UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
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).
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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
Number of shares of the registrant’s Common Stock outstanding as of August 5, 2022 was
Table of Contents
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PART I. |
1 |
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Item 1. |
1 |
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Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 |
1 |
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2 |
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3 |
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Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 |
4 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
5 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 |
Item 3. |
18 |
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Item 4. |
19 |
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PART II. |
20 |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 6. |
21 |
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22 |
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i
Note Regarding Company References
Throughout this Quarterly Report on Form 10-Q, the “Company,” “Vor,” “Vor Bio,” “Vor Biopharma Inc.,” “we,” “us,” and “our,” except where the context requires otherwise, refer to Vor Biopharma Inc. and its consolidated subsidiary, and “our board of directors” refers to the board of directors of Vor Biopharma Inc.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, and objectives of management, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “estimate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions intended to identify statements about the future. These statements speak only as of the date of this Quarterly Report on Form 10-Q and involve known and unknown risks, uncertainties and other important 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 the forward-looking statements.
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements include, without limitation, statements about:
You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we
ii
expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. You should refer to the “Summary Risk Factors” and “Part I, Item 1A. Risk Factors” sections in our Annual Report on Form 10-K for the year ended December 31, 2021 for a discussion of material factors that may cause our actual results or events to differ materially from those expressed or implied by our forward-looking statements.
iii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
VOR BIOPHARMA INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
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June 30, |
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December 31, |
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(in thousands, except share amounts) |
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2022 |
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2021 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Restricted cash equivalents |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Operating lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Long-term liabilities: |
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Operating lease liabilities—non-current |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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— |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
VOR BIOPHARMA INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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(in thousands, except share and per share amounts) |
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2022 |
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2021 |
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2022 |
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2021 |
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Operating expenses: |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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General and administrative |
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Total operating expenses |
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$ |
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$ |
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$ |
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$ |
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Loss from operations |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Other income: |
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Interest income |
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Total other income |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Cumulative dividends on redeemable convertible |
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— |
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— |
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— |
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( |
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Net loss attributable to common stockholders |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per share attributable to common stockholders, |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted-average common shares outstanding, |
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Other comprehensive loss: |
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Unrealized loss on available for sale investments |
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( |
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— |
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( |
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— |
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Total other comprehensive loss |
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( |
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— |
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( |
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— |
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Comprehensive loss attributable to common stockholders |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Vor Biopharma Inc.
CONDENSED CONSOLIDATED Statements of redeemable convertible preferred stock and
stockholders’ EQUITY (Deficit)
(Unaudited)
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Common |
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Additional |
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Accumulated other comprehensive |
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Accumulated |
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Total |
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(in thousands, except share amounts) |
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Shares |
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Amount |
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Capital |
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loss |
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Deficit |
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Equity |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Issuance of common stock upon vesting |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock upon vesting |
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— |
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— |
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— |
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Issuance of common stock from open |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance at June 30, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Series A-1 Preferred |
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Series A-2 Preferred |
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Series B Preferred |
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Common |
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Additional |
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Accumulated |
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Total |
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(in thousands, except share amounts) |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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(Deficit) |
Balance at December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$( |
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$( |
Issuance of Series B |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
Conversion of redeemable |
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( |
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( |
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( |
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( |
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( |
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( |
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— |
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Issuance of common stock upon closing |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
Balance at March 31, 2021 |
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— |
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$— |
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— |
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$— |
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— |
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$— |
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$ |
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$ |
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$( |
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$ |
Issuance of common stock |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
Balance at June 30, 2021 |
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— |
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$— |
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— |
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$— |
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— |
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$— |
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$ |
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$ |
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$( |
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$ |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Vor Biopharma Inc.
condensed CONSOLIDATED StatementS of Cash Flows
(unaudited)
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Six Months Ended June 30, |
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(in thousands) |
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2022 |
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2021 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
) |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operations: |
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Depreciation expense |
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Non-cash lease expense |
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Stock-based compensation |
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Other |
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Changes in operating assets and liabilities: |
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Operating lease liability |
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( |
) |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
) |
Accounts payable and accrued liabilities |
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( |
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( |
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Other assets |
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( |
) |
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( |
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Net cash used in operating activities |
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( |
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( |
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Cash flow from investing activities |
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Purchases of marketable securities |
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( |
) |
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( |
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Proceed from maturities of marketable securities |
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— |
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Purchases of property and equipment |
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( |
) |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flow from financing activities |
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Proceeds from issuance of redeemable convertible preferred stock |
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— |
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Proceeds from the issuance of common stock upon closing of initial |
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— |
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Payment of initial public offering costs |
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— |
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( |
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Proceeds from the issuance of common stock from open market sales agreement |
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— |
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Proceeds from stock option exercises |
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Net cash provided by financing activities |
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Net (decrease) increase in cash, cash equivalents and restricted cash equivalents |
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( |
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Cash, cash equivalents and restricted cash equivalents, |
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$ |
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$ |
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Cash, cash equivalents and restricted cash equivalents, end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash activities |
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Lease incentive paid by the landlord on behalf of the Company |
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$ |
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$ |
— |
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Operating right-of-use assets and operating lease liability recorded |
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$ |
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$ |
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Purchases of property and equipment in accounts payable and accrued liabilities |
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$ |
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$ |
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Conversion of redeemable convertible preferred stock to common |
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$ |
— |
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$ |
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A reconciliation of the cash, cash equivalents and restricted cash equivalents reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the statements of cash flows is as follows:
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For the Six Months Ended June 30, |
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(in thousands) |
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2022 |
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2021 |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash equivalents |
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Total cash, cash equivalents and restricted cash equivalents as shown on the |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
VOR BIOPHARMA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Nature of the Business
Vor Biopharma Inc. (the “Company”) is a clinical-stage cell and genome engineering company that combines a novel patient engineering approach with targeted therapies to provide a single company solution for patients suffering from hematological malignancies. The Company’s proprietary platform leverages its expertise in hematopoietic stem cell (“HSC”) biology, genome engineering and targeted therapy development to genetically modify HSCs to remove surface targets expressed by cancer cells. The Company is headquartered in Cambridge, Massachusetts. The Company was incorporated on
Risks and Uncertainties
The Company is subject to a number of risks common to development stage companies in the biotechnology industry, including, but not limited to, risks of failure of preclinical studies and clinical trials, dependence on key personnel, protection of proprietary technology, reliance on third party organizations, risks of obtaining regulatory approval for any product candidate that it may develop, development by competitors of technological innovations, compliance with government regulations, the impact of the COVID-19 pandemic, including impacts related to the variants of the virus, geopolitical tensions, adverse macroeconomic conditions and the need to obtain additional financing.
The Company anticipates that it will continue to incur significant operating losses for the next several years as it continues to develop its product candidates. The Company believes that its existing cash, cash equivalents and marketable securities at June 30, 2022 will be sufficient to allow the Company to fund its current operations through at least a period of one year after the date the financial statements are issued.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of expenses during the reporting period. Actual results could differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies in developing the estimates and assumptions that are used in the preparation of the condensed consolidated financial statements. Management must apply significant judgment in this process. Management’s estimation process often may yield a range of potentially reasonable estimates and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: estimating the fair value of the Company’s common stock (prior to its initial public offering); accrued expenses and research and development expenses.
Unaudited Interim Financial Information
The condensed consolidated financial statements of the Company included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.
The accompanying condensed consolidated balance sheet as of December 31, 2021 has been derived from the Company’s audited consolidated financial statements for the year ended December 31, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited annual
5
consolidated financial statements and notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”).
During the six months ended June 30, 2022, other than the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as discussed below, and addition of the cloud computing arrangement accounting policy, there have been no changes to the Company’s significant accounting policies as described in the 2021 Annual Report.
Measurement of Credit Losses
For financial assets measured at fair value through other comprehensive loss, the Company must record an allowance for credit losses at the end of each reporting period in the condensed consolidated statement of operations. When developing an estimate of expected credit losses on financial assets, the Company will consider available information relevant to assessing the collectability of cash flows. This information may include internal information, external information, or a combination of both, relating to past events, current conditions, and reasonable and supportable forecasts for financial asset pools.
The Company’s investment in corporate bonds and U.S. treasury securities, reported as available-for-sale investments, and the associated accrued interest reported as other current assets on the condensed consolidated balance sheets, is the only financial asset pool. The financial asset pool was determined by the type of financial asset instrument and its credit quality. Management does not expect a credit loss with this financial asset pool and determined an allowance was not required based on the issuers' current high quality credit ratings and the lack of default history on its obligations.
Cloud Computing Arrangements
The Company capitalizes implementation costs for cloud computing arrangement service contracts. The Company’s cloud computing arrangements relate to its enterprise resource planning and manufacturing software. These assets are classified as software and included in property and equipment, net in the consolidated balance sheets and are amortized on a straight-line basis over their assessed useful life beginning when the contract is ready for its intended use. The estimated useful lives of these assets is three years and are subject to the Company’s existing Impairment of Long-Lived Assets accounting policy as described in the 2021 Annual Report.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued , Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which has been subsequently amended by ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11 and ASU 2020-03 (“ASU 2016-13”). This standard requires that credit losses be recorded using an expected losses model rather than the incurred losses model that was previously used and establishes additional credit risk disclosures associated with financial assets. The
3. Marketable Securities
The amortized cost and estimated fair value of marketable securities, by contractual maturity are as follows:
|
|
June 30, 2022 |
|
|||||||||||||
(in thousands) |
|
Amortized Cost |
|
|
Gross Unrealized Holding Gains |
|
|
Gross Unrealized Holding Losses |
|
|
Fair Value |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Maturing in one year or less |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||
U.S. Treasuries |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Total |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||
6
|
|
December 31, 2021 |
|
|||||||||||||
(in thousands) |
|
Amortized Cost |
|
|
Gross Unrealized Holding Gains |
|
|
Gross Unrealized Holding Losses |
|
|
Fair Value |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Maturing in one year or less |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
U.S. Treasuries |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Maturing after one year through five years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
U.S. Treasuries |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
The unrealized losses of the Company’s marketable securities above were a result of market interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than par value. The Company’s intent is to hold the investments until their maturity and any change in fair value that is not credit related is recognized as other comprehensive income (loss), net of applicable taxes. A credit-related impairment is recognized as an allowance to the balance sheet with a corresponding adjustment to earnings. The Company did
4. Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:
|
|
June 30, 2022 |
|
|||||||||||||
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
U.S. Treasuries |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total marketable securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Restricted cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
|
|
December 31, 2021 |
|
|||||||||||||
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
U.S. Treasuries |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total marketable securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Restricted cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
The fair value of the Company’s cash equivalents and restricted cash equivalents is based on quoted market prices in active markets with no valuation adjustment. The fair value of marketable securities was determined based on observable market inputs. There were
7
5. Property and Equipment, Net
Property and equipment, net consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
(in thousands) |
|
2022 |
|
|
2021 |
|
||
Computer equipment and software |
|
$ |
|
|
$ |
|
||
Laboratory equipment |
|
|
|
|
|
|
||
Manufacturing equipment |
|
|
|
|
|
— |
|
|
Other |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
— |
|
|
Total |
|
|
|
|
|
|
||
Less: Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense for the three and six months ended June 30, 2022 was $
6. Accrued Liabilities
Accrued liabilities consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
(in thousands) |
|
2022 |
|
|
2021 |
|
||
Employee-related and other expenses |
|
$ |
|
|
$ |
|
||
Research and development expenses |
|
|
|
|
|
|
||
Professional fees |
|
|
|
|
|
|
||
Property and equipment |
|
|
|
|
|
— |
|
|
Other |
|
|
|
|
|
|
||
Total accrued liabilities |
|
$ |
|
|
$ |
|
||
7. Stock-Based Compensation
Stock Incentive Plan
As of June 30, 2022, the Company had
Stock Options
The Company’s stock options generally
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Fair value of common stock |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expected term (in years) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected volatility |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Risk-free interest rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Dividend yield |
|
|
|
|
|
|
|
|
|
|
|
|
||||
During the six months ended June 30, 2022 and 2021, the Company granted stock options to purchase
8
As of June 30, 2022, options for
Restricted Stock Units
During the six months ended June 30, 2022, the Company granted
Stock-Based Compensation
Stock-based compensation expense was allocated as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(in thousands) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Research and development |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
8. Leases
Cambridgepark Lease Amendments
On June 15, 2021, the Company entered into the first lease amendment (“First Lease Amendment”) and second lease amendment (“Second Lease Amendment” and, together with the First Lease Amendment, the “Lease Amendments”) with PPF Off 100 Cambridge Park Drive, LLC (the “Landlord”). The Lease Amendments amended the Company’s lease agreement for its corporate office and laboratory facilities with the Landlord in Cambridge, Massachusetts to add additional leased space in the same building (the “Amended Cambridgepark Lease”).
The First Lease Amendment and Second Lease Amendment commenced for accounting purposes on
Payments due associated with the Lease Amendments include fixed and variable payments. Variable payments relate to the Company’s share of the Landlord’s operating costs associated with the underlying assets and are recognized when the event on which those payments are assessed. The Amended Cambridgepark Lease does not contain a residual value guarantee. The Lease Amendments term end dates are coterminous with the existing lease agreement. In conjunction with the Lease Amendments, the Company was required to increase its irrevocable standby letter of credit to $
For further information regarding the Company’s Cambridgepark lease, please see Note 10 to the consolidated financial statements included in the 2021 Annual Report.
The elements of lease expense were as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(in thousands) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Short-term lease cost |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Variable lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
9
Amounts reported in the condensed consolidated balance sheets and the weighted-average lease term and discount rate information were as follows:
(in thousands except weighted-average amounts) |
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
Assets |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
$ |
|
|
$ |
|
||
Liabilities |
|
|
|
|
|
|
||
Operating lease liabilities, current |
|
$ |
|
|
$ |
|
||
Operating lease liabilities, non-current |
|
|
|
|
|
|
||
Total lease liabilities |
|
$ |
|
|
$ |
|
||
Weighted Average Lease Term and Discount Rate |
|
|
|
|
|
|
||
Weighted-average remaining lease term (years) |
|
|
|
|
||||
Weighted-average discount rate |
|
|
% |
|
|
% |
||
The following table represents other lease activity:
|
|
Six Months Ended June 30, |
|
|||||
(in thousands) |
|
2022 |
|
|
2021 |
|
||
Other Information |
|
|
|
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
|
|
||
Operating cash flows for operating leases |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for lease obligations |
|
$ |
|
|
$ |
|
||
9. Significant Agreements
Since December 31, 2021, there have been no material changes to the key terms of the Company’s license agreements. For further information regarding the Company’s existing license agreements, please see Note 11 to the consolidated financial statements included in the 2021 Annual Report.
10. Net Loss Per Share
The following table sets forth the computation of the Company’s basic and diluted net loss per share for the three and six months ended June 30, 2022 and 2021:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(in thousands, except share and per share amounts) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Cumulative dividends on redeemable convertible preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss attributable to common stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average number of common shares outstanding, basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share attributable to common stockholders, basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
As of the three and six months ended June 30, 2022 and 2021, the Company’s potentially dilutive securities were stock options, unvested restricted stock and restricted stock units. The Company excluded the following potential common shares from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect:
|
|
As of June 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Options to purchase common stock |
|
|
|
|
|
|
||
Unvested restricted stock |
|
|
|
|
|
|
||
Restricted stock units |
|
|
|
|
|
— |
|
|
10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”).
Overview
We are a clinical-stage cell and genome engineering company with a vision to cure blood cancers through cell and genome engineering. Our mission is to change the standard of care for patients with blood cancer by engineering hematopoietic stem cells (“HSCs”) to enable the use of targeted therapies post-transplant. Leveraging our expertise in HSC biology and genome engineering, we genetically modify HSCs to remove surface targets and then provide these cells as hematopoietic stem cell transplants to patients. Once these cells engraft into bone marrow, the patient’s healthy cells are protected because they no longer express the surface target, leaving only the cancerous cells exposed. We believe this will unlock the potential of targeted therapies to selectively destroy cancerous cells while sparing healthy cells. As a result, our engineered HSCs (“eHSCs”) are designed to limit the on-target toxicities associated with these targeted therapies, thereby enhancing their utility, and broadening their applicability. We intend to pair future eHSC product candidates with targeted therapeutics such as our VCAR33 programs, chimeric antigen receptor (“CAR”)-T therapies designed to target CD33, as well as with potentially best-in-class targeted therapies from collaborators, to bring potentially transformative outcomes to patients and establish new standard of care Treatment Systems for blood cancers.
We are developing our lead eHSC product candidate, VOR33, which we believe has the potential to transform the treatment for acute myeloid leukemia (“AML”) and other blood cancers. VOR33 is created by genetically modifying healthy donor HSCs in order to remove the CD33 surface target. We intend to develop VOR33 as a hematopoietic stem cell transplant product candidate to replace the standard of care in transplant settings. Our investigational new drug (“IND”) application for VOR33 in patients with AML was accepted by the U.S. Food and Drug Administration (“FDA”) in January 2021, and we have initiated and are actively recruiting for VBP101, our first-in-human Phase 1/2a trial of VOR33 in combination with Mylotarg. We anticipate initial clinical data for this trial during the fourth quarter of 2022. If successful, this trial will provide important validating evidence of the potential of VOR33 and our broader eHSC approach.
The VCAR33 programs are CAR-T therapy candidates designed to target CD33, a clinically-validated target for AML that we have licensed from the National Institutes of Health (“NIH”). VCAR33 is made up of two programs with different cell sources. The first uses autologous cells from each patient and is being studied in an ongoing Phase 1/2 clinical trial sponsored by the National Marrow Donor Program (“NMDP”) in young adult and pediatric patients with relapsed/refractory AML in a bridge-to-transplant study, which we refer to as VCAR33AUTO. The second uses allogeneic healthy donor-derived cells that we refer to as VCAR33ALLO. We plan to submit an IND for our VCAR33ALLO program in the first half of 2023 to support a Phase 1/2 clinical trial for patients with relapsed/refractory AML. The NMDP is currently evaluating VCAR33AUTO in a multi-site Phase 1/2 clinical trial in young adult and pediatric patients with relapsed/refractory AML, with initial monotherapy proof-of-concept data expected in 2022, depending on the investigator’s timing of data release. The NMDP is responsible for all aspects of the VCAR33AUTO trial, including the design of the trial, the manufacture of study product, the enrollment, dosing and follow-up of patients, the recording of trial data and the analysis of results. We did not control the preclinical development of VCAR33AUTO, which was conducted by the NIH, and we do not have rights under the license agreement to certain intellectual property, such as know-how, employed by the NMDP in manufacturing study product or conducting its clinical trial; however, the NMDP has permitted us to cross-reference its IND for this trial in future IND applications that we may submit with the FDA.
We believe that the combination of VOR33 followed by treatment with VCAR33ALLO in the post-transplant setting, which we refer to as the VOR33 + VCAR33 Treatment System, may transform patient outcomes and offer the potential for cures for patients that have limited treatment options. The VOR33 + VCAR33 Treatment System would utilize the same healthy donor allogenic cell source for both VOR33 and VCAR33ALLO. Following ongoing discussions with the FDA and alongside improved scientific understanding of the differences in T-cell sources, we plan to collect initial data on VOR33 from the VBP101 clinical trial and initial clinical data from the VCAR33ALLO program prior to IND submission for the Treatment System. We believe this approach allows for a more methodical development pathway for this novel-novel treatment combination.
Since our inception in December 2015, we have devoted substantially all of our resources to raising capital, organizing and staffing our company, business and scientific planning, conducting discovery and research activities, acquiring or discovering product candidates, establishing and protecting our intellectual property portfolio, developing and progressing our product candidates and preparing for clinical trials, establishing arrangements with third parties for the manufacture of our product candidates and component materials, building out our internal clinical manufacturing facility, and providing general and administrative support for these operations. We do not have any product candidates approved for sale and have not generated any revenue from product sales. Through June 30, 2022, we funded our operations primarily through the sale of equity securities and debt financings and have received aggregate net proceeds from these transactions of $344.6 million.
11
We have incurred significant operating losses since inception, including net losses of $21.7 million and $44.4 million for the three and six months ended June 30, 2022, respectively, and $68.9 million for the year ended December 31, 2021. As of June 30, 2022, we had an accumulated deficit of $174.5 million.
As of June 30, 2022, we had cash, cash equivalents and marketable securities of $151.1 million. We expect that our existing cash, cash equivalents and marketable securities at June 30, 2022 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2024.
Business Impact of the COVID-19 Pandemic
The global COVID-19 pandemic continues to rapidly evolve, including with respect to the variants of the virus, and we will continue to monitor the COVID-19 situation closely. To date our financial condition and operations have not been significantly impacted by the COVID-19 pandemic, including resulting adverse macroeconomic conditions, but we have experienced delays in our Phase 1/2a trial for VOR33 in part due to the COVID-19 pandemic, including site activation and readiness delays, which has resulted in enrollment delays. We cannot, at this time, predict the specific extent, duration or full impact that these uncertainties will have on our financial condition and operations, including our ongoing and planned preclinical and clinical trials. The extent of the impact of the COVID-19 on our business, operations and clinical development timelines and plans remains uncertain and will depend on certain developments, including the duration and subsequent waves of the outbreak, such as those related to variants of the virus, and its impact on our clinical trial enrollment, trial sites, contract research organizations (“CROs”), third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. To the extent possible, we are conducting business as usual, with necessary or advisable modifications to employee travel. We will continue to actively monitor the rapidly evolving situation related to COVID-19 and may take further actions that alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business. The development of our product candidates could be disrupted and materially adversely affected in the future by the COVID-19 pandemic, including due to the ongoing global supply chain issues that may limit our ability and service providers' ability to acquire the raw materials necessary to conduct our research, development, manufacturing and clinical activities. Our clinical trials also could be delayed due to government orders and site policies on account of the pandemic, and some patients may be unwilling or unable to travel to study sites, enroll in our trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, which would delay our ability to conduct clinical trials or release clinical trial results and could delay our ability to obtain regulatory approval and commercialize our product candidates. Furthermore, COVID-19 could affect our employees or the employees of research sites and service providers on whom we rely, including CROs, as well as those of companies with which we do business, including our suppliers and contract manufacturing organizations (“CMOs”), thereby disrupting our business operations. Quarantines and travel restrictions imposed by governments in the jurisdictions in which we and the companies with which we do business operate could materially impact the ability of employees to access preclinical and clinical sites, laboratories, manufacturing site and office. These and other events resulting from the COVID-19 pandemic could disrupt, delay, or otherwise adversely impact our business.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of our condensed consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, costs, and expenses, and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates, if any, will be reflected in the condensed consolidated financial statements prospectively from the date of change in estimates. There have been no material changes to our critical accounting estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual Report other than those described in Note 2 of the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Financial Operations Overview
Revenue
We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products in the near future, if at all. If our development efforts for our product candidates are successful and result in marketing approval, or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such agreements.
12
Expenses
Research and Development Expenses
Research and development expenses consist primarily of external and internal expenses incurred in connection with our research and development activities, including our drug discovery efforts and the development of our product candidates.
External expenses include:
Internal expenses include:
We expense research and development costs as incurred. We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated financial statements as prepaid expenses or accrued research and development expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized, even when there is no alternative future use for the research and development. The capitalized amounts are expensed as the related goods are delivered or the services are performed.
A significant portion of our research and development costs have been external costs, which we track by stage of development, preclinical or clinical. However, we do not track our internal research and development expenses on a program specific basis because these costs are deployed across multiple projects and, as such, are not separately classified.
Research and development activities are central to our business model. We expect that our research and development expenses will increase significantly for the foreseeable future as we continue to identify and develop product candidates, particularly as more of our product candidates move into clinical development and later stages of clinical development, and as we continue to invest in our laboratory and manufacturing facilities.
The successful development of our product candidates in the future is highly uncertain. Therefore, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development and commercialization of any of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of our product candidates, if approved. This is due to the numerous risks and uncertainties associated with developing product candidates, many of which are outside of our control, including the uncertainty of:
13
Any changes in the outcome of any of these variables could mean a significant change in the costs and timing associated with the development of our product candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related costs, including salaries, bonuses, benefits and stock-based compensation expenses, for employees involved in our executive, finance, corporate, business development and administrative functions, as well as expenses for outside professional services, including legal, audit, accounting and tax-related services and other consulting fees, facility-related expenses, which include depreciation costs and other allocated expenses for rent and maintenance of facilities, insurance costs, recruiting costs, travel expenses and other general administrative expenses.
We expect that our general and administrative expenses will increase significantly for the foreseeable future as our business expands and we hire additional personnel to support our continued research and development activities, including our future clinical programs. We also anticipate increased expenses associated with being a public company, including costs for legal, audit, accounting, investor and public relations, regulatory and tax-related services related to compliance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), listing standards applicable to companies listed on a national securities exchange, director and officer insurance premiums and investor relations costs.
Other Income
Interest Income
Interest income consists of interest income earned on our cash, cash equivalents and marketable securities held at financial institutions.
Results of Operations
Comparison of Three and Six Months Ended June 30, 2022 and 2021
The following table summarizes our results of operations for the periods indicated (amounts in thousands):
|
|
Three Months Ended June 30, |
|
|
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
$ |
15,333 |
|
|
$ |
12,970 |
|
|
$ |
2,363 |
|
General and administrative |
|
|
6,459 |
|
|
|
5,410 |
|
|
|
1,049 |
|
Total operating expenses |
|
|
21,792 |
|
|
|
18,380 |
|
|
|
3,412 |
|
Loss from operations |
|
|
(21,792 |
) |
|
|
(18,380 |
) |
|
|
(3,412 |
) |
Other income: |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
133 |
|
|
|
10 |
|
|
|
123 |
|
Total other income |
|
|
133 |
|
|
|
10 |
|
|
|
123 |
|
Net loss |
|
$ |
(21,659 |
) |
|
$ |
(18,370 |
) |
|
$ |
(3,289 |
) |
14
|
|
Six Months Ended June 30, |
|
|
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
$ |
30,613 |
|
|
$ |
21,911 |
|
|
$ |
8,702 |
|
General and administrative |
|
|
13,979 |
|
|
|
10,199 |
|
|
|
3,780 |
|
Total operating expenses |
|
|
44,592 |
|
|
|
32,110 |
|
|
|
12,482 |
|
Loss from operations |
|
|
(44,592 |
) |
|
|
(32,110 |
) |
|
|
(12,482 |
) |
Other income: |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
196 |
|
|
|
17 |
|
|
|
179 |
|
Total other income |
|
|
196 |
|
|
|
17 |
|
|
|
179 |
|
Net loss |
|
$ |
(44,396 |
) |
|
$ |
(32,093 |
) |
|
$ |
(12,303 |
) |
Research and Development Expenses
The following table summarizes our research and development expenses incurred for the periods indicated (amounts in thousands):
|
|
Three Months Ended June 30, |
|
|
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|||
External expenses |
|
$ |
6,019 |
|
|
$ |
6,586 |
|
|
$ |
(567 |
) |
Internal expenses: |
|
|
|
|
|
|
|
|
|
|||
Personnel expenses (including stock-based compensation) |
|
|
6,928 |
|
|
|
5,066 |
|
|
|
1,862 |
|
Facilities and other expenses |
|
|
2,386 |
|
|
|
1,318 |
|
|
|
1,068 |
|
Total research and development expenses |
|
$ |
15,333 |
|
|
$ |
12,970 |
|
|
$ |
2,363 |
|
|
|
Six Months Ended June 30, |
|
|
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|||
External expenses |
|
$ |
12,523 |
|
|
$ |
9,995 |
|
|
$ |
2,528 |
|
Internal expenses: |
|
|
|
|
|
|
|
|
|
|||
Personnel expenses (including stock-based compensation) |
|
|
13,887 |
|
|
|
9,384 |
|
|
|
4,503 |
|
Facilities and other expenses |
|
|
4,203 |
|
|
|
2,532 |
|
|
|
1,671 |
|
Total research and development expenses |
|
$ |
30,613 |
|
|
$ |
21,911 |
|
|
$ |
8,702 |
|
Research and development expenses were $15.3 million for the three months ended June 30, 2022, compared to $13.0 million for the three months ended June 30, 2021. The increase of $2.3 million was primarily due to increases of $1.8 million in personnel costs, attributable to an increase in employee headcount to support the growth of our research and development efforts, and $1.1 million in facilities and other expenses, as a result of our laboratory and current Good Manufacturing Practices (”cGMP”) manufacturing facility expansion and due to increases in depreciation expense, that were offset by a decrease in external clinical program costs of $0.5 million.
Research and development expenses were $30.6 million for the six months ended June 30, 2022, compared to $21.9 million for the six months ended June 30, 2021. The increase of $8.7 million was primarily due to increases of $2.4 million in external preclinical studies, research consulting fees, and laboratory supplies costs, $4.5 million in personnel costs, attributable to an increase in employee headcount to support the growth of our research and development efforts, and $1.7 million in facilities and other expenses, as a result of our laboratory and cGMP manufacturing facility expansion and due to increases in depreciation expense.
General and Administrative Expenses
General and administrative expenses were $6.5 million for the three months ended June 30, 2022, compared to $5.4 million for the three months ended June 30, 2021. The increase of $1.1 million was primarily due to increases of $0.6 million in personnel costs and stock-based compensation and $0.4 million in facilities and other expenses, as a result of our corporate headquarters office expansion.
General and administrative expenses were $14.0 million for the six months ended June 30, 2022, compared to $10.2 million for the six months ended June 30, 2021. The increase of $3.8 million was primarily due to increases of $2.3 million in personnel costs, primarily attributable to an increase in employee headcount and stock-based compensation, $0.6 million in professional fees and $0.9 million in facilities and other expenses, as a result of our corporate headquarters office expansion.
15
Other Income
Other income increased by $123 thousand for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. Other income increased by $179 thousand for the six months ended June 30, 2022, compared to the six months ended June 30, 2021.The increase in interest income was due to increases in interest received from our cash, cash equivalents and marketable securities.
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have not recognized any revenue and have incurred operating losses and negative cash flows from our operations. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all. We have funded our operations primarily through the sale of equity securities and debt financings and have received aggregate net proceeds from these transactions of $344.6 million as of June 30, 2022.
In order to fund our future operations, including our planned clinical trials, on March 14, 2022, we filed a universal shelf registration statement (the “Shelf Registration Statement”), which will provide for aggregate offerings of up to $350.0 million of common stock, preferred stock, debt securities, warrants or any combination thereof. The Shelf Registration Statement was declared effective by the Securities and Exchange Commission on March 18, 2022. We believe that our Shelf Registration Statement will provide us with the flexibility to raise additional capital to finance our operations as needed. We may offer additional securities under our Shelf Registration Statement from time to time in response to market conditions or other circumstances if we believe such a plan of financing is in the best interests of our stockholders. In March 2022, we entered into an open market sale agreement (the “Sale Agreement”), with Jefferies LLC (“Jefferies”), as the sales agent, pursuant to which we may from time to time, issue and sell common stock with an aggregate value of up to $125.0 million in an at-the-market offering (the “ATM Facility”). Jefferies is acting as the sole sales agent for any sales made under the Sale Agreement for a commission up to 3% on gross proceeds. The common stock will be sold at prevailing market prices at the time of the sale, and, as a result, prices may vary. Unless otherwise terminated earlier, the Sale Agreement will continue until all shares available under the Sale Agreement have been sold.
We sold 95,564 shares of our common stock under the ATM Facility during the three and six months ended June 30, 2022. These shares were sold at a weighted average price per share of $5.97 for aggregate net proceeds of $0.6 million, after deducting commissions and offering costs. As of June 30, 2022, $124.4 million remained available to be sold under the ATM Facility.
Cash Requirements
As of June 30, 2022, there was no material changes in our short-term and long-term cash requirements from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2021 Annual Report, except for those described below in “Contractual Obligations and Other Commitments”.
As of June 30, 2022, we had cash, cash equivalents and marketable securities of $151.1 million. We will need to raise additional capital in the future to fund our future operations. However, we cannot guarantee that we will be able to obtain sufficient additional funding or that if we do obtain additional funding, that such funding will be obtainable on terms satisfactory to us. In the event that we are unable to obtain sufficient additional funding, there can be no assurance that we will be able to continue as a going concern.
We expect that our existing cash, cash equivalents and marketable securities at June 30, 2022 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2024. We have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.
We expect our expenses to increase substantially if, and as, we:
16
In addition, we expect to continue to incur additional costs associated with operating as a public company, including significant legal, audit, accounting, investor and public relations, regulatory, tax-related, director and officer insurance premiums, investor relations and other expenses that we did not incur as a private company. Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval for any product candidates or generate revenue from the sale of any product candidate for which we may obtain marketing approval. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for at least several years, if ever.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the public or private sale of our equity, government or private party grants, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. To the extent that we raise additional capital through the sale of our equity or convertible debt securities, including through the use of our ATM Facility, the ownership interest of our shareholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain additional funding, we could be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion or any commercialization efforts, which could adversely affect our business prospects, or we may be unable to continue operations. If we raise funds through strategic collaborations or other similar arrangements with third parties, we may have to relinquish valuable rights to our platform technology, future revenue streams, research programs or product candidates or may have to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Our ability to raise additional funds may be adversely impacted by worsening global economic conditions and disruptions to and volatility in the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic, geopolitical tensions and adverse macroeconomic conditions or otherwise. Because of the numerous risks and uncertainties associated with product development, we cannot predict the timing or amount of increased expenses, and there is no assurance that we will ever be profitable or generate positive cash flow from operating activities.
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements that, have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.
Cash Flows
The following table provides information regarding our cash flows for the periods presented (in thousands):
|
|
Six Months Ended June 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Net cash used in operating activities |
|
$ |
(47,896 |
) |
|
$ |
(34,214 |
) |
Net cash used in investing activities |
|
|
(9,757 |
) |
|
|
(77,212 |
) |
Net cash provided by financing activities |
|
|
804 |
|
|
|
232,403 |
|
Net (decrease) increase in cash, cash equivalents and restricted cash equivalents |
|
$ |
(56,849 |
) |
|
$ |
120,977 |
|
Operating Activities
Net cash used in operating activities was $47.9 million for the six months ended June 30, 2022, reflecting a net loss of $44.4 million and net cash used of $10.6 million for operating assets and liabilities, that were partially offset by non-cash charges of $7.1 million. The change in our net operating assets and liabilities was due to decreases in operating lease liabilities of $8.2 million and in accounts payable and accrued expense of $1.5 million and increases in prepaid expenses and other current assets of $0.7 million and in other assets of $0.2 million. The non-cash charges primarily consisted of stock-based compensation expense of $3.5 million, non-cash lease expense of $2.5 million and depreciation expense of $1.0 million.
17
Net cash used in operating activities was $34.2 million for the six months ended June 30, 2021, reflecting a net loss of $32.1 million and net cash used of $6.2 million for operating assets and liabilities, that were partially offset by non-cash charges of $4.1 million. The change in our net operating assets and liabilities was primarily due to decreases in operating lease liabilities of $1.1 million and in accounts payable and accrued expenses of $0.7 million and increases in prepaid expenses and other current assets of $4.1 million and in other assets of $0.3 million. The non-cash charges primarily consisted of stock-based compensation expense of $1.9 million, non-cash lease expense of $1.5 million and depreciation expense of $0.7 million.
The $13.7 million increase in net cash used in operating activities for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to an increase in operating expenses as a result of our increased efforts identifying product candidates and advancing the development of VOR33, increased personnel costs related to our increased employee headcount and an increase in facility costs relating to our laboratory, cGMP manufacturing facility and headquarters office expansion.
Investing Activities
Net cash used in investing activities was $9.8 million for the six months ended June 30, 2022, which consisted of purchases of $5.1 million of marketable securities and $7.8 million of property and equipment and proceeds of $3.1 million from the maturity of marketable securities. Net cash used in investing activities was $77.2 million for the six months ended June 30, 2021, which consisted of purchases of $75.1 million of marketable securities and $2.1 million of purchases of property and equipment.
Financing Activities
Net cash provided by financing activities was $0.8 million for the six months ended June 30, 2022, which consisted of proceeds from issuance of common stock from our ATM Facility of $0.5 million and stock option exercises of $0.3 million. Net cash provided by financing activities was $232.4 million for the six months ended June 30, 2021, which consisted of proceeds of $45.4 million received from the sale and issuance of shares of our preferred stock and net proceeds of $187.0 million from our initial public offering.
Contractual Obligations and Other Commitments
During the six months ended June 30, 2022, there was an increase of $31.5 million in contractual obligations and commitments from that described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments” in our 2021 Annual Report relating to commencement of the Lease Amendments and a certain other lease of which $1.4 million is due during the next 12 months. For further information on these Lease Amendments, please see Note 8 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Recent Accounting Pronouncements
There are no new significant recent accounting pronouncements which may materially impact our financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our exposure to money market funds, corporate debt and U.S. Treasury securities in our cash equivalents and marketable security balances. Interest income is sensitive to changes in the general level of interest rates. However, due to the short-term maturities of our cash equivalents and marketable securities, we believe a hypothetical 100 basis point increase or decrease in interest rates during any of the periods presented would not have had a material impact on our financial statements.
As of June 30, 2022 and December 31, 2021, we had no debt outstanding and therefore were not exposed to related interest rate risk.
Foreign Currency Exchange Risk
All of our employees and our operations are currently located in the United States and our expenses are generally denominated in U.S. dollars. We therefore are not currently exposed to significant market risk related to changes in foreign currency exchange rates. However, we have contracted with and may continue to contract with non-U.S. vendors who we may pay in local currency. Our operations may be subject to fluctuations in foreign currency exchange rates in the future. To date, foreign currency transaction gains and losses have not been material to our financial statements, and we have not had a formal hedging program with respect to foreign currency. We believe a hypothetical 100 basis point increase or decrease in exchange rates during any of the periods presented would not have a material effect on our financial statements.
18
Effects of Inflation
Inflation generally affects us by increasing our cost of labor and clinical trial costs. We believe that inflation has not had a material effect on our financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation of our disclosure controls and procedures as of June 30, 2022, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of such date were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
19
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently a party to any material legal proceedings. From time to time, we may become involved in other litigation or legal proceedings relating to claims arising from the ordinary course of business.
Item 1A. Risk Factors.
There have been no material changes in risk factors discussed in “Part I. Item 1A. Risk Factors” in 2021 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Use of Proceeds from Registered Securities
On February 9, 2021, we closed our initial public offering of 11,302,219 shares of our common stock, including 1,474,202 shares of our common stock pursuant to the full exercise by the underwriters of an option to purchase additional shares, at a public offering price of $18.00 per share for aggregate offering proceeds of approximately $203.4 million (the “IPO”). The offer and sale of all of the shares in the offering were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-252175), which was declared effective by the SEC on February 4, 2021, and a registration statement on Form S-1 (File No. 333-252766), which was deemed effective on February 5, 2021. Goldman Sachs & Co. LLC, Evercore Group L.L.C., Barclays Capital Inc. and Stifel, Nicolaus & Company, Incorporated acted as the lead book-running managers and representatives of the underwriters. The offering commenced on February 5, 2021 and did not terminate until the sale of all of the shares offered.
We received aggregate net proceeds from the IPO of $186.3 million, after deducting underwriting discounts and commissions and other offering expenses payable by us. None of the underwriting discounts and commissions or other offering expenses were incurred or paid to directors or officers of ours or their associates or to persons owning 10% or more of our common stock or to any affiliates of ours.
As of June 30, 2022, we have used $34.9 million of the net proceeds from our IPO primarily to fund the development of VOR33, the development of VCAR33ALLO, VCAR33AUTO and VOR33 + VCAR33 Treatment System, and continued expansion of our platform technology, including to advance the research and development of additional eHSC and internal CAR-T programs, as well as for working capital and general corporate purposes.
We have invested the remaining net proceeds from the offering in a variety of capital preservation investments, including short-term investment grade interest bearing instruments and U.S. government securities. There has been no material change in our planned use of the net proceeds from the offering as described in the final prospectus for our IPO filed with the SEC pursuant to Rule 424(b) under the Securities Act.
20
Item 6. Exhibits.
|
|
|
|
|
|
Incorporated by Reference |
||||||
Exhibit Number |
|
Description |
|
Form |
|
File No. |
|
Exhibit Number |
|
Filing Date |
|
Filed Herewith |
10.1+ |
|
Separation Agreement, by and between the Registrant and Christopher Slapak, dated May 11, 2022
|
|
|
|
|
|
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31.1 |
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31.2 |
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32.1† |
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101.INS |
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Inline XBRL Instance Document
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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Inline XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
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104 |
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The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL. |
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+ Indicates management contract or compensatory plan.
† The certifications furnished in Exhibit 32.1 hereto are deemed to be furnished with this Quarterly Report on Form 10-Q and will not be deemed to be “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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VOR BIOPHARMA INC. |
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Date: August 11, 2022 |
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By: |
/s/ Robert Ang |
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Robert Ang President and Chief Executive Officer (Principal Executive Officer) |
Date: August 11, 2022 |
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By: |
/s/ Nathan Jorgensen |
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Nathan Jorgensen Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
22
Exhibit 10.1
May 11, 2022
Christopher Slapak, M.D.
Via DocuSign/Email
Re: Separation Agreement
Dear Christopher:
This letter sets forth the substance of the separation agreement (hereinafter, “Agreement”) that Vor Biopharma Inc. (hereinafter, the “Company”) is offering to you to aid in your employment transition and retirement from the Company.
1
To the extent Internal Revenue Code Section 409A (“Section 409A”) applies to the consideration for this Agreement, both you and the Company intend this Agreement to comply with Section 409A and its exceptions. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, your right to receive any installment payments under this Agreement (whether severance payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment hereunder shall at all times be considered a separate and distinct payment. You acknowledge and agree that the Company does not guarantee or make any representation whatsoever regarding the tax treatment or tax consequences associated with any payment or benefit arising under this Agreement, including, without limitation, consequences related to Section 409A, and that you will consult with your financial advisor regarding the tax consequences of the Severance Benefits and your obligations with respect to same. In the event any payments are deemed by the Internal Revenue Service to be non-compliant, this Agreement, at your option, shall be modified to the extent practicable, so as to make it compliant by altering payments, or the timing of their receipt, provided that no such modification shall in any way increase the Company’s obligations under this Agreement.
2
3
4
You expressly release any and all claims, whether known or unknown, arising under any state or federal statute regarding the payment of wages and other compensation, including but not limited to the Massachusetts Payment of Wages Act and the Massachusetts minimum wage and overtime laws.
Notwithstanding the foregoing general release, other than events expressly contemplated by this Agreement you do not waive or release rights or Claims that may arise from events that occur after the date this waiver is executed or your right to enforce this Agreement. Also excluded from this Agreement are any Claims which cannot be waived by law, including, without limitation, any rights you may have under applicable workers’ compensation laws and your right, if applicable, to file or participate in an investigative proceeding of any federal, state or local governmental agency. Nothing in this Agreement shall prevent you from filing, cooperating with, or participating in any proceeding or investigation before the Equal Employment Opportunity Commission, United States Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal government agency, or similar state or local agency (“Government Agencies”), or exercising any rights pursuant to Section 7 of the National Labor Relations Act. You further understand this Agreement does not limit your ability to voluntarily communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. While this Agreement does not limit your right to receive an award for information provided to the Securities and Exchange Commission, you understand and agree that, you are otherwise waiving, to the fullest extent permitted by law, any and all rights you may have to individual relief based on any Claims that you have released and any rights you have waived by signing this Agreement. If any Claim is not subject to release, to the greatest extent permitted by law, you waive any right or ability to be a class or collective action representative or to otherwise participate in any putative or certified class, collective or multi-party action or proceeding based on such a Claim in which the Company is a party. This Agreement does not abrogate your existing rights under any Company benefit plan or any plan or agreement related to equity ownership in the Company; however, it does waive, release and forever discharge Claims existing as of the date you execute this Agreement pursuant to any such plan or agreement.
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6
If this Agreement is acceptable to you, please sign below and return the original to me on or after your Separation Date, but no later than the date that is twenty-one (21) days after you receive this Agreement. This offer will expire if we have not received your executed copy by that date.
[Remainder of this page left intentionally blank. Signature page to follow.]
7
I wish you good luck in your future endeavors.
Sincerely,
Vor Biopharma Inc.
/s/ Robert Ang
Robert Ang, Chief Executive Officer
Attachments:
Exhibit A – Employee Confidentiality, Assignment, and Non-Solicitation Agreement
Agreed to and accepted this 11th day of May 2022:
/s/ Christopher Slapak
Signature
Christopher Slapak
Print Name
CONSIDERATION PERIOD
I, Christopher Slapak, M.D., understand that I have the right to take at least 21 days to consider whether to sign this Agreement, which I received on May 11, 2022. If I elect to sign this Agreement before 21 days have passed, I understand I am to sign and date below this paragraph to confirm that I knowingly and voluntarily agree to waive the 21-day consideration period.
Agreed
/s/ Christopher Slapak
Signature
5/11/2022
Date
Exhibit A
Employee Confidentiality, Assignment and Non-Solicitation Agreement
8
EXHIBIT A
Prior Inventions
9
Exhibit 31.1
CERTIFICATIONS
I, Robert Ang, certify that:
Date: August 11, 2022 |
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By: |
/s/ Robert Ang |
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Robert Ang |
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President and Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS
I, Nathan Jorgensen, certify that:
Date: August 11, 2022 |
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By: |
/s/ Nathan Jorgensen |
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Nathan Jorgensen |
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Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Vor Biopharma Inc. (the “Company”) for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
Date: August 11, 2022 |
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By: |
/s/ Robert Ang |
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Robert Ang President and Chief Executive Officer (Principal Executive Officer) |
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Date: August 11, 2022 |
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By: |
/s/ Nathan Jorgensen |
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Nathan Jorgensen Chief Financial Officer (Principal Financial Officer) |
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