lenz-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			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 001-40532

_________________________

LENZ THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

_________________________


Delaware						84-4867570
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

445 Marine View Ave., Ste. #320 Del Mar, California 92014
(Address of principal executive offices, including zip code)
(858) 925-7000
(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

_________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.00001 per share

LENZ

The Nasdaq Stock Market LLC

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.

Yes ☒ No ☐

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).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☒

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 o No ☒

As of May 3, 2024, 25,534,458 shares of the registrant's common stock were outstanding.

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, commercial activities and costs, research and development costs, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that are in some cases beyond our control and 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.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

•the likelihood of our clinical trials demonstrating safety and efficacy of our product candidates to the satisfaction of the Food and Drug Administration ("FDA"), and other positive results;

•the timing, scope and likelihood of regulatory filings and approvals for LNZ100;

•our ability to obtain and maintain regulatory approval of LNZ100;

•our plans relating to the development of LNZ100;

•the size of the market opportunity for LNZ100, including our estimates of the size of the affected population and potential adoption rate;

•our plans relating to commercializing LNZ100, if approved, including the geographic areas of focus and sales strategy;

•our competitive position and the success of competing therapies that are or may become available;

•the beneficial characteristics, and the potential safety, efficacy and therapeutic effects of LNZ100;

•the need to hire additional personnel and our ability to attract and retain such personnel;

•our plans relating to the further development and manufacturing of LNZ100 and any future product candidates;

•the expected potential benefits of strategic collaborations with third parties and our ability to attract collaborators with development, regulatory and commercialization expertise;

•the rate and degree of market acceptance and clinical utility of LNZ100 and any other product candidates we may develop;

•the impact of existing laws and regulations and regulatory developments in the United States and other jurisdictions;

•our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering LNZ100, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;

•our continued reliance on third parties to conduct any additional clinical trials of LNZ100 or any future product candidates, and for the manufacture of our product candidates for any such trials;

•the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•our financial performance;

•costs related to the Merger (as defined in Part I, Item I, Note 1, “Organization and Liquidity,” in our notes to condensed consolidated financial statements in this Quarterly Report on Form 10-Q);

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•our ability to recognize the anticipated benefits of the Merger;

•our expectation that our existing cash, cash equivalents, and marketable securities will be sufficient to fund the Company to positive operating cash flow subsequent to commercial launch, if LNZ100 is approved;

•our expectations regarding the period during which we will remain an emerging growth company under the JOBS Act; and

•our anticipated use of our existing resources and the proceeds from the Merger and the concurrent PIPE Financing (as defined in Part I, Item I, Note 3, “Merger and Related Transactions,” in our notes to condensed consolidated financial statements in this Quarterly Report on Form 10-Q).

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we undertake no obligation to update or revise any forward-looking statements contained herein to reflect events or circumstances after the date of this Quarterly Report, whether as a result of any new information, future events or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

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			Page
PART I - FINANCIAL INFORMATION
	Item 1.	Financial Statements	1
		Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of Operations And Comprehensive Loss	3
		Condensed Consolidated Statements of Convertible Preferred and Common Stock and Stockholders’ Equity (Deficit)	4
		Condensed Consolidated Statements of Cash Flows	6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
	Item 4.	Controls and Procedures	27
PART II - OTHER INFORMATION
	Item 1.	Legal Proceedings	28
	Item 1A.	Risk Factors	28
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	76
	Item 3.	Defaults Upon Senior Securities	76
	Item 4.	Mine Safety Disclosures	76
	Item 5.	Other Information	76
	Item 6.	Exhibits	76
Signatures			79

iii

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Part I. Financial Information

Item 1. Financial Statements.

LENZ THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for shares and par value)


	March 31, 2024		December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	200,357	$	35,140
Marketable securities	12,922		30,654
Prepaid expenses and other current assets	3,281		1,450
Restricted cash	114		—
Total current assets	216,674		67,244
Property and equipment, net	49		54
Operating lease right-of-use asset	578		318
Deferred offering costs	—		2,739
Security deposit	21		21
Total assets	$	217,322	$	70,376
Liabilities, convertible preferred and common stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	7,131	$	5,711
Accrued liabilities	11,757		12,803
Total current liabilities	18,888		18,514
Operating lease liability, net	156		192
Other noncurrent liabilities	111		121
Preferred stock warrants liability	—		871
Total liabilities	19,155		19,698
Commitments and contingencies (Note 6)
Convertible preferred and common stock:
Series A convertible preferred stock, par value of $0.001 per share; no shares and 22,791,777 shares authorized at March 31, 2024 and December 31, 2023, respectively; no shares and 21,977,282 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	—		44,621
Series A-1 convertible preferred stock, par value of $0.001 per share; no shares and 2,950,548 shares authorized at March 31, 2024 and December 31, 2023, respectively; no shares and 2,950,548 issued and outstanding at March 31, 2024 and December 31, 2023, respectively	—		9,893
Series B convertible preferred stock, par value of $0.001 per share; no shares and 28,019,181 shares authorized at March 31, 2024 and December 31, 2023, respectively; no shares and 28,019,181 issued and outstanding at March 31, 2024 and December 31, 2023, respectively	—		82,976
Class B convertible common stock, par value of $0.001 per share; no shares and 2,744,184 shares authorized at March 31, 2024 and December 31, 2023, respectively; no shares and 2,744,184 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	—		5,900
Total convertible preferred and common stock	—		143,390
Stockholders' equity (deficit) (1):

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Common stock, par value of $0.00001 per share; 300,000,000 and 16,017,929 shares authorized at March 31, 2024 and December 31, 2023, respectively, 25,534,451 and 2,004,783 shares issued at March 31, 2024 and December 31, 2023, respectively, and 25,500,130 and 1,969,360 shares outstanding at March 31, 2024 and December 31, 2023, respectively	—		10
Additional paid-in capital	310,061		2,517
Accumulated deficit	(111,893)		(95,245)
Accumulated other comprehensive income (loss)	(1)		6
Total stockholders’ equity (deficit)	198,167		(92,712)
Total liabilities, convertible preferred and common stock and stockholders’ equity (deficit)	$	217,322	$	70,376

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

(1)Retroactively recast for the reverse recapitalization as described in Note 3.

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LENZ THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Operating expenses:
Research and development	$	10,537	$	10,325
Selling, general and administrative	5,551		2,291
Total operating expenses	16,088		12,616
Loss from operations	(16,088)		(12,616)
Other income (expense):
Other expense	(1,348)		(54)
Interest income	788		—
Total other income (expense), net	(560)		(54)


Net loss	$	(16,648)	$	(12,670)
Other comprehensive loss:
Unrealized loss on marketable securities	(7)		—
Comprehensive loss	$	(16,655)	$	(12,670)
Net loss per share, basic and diluted	$	(3.53)	$	(6.50)
Weighted-average common shares outstanding, basic and diluted (1)	4,717,613		1,950,653

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

(1)Retroactively recast for the reverse recapitalization as described in Note 3. See Note 2 for further information on weighted-average common shares outstanding.

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LENZ THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED AND COMMON STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share data)

(unaudited)


	Convertible Preferred and Common Stock												Stockholders' Equity (Deficit)

	Series A Convertible Preferred Stock			Series A-1 Convertible Preferred Stock			Series B Convertible Preferred Stock			Class B Convertible Common Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Stockholders' Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance as of December 31, 2023 (1)	21,977,282	$	44,621	2,950,548	$	9,893	28,019,181	$	82,976	2,744,184	$	5,900	1,969,360	$	10	$	2,517	$	(95,245)	$	6	$	(92,712)
Conversion of convertible preferred stock and Class B convertible common stock to common stock as a result of the Merger and reset to par of $0.00001	(21,977,282)	(44,621)		(2,950,548)	(9,893)		(28,019,181)	(82,976)		(2,744,184)	(5,900)		11,260,672	(10)		143,400		—		—		143,390
Issuance of common stock to Graphite stockholders as a result of the Merger	—	—		—	—		—	—		—	—		8,320,485	—		116,145		—		—		116,145
Issuance of common stock from private placement, net	—	—		—	—		—	—		—	—		3,559,565	—		49,840		—		—		49,840
Reclassification of warrant liability to equity	—	—		—	—		—	—		—	—		—	—		1,918		—		—		1,918
Merger transaction costs	—	—		—	—		—	—		—	—		—	—		(5,146)		—		—		(5,146)
Unrealized gain (loss) on marketable securities	—	—		—	—		—	—		—	—		—	—		—		—		(7)		(7)
Exercise of stock options and common warrants	—	—		—	—		—	—		—	—		383,898	—		430		—		—		430
Vesting of early exercised stock options	—	—		—	—		—	—		—	—		6,150	—		10		—		—		10
Share-based compensation	—	—		—	—		—	—		—	—		—	—		947		—		—		947
Net loss	—	—		—	—		—	—		—	—		—	—		—		(16,648)		—		(16,648)
Balance as of March 31, 2024	—	$	—	—	$	—	—	$	—	—	$	—	25,500,130	$	—	$	310,061	$	(111,893)	$	(1)	$	198,167

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

(1)Retroactively recast for the reverse recapitalization as described in Note 3.

SEC Form 10-Q filed by Graphite Bio Inc.