Beam Therapeutics(BEAM) - 2023 Q2 - Quarterly Report

PART I Financial Information Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Beam Therapeutics Inc. as of June 30, 2023, including balance sheets, statements of operations, statements of stockholders' equity, and statements of cash flows, along with detailed notes Condensed Consolidated Balance Sheets Total assets increased slightly to $1.35 billion as of June 30, 2023, from $1.34 billion at year-end 2022, primarily due to increased additional paid-in capital offsetting the accumulated deficit, with cash and marketable securities remaining the largest asset components at approximately $1.1 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $225,544 | $232,767 | | Marketable securities | $847,472 | $845,367 | | Total current assets | $1,094,805 | $1,092,896 | | Total assets | $1,353,887 | $1,341,714 | | Liabilities & Equity | | | | Total current liabilities | $209,536 | $223,595 | | Total liabilities | $542,244 | $608,240 | | Accumulated deficit | $(1,236,598) | $(1,057,362) | | Total stockholders' equity | $811,643 | $733,474 | Condensed Consolidated Statements of Operations and Other Comprehensive Loss The company reported a net loss of $179.2 million for the six months ended June 30, 2023, an increase from $141.2 million in the prior year, driven by higher research and development expenses which rose to $197.3 million Statement of Operations Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | License and collaboration revenue | $44,324 | $25,084 | | Research and development | $197,254 | $139,966 | | General and administrative | $48,146 | $43,309 | | Loss from operations | $(201,076) | $(158,191) | | Net loss | $(179,236) | $(141,164) | | Net loss per share, basic and diluted | $(2.41) | $(2.03) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity increased from $733.5 million at December 31, 2022, to $811.6 million at June 30, 2023, primarily due to proceeds from the At-the-Market (ATM) stock offering and other stock-based activities, which offset the $179.2 million net loss Changes in Stockholders' Equity (Six Months Ended June 30, 2023, in thousands) | Description | Amount | | :--- | :--- | | Balance at December 31, 2022 | $733,474 | | Issuance of common stock from ATM offering, net | $200,993 | | Stock-based compensation | $50,195 | | Net loss | $(179,236) | | Balance at June 30, 2023 | $811,643 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $194.5 million for the six months ended June 30, 2023, while financing activities provided $206.0 million, resulting in a net decrease in cash, cash equivalents, and restricted cash of $4.6 million Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(194,484) | $166,214 | | Net cash provided by (used in) investing activities | $(16,029) | $(538,601) | | Net cash provided by (used in) financing activities | $205,958 | $78,016 | | Net change in cash, cash equivalents and restricted cash | $(4,555) | $(294,371) | Notes to Condensed Consolidated Financial Statements The notes provide detailed information on the company's business, liquidity, accounting policies, fair value measurements, marketable securities, accrued liabilities including a legal contingency, significant license and collaboration agreements, common stock transactions, and stock-based compensation plans - The company expects its cash, cash equivalents, and marketable securities of $1.1 billion as of June 30, 2023, to be sufficient to fund operations for at least the next 12 months[217] - The company has accrued a $3.4 million liability related to a dispute with a research institution over an alleged breach of a confidentiality agreement, which the institution has rejected[2] Revenue Recognition from Key Collaborations (Six Months Ended June 30, 2023, in millions) | Agreement | Revenue Recognized | | :--- | :--- | | Pfizer Agreement | $26.3 | | Apellis Agreement | $12.2 | | Orbital Agreement | $4.2 | - As of June 30, 2023, the company has sold an additional 9,727,417 shares under its amended At-the-Market (ATM) sales agreement for aggregate gross proceeds of $528.2 million[17] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's business strategy, clinical pipeline progress, financial results, and liquidity, highlighting advancements in BEAM-101 and BEAM-201 trials, plans for BEAM-301 and BEAM-302 regulatory submissions, and the significant increase in R&D expenses, while confirming a cash runway of at least 12 months Overview and Pipeline Beam is a biotechnology company focused on precision genetic medicines using proprietary base editing technology, advancing a diversified portfolio across hematology, immunology/oncology, and genetic diseases, with key programs including BEAM-101 and BEAM-201 in clinical trials and regulatory submissions planned for BEAM-302 and BEAM-301 - BEACON trial for BEAM-101 (sickle cell disease) is ongoing, with data from multiple patients planned for release in 2024[77][97] - The first patient in the Phase 1/2 trial for BEAM-201 (T-ALL/T-LL) is expected to be dosed in Q3 2023[132] - The company plans to submit a regulatory application for BEAM-302 (AATD) in Q1 2024 and for BEAM-301 (GSDIa) in H1 2024 to initiate clinical trials[103][102] - The company's 100,000 sq. ft. manufacturing facility in North Carolina became operational in Q1 2023 and is expected to initiate cGMP operations in late 2023[106] Collaborations The company leverages strategic collaborations to expand its base editing technology, including partnerships with Pfizer, Apellis, Verve, Sana, and Orbital, which provide upfront payments, potential milestones, and royalties, contributing to the company's revenue stream - Collaboration with Pfizer focuses on in vivo base editing for three rare genetic disease targets in the liver, muscle, and central nervous system[108] - Collaboration with Apellis focuses on discovering new treatments for complement system-driven diseases across six preclinical programs[109] - Collaboration with Verve Therapeutics granted Verve exclusive licenses for base editing technology against three liver-mediated cardiovascular disease targets, with Verve's lead product, VERVE-101, currently in a global Phase 1b clinical trial[110] Results of Operations The company's financial results show a significant year-over-year increase in operating expenses, primarily due to higher R&D costs, which rose by $57.3 million to $197.3 million for the six months ended June 30, 2023, driven by clinical trial costs, IND-enabling studies, and increased personnel, while license and collaboration revenue grew to $44.3 million Comparison of Operating Expenses (Six Months Ended June 30, in thousands) | Expense Category | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $197,254 | $139,966 | $57,288 | | General and administrative | $48,146 | $43,309 | $4,837 | | Total operating expenses | $245,400 | $183,275 | $62,125 | - The $57.3 million increase in R&D expenses for the first half of 2023 was primarily due to a $30.9 million increase in external costs (manufacturing, clinical expenses for BEAM-101/201, IND-enabling studies for BEAM-301/302) and a $14.4 million increase in employee-related expenses due to headcount growth[179][125] Liquidity and Capital Resources As of June 30, 2023, Beam had $1.1 billion in cash, cash equivalents, and marketable securities, primarily funded through equity offerings, including an amended At-the-Market (ATM) sales agreement allowing for the sale of up to an additional $800.0 million in common stock, which management believes is sufficient to fund operations for at least the next 12 months - The company had $1.1 billion in cash, cash equivalents, and marketable securities as of June 30, 2023[159] - The company received a $300.0 million upfront payment from Pfizer in January 2022 and a $25.0 million payment from Apellis in June 2022[159] - The company expects its current cash position will fund operating expenses and capital expenditures for at least the next 12 months from the report's issuance date[186] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is interest rate sensitivity on its $1.1 billion portfolio of cash, cash equivalents, and marketable securities, though due to the short-term duration and low-risk profile of these investments, a 10% change in interest rates is not expected to have a material effect, and the company has minimal foreign currency exchange or inflation risk - The company's main market risk is interest rate changes affecting its $1.1 billion in cash and investments[166] - Due to the short-term nature of its investment portfolio, a 10% change in interest rates is not expected to have a material impact on the portfolio's fair market value[166] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[167] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[167] PART II Other Information Item 1. Legal Proceedings The company reports that it is not currently subject to any material legal proceedings, though Note 6 of the financial statements describes a pre-litigation dispute with a research institution - The company states it is not currently subject to any material legal proceedings[197] Item 1A. Risk Factors This section highlights key risks to the company's business, including the dynamic and litigious intellectual property landscape for gene editing, reliance on third-party manufacturers for critical supplies (citing a recent DOJ subpoena of a key NHP supplier), and potential difficulties in enrolling patients in clinical trials for rare diseases - The intellectual property landscape for gene editing is highly dynamic, and the company faces risk of infringement lawsuits from third parties, which could be costly and delay development[168] - The company relies on third parties for manufacturing and supply, which increases risks of delays and cost overruns, and a key supplier of non-human primates (NHPs), Charles River, received a DOJ subpoena regarding NHP importation, which could affect preclinical development[199] - The company may face challenges in enrolling patients for clinical trials, particularly for rare diseases, which could delay or prevent regulatory approvals and increase development costs[170][200] Item 5. Other Information This section discloses the adoption of Rule 10b5-1 trading arrangements by several of the company's directors and officers, including the CEO, CFO, President, Chief Legal Officer, and Chief Medical Officer, to facilitate the orderly sale of company securities, including sales to cover tax withholding obligations on vesting restricted stock units (RSUs) - Several executives, including CEO John Evans, CFO Terry-Ann Burrell, and President Giuseppe Ciaramella, adopted Rule 10b5-1 trading plans during the quarter[228] - The plans include arrangements for the sale of shares to cover tax withholding obligations upon the vesting of RSU equity awards[238] Item 6. Exhibits This section lists the exhibits filed with the quarterly report, including an amendment to the Sales Agreement with Jefferies LLC, certifications from the CEO and CFO as required by the Sarbanes-Oxley Act, and XBRL data files - Filed exhibits include Amendment No. 2 to the At-the-Market (ATM) Sales Agreement with Jefferies LLC, dated May 10, 2023[232] - Certifications by the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Sections 302 and 906 are included as exhibits[232]