Lyell Immunopharma, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. Lyell is a clinical-stage cell therapy company developing treatments for solid tumors. It has no approved products and has never generated product-sales revenue. Financial comparisons below are with fiscal 2021.
Financial performance and position
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $84.7 million | $10.7 million |
| Research and development expense | $159.2 million | $138.7 million |
| General and administrative expense | $117.3 million | $89.1 million |
| Loss from operations | $187.1 million | $214.8 million |
| Net loss | $183.1 million | $250.2 million |
| Net cash used in operating activities | $169.6 million | $126.2 million |
- 2022 revenue was primarily from the GSK collaboration, not product sales. A $83.6 million cumulative revenue adjustment, associated with changes in estimated progress after Lyell and GSK agreed to conclude research activities and GSK terminated the agreement, substantially drove the year-over-year increase.
- Lyell reported no gross margin; the filing does not present product sales or a meaningful product-margin measure.
- At year-end, cash, cash equivalents and marketable securities totaled approximately $710.3 million; accumulated deficit was $767.5 million. Management said existing resources were expected to fund working capital and capital needs into 2026, while noting additional capital would be needed to complete development of current programs.
- There was no debt outstanding. Year-end total liabilities were $104.3 million, including $67.7 million of operating lease liabilities. Operating cash outflow increased from 2021 despite the lower net loss.
- Stock-based compensation was $81.9 million, up from $62.2 million. The company recorded a $5.0 million impairment of an investment, compared with a $36.4 million PACT investment impairment in 2021.
Material changes and business developments
- Research and development expense rose 14.8%, primarily from higher personnel, facilities and technology, and clinical research costs. General and administrative expense increased 31.7%, including higher stock-based compensation, legal and public-company costs.
- GSK terminated its collaboration effective December 24, 2022; Lyell discontinued work on the related programs. The company does not expect further revenue from that agreement.
- Lyell settled its dispute with PACT in October 2022. It received non-voting PACT Series D preferred shares and reported approximately 80% ownership on a fully diluted basis; Lyell concluded it did not control PACT and did not consolidate it.
- Enrollment in the Phase 1 LYL797 trial was slower than anticipated. Lyell expected initial data from LYL797 in the first half of 2024 and initial LYL845 data during 2024.
Outlook, risks and unusual items
- LYL797 and LYL845 were in Phase 1 development; LYL119 and another TIL candidate were in preclinical development. Lyell expected to submit an IND for LYL119 in the first half of 2024. These timelines are forward-looking expectations, not guarantees.
- Key risks include clinical-trial delays or failure, patient enrollment and tumor-tissue availability, treatment safety, complex and variable cell manufacturing, supply constraints, regulatory uncertainty, competition and the need for future financing. The company cited potential CAR T-cell toxicities, ROR1 expression in normal tissues and possible c-Jun-related risks.
- Lyell’s wholly owned LyFE facility was producing clinical-trial supply. Manufacturing qualification, quality, capacity and supply-chain execution remain important risks.
- Potential success payments to Fred Hutch and Stanford could total up to $400 million in aggregate if specified stock-price thresholds are reached. No payments had been triggered by year-end 2022; the recorded liability was $4.4 million.
- The company reported an unqualified audit opinion and effective internal control over financial reporting as of year-end. A prior material weakness related to technical accounting for tranche liabilities was reported as remediated.
Important facts for investors to verify
- Whether the expected 2024 clinical-data and LYL119 IND milestones were achieved, and the safety, efficacy and enrollment details reported.
- How much of reported revenue reflects the one-time GSK-related cumulative adjustment, and what recurring collaboration revenue, if any, remains after GSK’s termination.
- Whether cash burn and operating plans remain consistent with management’s stated runway into 2026, and whether additional financing or share issuance is likely.
- Progress in manufacturing reliability, clinical supply, facility qualification and access to patient tumor samples.
- Developments affecting the PACT investment, success-payment liabilities, lease commitments and any other contingent obligations.