redeemable convertible preferred stock automatically converted into an aggregate of 24,924,501 shares of common stock[27] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strategic focus on VOR33 and VCAR33, increased operating expenses, and substantial IPO and Series B funding expected to last into Q1 2023 Overview Vor Biopharma develops VOR33 and VCAR33 for hematological malignancies, with VOR33's IND accepted and initial Phase 1/2a data expected in H1 2022 - The company is developing VOR33, an engineered hematopoietic stem cell (eHSC) product candidate, and VCAR33, a companion CAR-T therapy, to treat acute myeloid leukemia (AML) and other hematological malignancies[69][70] - The Investigational New Drug (IND) application for VOR33 was accepted by the FDA in January 2021, and a no objection letter was received from Health Canada in April 2021 for the Phase 1/2a clinical trial[70] - Initial clinical data from the VOR33 trial is expected in the first half of 2022, and the company plans to submit an IND for the VOR33/VCAR33 Treatment System in the second half of 2022[70][72] - The company has experienced delays in its Phase 1/2a trial for VOR33 in part due to the COVID-19 pandemic[76] Results of Operations Operating expenses significantly increased in H1 2021, leading to a $32.1 million operating loss, primarily due to higher R&D and G&A costs Comparison of Operating Expenses (in thousands) | Expense Category | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $21,911 | $12,146 | $9,765 | | General and administrative | $10,199 | $3,772 | $6,427 | | Total operating expenses | $32,110 | $15,918 | $16,192 | - The $9.8 million increase in R&D expenses for the six months ended June 30, 2021, was primarily due to a $6.0 million increase in personnel costs from higher headcount, a $2.2 million increase in external clinical and preclinical study costs, and a $1.6 million increase in facilities and other expenses[91] - The $6.4 million increase in G&A expenses for the six months ended June 30, 2021, was mainly due to a $3.0 million increase in personnel costs, a $2.6 million increase in professional fees (consultants, insurance), and a $0.8 million increase in facilities and other expenses[93] Liquidity and Capital Resources The company held $244.6 million in cash and investments by June 30, 2021, primarily from IPO and Series B financing, expected to fund operations into Q1 2023 - As of June 30, 2021, the company had cash, cash equivalents, and investments of $244.6 million[75][102] - In the first half of 2021, the company raised approximately $232.4 million from financing activities, including $45.4 million from the final tranche of its Series B preferred stock financing and $187.0 million in net proceeds from its IPO[95][101] - Existing cash is expected to fund operating expenses and capital expenditure requirements into at least the first quarter of 2023[75][103] - In June 2021, the company entered into two lease amendments to expand its corporate office and laboratory space, resulting in future fixed payment commitments of $31.3 million not yet recorded on the balance sheet[105][106] Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risk is immaterial interest rate sensitivity on short-term cash and investments, with no significant foreign currency or inflation risk - The primary market risk is interest rate sensitivity on cash equivalents and investments, but the impact is considered immaterial due to their short-term maturities[109] - The company is not currently exposed to significant foreign currency exchange risk as operations are located in the U.S. and expenses are denominated in U.S. dollars[111] Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of June 30, 2021, the company's disclosure controls and procedures were effective at the reasonable assurance level[114] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[115] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings, though ordinary course litigation may arise - The company is not currently a party to any material legal proceedings[118] Item 1A. Risk Factors The company faces extensive risks including net losses, funding needs, unproven eHSC technology, manufacturing complexity, regulatory uncertainties, third-party reliance, and intellectual property challenges Risks Related to Financial Position and Capital Needs The company has significant net losses and accumulated deficit, expects continued losses, requires substantial additional funding, and its limited operating history complicates future viability assessment - The company has incurred significant net losses since inception, with a net loss of $32.1 million for the six months ended June 30, 2021, and an accumulated deficit of $93.3 million as of that date[120] - The company will need substantial additional funding and may be forced to delay, reduce, or eliminate research and development programs if unable to raise capital when needed[123] - The company has a limited operating history, has not completed any clinical trials, and has no history of commercializing products, making it difficult to assess its future viability[133] Risks Related to Discovery, Development, and Commercialization Risks include unproven eHSC technology, dependence on VOR33 and VCAR33, complex manufacturing, intense competition, and potential market acceptance or reimbursement issues - Engineered hematopoietic stem cells (eHSCs) are a novel technology that is not yet clinically validated for human use, and the company's approach is unproven[142] - The company is substantially dependent on the success of its two most advanced product candidates, VOR33 and VCAR33[146] - The company's product candidates are complex and difficult to manufacture, which could lead to delays, limit supply, or otherwise harm the business[207] - The company faces significant competition, and competitors may develop safer, more effective, or less expensive therapies or achieve regulatory approval sooner[184] Risks Related to Regulatory Review Regulatory hurdles include potential clinical trial failures, an uncertain genome engineering landscape, and risk that trial endpoints may not be deemed clinically meaningful by authorities - Clinical trials may fail to demonstrate safety and efficacy, and the company may incur additional costs or be unable to complete development and commercialization[222] - Genome engineering technology is novel, and the regulatory landscape is uncertain and may change, making it difficult to predict the time and cost of obtaining regulatory approval[231] - There is a risk that regulatory authorities like the FDA may not consider the endpoints of the company's clinical trials to provide clinically meaningful results due to the novel technology and mechanisms of action[238] Risks Related to Third-Party Relationships Heavy reliance on third parties for research, clinical trials, and manufacturing, including single-source suppliers, poses risks of performance issues, delays, and supply disruptions - The company relies on third parties like CROs to conduct clinical trials, and these parties may not perform satisfactorily, potentially delaying product development[249] - The company relies on third-party manufacturers, including single-source suppliers, for materials, which increases the risk of insufficient quantities or supply disruptions that could impair development[256] - Future collaborations for research, development, and commercialization are uncertain and, if unsuccessful, could prevent the company from capitalizing on market potential[262] Risks Related to Intellectual Property Success depends on in-licensed IP, with risks including license termination, challenges in acquiring key technology rights like CRISPR-Cas9, and potential third-party infringement claims - The company is highly dependent on intellectual property licensed from third parties, including Columbia University for VOR33 and the National Cancer Institute (NCI) for VCAR33, and termination of these licenses would significantly harm the business[270][271][272] - The company may not be successful in acquiring or in-licensing necessary rights to key technologies, such as CRISPR-Cas9, which are required for commercialization of its product candidates[297][298] - Third-party claims of intellectual property infringement could prevent or delay product development, and the company is aware of third-party patents that may be construed to cover its eHSC technology[303][304] Risks Related to Regulatory and Other Legal Compliance Risks include challenges in foreign marketing approvals, ongoing regulatory compliance, exposure to complex healthcare laws, and potential impacts from healthcare reform on costs and pricing - Failure to obtain marketing approval in foreign jurisdictions would prevent product sales and impair the ability to generate revenue[326] - Relationships with healthcare providers and payors are subject to anti-kickback, fraud and abuse, and other healthcare laws, which could expose the company to criminal and civil penalties[339] - Healthcare reform legislation, such as the ACA, may increase the difficulty and cost of obtaining marketing approval and commercializing products, and could negatively affect prices[345][346] Risks Related to COVID-19, Personnel, Growth, and IT Risks include COVID-19 disruptions, dependence on key personnel, challenges in managing growth, and vulnerability of IT systems to security breaches - The COVID-19 pandemic has caused delays in activating clinical sites for the VOR33 Phase 1/2a trial and could continue to disrupt clinical trials, supply chains, and regulatory reviews[356][358] - The company is highly dependent on its key executives and its ability to attract and retain qualified scientific, clinical, and manufacturing personnel[359][360] - Internal computer systems and those of third-party vendors are vulnerable to security breaches, which could result in material disruption of product development programs and business operations[365] Risks Related to Common Stock Ownership Common stock ownership risks include price volatility, lock-up expiration impact, substantial insider control, reduced disclosure as an 'emerging growth company,' and charter provisions hindering change of control - The market price of the company's common stock may be volatile due to factors such as clinical trial results, regulatory developments, and market conditions[370] - Insiders, including executive officers, directors, and 5%+ stockholders, have substantial control over the company, which could limit other stockholders' ability to influence key transactions[376] - The company is an "emerging growth company" and a "smaller reporting company," allowing it to rely on reduced disclosure requirements, which may make its stock less attractive to some investors[379][382] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company's IPO closed February 9, 2021, raising $186.3 million in net proceeds, unused as of June 30, 2021, with no material change to planned use - The company closed its IPO on February 9, 2021, raising net proceeds of approximately $186.3 million[393][394] - As of June 30, 2021, the company had not used any of the net proceeds from its IPO, and the planned use of proceeds has not materially changed[395] Item 6. Exhibits This section lists exhibits filed, including lease amendments and certifications from Principal Executive and Financial Officers - Exhibits filed include two amendments to the lease agreement with PPF Off 100 Cambridge Park Drive, LLC, dated June 15, 2021[397] - Certifications from the CEO and CFO pursuant to Sarbanes-Oxley Act Sections 302 and 906 are included as exhibits[397]