Lyell Immunopharma, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed February 28, 2024. This is an annual report, not a standalone fourth-quarter earnings report. Lyell is a clinical-stage cell therapy company with no approved products and no product-sales revenue.
Financial performance and liquidity
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Revenue | $0.1 million | $84.7 million |
| Research and development expense | $182.9 million | $159.2 million |
| General and administrative expense | $67.0 million | $117.3 million |
| Operating loss | $247.0 million | $187.1 million |
| Net loss | $234.6 million | $183.1 million |
| Net loss per share, basic and diluted | $0.93 | $0.74 |
| Cash used in operating activities | $163.7 million | $169.6 million |
Revenue and profit margins are not meaningful indicators of product economics at this pre-commercial stage. The company reported no product-sales revenue and continued to incur substantial losses.
At December 31, 2023, cash and cash equivalents were $145.6 million and marketable securities were $417.1 million, totaling approximately $562.7 million. Current assets were $554.7 million and current liabilities were $34.5 million. The company had no debt outstanding. Operating lease liabilities totaled $63.2 million, including $6.3 million current. Management said existing cash, cash equivalents and marketable securities were expected to fund working capital and capital expenditures into 2027, while noting additional capital will be needed to complete clinical development.
Material changes and notable items
- Revenue fell by $84.6 million year over year after GSK terminated its collaboration in December 2022. FY 2022 revenue included an $83.6 million cumulative revenue adjustment following a change in estimated project costs and the conclusion of certain GSK research activities.
- R&D expense rose $23.8 million, principally reflecting clinical and laboratory activity and personnel costs. G&A expense fell $50.3 million, mainly due to lower stock-based compensation and outside services.
- Interest income increased to $23.5 million from $7.1 million, primarily due to higher interest rates. Other-investment impairment expense was $12.9 million, versus $5.0 million in 2022.
- Operating cash use was $163.7 million. Investing cash inflow of $184.0 million mainly reflected net maturities and sales of marketable securities, rather than operating cash generation.
- The company reduced its workforce by approximately 25% in the fourth quarter of 2023 and recorded $5.5 million in severance and related costs. It also repriced certain employee options in November 2023, resulting in $8.9 million of incremental stock-based compensation expense.
Pipeline, outlook and risks
- LYL797, a ROR1-targeted CAR T-cell candidate, and LYL845, a TIL candidate, were in Phase 1 trials. Management expected initial LYL797 data from at least 20 patients in the first half of 2024 and initial LYL845 data in the second half of 2024.
- LYL119, a next-generation ROR1 CAR T candidate, was in preclinical development; an IND submission was expected in the first half of 2024. A second-generation TIL candidate and T-cell rejuvenation technology were also in preclinical or research stages.
- Lyell received FDA Orphan Drug Designation for LYL845 for stage IIB–IV melanoma. The FDA’s February 2024 approval of Iovance’s lifileucel may increase competition and affect enrollment in Lyell’s melanoma trial.
- The company operates its own manufacturing facility and was exploring automated manufacturing with Cellares and a shortened TIL manufacturing process. Management emphasized that manufacturing scale, consistency, supply availability and regulatory qualification remain execution risks.
- Key risks include clinical efficacy and safety uncertainty, trial enrollment and timing, manufacturing complexity, reliance on suppliers and CROs, competition, regulatory approval and reimbursement uncertainty, and the need for future financing. Success-payment agreements with Fred Hutch and Stanford could require up to $400 million in aggregate if specified share-price thresholds are reached; none had been incurred by year-end.
- In February 2024, Lyell established an at-the-market program allowing up to $150 million of common-stock sales. No shares had been sold under it as of the filing date; any use could dilute shareholders.
Important facts for investors to verify
- Progress, patient enrollment, safety findings and complete clinical data for LYL797 and LYL845, and whether planned 2024 milestones were achieved.
- Whether cash use and operating costs remain consistent with management’s runway estimate into 2027, and whether additional financing or ATM sales occur.
- Manufacturing readiness, capacity, product consistency and the results of the Cellares collaboration and Epi-R P2 process.
- The assumptions and potential financial effects of investment impairments, success-payment liabilities and stock-based compensation.
- Auditor’s opinion was unqualified, and management and the auditor reported effective internal control over financial reporting as of December 31, 2023. The auditor identified accrued clinical expenses as a critical audit matter because estimating third-party work completed requires judgment.