Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

August 14, 2023

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to ______

Commission File Number: 001-40532

 

GRAPHITE BIO, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

84-4867570

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

201 Haskins Way, Suite 210

South San Francisco, CA

94080

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 484-0886

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.00001 per share

 

GRPH

 

The Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of August 10, 2023, the registrant had 57,980,275 shares of common stock, $0.00001 par value per share, outstanding.

 

 


 

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”), including its section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Forward-looking statements in this Form 10-Q may include, but are not limited to, statements about:

our plans and expectations regarding strategic alternatives that could significantly impact our future operations and financial position, and the timing and success of such process;
the therapeutic potential of any product candidates, and the disease indications for which we intend to develop any product candidates;
estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for or ability to obtain additional funding before we can expect to generate any revenue from product sales;
our ability to establish or maintain licenses, collaborations, partnerships or strategic relationships;
our ability to create and maintain a pipeline of product candidates;
our ability to advance any product candidate into, and successfully complete clinical trials;
our ability to obtain and maintain intellectual property protection for our current and future product candidates, the duration of such protection and our ability to operate our business without infringing on the intellectual property rights of others;
other implementation and effects of the restructuring initiative that we announced in February 2023 and any future restructuring plans that we may pursue;
our expectations regarding use of our cash, cash equivalents and investments in marketable securities;
our financial performance;
our ability to retain and recruit key personnel;
our competitive position and development of and projections relating to our competitors or our industry, including in gene editing and gene therapy;
the impact of laws and regulations in the United States and foreign countries on various aspects of our operations, including our regulatory and clinical strategy; and
our expectations regarding the time during which we will be an emerging growth company under the JOBS Act.

In some cases, forward-looking statements can be identified by terminology such as “will,” “may,” “should,” “could,” “expects,” “intends,” “plans,” “aims,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section entitled “Risk Factors” and elsewhere in this Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those expressed or implied by the forward-looking statements. No forward-looking statement is a promise or a guarantee of future performance.

The forward-looking statements in this Form 10-Q represent our views as of the date of this Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Form 10-Q.

This Form 10-Q may include statistical and other industry and market data that we obtained from industry publications and research, surveys, and studies conducted by third parties. Industry publications and third-party research, surveys, and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We have not independently verified the information contained in such sources.

We use various trademarks and trade names in our business, including without limitation our corporate name and logo. All other trademarks or trade names referred to in this Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Form 10-Q may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

 


 

Table of Contents

 

 

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

 

Condensed Balance Sheets

1

Condensed Statements of Operations and Comprehensive Loss

2

Condensed Statements of Stockholders’ Equity

3

Condensed Statements of Cash Flows

5

Notes to Condensed Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

33

PART II.

OTHER INFORMATION

34

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

34

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

35

Item 3.

Defaults Upon Senior Securities

35

Item 4.

Mine Safety Disclosures

35

Item 5.

Other Information

35

Item 6.

Exhibits

36

Signatures

37

 

i


 

Graphite Bio, Inc.

Condensed Balance Sheets

(in thousands, except share and per share data)

(unaudited)

 

 

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

128,506

 

 

$

47,730

 

Investments in marketable securities, current

 

 

118,159

 

 

 

220,499

 

Assets held for sale

 

 

1,628

 

 

 

 

Prepaid expenses and other current assets

 

 

2,878

 

 

 

7,136

 

Total current assets

 

 

251,171

 

 

 

275,365

 

Restricted cash

 

 

1,716

 

 

 

1,716

 

Investments in marketable securities, non-current

 

 

 

 

 

15,322

 

Property and equipment, net

 

 

17,965

 

 

 

22,630

 

Operating lease right-of-use assets

 

 

15,837

 

 

 

5,580

 

Other assets

 

 

355

 

 

 

1,289

 

Total assets

 

$

287,044

 

 

$

321,902

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,720

 

 

$

2,608

 

Accrued compensation

 

 

2,268

 

 

 

3,799

 

Accrued research costs

 

 

577

 

 

 

720

 

Accrued expenses and other current liabilities

 

 

3,791

 

 

 

1,871

 

Operating lease liabilities, current

 

 

2,914

 

 

 

4,045

 

Total current liabilities

 

 

12,270

 

 

 

13,043

 

Operating lease liabilities, non-current

 

 

50,628

 

 

 

1,749

 

Other long- term liabilities

 

 

 

 

 

10,819

 

Total liabilities

 

 

62,898

 

 

 

25,611

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.00001 par value, 10,000,000 shares authorized as of June 30, 2023 and December 31, 2022; and no shares issued and outstanding as of June 30, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.00001 par value, 300,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 57,989,273 and 58,221,760 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

546,067

 

 

 

539,741

 

Accumulated other comprehensive loss

 

 

(271

)

 

 

(1,048

)

Accumulated deficit

 

 

(321,651

)

 

 

(242,403

)

Total stockholders’ equity

 

 

224,146

 

 

 

296,291

 

Total liabilities and stockholders’ equity

 

$

287,044

 

 

$

321,902

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

1


 

Graphite Bio, Inc.

Condensed Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

13,508

 

 

$

17,777

 

 

$

29,752

 

 

$

36,023

 

 

General and administrative

 

 

7,455

 

 

 

8,999

 

 

 

15,078

 

 

 

16,711

 

 

Restructuring and impairment costs

 

 

37,196

 

 

 

 

 

 

39,779

 

 

 

 

 

Total operating expenses

 

 

58,159

 

 

 

26,776

 

 

 

84,609

 

 

 

52,734

 

 

Loss from operations

 

 

(58,159

)

 

 

(26,776

)

 

 

(84,609

)

 

 

(52,734

)

 

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

2,845

 

 

 

840

 

 

 

5,432

 

 

 

963

 

 

Loss on disposal of assets

 

 

 

 

 

 

 

 

(71

)

 

 

 

 

Total other income, net

 

 

2,845

 

 

 

840

 

 

 

5,361

 

 

 

963

 

 

Net loss

 

$

(55,314

)

 

$

(25,936

)

 

$

(79,248

)

 

$

(51,771

)

 

Unrealized gain (loss) on investments in marketable securities

 

 

198

 

 

 

(724

)

 

 

777

 

 

 

(1,033

)

 

Comprehensive loss

 

$

(55,116

)

 

$

(26,660

)

 

$

(78,471

)

 

$

(52,804

)

 

Net loss per share attributable to common stockholders—basic and diluted

 

$

(0.97

)

 

$

(0.48

)

 

$

(1.40

)

 

$

(0.95

)

 

Weighted-average shares used in computing net loss per share—basic and diluted

 

 

56,745,347

 

 

 

54,572,866

 

 

 

56,499,160

 

 

 

54,284,836

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

2


 

Graphite Bio, Inc.

Condensed Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Common

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2022

 

 

58,221,760

 

 

$

1

 

 

$

539,741

 

 

$

(1,048

)

 

$

(242,403

)

 

$

296,291

 

Vesting of early exercised shares

 

 

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

25

 

Repurchase of unvested early exercised shares

 

 

(26,942

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,263

 

 

 

 

 

 

 

 

 

3,263

 

Unrealized gain on investments in marketable securities

 

 

 

 

 

 

 

 

 

 

 

579

 

 

 

 

 

 

579

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,934

)

 

 

(23,934

)

Balance at March 31, 2023

 

 

58,194,818

 

 

$

1

 

 

$

543,029

 

 

$

(469

)

 

$

(266,337

)

 

$

276,224

 

Common stock issued upon exercise of options

 

 

55,047

 

 

 

 

 

 

18

 

 

 

 

 

 

 

 

 

18

 

Common stock issued under ESPP

 

 

65,222

 

 

 

 

 

 

157

 

 

 

 

 

 

 

 

 

157

 

Vesting of early exercised shares

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

 

 

 

18

 

Repurchase of founders' shares

 

 

(152,694

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of unvested early exercised shares

 

 

(173,120

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,845

 

 

 

 

 

 

 

 

 

2,845

 

Unrealized gain on investments in marketable securities

 

 

 

 

 

 

 

 

 

 

 

198

 

 

 

 

 

 

198

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55,314

)

 

 

(55,314

)

Balance at June 30, 2023

 

 

57,989,273

 

 

$

1

 

 

$

546,067

 

 

$

(271

)

 

$

(321,651

)

 

$

224,146

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

3


 

Graphite Bio, Inc.

Condensed Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Common

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

 

58,010,823

 

 

$

1

 

 

$

525,400

 

 

$

 

 

$

(141,351

)

 

$

384,050

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,342

 

 

 

 

 

 

 

 

 

3,342

 

Vesting of early exercised shares

 

 

 

 

 

 

 

 

51

 

 

 

 

 

 

 

 

 

51

 

Unrealized loss on investments in marketable securities

 

 

 

 

 

 

 

 

 

 

 

(309

)

 

 

 

 

 

(309

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,835

)

 

 

(25,835

)

Balance at March 31, 2022

 

 

58,010,823

 

 

$

1

 

 

$

528,793

 

 

$

(309

)

 

$

(167,186

)

 

$

361,299

 

Common stock issued upon exercise of options

 

 

43,945

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

13

 

Common stock issued under ESPP

 

 

207,137

 

 

 

 

 

 

414

 

 

 

 

 

 

 

 

 

414

 

Vesting of early exercised shares

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

 

 

 

30

 

Repurchase of unvested early exercised stock options

 

 

(50,713

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,360

 

 

 

 

 

 

 

 

 

3,360

 

Unrealized loss on investments in marketable securities

 

 

 

 

 

 

 

 

 

 

 

(724

)

 

 

 

 

 

(724

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,936

)

 

 

(25,936

)

Balance at June 30, 2022

 

 

58,211,192

 

 

$

1

 

 

$

532,610

 

 

$

(1,033

)

 

$

(193,122

)

 

$

338,456

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

4


 

Graphite Bio, Inc.

Condensed Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

 

(79,248

)

 

$

 

(51,771

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Net amortization of premiums and discounts on investments in marketable securities

 

 

 

(2,466

)

 

 

 

83

 

Depreciation and amortization

 

 

 

1,503

 

 

 

 

1,018

 

Non-cash lease expense

 

 

 

2,815

 

 

 

 

2,938

 

Stock-based compensation expense

 

 

 

6,108

 

 

 

 

6,702

 

Loss on sale/ disposal of assets

 

 

 

71

 

 

 

 

 

Impairment of assets

 

 

 

36,061

 

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Assets held for sale

 

 

 

(1,628

)

 

 

 

 

Prepaid expenses and other current assets and other assets

 

 

 

7,109

 

 

 

 

527

 

Accounts payable

 

 

 

(1,089

)

 

 

 

883

 

Accrued compensation

 

 

 

(1,531

)

 

 

 

(508

)

Accrued research costs

 

 

 

(143

)

 

 

 

(173

)

Accrued expenses and other current liabilities and other liabilities

 

 

 

(53

)

 

 

 

55

 

Operating lease liabilities

 

 

 

(2,238

)

 

 

 

(3,088

)

Net cash used in operating activities

 

 

 

(34,729

)

 

 

 

(