Beam Therapeutics(US:BEAM)2022-08-08 16:00Part I: Financial Information Financial Statements (Unaudited) Beam Therapeutics' unaudited condensed consolidated financial statements as of June 30, 2022, detail its financial position, results of operations, and cash flows, reporting $1.42 billion in total assets and a $141.2 million net loss for the six months ended, with $166.2 million in operating cash flow primarily from a Pfizer payment Condensed Consolidated Balance Sheets As of June 30, 2022, Beam Therapeutics reported $1.17 billion in cash and equivalents, with total assets at $1.42 billion, liabilities at $618.2 million, and stockholders' equity at $800.2 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $265,623 | $559,994 | | Marketable securities | $900,492 | $405,653 | | Collaboration receivable | $0 | $300,000 | | Total current assets | $1,179,890 | $1,273,007 | | Total assets | $1,418,375 | $1,474,453 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $212,278 | $213,435 | | Total liabilities | $618,214 | $647,715 | | Total stockholders' equity | $800,161 | $826,738 | | Total liabilities and stockholders' equity | $1,418,375 | $1,474,453 | Condensed Consolidated Statements of Operations and Other Comprehensive Loss Beam reported Q2 2022 revenue of $16.7 million and a net loss of $72.0 million, with the six-month net loss improving to $141.2 million from $277.8 million in H1 2021 due to a prior year R&D charge Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | License and collaboration revenue | $16,652 | $6 | $25,084 | $12 | | Research and development | $74,556 | $45,577 | $139,966 | $235,683 | | General and administrative | $24,062 | $13,403 | $43,309 | $23,676 | | Loss from operations | ($81,966) | ($58,974) | ($158,191) | ($259,347) | | Net loss | ($71,950) | ($76,253) | ($141,164) | ($277,813) | | Net loss per share, basic and diluted | ($1.02) | ($1.23) | ($2.03) | ($4.54) | Condensed Consolidated Statements of Cash Flows For H1 2022, operating activities provided $166.2 million in cash, primarily from a $300.0 million Pfizer payment, while investing activities used $538.6 million and financing activities provided $78.0 million Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $166,214 | ($71,105) | | Net cash used in investing activities | ($538,601) | ($292,763) | | Net cash provided by financing activities | $78,016 | $413,712 | | Net change in cash, cash equivalents and restricted cash | ($294,371) | $49,844 | - The primary driver for positive operating cash flow in H1 2022 was the collection of a $300.0 million collaboration receivable from Pfizer23227 Notes to Condensed Consolidated Financial Statements The notes provide detailed accounting policies and disclosures on liquidity, fair value measurements, lease agreements, the Guide acquisition, and significant collaboration agreements with partners like Pfizer and Harvard - The company expects its cash, cash equivalents, and marketable securities of $1.2 billion as of June 30, 2022, to be sufficient to fund operations for at least the next 12 months33 - The company's success payment liabilities to Harvard and Broad Institute, tied to stock market value, decreased significantly from $42.2 million at year-end 2021 to $16.4 million at June 30, 2022, due to a drop in the company's stock price54 - In June 2022, the lease for a 100,000 sq. ft. manufacturing facility in North Carolina commenced, with an operating lease ROU asset of $13.6 million and a lease liability of $30.4 million recorded61 - The company recognized $20.6 million in revenue from the Pfizer agreement and $4.5 million from the Apellis agreement in the first six months of 20228694 Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion analyzes the company's financial condition and operations, detailing its base editing strategy, pipeline updates including the BEAM-201 clinical hold, and financial results, confirming sufficient capital for the next 12 months Overview and Pipeline Update Beam is advancing its base editing pipeline, with updates on BEACON-101 and BEAM-102 trials, a clinical hold on BEAM-201, nomination of BEAM-301, and progress on its North Carolina cGMP manufacturing facility - BEAM-101 (Sickle Cell Disease): The company is preparing to initiate the Phase 1/2 BEACON-101 trial and plans to enroll the first subject in the second half of 2022132 - BEAM-102 (Sickle Cell Disease): The company has initiated IND-enabling studies and expects to submit an IND to the FDA in the second half of 2022134 - BEAM-201 (T-ALL/T-LL): The IND for BEAM-201 was placed on clinical hold by the FDA on July 29, 2022, and the company plans to provide updates after discussions with the FDA143 - BEAM-301 (GSDIa): Nominated as the first in vivo development candidate, the company anticipates initiating IND-enabling studies in the second half of 2022148 - Manufacturing: The company's 100,000 square foot cGMP manufacturing facility in North Carolina is anticipated to be operational in the first quarter of 2023163 Results of Operations Q2 2022 revenue was $16.7 million, with R&D expenses increasing to $74.6 million and G&A to $24.1 million, while H1 2022 R&D decreased to $140.0 million due to a prior year one-time charge Comparison of Operating Results (in thousands) | Metric | Q2 2022 | Q2 2021 | Change | H1 2022 | H1 2021 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | License and collaboration revenue | $16,652 | $6 | $16,646 | $25,084 | $12 | $25,072 | | Research and development | $74,556 | $45,577 | $28,979 | $139,966 | $235,683 | ($95,717) | | General and administrative | $24,062 | $13,403 | $10,659 | $43,309 | $23,676 | $19,633 | | Loss from operations | ($81,966) | ($58,974) | ($22,992) | ($158,191) | ($259,347) | $101,156 | - The $95.7 million decrease in R&D expenses for H1 2022 compared to H1 2021 is primarily due to a one-time $155.0 million write-off of in-process R&D from the Guide acquisition in 2021208209 - Excluding the one-time charge, R&D expenses increased due to higher personnel costs (+$23.2 million), stock-based compensation (+$15.2 million), lab supplies (+$7.1 million), and outsourced services (+$3.2 million) in H1 2022209 Liquidity and Capital Resources As of June 30, 2022, Beam held $1.2 billion in cash and equivalents, funded by equity and collaboration payments, with management expecting current capital to suffice for at least the next 12 months, though future funding will be needed - As of June 30, 2022, the company held $1.2 billion in cash, cash equivalents, and marketable securities222 - The company received a $300.0 million upfront payment from Pfizer in January 2022 and a $25.0 million payment from Apellis in June 2022219221 - The company has sold a total of $589.3 million in common stock under its At-The-Market (ATM) sales agreement as of June 30, 2022218220 - Management expects current cash to fund operating expenses and capital expenditures for at least the next 12 months from the issuance date of the report234 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $1.2 billion cash and investment portfolio, which management deems immaterial due to its short-term, low-risk nature, with no significant foreign currency risk but potential future inflation impact - The company's main market risk is interest rate sensitivity on its $1.2 billion in cash and investments240 - Due to the short-term duration and low-risk profile of its investment portfolio, the company does not expect significant impact from interest rate fluctuations240 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - The principal executive and financial officers concluded that the company's disclosure controls and procedures were effective as of June 30, 2022245 - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2022246 Part II: Other Information Legal Proceedings Beam Therapeutics is not currently subject to material legal proceedings, though a dispute with a research institution regarding an alleged confidentiality breach is noted under Risk Factors - The company is not currently subject to any material legal proceedings249 - The company has received correspondence from a research institution alleging breach of a confidentiality agreement, misappropriation of trade secrets, and other claims, which the company believes are without merit274 Risk Factors This section details new and updated risks, primarily focusing on the dynamic intellectual property landscape for gene editing, including ongoing patent interference proceedings and potential infringement lawsuits, alongside a claim of trade secret misappropriation - The company's licensor, the Boston Licensing Parties (including Broad Institute), is involved in multiple patent interference proceedings concerning CRISPR/Cas9 technology, which creates uncertainty for Beam's intellectual property rights254259260 - A key interference proceeding (No. 106,115) with the University of California regarding CRISPR-Cas9 systems in eukaryotic cells was decided in favor of the Boston Licensing Parties by the PTAB, but this decision is being appealed256 - The intellectual property landscape for gene editing is highly dynamic, and the company faces a risk of third-party lawsuits alleging infringement of their patents, which could prevent or delay product development264265 - The company has received a claim from a research institution alleging breach of a confidentiality agreement and misappropriation of trade secrets; while Beam believes the claims are without merit, litigation could be costly and distracting274