VERVE THERAPEUTICS, INC. The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our condensed consolidated
financial statements and the related notes to those statements included
elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form
10-K filed with the
Overview
We are a clinical-stage genetic medicines company pioneering a new approach to the care of cardiovascular disease, or CVD, transforming treatment from chronic management to single-course gene editing medicines. Despite advances in treatment over the last 50 years, CVD remains the leading cause of death worldwide. The current paradigm of chronic care is fragile-requiring rigorous patient adherence, extensive healthcare infrastructure and regular healthcare access-and leaves many patients without adequate care. Our goal is to disrupt the chronic care model for CVD by providing a new therapeutic approach with single-course in vivo gene editing treatments focused on addressing the root causes of this highly prevalent and life-threatening disease. Our initial two programs target PCSK9 and ANGPTL3, respectively, genes that have been extensively validated as targets for lowering blood lipids, such as low-density lipoprotein cholesterol, or LDL-C. We believe that editing these genes could potently and durably lower LDL-C throughout the lifetime of patients with or at risk for atherosclerotic cardiovascular disease, or ASCVD, the most common form of CVD.
Our approach leverages multiple breakthroughs in 21st century biomedicine-human genetic analysis, gene editing, messenger RNA, or mRNA, -based therapies and lipid nanoparticle, or LNP, delivery-to target genes that are predominantly expressed in the liver and disrupt the production of proteins that cause CVD. We are advancing a pipeline of single-course in vivo gene editing programs, each designed to mimic natural disease resistance mutations and turn off specific genes in order to lower blood lipids, thereby reducing the risk of ASCVD. We intend to initially develop these programs for the treatment of patients with familial hypercholesterolemia, or FH, a genetic disease that causes life-long severely elevated blood LDL-C, leading to increased risk of early-onset ASCVD. If our programs are successful in FH, we believe they could also provide a potential treatment for the broader population of patients with established ASCVD. Ultimately, we believe that these treatments could potentially be developed for administration to people at risk for ASCVD as a preventative measure similar to the way that certain vaccines offer long-term protection against infectious diseases.
We were incorporated in
On
On
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On
On
We are a clinical-stage company. To date, we have not generated any revenue from
product sales and do not expect to generate revenue from the sale of products
for the foreseeable future. Prior to the execution of the Vertex Agreement, on
We expect to continue to incur significant expenses and increasing operating losses in connection with ongoing development activities related to our portfolio of programs as we advance VERVE-101 in our heart-1 clinical trial; continue our preclinical development of other product candidates; advance these product candidates toward clinical development; further develop base editing and novel gene editing technology, delivery technology and manufacturing capabilities; seek to discover and develop additional product candidates including VERVE-201, our development candidate targeting ANGPTL3; maintain, expand enforcement, defend, and protect our intellectual property portfolio; hire research and development and clinical personnel; ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; establish a commercial manufacturing source and secure supply chain capacity sufficient to provide commercial quantities of any product candidates for which we may obtain regulatory approval; and add operational, legal, compliance, financial and management information systems and personnel to support our research, product development, future commercialization efforts and operations as a public company.
As a result, we will need substantial additional funding to support our continuing operations and pursue our strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings and other sources of capital, which may include collaborations or licensing arrangements with other companies or other strategic transactions. If we are unable to raise capital or obtain adequate funds when needed or on acceptable terms, we may be required to delay, limit, reduce or terminate our research and development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As of
Recent Developments
VERVE-101
Our lead product candidate, VERVE-101, is designed to permanently turn off the PCSK9 gene in the liver. PCSK9 is a highly validated target that plays a critical role in controlling blood LDL-C through its regulation of the LDL receptor, or LDLR. Reduction of PCSK9 protein in the blood improves the ability of the liver to clear LDL-C from the blood. VERVE-101 utilizes LNP-mediated delivery to target the liver and base editing technology to make a single base change at a specific site in the PCSK9 gene in order to disrupt PCSK9 protein production.
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VERVE-101 is being developed for the treatment of patients with heterozygous
familial hypercholesterolemia, or HeFH, which affects approximately 1.3 million
people in
In an ongoing in vivo proof-of-concept study of a precursor formulation of VERVE-101 in non-human primates, or NHPs, we observed substantial lowering of LDL-C levels that was sustained over an extended period of time following treatment. In this study, following a single intravenous infusion of a base editor targeting PCSK9, we observed an average reduction of blood PCSK9 protein of 89% accompanied by an average reduction of blood LDL-C levels of 59% at two weeks after treatment. This LDL-C reduction was maintained at an average of greater than 60% for 20 months following treatment. If we are able to achieve similar reductions in PCSK9 protein levels in humans, we believe this could result in marked and sustained LDL-C reductions of approximately 60%, which would potentially offer superior cumulative LDL-C lowering to what has been clinically demonstrated with other PCSK9-targeting treatment modalities.
In an ongoing preclinical study with VERVE-101 in NHPs, we observed 70% mean editing following a single administration of 1.5 mg/kg dose at the PCSK9 target gene site in liver biopsies taken at day 15. In this study, we also observed an average reduction in blood PCSK9 protein of 86% accompanied by an average reduction of blood LDL-C levels of 62% at two weeks after treatment. These reductions were durable when assessed 12 months after treatment, with mean reduction in blood PCSK9 protein of 89% and blood LDL-C levels of 68%.
In our preclinical studies in NHPs to date, VERVE-101 has been well tolerated following a single administration with only mild elevations in liver function tests that resolved within two weeks.
In GLP toxicology studies, we observed that the highest dose that did not produce a significant increase in adverse effects relative to control was 2.0 mg/kg and 5.0 mg/kg in NHPs and a mouse model, respectively. In the toxicology studies in NHPs, we observed transient mild elevations in liver function tests and evidence of minimal to mild single cell hepatocyte necrosis two days after dosing and all findings were reversible and observed to be resolved at a 90-day measurement. In the mouse model, we did not observe any differences between wild-type mice or the HeFH mouse disease model.
In
We have received clearance of our first clinical trial application, or CTA, for
VERVE-101 in
The heart-1 clinical trial is designed to enroll approximately 40 adult HeFH patients with established ASCVD and evaluate the safety and tolerability of VERVE-101 administration, with additional analyses for pharmacokinetics and reductions in blood PCSK9 protein and LDL-C. The trial includes three parts - (A) a single ascending dose portion, followed by (B) an expansion single-dose cohort, in which additional participants will receive the selected potentially therapeutic dose and (C) an optional second-dose cohort, in which eligible participants in lower dose cohorts in Part A have the option to receive a second treatment at the selected potentially therapeutic dose. We expect to report interim clinical data from the heart-1 clinical trial including safety parameters, blood PCSK9 level, and blood LDL-C level in 2023.
ANGPTL3 Program
VERVE-201, our development candidate targeting ANGPTL3, is designed to
permanently turn off the ANGPTL3 gene in the liver. We plan to develop this
program initially for the treatment of homozygous familial hypercholesterolemia,
or HoFH, which affects approximately 1,300 patients in
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ASCVD
We plan to utilize internally developed GalNAc-LNP technology in VERVE-201 to deliver a base editor targeting the ANGPTL3 gene to the liver. In patients with HoFH, delivery of base editors with standard LNPs to the liver is challenging due to the deficiency of LDLR, which is known to mediate LNP uptake. We have developed proprietary LNPs with a GalNAc ligand designed to bind to asialoglycoprotein receptors, in the liver, which bypass LDLR, thereby enabling uptake into the liver in HoFH patients.
In an ongoing proof of concept study of an ANGPTL3 base editor in NHPs (n=4), we observed a 96% reduction in blood ANGPTL3 protein from baseline, with follow-up out to approximately 20 months. In addition, no long-term impacts were observed on markers of liver toxicity, as measured by alanine aminotransferase (ALT) and bilirubin levels following treatment administration.
In addition, in our preclinical studies of our ANGPTL3 program using a single treatment of two different formulations of our proprietary GalNAc-LNPs to deliver an ANGPTL3-targeted base editor we observed approximately 94% (n=3) and 97% (n=3) reduction in blood ANGPTL3 protein, and reductions in LDL-C of nearly 100 mg/dL, which was an approximately 35% reduction from baseline. We conducted these studies in an internally developed NHP model of HoFH, which we created by editing the LDLR gene in wild-type NHPs and eliminating LDLR expression in the livers of NHPs using a Cas9 and dual guide RNA strategy encapsulated in standard LNPs, which led to nearly 70% whole liver DNA editing at the LDLR gene and resulted in an approximately 94% reduction in LDLR protein in the liver and a six-fold increase in blood LDL-C.
We have also assessed the potential broad utility of our proprietary GalNAc-LNP approach for delivery of our ANGPTL3-targeted base editor, in a preclinical study evaluating delivery efficiency of an ANGPTL3 base editor using either a GalNAc-LNP or a standard LNP without GalNAc in wild-type NHPs with normal livers. In these studies, we observed that wild-type NHPs treated with our ANGPTL3-targeted base editor delivered via our GalNAc-LNP had an approximately 89% reduction in ANGPTL3 protein compared to an approximately 74% reduction in wild-type NHPs treated with a standard LNP. A follow up study in which we performed dose-response assessments at three dose levels (0.75 mg/kg, 1.5 mg/kg and 3.0 mg/kg) in wild-type NHPs confirmed the observation that the addition of GalNAc-lipid to a standard LNP enhanced potency of liver base editing. In this study, we observed greater editing potency of a ANGPTL3 precursor formulation with our GalNAc-LNP than with standard LNPs at day 14. We also observed that the use of a GalNAc-LNP led to reductions in blood ANGPTL3 protein at each dose level at day 14, including a 51% reduction at 0.75mg/kg, an 83% reduction at 1.5 mg/kg and a 98% reduction at 3.0 mg/kg. In this study, the alanine aminotransferase profiles over 14 days following treatment did not differ between NHPs treated with GalNAc-LNP versus a standard LNP. We also evaluated the biodistribution of editing following administration of an ANGPTL3 precursor at a dose of 1.5 mg/kg using our GalNAc-LNP and observed editing to be localized to the liver with minimal biodistribution to other organs.
We believe this data suggests that GalNAc-LNP delivery may have broad utility for liver editing in other indications.
We are continuing to invest and build out capabilities in the development of novel and optimized GalNAc-targeting ligands, optimal lipid anchors, optimal compositions and ratios of LNP components, and optimal processes of addition and LNP formation with targeting ligands. We believe GalNAc provides a delivery platform for patients with both forms of FH and potentially may be applicable in other applications where liver-directed delivery is advantageous.
Impact of COVID-19 on our business
In
We also plan to continue to closely monitor the ongoing impact of the COVID-19 pandemic on our employees and our other business operations. In an effort to provide a safe work environment for our employees, we have, among other things, limited employees in our office and lab facilities to those where on-site presence is needed for their job activities, increased the cadence of sanitization of our office and lab facilities, implemented various social distancing measures in our offices and labs including replacing all in-person meetings with virtual interactions. Recently, additional employees
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have returned to our office and lab facilities in limited capacities. We continue to provide personal protective equipment and recommend regular COVID-19 testing for employees and visitors present in our office and lab facilities. We continue to monitor the impact and effects of the COVID-19 pandemic and our response to it, and we expect to continue to take actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees and other business partners in light of the pandemic.
While the COVID-19 pandemic did not significantly impact our business or results
for the three and six months ended
License and collaboration agreements
We have obligations under various license and collaboration agreements to make potentially significant milestone and success payments in the future and to pay royalties on sales of any product candidates covered by those agreements that eventually achieve regulatory approval and commercialization. For information regarding these agreements, see Note 8, "License agreements" and Note 14, "Subsequent events" to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Components of our results of operations
Revenue
Through
Operating expenses
Research and development expenses
Research and development expenses consist of costs incurred in performing research and development activities, which include:
•
the cost to obtain and maintain licenses to intellectual property, such as those
with the President and Fellows of
•
personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation for employees engaged in research and development functions;
•
expenses incurred in connection with the discovery and preclinical development of our research programs, including under agreements with third parties, such as consultants, contractors and CROs;
•
the cost of developing and validating our manufacturing process for use in our preclinical studies and ongoing, planned and future clinical trials, including the cost of raw materials used in our research and development activities;
•
the cost of laboratory supplies and research materials; and
•
facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance.
We expense research and development costs as incurred. Nonrefundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the benefits are consumed.
In the early phases of development, our research and development costs are often devoted to proof-of-concept studies that are not necessarily allocable to a specific target; therefore, we have not yet begun tracking our expenses on a program-by-program basis.
Research and development activities are central to our business model. We expect that our research and development expenses will continue to increase for the foreseeable future as we advance our programs and product candidates into and through clinical development, as we continue to develop additional product candidates, and as we continue to
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develop our gene editing and LNP technology. We also expect our discovery research efforts and our related personnel costs will increase and, as a result, we expect our research and development expenses, including costs associated with stock-based compensation, will increase above historical levels. In addition, we may incur additional expenses related to milestone and royalty payments payable to third parties with whom we may enter into license, acquisition and option agreements to acquire the rights to future product candidates.
At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of, and obtain regulatory approval for, any of our product candidates or programs. The successful development of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development, including the following:
•
the timing and progress of preclinical and clinical development activities;
•
the number and scope of preclinical and clinical programs we decide to pursue;
•
raising additional funds necessary to complete preclinical and clinical development of our product candidates;
•
the timing of filing and acceptance of INDs or comparable foreign applications that allow commencement of planned and future clinical trials for our product candidates;
•
the successful initiation, enrollment and completion of clinical trials;
•
our ability to achieve positive results from our ongoing and future clinical programs that support a finding of safety and effectiveness and an acceptable risk-benefit profile in the intended patient populations of any product candidates we may develop;
•
our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our product candidates for the expected indications and patient populations;
•
our ability to hire and retain key research and development personnel;
•
the costs associated with the development of any additional product candidates we develop or acquire through collaborations;
•
our ability to establish and maintain agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidates are approved;
•
the terms and timing of any existing or future collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder;
•
our ability to establish and obtain intellectual property protection and regulatory exclusivity for our product candidates and enforce and defend our intellectual property rights and claims;
•
our ability to commercialize products, if and when approved, whether alone or in collaboration with others;
•
our ability to maintain a continued acceptable safety, tolerability and efficacy profile of our product candidates following approval; and
•
the effects of the COVID-19 pandemic.
A change in any of these variables with respect to any of our current or future product candidates could significantly change the costs, timing and viability associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any product candidate we may develop.
General and administrative expenses
General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for personnel in our executive, intellectual property, business development, and administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel, and direct and allocated facility-related expenses and other operating costs.
We anticipate that our general and administrative expenses will increase in the
future to support increased research and development activities. We also expect
to continue to incur increased costs associated with being a public company,
including costs of accounting, audit, legal, regulatory and tax-related services
associated with maintaining compliance with Nasdaq and
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Other income
Change in fair value of antidilution rights liability
Change in fair value of antidilution rights liability consists of remeasurement gains or losses associated with changes in the antidilution rights liability associated with our license agreements with Harvard and Broad, or the Harvard/Broad License Agreement, and Broad, or the Broad License Agreement.
The antidilution rights represented the obligation to issue additional shares of common stock to Harvard and Broad following the completion of preferred stock financings and other equity financings, which was fully satisfied upon the closing of our IPO. At the inception of the agreements, the liability for the antidilution rights was recorded at fair value with the cost recorded as research and development expense and were remeasured at each reporting period with changes recorded in other income (expense) while the instruments are outstanding.
The antidilution rights liability was partially satisfied in 2019 and 2020 and
was satisfied in full in
Change in fair value of success payment liability
We are also obligated to pay to Harvard and Broad tiered success payments in the
event our average market capitalization exceeds specified thresholds ascending
from a high nine-digit dollar amount to
Depending on our valuation, the fair value of the success payment liability, and the corresponding changes in fair value that we record in our statements of operations, could fluctuate significantly from period to period.
During the year ended
Interest and other income, net
Interest and other income primarily consisted of interest earned on our marketable securities and other miscellaneous income and expenses unrelated to our core operations.
Income tax
During the three and six months ended
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Results of operations
Comparison of three months ended
The following table summarizes our results of operations for the three months
ended
Three months ended
June 30,
(in thousands) 2022 2021 Change
Operating expenses:
Research and development $ 33,125 $ 13,423 $ 19,702
General and administrative 9,067 3,541 5,526
Total operating expenses $ 42,192 $ 16,964 $ 25,228
Other income (expense):
Change in fair value of antidilution rights
liability - (25,970 ) 25,970
Change in fair value of success payment
liability 938 (10,036 ) 10,974
Interest and other income, net 308 5 303
Total other income (expense) $ 1,246 $ (36,001 ) $ 37,247
Net loss $ (40,946 ) $ (52,965 ) $ 12,019 Research and development expenses
The following table summarizes our research and development expenses for the
three months ended
Three months ended
June 30,
(in thousands) 2022 2021 Change
Employee-related expenses $ 10,917 $ 4,113 $ 6,804
External expenses associated with preclinical
studies performed by outside consultants,
including third-party CROs 7,462 3,681 3,781
Raw material costs and external expenses
associated with manufacturing activities,
including third-party CMOs 5,552 2,990 2,562
License and milestone payments 3,047 25 3,022
Lab supplies 2,369 1,138 1,231
Facility-related costs (including
depreciation) 1,602 821 781
Clinical trial costs 1,305 - 1,305
Other research and development costs 871 655 216
Total research and development expenses
Research and development expenses were
•
an increase in personnel-related costs of
•
an increase in external expenses associated with preclinical studies (primarily
animal-study costs) performed by outside consultants, including third-party
CROs, of
•
an increase in raw material costs and external expenses associated with
developing and validating our manufacturing activities, including third-party
CMOs, for use in our preclinical studies and clinical trial of
•
an increase in research and development expense attributed to license and
milestone payments of
•
an increase in lab supplies of
•
an increase in facility-related costs (including depreciation) and other
allocated miscellaneous expenses of
•
an increase in clinical trial costs of
•
an increase in other research and development costs of
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We expect that our research and development expenses will continue to increase for the foreseeable future as we advance our programs and product candidates into and through clinical development, and as we continue to develop additional product candidates and invest in our technology and manufacturing capabilities.
General and administrative expenses
General and administrative expenses were
•
an increase of
•
an increase of
•
an increase in other miscellaneous expenses of
We anticipate that our general and administrative expenses will increase in the future to support increased research and development activities.
Other income (expense)
Change in fair value of antidilution rights liability
The decrease in the change in the fair value of the antidilution rights
liability was as a result of the liability being fully settled during the three
months ended
Change in fair value of success payments liability
During the three months ended
Interest and other income, net
The increase of
Comparison of six months ended
The following table summarizes our results of operations for the six months
ended
Six months ended
June 30,
(in thousands) 2022 2021 Change
Operating expenses:
Research and development 57,614 $ 24,768 $ 32,846
General and administrative 16,503 6,257 10,246
Total operating expenses $ 74,117 $ 31,025 $ 43,092
Other income (expense):
Change in fair value of antidilution rights
liability - (25,574 ) 25,574
Change in fair value of success payment
liability 2,615 (9,654 ) 12,269
Interest and other income, net 390 25 365
Total other income (expense) $ 3,005 $ (35,203 ) $ 38,208
Net loss $ (71,112 ) $ (66,228 ) $ (4,884 )
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Research and development expenses
The following table summarizes our research and development expenses for the six
months ended
Six months ended
June 30,
(in thousands) 2022 2021 Change
Employee-related expenses $ 19,849 $ 6,806 $ 13,043
External expenses associated with preclinical
studies performed by outside consulting
services, including third-party CROs 13,702 7,691 6,011
Raw material costs and external expenses
associated with manufacturing activities,
including third-party CMOs 9,657 5,385 4,272
Lab supplies 3,775 1,869 1,906
License and milestone payments 3,400 80 3,320
Facility-related costs (including
depreciation) 3,031 1,600 1,431
Clinical trial costs 1,317 - 1,317
Other research and development costs 2,883 1,337 1,546
Total research and development expenses
Research and development expenses were
•
an increase in personnel-related costs of
•
an increase in external expenses associated with preclinical studies (primarily
animal-study costs) performed by outside consultants, including third-party
CROs, of
•
an increase in raw material costs and external expenses associated with
developing and validating our manufacturing activities, including third-party
CMOs, for use in our preclinical studies and clinical trial of
•
an increase in lab supplies of
•
an increase in research and development expense attributed to license and
milestone payments of
•
an increase in facility-related costs (including depreciation) and other
allocated miscellaneous expenses of
•
an increase in clinical trial costs of
•
an increase in other research and development costs of approximately
We expect that our research and development expenses will continue to increase for the foreseeable future as we advance our programs and product candidates into and through clinical development, and as we continue to develop additional product candidates and invest in our technology and manufacturing capabilities.
General and administrative expenses
General and administrative expenses were
•
an increase of
•
an increase of
•
an increase in other miscellaneous expenses of
We anticipate that our general and administrative expenses will increase in the future to support increased research and development activities.
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Other income (expense)
Change in fair value of antidilution rights liability
The decrease in the change in the fair value of the antidilution rights
liability was as a result of the liability being fully settled during the six
months ended
Change in fair value of success payments liability
During the six months ended
Interest and other income, net
The increase of
Liquidity and capital resources
Sources of liquidity and capital
Since our inception in 2018, we have incurred significant operating losses. We
expect to incur significant expenses and operating losses for the foreseeable
future as we advance the preclinical and, if successful, clinical development of
our programs. To date, we have funded our operations primarily through equity
offerings. Through
In
As of
On
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Cash flows
The following table summarizes our sources and uses of cash for each period
presented:
Six months ended
June 30,
(in thousands) 2022 2021
Cash used in operating activities $ (60,265 ) $ (28,482 )
Cash provided by investing activities 67,874 30,203
Cash provided by financing activities 950 376,732
Net increase in cash, cash equivalents and restricted cash
Operating activities
For the six months ended
For the six months ended
Investing activities
For the six months ended
For the six months ended
Financing activities
For the six months ended
For the six months ended
Funding requirements
Our operating expenses and future funding requirements are expected to increase substantially as we continue to advance our portfolio of programs.
Specifically, our expenses will increase if and as we:
•
conduct our ongoing heart-1 clinical trial for VERVE-101 in
•
continue our current research programs and our preclinical development of product candidates from our current research programs;
•
seek to identify additional research programs and additional product candidates;
•
advance our existing and future product candidates into clinical development;
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•
initiate preclinical studies and clinical trials for any additional product candidates we identify and develop or expand development of existing programs into additional patient populations;
•
maintain, expand, enforce, defend and protect our intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio;
•
seek regulatory and marketing approvals for any of our product candidates that we develop;
•
seek to identify, establish and maintain additional collaborations and license agreements, and the success of those collaborations and license agreements;
•
make milestone payments to Beam under our amended and restated collaboration and license agreement with Beam, milestone payments to Acuitas under our non-exclusive license agreement with Acuitas, and milestone payments or success payments to Harvard and Broad under the Harvard/ Broad License Agreements, and potential payments to other third parties under our other collaboration agreements or under any additional future collaboration or license agreements that we obtain;
•
ultimately establish a sales, marketing, and distribution infrastructure to commercialize any drug products for which we may obtain marketing approval, either by ourselves or in collaboration with others;
•
generate revenue from commercial sales of product candidates we may develop for which we receive marketing approval;
•
further develop base editing and novel gene editing technology;
•
hire additional personnel including research and development, clinical and commercial personnel;
•
add operational, financial and management information systems and personnel, including personnel to support our product development;
•
acquire or in-license products, intellectual property, medicines and technologies;
•
satisfy any post-marketing requirements, such as a cardiovascular outcomes trial;
•
establish commercial-scale current good manufacturing practices capabilities through a third-party or our own manufacturing facility; and
•
continue to operate as a public company.
As of
Identifying potential product candidates and conducting preclinical testing and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for several years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.
Our expectation with respect to our ability to fund current planned operations is based on estimates that are subject to risks and uncertainties. Our operating plan may change as a result of many factors currently unknown to management and there can be no assurance that the current operating plan will be achieved in the time frame anticipated by us, and we may need to seek additional funds sooner than planned.
Adequate additional funds may not be available to us on acceptable terms, or at all. We do not have any source of committed external funds. Market volatility could also adversely impact our ability to access capital as and when needed. Additional capital raised through the sale of equity or convertible debt securities may include liquidation or other preferences. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making capital expenditures or declaring dividends and may require the issuance of warrants.
If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research
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programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed or on terms acceptable to us, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Contractual obligations
During the three months ended
Emerging growth company status
As an emerging growth company, or EGC, under the Jumpstart Our Business Startups
Act of 2012, or JOBS Act, we may delay the adoption of certain accounting
standards until such time as those standards apply to private companies. Other
exemptions and reduced reporting requirements under the JOBS Act for EGCs
include presentation of only two years of audited financial statements in a
registration statement for an IPO, an exemption from the requirement to provide
an auditor's report on internal controls over financial reporting pursuant to
Section 404(b) of the Sarbanes-Oxley Act of 2002, an exemption from any
requirement that may be adopted by the
In addition, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an EGC to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
We may remain classified as an EGC until
Critical accounting policies and significant judgments
This management's discussion and analysis of our financial condition and results
of operations is based on our consolidated financial statements, which we have
prepared in accordance with
During the three and six months ended
Recently issued accounting pronouncements
See Note 2, "Summary of significant accounting policies - Recently issued
accounting pronouncements" to our consolidated financial statements included in
our Annual Report on Form 10-K filed with the
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