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LENZ Therapeutics, Inc.(LENZ) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The company's pre-commercial financial statements show a $29.5 million net loss for the six months ended June 30, 2025, driven by R&D and SG&A, with strong liquidity and initial license revenue Condensed Consolidated Balance Sheets As of June 30, 2025, the company reported total assets of $217.3 million, a slight increase from $215.3 million at December 31, 2024, with cash, cash equivalents, and marketable securities dominating the asset base Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $37,608 | $20,158 | | Marketable securities | $171,911 | $188,872 | | Total current assets | $213,602 | $211,917 | | Total assets | $217,332 | $215,304 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $10,398 | $10,406 | | Total liabilities | $10,967 | $11,220 | | Total stockholders' equity | $206,365 | $204,084 | | Total liabilities and stockholders' equity | $217,332 | $215,304 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the six months ended June 30, 2025, the company reported its first license revenue of $5.0 million, with increased operating expenses leading to a net loss of $29.5 million Statement of Operations Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | License Revenue | $5,000 | $0 | | Research and development | $14,879 | $17,482 | | Selling, general and administrative | $23,909 | $12,958 | | Loss from operations | ($33,788) | ($30,440) | | Net loss | ($29,531) | ($26,902) | | Net loss per share, basic and diluted | ($1.06) | ($1.77) | - The company recognized $5.0 million in license revenue in the second quarter and first half of 2025, a new development compared to zero revenue in the prior year periods21 Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity increased to $206.4 million by June 30, 2025, primarily due to $26.1 million from an ATM offering, offset by net loss, reflecting significant recapitalization from the 2024 reverse merger - In the second quarter of 2025, the company issued 920,500 shares through its at-the-market (ATM) offering, generating net proceeds of $26.1 million24 - The accumulated deficit grew to $174.5 million as of June 30, 2025, from $145.0 million at the end of 2024, reflecting ongoing net losses24 - The 2024 statement shows the significant recapitalization from the merger, including the conversion of preferred stock and issuance of common stock to Graphite stockholders and private placement investors27 Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operations was $27.6 million, with investing activities providing $18.5 million and financing activities providing $26.5 million, resulting in a $17.5 million net cash increase Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($27,557) | ($39,732) | | Net cash provided by (used in) investing activities | $18,475 | ($80,390) | | Net cash provided by financing activities | $26,532 | $169,131 | | Net increase in cash, cash equivalents, and restricted cash | $17,450 | $49,009 | - Financing activities in H1 2025 were driven by $26.1 million in net proceeds from the ATM offering, whereas H1 2024 was dominated by $117.8 million in cash acquired from the merger and $49.8 million from a PIPE financing30 Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, liquidity, license agreements, and equity transactions, including the March 2024 reverse merger and a new ATM program, confirming sufficient cash for at least 12 months of operations - The company believes its existing cash, cash equivalents, and marketable securities of $209.6 million as of June 30, 2025, are sufficient to support operations for at least the next 12 months36 - The March 21, 2024 merger with Graphite Bio was accounted for as a reverse recapitalization, with LENZ OpCo as the accounting acquirer, bringing in $112.6 million of net cash and cash equivalents348185 - In May 2025, the company entered into a license agreement with Lotus Pharmaceutical, receiving a $5.0 million upfront payment, which was recognized as revenue in Q2 2025119121 - A subsequent event in July 2025 was a license and commercialization agreement with Laboratoires Théa for Canada, with eligibility for up to $70.0 million in various payments and royalties124 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses LNZ100's progress, including positive Phase 3 data and NDA submission, affirming sufficient cash to fund operations to positive cash flow post-launch, with increased SG&A for pre-commercial activities and new license revenue Overview and Recent Developments LENZ, a pre-commercial biopharmaceutical company, focuses on LNZ100 for presbyopia, with an FDA PDUFA date of August 8, 2025, and recent developments including robust Phase 3 data, sales force hiring, and new licensing agreements - The company's lead product candidate, LNZ100, is under FDA review with a PDUFA target action date of August 8, 2025, for the treatment of presbyopia132 - Phase 3 CLARITY study data for LNZ100 showed rapid onset (71% achieved ≥3 lines improvement at 30 mins) and long duration (40% achieved ≥3 lines at 10 hours)131136 - In Q2 2025, the company hired eighty-eight sales specialists to target approximately 15,000 eye care professionals for the potential commercial launch of LNZ100144 - The company recently executed two new licensing agreements for LNZ100, potentially bringing in up to $195 million in upfront, regulatory, and commercial milestone payments plus royalties145 Results of Operations The company's operating results reflect its transition towards commercialization, with $5.0 million in license revenue, increased R&D due to pre-approval manufacturing, and significantly higher SG&A expenses driven by sales force hiring and pre-commercial marketing Comparison of Operating Results (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | License revenue | $5,000 | $0 | $5,000 | $0 | | Research and development | $9,061 | $6,945 | $14,879 | $17,482 | | Selling, general and administrative | $12,796 | $7,407 | $23,909 | $12,958 | - The increase in SG&A expenses was primarily driven by a $3.9 million increase in employee salaries and related costs from hiring eighty-eight sales specialists and a $1.4 million increase in pre-commercial marketing and sales infrastructure expenses in Q2 2025158 - The decrease in R&D expenses for the six-month period was mainly due to a $6.1 million reduction in clinical research costs following the substantial completion of the Phase 3 CLARITY trials in March 2024164 Liquidity and Capital Resources As of June 30, 2025, the company had $209.6 million in cash, cash equivalents, and marketable securities, which management believes are sufficient to support the commercial launch of LNZ100 and fund the company to positive operating cash flow - The company had $209.6 million in cash, cash equivalents, restricted cash, and marketable securities as of June 30, 2025167 - Management believes existing cash will fund the company to positive operating cash flow subsequent to the commercial launch of LNZ100, if approved170 - During Q2 2025, the company sold 920,500 shares of common stock under its ATM Sales Agreement, resulting in net proceeds of $26.1 million, with $123.5 million of capacity remaining under the agreement169 Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($27,557) | ($39,732) | | Net cash provided by (used in) investing activities | $18,475 | ($80,390) | | Net cash provided by financing activities | $26,532 | $169,131 | Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company as defined by the SEC and is therefore not required to provide the information for this item - As a smaller reporting company, LENZ Therapeutics is not required to provide quantitative and qualitative disclosures about market risk195 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025196 - No material changes to the company's internal control over financial reporting were identified during the second quarter of 2025197 PART II - OTHER INFORMATION Legal Proceedings The company states it is not currently a party to any legal proceedings that would have a material adverse effect on its business, financial condition, or results of operations - As of the report date, the company is not involved in any material legal proceedings200 Risk Factors The company outlines numerous risks, emphasizing its pre-commercial status and complete dependence on the successful commercialization of its sole product candidate, LNZ100, alongside market acceptance, competition, third-party reliance, and intellectual property concerns - The company's business depends entirely on the successful development and commercialization of its single lead product candidate, LNZ100202207 - Even if approved, LNZ100 may fail to gain market acceptance from eye care professionals and patients, and faces competition from established treatments like glasses and other pharmaceuticals such as Vuity and Qlosi202223224 - The company relies on third-party contract manufacturers for its product supply and CROs for clinical trials, which introduces risks related to supply sufficiency, quality control (cGMP compliance), and trial execution205375379 - The company faces significant intellectual property risks, including the ability to obtain and maintain patent protection, the potential for infringement claims from third parties, and the need to protect trade secrets205251277 Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the quarter ended June 30, 2025, that were not already disclosed in previous Form 8-K filings - No unregistered sales of equity securities occurred in Q2 2025 that had not been previously reported439 Defaults Upon Senior Securities The company reports that there have been no defaults upon senior securities - None440 Mine Safety Disclosures This item is not applicable to the company - Not applicable441 Other Information The company discloses that none of its directors or officers adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement during the last fiscal quarter - During the last fiscal quarter, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement442 Exhibits This section lists the exhibits filed with the Form 10-Q, including the company's amended certificate of incorporation and bylaws, the sales agreement for the ATM offering, and certifications by the CEO and CFO - The report includes a list of filed exhibits, such as corporate governance documents, material contracts (e.g., Sales Agreement with TD Securities), and required officer certifications444