prime medicine(PRME) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for Q2 and H1 2025, including balance sheets, operations, cash flows, and detailed notes Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $279.0 million while total liabilities increased to $218.1 million, driven by operating lease liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $53,804 | $182,476 | | Total current assets | $121,287 | $211,886 | | Total assets | $279,009 | $297,508 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $34,109 | $37,961 | | Operating lease liability, net of current | $112,478 | $37,180 | | Total liabilities | $218,149 | $144,359 | | Total stockholders' equity | $60,860 | $153,149 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q2 2025 saw $1.1 million in revenue and a $52.6 million net loss, while H1 2025 net loss was $104.5 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $1,115 | $0 | $2,569 | $591 | | Research and development | $41,375 | $43,071 | $81,937 | $80,845 | | General and administrative | $13,117 | $12,601 | $26,401 | $23,759 | | Loss from operations | $(53,377) | $(55,672) | $(105,769) | $(104,013) | | Net loss | $(52,591) | $(55,327) | $(104,481) | $(101,088) | | Net loss per share | $(0.41) | $(0.46) | $(0.81) | $(0.90) | Condensed Consolidated Statements of Cash Flows H1 2025 net cash used in operating activities was $90.3 million, with financing activities providing $6.2 million, ending the period with $67.5 million in cash Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(90,269) | $(113,198) | | Net cash used in investing activities | $(44,971) | $(30,138) | | Net cash provided by financing activities | $6,197 | $157,362 | | Net change in cash, cash equivalents, and restricted cash | $(129,043) | $14,026 | | Cash, cash equivalents, and restricted cash at end of period | $67,495 | $69,096 | Notes to Condensed Consolidated Financial Statements These notes detail liquidity, accounting policies, and key agreements, including a $138.2 million stock offering, stock option repricing, and ongoing arbitration with Beam Therapeutics - In August 2025, the company raised approximately $138.2 million in net proceeds from a common stock offering, which is expected to be sufficient to fund operations for at least the next twelve months[34][35] - On August 1, 2025, the company repriced certain outstanding employee and director stock options with exercise prices above $4.04 down to $4.04 per share to improve retention and incentive value[80][81] - The company is in an arbitration proceeding with Beam Therapeutics, Inc regarding a dispute over the development of a treatment for alpha-1 antitrypsin deficiency (AATD)[89][141] - In July 2025, the company entered into an agreement with the Cystic Fibrosis Foundation (CFF) for up to $24 million in additional funding to accelerate the development of Prime Editors for cystic fibrosis[87] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic shift to the in vivo liver franchise, analyzes Q2 and H1 2025 financial results, and highlights a $138.2 million financing extending the cash runway into 2027 Overview and Business Update The company strategically refocused on its in vivo liver franchise (Wilson's Disease, AATD) with 2026 IND/CTA filings, while continuing CF and CAR-T programs and seeking partners for PM359 - Strategic focus has shifted to the in vivo liver franchise, targeting Wilson's Disease and AATD, with IND/CTA filings anticipated in the first half and middle of 2026, respectively[94] - The company will continue its Cystic Fibrosis program, supported by up to $24 million in additional funding from the Cystic Fibrosis Foundation, and its CAR-T collaboration with Bristol-Myers Squibb[95][96] - Initial data from the Phase 1/2 trial of PM359 for CGD showed high levels of dihydrorhodamine positivity, considered potentially curative; the company is now seeking partners for this program following its strategic shift[97] Results of Operations Q2 2025 R&D expenses decreased by $1.7 million due to program deprioritization, while H1 2025 G&A expenses increased by $2.6 million from severance and legal fees R&D Expense Comparison - Q2 (in thousands) | Category | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Personnel expenses | $14,448 | $16,198 | $(1,750) | | Facility related | $13,765 | $11,302 | $2,463 | | Research costs | $8,116 | $11,390 | $(3,274) | | Total R&D expenses | $41,375 | $43,071 | $(1,696) | G&A Expense Comparison - H1 (in thousands) | Category | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Personnel expenses | $14,238 | $12,840 | $1,398 | | Professional and consultant fees | $7,228 | $5,931 | $1,297 | | Total G&A expenses | $26,401 | $23,759 | $2,642 | - The decrease in Q2 R&D spending was driven by a $3.3 million reduction in research costs and a $1.1 million drop in clinical expenses due to the deprioritization of the CGD program[107] - The increase in H1 G&A expenses was primarily due to a $1.4 million increase in personnel costs related to one-time severance payments from the workforce reduction and a $1.3 million increase in corporate legal fees[112][116] Liquidity and Capital Resources As of June 30, 2025, the company held $101.8 million in cash and investments, supplemented by a $138.2 million August 2025 stock offering, extending its cash runway into 2027 - As of June 30, 2025, the company held $101.8 million in cash, cash equivalents, and investments[117] - An August 2025 stock offering generated approximately $138.2 million in net proceeds, extending the company's cash runway into 2027[118][126] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $115.4 million investment portfolio, though a 10% rate change is not expected to be material - The company is exposed to interest rate risk on its $115.4 million portfolio of cash, cash equivalents, investments, and restricted cash[135] - Management does not believe a 10% change in interest rates would materially affect the fair market value of its investments due to their short-term nature[135] Item 4. Controls and Procedures As of June 30, 2025, the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during Q2 2025 - The company's disclosure controls and procedures were deemed effective as of the end of the period covered by this report (June 30, 2025)[138] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[139] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is in arbitration with Beam Therapeutics over alleged breach of a collaboration agreement regarding the AATD program, with Beam seeking damages and program transfer - The company is in a consolidated arbitration proceeding with Beam Therapeutics regarding the development of a treatment for AATD[141] - Beam alleges breach of contract and seeks declaratory, injunctive, and monetary relief, which could include forcing the company to cease work on its AATD program and transfer it to Beam[141] Item 1A. Risk Factors Updated risk factors include healthcare reform, U.S. tax/trade policy changes, challenges in retaining key personnel, collaborator disputes, and operational risks from the May 2025 restructuring - Healthcare reform, including the Inflation Reduction Act of 2022 (IRA), could increase costs, add downward pressure on drug prices, and adversely affect profitability[143][147] - The company's ability to retain key employees is a significant risk, exacerbated by a declining stock price that has left many stock options "underwater"; a recent option repricing was implemented to address this[158][160] - The ongoing arbitration with Beam Therapeutics is highlighted as a material risk, as an adverse outcome could result in monetary damages and the loss of the company's AATD program[163] - The May 2025 strategic restructuring and workforce reduction may not achieve anticipated cost savings and could disrupt operations, reduce morale, and lead to further attrition[164][165] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the three months ended June 30, 2025 - There were no unregistered sales of equity securities in the three months ended June 30, 2025[167] Item 5. Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 trading plans during the three months ended June 30, 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan during the quarter[171] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and various agreements