Graphite Bio(GRPH) - 2024 Q3 - Quarterly Report

Product Development - LENZ's lead product candidate LNZ100 demonstrated a robust product profile with 71% and 91% of participants achieving three- and two-lines or greater improvement in near vision at 30 minutes in the Phase 3 CLARITY study[98] - The FDA assigned a PDUFA target action date of August 8, 2025, for LNZ100, with a potential commercial launch as early as Q4 2025 if approved[104] - LNZ100 achieved statistically significant improvements in distance vision, with 41% of participants achieving at least one line of improvement[100] - LNZ100 has patent protection until at least 2039 in the United States, supported by a robust intellectual property portfolio[98] - The CORXEL License Agreement includes potential milestone payments of up to $95.0 million and tiered royalties ranging from 5% to 15% on net sales of LNZ100 in Greater China[102] Financial Performance - The company incurred an accumulated deficit of $132.4 million as of September 30, 2024, primarily from research and development and administrative costs[100] - The company incurred net losses of $10.2 million and $18.9 million for Q3 2024 and 2023, respectively, and $37.1 million and $46.3 million for the nine months ended September 30, 2024 and 2023, respectively[118] - Cash used in operating activities for the nine months ended September 30, 2024 was $50.3 million, compared to $39.4 million for the same period in 2023[123] - Cash provided by financing activities for the nine months ended September 30, 2024 was $198.9 million, compared to $82.6 million for the same period in 2023[125] - Other income, net for Q3 2024 was $2.7 million, compared to $1.0 million for Q3 2023, driven by an increase in interest income of $1.7 million[112] - Other income, net for the nine months ended September 30, 2024 was $6.3 million, compared to $1.2 million for the same period in 2023, primarily due to an increase in interest income of $4.6 million[116] Research and Development Expenses - Research and development costs decreased during the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to reduced contract manufacturing and clinical research expenses[103] - Research and development expenses decreased by $10.6 million, or 62%, to $6.5 million for Q3 2024 compared to $17.0 million for Q3 2023[111] - For the nine months ended September 30, 2024, research and development expenses decreased by $16.0 million, or 40%, to $23.9 million compared to $40.0 million for the same period in 2023[114] Selling, General and Administrative Expenses - Selling, general and administrative expenses are expected to increase in 2024 as the company builds its commercial infrastructure in preparation for the potential launch of LNZ100[103] - Selling, general and administrative expenses increased by $3.6 million, or 127%, to $6.5 million for Q3 2024 compared to $2.9 million for Q3 2023[112] - Selling, general and administrative expenses for the nine months ended September 30, 2024 increased by $12.0 million, or 160%, to $19.5 million compared to $7.5 million for the same period in 2023[115] Cash Position - As of September 30, 2024, LENZ had $217.2 million in cash, cash equivalents, restricted cash, and marketable securities, which is expected to fund operations until positive operating cash flow post-commercial launch[100] - As of September 30, 2024, the company had $217.2 million in cash, cash equivalents, restricted cash, and marketable securities[118] Company Classification and Future Outlook - The company is classified as an emerging growth company under the JOBS Act and may remain so until December 31, 2026[135] - The company has total annual gross revenue of less than $100 million for the fiscal year ended December 31, 2023[135] - The market value of the company's stock held by non-affiliates was less than $700 million as of June 30, 2024[135] - The company intends to rely on exemptions from various public company disclosure and reporting requirements while remaining an emerging growth company[135] - The company has not historically paid dividends, except for a special dividend prior to the Merger, and does not anticipate future dividends[134] Equity Awards and Valuation - The fair value of equity awards is estimated using the Black-Scholes option pricing model, which is influenced by several assumptions[132] - The expected volatility for equity awards is derived from the average historical volatilities of comparable publicly traded companies[134] - The company uses the simplified method to calculate the expected term for options granted to employees due to insufficient historical exercise data[134] - The Series A Warrants became exercisable into shares of common stock upon completion of the Merger and are no longer remeasured at each reporting date[131] - The company has historically not experienced material changes to its condensed consolidated financial statements due to revisions in estimates[130]