Graphite Bio(GRPH) - 2024 Q4 - Annual Report

Product Development - LENZ's lead product candidate LNZ100 is a once-daily eye drop targeting presbyopia, with a U.S. market opportunity exceeding $3 billion[487] - In the Phase 3 CLARITY study, LNZ100 demonstrated that 71% of participants achieved three-lines or greater improvement in near vision at 3 hours post-application[489] - The FDA assigned a PDUFA target action date of August 8, 2025, for LNZ100, with a potential commercial launch in Q4 2025 if approved[491] - LNZ100 has patent protection until at least 2039 in the U.S., supported by a robust intellectual property portfolio[488] - The company has not yet realized product revenue and continues to focus on research and development for its product candidate LNZ100[574] - The company expects to incur additional losses as it advances its product candidate through clinical development and seeks regulatory approval[574] Financial Performance - As of December 31, 2024, LENZ had $209.1 million in cash and marketable securities, sufficient to support operations until positive cash flow post-commercial launch[492] - The company incurred an accumulated deficit of $145 million as of December 31, 2024, primarily from research and development costs[492] - Net losses were $49.8 million for the year ended December 31, 2024, compared to $70.0 million for 2023[515] - The company expects to continue incurring significant expenses and operating losses as it seeks approval and pursues the potential commercialization of LNZ100[515] - For the year ended December 31, 2024, the net loss was $49.769 million, an improvement from a net loss of $69.968 million in 2023, representing a 29% reduction in losses[570] Expenses - Research and development expenses decreased by 50% from $59.5 million in 2023 to $29.8 million in 2024 due to the completion of Phase 3 trials[509] - Selling, general and administrative expenses increased by 123% from $12.9 million in 2023 to $28.8 million in 2024, reflecting the build-out of a commercial team[509] - Total operating expenses were $58.61 million, a decrease from $72.43 million in 2023, primarily driven by reduced research and development expenses of $27.91 million compared to $59.06 million in the prior year[616] Cash Flow and Financing - Cash used in operating activities was $59.4 million for the year ended December 31, 2024, resulting from a net loss of $49.8 million[523] - Cash provided by financing activities was $199.0 million for the year ended December 31, 2024, including $117.8 million from the Merger[528] - Cash used in investing activities was $154.5 million for the year ended December 31, 2024, primarily due to $241.9 million in purchases of marketable securities[525] - The company raised $79.513 million from the issuance of common stock in 2024, contributing to a net cash provided by financing activities of $199.002 million[570] Shareholder Equity - The company reported total stockholders' equity of $204.1 million in 2024, compared to a deficit of $92.7 million in 2023[558] - The weighted-average common shares outstanding increased to 21.3 million in 2024 from 2.0 million in 2023[561] - The total common stock outstanding increased to 27,518,439 shares, with an additional paid-in capital of $348,901 million[567] Mergers and Acquisitions - The merger with LENZ OpCo was completed on March 21, 2024, with Graphite changing its name to LENZ Therapeutics, Inc.[573] - Following the merger, former LENZ OpCo stockholders owned approximately 56% of the combined company, while Graphite stockholders and PIPE investors owned 31% and 13%, respectively[624] - The merger resulted in the issuance of 15,409,102 shares of Graphite common stock to LENZ OpCo stockholders, with a conversion ratio of 0.2022 shares of Graphite for each share of LENZ OpCo[623] Tax and Deferred Assets - The company recorded a valuation allowance against its net deferred tax assets due to uncertainty regarding their realization, reflecting cautious tax planning[608] - The total deferred tax assets increased significantly to $53.8 million in 2024 from $26.8 million in 2023, primarily due to net operating loss carryforwards of $15.5 million and research and development credit carryforwards of $8.2 million[670] - The valuation allowance against deferred tax assets rose by $26.5 million during 2024, totaling $53.2 million at year-end, indicating uncertainty in realizing these assets[673] License Agreements - The CORXEL License Agreement includes $15 million in upfront payments and potential milestone payments up to $95 million, plus royalties of 5% to 15% on net sales in Greater China[498] - The Company recognized $15.0 million as revenue from the CORXEL License upon completion of the transfer in 2022, with no contractual milestones met in 2024 or 2023[681]