Lyell(LYEL) - 2023 Q1 - Quarterly Report

markdown PART I—FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Unaudited Q1 2023 financials report a **$67.0 million net loss**, **$880.5 million total assets**, and **$46.2 million net cash used in operations** [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$880.5 million** by March 31, 2023, primarily due to reduced cash and marketable securities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $109,426 | $123,554 | | Marketable securities (current & non-current) | $558,598 | $586,715 | | Total current assets | $624,398 | $651,295 | | Total assets | $880,450 | $937,561 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $30,797 | $37,028 | | Total liabilities | $96,624 | $104,309 | | Total stockholders' equity | $783,826 | $833,252 | | Total liabilities and stockholders' equity | $880,450 | $937,561 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q1 2023 net loss was **$67.0 million**, a slight improvement from prior year, impacted by lower G&A and an impairment Statement of Operations Summary (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Revenue | $65 | $553 | | Research and development | $44,630 | $35,830 | | General and administrative | $19,279 | $34,421 | | Loss from operations | ($62,556) | ($68,576) | | Impairment of other investments | ($10,000) | $0 | | Net loss | ($66,959) | ($68,144) | | Net loss per common share, basic and diluted | ($0.27) | ($0.28) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2023 saw **$46.2 million** net cash used in operations and **$32.2 million** provided by investing, resulting in a **$14.1 million** cash decrease Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($46,212) | ($47,852) | | Net cash provided by (used in) investing activities | $32,154 | ($26,122) | | Net cash (used in) provided by financing activities | ($69) | $2,555 | | **Net decrease in cash, cash equivalents and restricted cash** | **($14,127)** | **($71,419)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes confirm a 12-month cash runway, detail GSK termination, a **$10.0 million** investment impairment, and an unutilized **$200.0 million** ATM program - The company believes its available cash, cash equivalents, and marketable securities as of March 31, 2023, are **adequate** to fund operations for at least the **next 12 months**[32](index=32&type=chunk) - The collaboration agreement with GSK was **terminated** effective December 24, 2022, and the company has **discontinued further work** on the related programs (LYL331 and LYL132) Revenue from this agreement was **zero in Q1 2023**, down from **$0.6 million** in Q1 2022[50](index=50&type=chunk)[52](index=52&type=chunk) - The company recorded a **$10.0 million** impairment expense for one of its other investments during the three months ended March 31, 2023, determining its fair value to be **negligible**[63](index=63&type=chunk) - In August 2022, the company established an at-the-market (ATM) offering program to sell up to **$200.0 million** of its common stock To date, **no sales have been made** under this agreement[79](index=79&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses pipeline progress, Q1 2023 financials with increased R&D and decreased G&A, confirming cash runway into 2026 Product Candidate Pipeline Status | Product Candidate | Modality | Target Indications | Status | Next Expected Milestone | | :--- | :--- | :--- | :--- | :--- | | LYL797 | CAR T Cell | TNBC, NSCLC | Phase 1 | Initial data in 1H 2024 | | LYL119 | CAR T Cell | ROR1+ Solid Tumors | Preclinical | Submit IND in 1H 2024 | | LYL845 | TIL | Melanoma, CRC, NSCLC | Phase 1 | Initial data in 2024 | - The company's LyFE™ manufacturing center in Bothell, Washington is **operational** and producing clinical supply for its Phase 1 trials At **full capacity**, it is expected to manufacture approximately **500 infusions per year**[113](index=113&type=chunk)[114](index=114&type=chunk) Comparison of Results of Operations (in thousands) | Line Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $44,630 | $35,830 | $8,800 | | General and administrative | $19,279 | $34,421 | ($15,142) | | Loss from operations | ($62,556) | ($68,576) | $6,020 | | Net loss | ($66,959) | ($68,144) | $1,185 | - The company believes its existing cash, cash equivalents, and marketable securities of **$668.0 million** as of March 31, 2023, will be **sufficient** to meet working capital and capital expenditure needs **into 2026**[141](index=141&type=chunk)[144](index=144&type=chunk)[183](index=183&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate sensitivity on **$642.5 million** in short-term investments, considered not significant - The company's primary market risk is interest rate risk on its **$83.9 million** in cash equivalents and **$558.6 million** in marketable securities as of March 31, 2023 This risk is considered **not significant** due to the short-term nature of the investments[158](index=158&type=chunk) - The company has **no significant exposure** to foreign currency exchange risk as all operations and employees are currently located in the United States[159](index=159&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 31, 2023, with no material changes during the quarter - The CEO and CFO concluded that as of March 31, 2023, the company's disclosure controls and procedures were **effective at a reasonable assurance level**[162](index=162&type=chunk) - **No material changes** to the company's internal control over financial reporting occurred during the quarter ended March 31, 2023[163](index=163&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is not party to any material legal proceedings, nor aware of any contemplated by authorities - As of the filing date, the company is **not party to any legal proceedings considered material** to its operations[166](index=166&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) Key risks include early clinical stage, substantial losses, unproven technologies, manufacturing complexities, and need for additional capital - The company is an early clinical-stage biopharmaceutical company with a history of **substantial losses** (**$834.4 million** accumulated deficit as of March 31, 2023) and expects to incur increasing net losses for the foreseeable future[174](index=174&type=chunk) - The company's product candidates are based on novel, **unproven technologies**, which makes it difficult to predict the time and cost of development and the potential for regulatory approval[193](index=193&type=chunk) - Manufacturing of cellular therapies is **highly complex** and subject to risks such as product loss, contamination, and equipment failure, which could increase costs and delay programs[217](index=217&type=chunk) - The company's success payment obligations to Fred Hutch and Stanford, totaling up to **$400.0 million**, could result in **stockholder dilution or be a drain on cash resources** if triggered[185](index=185&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales occurred; **$391.8 million** IPO proceeds fund R&D, clinical trials, and general corporate purposes - The company raised approximately **$391.8 million** in net proceeds from its June 2021 IPO[369](index=369&type=chunk) - There has been **no material change** in the planned use of IPO proceeds, which are being used to fund R&D, clinical trials, and general corporate purposes[370](index=370&type=chunk) [Item 3. Defaults Upon Senior Securities](index=74&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable as the company has no defaults upon senior securities [Item 4. Mine Safety Disclosures](index=74&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company [Item 5. Other Information](index=74&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item [Item 6. Exhibits](index=75&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including required certifications and XBRL data files