Filing identity and reporting period
Important: The supplied filing is Graphite Bio, Inc.’s Form 10-K for the fiscal year ended December 31, 2023, filed February 27, 2024. It is not a LENZ Therapeutics, Inc. 10-K. The figures below describe Graphite Bio, not LENZ, and cover the full fiscal year rather than 2023 Q4 alone.
Business context
Graphite had discontinued all its development programs and was pursuing strategic alternatives. It stopped developing its lead sickle cell candidate, nula-cel, after a serious adverse event in the first patient dosed that the company considered likely treatment-related. Graphite reported no ongoing development programs at year-end and described its future operations as highly dependent on completing its proposed merger with LENZ.
Financial performance and position
| Metric | 2023 | 2022 |
|---|---|---|
| Product revenue | None reported | None reported |
| Research and development expense | $32.1 million | $72.8 million |
| General and administrative expense | $41.0 million | $32.9 million |
| Restructuring and impairment costs | $62.1 million | None reported |
| Total operating expenses / operating loss | $135.2 million / $(135.2) million | $105.6 million / $(105.6) million |
| Net loss | $(124.7) million | $(101.1) million |
| Net loss per share, basic and diluted | $(2.19) | $(1.84) |
| Net cash used in operating activities | $90.0 million | $88.0 million |
At December 31, 2023, cash and cash equivalents were $184.3 million, with restricted cash of $1.7 million; marketable securities were zero, compared with $235.8 million at year-end 2022. Total assets were $188.5 million, liabilities $4.9 million, and stockholders’ equity $183.6 million. The balance sheet reports no debt. Management said existing cash was expected to fund the current operating plan for at least 12 months from issuance of the financial statements, while noting that plans and spending could change.
Cash, cash equivalents, and restricted cash increased by $136.5 million during 2023. Operating activities used $90.0 million; investing activities provided $226.3 million, largely from sales and maturities of marketable securities, partly offset by purchases of securities and equipment. No meaningful product gross margin or operating margin is available because Graphite reported no product sales.
Material changes, outlook and risks
- R&D expense fell $40.7 million year over year, mainly from winding down clinical and manufacturing activity and workforce reductions. G&A expense rose $8.1 million, including merger-related professional costs and facility expense.
- The $62.1 million restructuring and impairment charge included $45.5 million of non-cash impairment associated with the Bayside lease, $8.1 million of severance, and other asset and lease-related charges. The cash flow statement reports $56.6 million of asset impairment; the measures reflect different accounting categories and should be checked against the notes.
- Graphite announced a proposed merger with LENZ in November 2023, subject to stockholder approvals and other closing conditions. A concurrent private placement was subscribed for approximately $53.5 million, potentially increasing to $125 million. The filing estimated legacy Graphite stockholders would own about 30.7% of the combined company under stated assumptions, including $115 million to $175 million of Graphite net cash at closing.
- A special cash dividend of approximately $60 million was contemplated in connection with the merger, subject to adjustments; it was not described as paid. The filing also disclosed a possible $7.5 million termination fee in specified circumstances if the merger agreement were terminated.
- Kamau held an option over certain nula-cel and platform assets, contingent on raising at least $10 million by August 4, 2024; as of year-end it had not met the financing milestone. Graphite received a 20% equity interest, which it recorded at no value at year-end. Graphite also sold its non-genotoxic conditioning assets to Maro for $0.5 million upfront, with contingent consideration and potential royalties.
- Other key risks include merger failure or delay, possible liquidation if strategic alternatives fail, ongoing losses and capital needs, a shell-company status and related securities resale restrictions, and the potential impact of the terminated clinical program. A purported stockholder filed merger-related litigation in February 2024; Graphite said it intended to defend the case.
- The auditor issued an unqualified opinion on the financial statements. Management said disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal controls.
Investor verification priorities
- Confirm the issuer and filing: this is Graphite Bio’s 2023 10-K, not LENZ’s.
- Check subsequent filings for the merger’s closing status, actual closing net cash, final ownership split, private-placement proceeds, and whether the special dividend was declared or paid.
- Reconcile restructuring and lease-related charges across the MD&A, cash flow statement, and financial-statement notes, including non-cash impairment and lease termination payments.
- Verify Graphite’s cash runway and any obligations or costs arising from merger completion, termination, liquidation, or the remaining legal matter.
- Check whether Kamau met the financing milestone by the deadline and whether the option was exercised, expired, or the assets reverted to Graphite.