Filing identity and reporting period
Important mismatch: The request identifies LENZ Therapeutics, Inc., but the supplied Form 10-Q is for Graphite Bio, Inc. (Nasdaq: GRPH), for the quarter ended September 30, 2022, filed November 9, 2022. The summary below reflects the supplied filing, not LENZ Therapeutics.
Graphite Bio is a clinical-stage gene-editing company developing precision gene-repair therapies. It had no approved products and had generated no product-sales revenue.
Financial results and liquidity
| Metric | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| Research and development expense | $18.3 million | $8.7 million | $54.3 million | $26.7 million |
| General and administrative expense | $7.9 million | $5.9 million | $24.6 million | $14.8 million |
| Total operating expenses | $26.2 million | $14.6 million | $78.9 million | $41.5 million |
| Net loss | $24.7 million | $14.6 million | $76.5 million | $51.8 million |
| Net loss per share, basic and diluted | $0.45 | $0.28 | $1.40 | $2.51 |
At September 30, 2022, cash and cash equivalents were $56.4 million and marketable securities were $248.7 million, for combined cash, cash equivalents and marketable securities of $305.1 million. Total assets were $334.8 million, total liabilities $18.4 million, and stockholders’ equity $316.5 million. The filing reports no borrowings or debt balance. No revenue or profit margins are applicable.
For the first nine months of 2022, operating cash use was $65.6 million, investing cash use was $255.4 million, and financing provided $0.4 million. Investing outflows primarily reflected purchases of marketable securities, partly offset by maturities; they should not be read as operating burn. Cash, cash equivalents and restricted cash ended the period at $58.1 million.
Changes versus comparable periods
- Q3 operating expenses rose $11.6 million year over year; R&D increased $9.6 million, mainly from clinical-trial and contract-manufacturing activity, personnel, and facilities-related costs. G&A increased $2.0 million, largely from hiring and related costs.
- Nine-month operating expenses increased $37.4 million year over year. Management attributed the R&D increase chiefly to clinical and manufacturing activities and personnel; G&A growth primarily reflected personnel, professional services and overhead.
- Nine-month net loss widened by $24.6 million. The comparison is affected by a $10.3 million noncash charge in 2021 from a preferred-stock tranche liability; 2022 instead included $2.4 million of interest income.
- Available-for-sale securities had a $1.6 million unrealized loss at September 30, 2022, recorded in comprehensive loss. Management said it intended and was able to hold the securities until recovery and reported no material credit loss.
- Operating cash use increased from $37.3 million to $65.6 million for the nine-month period.
Outlook, commentary and risks
- The lead candidate, nula-cel (formerly GPH101), is in the Phase 1/2 CEDAR trial for sickle cell disease. The first patient was dosed in August 2022; initial proof-of-concept data were anticipated in mid-2023. The company also intended to file an IND for a second program by mid-2024.
- Management estimated existing cash, cash equivalents and investments would fund its operating expenses and capital requirements into the fourth quarter of 2024. The liquidity note separately says resources were expected to cover the current operating plan for at least 12 months from issuance of the financial statements.
- The company expected substantial future losses and rising R&D and operating costs, and may need additional capital. A $300 million shelf registration and $75 million at-the-market program had been established; no shares had been sold and no proceeds received under them through November 9, 2022.
- Key risks include early-stage clinical and regulatory uncertainty, potential gene-editing safety issues, competition, intellectual-property disputes and dependence on third parties for clinical and manufacturing supply. The company noted COVID-19-related trial-site and enrollment disruption, including a delay in first-patient treatment, and broader market, inflation and geopolitical risks.
- After quarter-end, Graphite Bio entered a five-year master development and manufacturing services agreement with WuXi Advanced Therapies and a work order supporting nula-cel development and manufacturing. Pricing is determined under work orders.
- The company reported no material legal proceedings and stated that disclosure controls and procedures were effective as of September 30, 2022.
Most important facts to verify
- Confirm the issuer: this filing is Graphite Bio, Inc., not LENZ Therapeutics, Inc.
- Check subsequent CEDAR trial progress and whether the mid-2023 data expectation was met.
- Review updated cash runway, actual operating burn and any use of the shelf or ATM financing program.
- Assess clinical-manufacturing execution, including the WuXi work order, timelines, costs and supply risks.
- Track patent or licensing developments, including the disclosed opposition to an in-licensed European patent and obligations to Stanford and IDT.