Graphite Bio(GRPH) - 2024 Q2 - Quarterly Report

Market Opportunity - The estimated addressable population suffering from presbyopia in the U.S. is 128 million, representing a market opportunity exceeding $3 billion[85]. Clinical Trial Results - LNZ100 achieved a statistically significant three-lines or greater improvement in Best Corrected Distance Visual Acuity at near, with 71% of participants showing improvement at 3 hours in the CLARITY 2 trial[85]. - LNZ100 was well-tolerated in clinical trials, with no serious treatment-related adverse events reported in over 30,000 treatment days[93]. Financial Position - As of June 30, 2024, the company had $196.1 million in cash, cash equivalents, and marketable securities, sufficient to fund operations until positive operating cash flow post-commercial launch[88]. - The company incurred an accumulated deficit of $122.1 million as of June 30, 2024, primarily due to research and development costs[88]. - The company had $196.1 million in cash, cash equivalents, and marketable securities as of June 30, 2024, with an accumulated deficit of $122.1 million[110]. Financing Activities - The company completed a PIPE Financing in July 2024, raising $30.0 million by selling 1,578,947 shares at $19.00 per share[95]. - Cash provided by financing activities for the six months ended June 30, 2024, was $169.1 million, significantly higher than $83.2 million in the same period in 2023[117]. Research and Development Expenses - The company expects research and development costs to decrease in 2024 due to the completion of the Phase 3 CLARITY trials[92]. - Research and development expenses decreased by $5.7 million, or 45%, from $12.6 million in Q2 2023 to $6.9 million in Q2 2024, primarily due to a $9.2 million decrease in contract research expenses[102]. - For the six months ended June 30, 2024, research and development expenses totaled $17.5 million, down 24% from $22.9 million in the same period in 2023[106]. Selling, General, and Administrative Expenses - Selling, general, and administrative expenses are anticipated to increase in 2024 as the company prepares for a potential commercial launch of LNZ100[92]. - Selling, general and administrative expenses increased by $5.1 million, or 219%, from $2.3 million in Q2 2023 to $7.4 million in Q2 2024, driven by increased employee salaries and marketing expenses[103]. - Selling, general and administrative expenses for the six months ended June 30, 2024, rose to $13.0 million, an increase of 181% from $4.6 million in the same period in 2023[107]. Future Capital Requirements - Future capital requirements will depend on various factors, including manufacturing costs and regulatory review outcomes for LNZ100[111]. - The company expects to continue incurring significant expenses as it seeks approval and pursues the potential commercialization of LNZ100[110]. Licensing and Royalties - The Ji Xing License Agreement includes potential milestone payments of up to $95.0 million and tiered royalties ranging from 5% to 15% on net sales in Greater China[89]. Company Classification and Dividends - The company is classified as an emerging growth company under the JOBS Act and may remain so until December 31, 2026[125]. - The company has historically paid no dividends, except for a special dividend prior to the Merger, and does not anticipate paying dividends in the future[124]. Stock Valuation and Options - The fair value of the company's common stock prior to the Merger was determined by the board of directors based on various factors, including clinical milestones and capital market conditions[124]. - The company uses the Black-Scholes option pricing model to estimate the fair value of equity awards, which is influenced by assumptions such as risk-free interest rate and expected stock price volatility[123]. - The Series A Warrants were revalued at each balance sheet date, with changes recognized in other income (expense) until they became exercisable into common stock upon completion of the Merger[122]. - The company has limited historical stock price volatility data and derives expected volatility from comparable publicly traded companies[124]. - The company does not have sufficient historical exercise data to estimate the expected term for options granted to employees, using the simplified method instead[124]. - The company has not experienced material changes to its financial statements due to revisions in estimates historically[121].