10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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, 2023

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: 001-40489

 

VERVE THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

82-4800132

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

 

201 Brookline Avenue, Suite 601

Boston, Massachusetts

02215

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 603-0070

 

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 $0.001 per share

 

VERV

 

Nasdaq Global Select Market

 

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 ☐ No

As of May 10, 2023, the registrant had 61,930,485 shares of common stock, par value $0.001 per share, outstanding.

 

 

 


 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical fact, 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. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or the negative of these words or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:

the initiation, timing, progress and results of our research and development programs, preclinical studies and clinical trials, including the timing of our submissions of investigational new drug, or IND, applications, and clinical trial applications to regulatory authorities;
the timing and conduct of our heart-1 clinical trial, an ongoing Phase 1b clinical trial of VERVE-101, including statements regarding the timing of enrollment and completion of the clinical trials and the period during which the data from clinical trials will become available;
our expectations related to the hold that the U.S. Food and Drug Administration, or FDA, placed on our IND application to conduct a clinical trial evaluating VERVE-101 in the United States, including our plans and expectations for responding to the FDA;
our estimates regarding expenses, future revenue, capital requirements, need for additional financing and the period over which we believe our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements;
the timing of and our ability to submit applications for and obtain and maintain regulatory approvals for our current and future product candidates;
the potential therapeutic attributes and advantages of our current and future product candidates;
our expectations about the translatability of results from studies in non-human primates into clinical trials in humans;
our plans to develop and, if approved, subsequently commercialize any product candidates we may develop;
the rate and degree of market acceptance and clinical utility of our products, if approved;
our estimates regarding the addressable patient population and potential market opportunity for our current and future product candidates;
our commercialization, marketing and manufacturing capabilities and strategy;
our expectations regarding our ability to obtain and maintain intellectual property protection;
our ability to identify additional products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;
the impact of government laws and regulations;
our competitive position and expectations regarding developments and projections relating to our competitors and any competing therapies that are or become available;
developments relating to our competitors and our industry;
our ability to establish and maintain collaborations, including our collaborations with Beam Therapeutics, Inc. and Vertex Pharmaceuticals Incorporated;
the impact of the COVID-19 pandemic and of global economic developments, including rising inflation and interest rates, on our business, operations, strategy and goals; and
our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments we may make or enter into.

 


 

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to our other filings with the Securities and Exchange Commission completely and with the understanding that our actual future results may be materially different from what we 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.

Except where the context otherwise requires or where otherwise indicated, the terms “we,” “us,” “our,” “our company,” “the company,” and “our business” in this Quarterly Report on Form 10-Q refer to Verve Therapeutics, Inc. and its consolidated subsidiary.

 

 


 

 

RISK FACTOR SUMMARY

 

Our business is subject to a number of risks of which you should be aware before making an investment decision. Below we summarize what we believe to be the principal risks facing our business, in addition to the risks described more fully in Item 1A, “Risk Factors” of Part II of this Quarterly Report on Form 10-Q and other information included in this report. The risks and uncertainties described below are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also impair our business operations.

If any of the following risks occurs, our business, financial condition and results of operations and future growth prospects could be materially and adversely affected, and the actual outcomes of matters as to which forward-looking statements are made in this report could be materially different from those anticipated in such forward-looking statements:

We will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts;
Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability;
We are very early in our development efforts, and we only recently initiated our first clinical trial of a product candidate, VERVE-101, our lead product candidate targeting PCSK9. As a result, we expect it will be many years before we commercialize any product candidate, if ever. If we are unable to advance our current or future product candidates into and through clinical trials, obtain marketing approval and ultimately commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed;
The U.S. Food and Drug Administration has placed the investigational new drug, or IND, application to conduct a clinical trial evaluating VERVE-101 in the United States on hold. We cannot be certain that the hold will be lifted on a timely basis, or at all, and we may not be able to initiate our clinical trial of VERVE-101 in the United States;
Gene editing, including base editing, is a novel technology in a rapidly evolving field that is not yet clinically validated as being safe and efficacious for human therapeutic use. The approaches we are taking to discover and develop novel therapeutics are unproven and may never lead to marketable products. We are focusing our research and development efforts for VERVE-101, VERVE-102, our product candidate targeting PCSK9 using our GalNAc-LNP delivery technology and VERVE-201, our product candidate targeting ANGPTL3, on gene editing using base editing technology, but other gene editing technologies may be discovered that provide significant advantages over base editing and we may not be able to access or use those technologies, which could materially harm our business. We are also seeking to discover and develop new gene editing technologies and may not be successful in doing so;
The outcome of preclinical studies and earlier-stage clinical trials may not be predictive of future results or the success of later preclinical studies and clinical trials and interim or preliminary data from our clinical trials may materially change as participant enrollment continues and more participant data become available;
If any of the product candidates we may develop, or the delivery modes we rely on to administer them, including lipid nanoparticles, cause serious adverse events, undesirable side effects or unexpected characteristics, such events, side effects or characteristics could delay or prevent regulatory approval of the product candidates, limit the commercial potential or result in significant negative consequences following any potential marketing approval;
Adverse public perception of genetic medicines, and gene editing and base editing in particular, may negatively impact demand for our potential products and increased regulatory scrutiny of genetic medicines may adversely affect our ability to obtain regulatory approvals for our product candidates;
Genetic medicines are complex and difficult to manufacture. We could experience delays in satisfying regulatory authorities or production problems that result in delays in our development programs, limit the supply of our product candidates we may develop, or otherwise harm our business;
We rely, and expect to continue to rely, on third parties to conduct some or all aspects of our product manufacturing, research and preclinical and clinical testing, and these third parties may not perform satisfactorily;
We have entered into collaborations, and may enter into additional collaborations, with third parties for the research, development, manufacture and commercialization of programs or product candidates. If these collaborations are not successful, our business could be adversely affected;
If we or our licensors are unable to obtain, maintain, defend and enforce patent rights that cover our gene editing technology and product candidates or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully develop and commercialize our technology and product candidates may be adversely affected;

 


 

If we fail to comply with our obligations in our intellectual property license arrangements with third parties, or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that are important to our business;
The intellectual property landscape around genome editing technology, including base editing, is highly dynamic, and third parties may initiate legal proceedings alleging that we are infringing, misappropriating, or otherwise violating their intellectual property rights, the outcome of which would be uncertain and may prevent, delay or otherwise interfere with our product discovery, development and commercialization efforts; and
We face substantial competition, which may result in others discovering, developing or commercializing products before us or more successfully than we do. The market with respect to new products for the treatment of cardiovascular disease, for which the standard of care is well established, is particularly competitive.

 

 


 

 

Table of Contents

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

Condensed Consolidated Balance Sheets

1

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

Condensed Consolidated Statements of Stockholders’ Equity

3

Condensed Consolidated Statements of Cash Flows

4

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.

Controls and Procedures

25

 

 

 

PART II.

OTHER INFORMATION

27

Item 1.

Legal Proceedings

27

Item 1A.

Risk Factors

27

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

89

Item 6.

Exhibits

90

Signatures

91

 

 

 


 

Part I ─ Financial Information

Item 1. Financial Statements

Verve Therapeutics, Inc.

Condensed consolidated balance sheets

 

(in thousands, except share and per share amounts)
(unaudited)

 

March 31,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

83,746

 

 

$

115,412

 

Marketable securities

 

 

424,941

 

 

 

439,396

 

Collaboration receivable

 

 

1,404

 

 

 

1,012

 

Prepaid expenses and other current assets

 

 

7,696

 

 

 

7,339

 

Total current assets

 

 

517,787

 

 

 

563,159

 

Property and equipment, net

 

 

21,053

 

 

 

18,778

 

Restricted cash

 

 

4,824

 

 

 

4,824

 

Operating lease right-of-use assets

 

 

90,003

 

 

 

91,877

 

Other long-term assets

 

 

709

 

 

 

585

 

Total assets

 

$

634,376

 

 

$

679,223

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,372

 

 

$

2,424

 

Accrued expenses

 

 

18,996

 

 

 

20,767

 

Lease liability, current portion

 

 

11,184

 

 

 

11,904

 

Total current liabilities

 

 

33,552

 

 

 

35,095

 

Long-term lease liability

 

 

68,927

 

 

 

70,014

 

Success payment liability

 

 

2,147

 

 

 

2,885

 

Deferred revenue, non-current

 

 

20,014

 

 

 

20,014

 

Other long-term liabilities

 

 

260

 

 

 

283

 

Total liabilities

 

 

124,900

 

 

 

128,291

 

Commitments and contingencies (See Note 7 and Note 8)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 shares authorized, 61,863,010 and 61,730,816 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

 

62

 

 

 

62

 

Additional paid-in capital

 

 

905,863

 

 

 

895,801

 

Accumulated other comprehensive loss

 

 

(237

)

 

 

(694

)

Accumulated deficit

 

 

(396,212

)

 

 

(344,237

)

Total stockholders’ equity

 

 

509,476

 

 

 

550,932

 

Total liabilities and stockholders’ equity

 

$

634,376

 

 

$

679,223

 

 

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

1


 

Verve Therapeutics, Inc.

Condensed consolidated statements of operations and comprehensive loss

 

 

 

Three months ended March 31,

 

(in thousands, except share and per share amounts)
(unaudited)

 

2023

 

 

2022

 

Collaboration revenue

 

$

1,404

 

 

$

-

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

47,110

 

 

 

24,490

 

General and administrative

 

 

12,553

 

 

 

7,435

 

Total operating expenses

 

 

59,663

 

 

 

31,925

 

Loss from operations

 

 

(58,259

)

 

 

(31,925

)

Other income:

 

 

 

 

 

 

Change in fair value of success payment liability

 

 

738

 

 

 

1,677

 

Interest and other income, net

 

 

5,546

 

 

 

82

 

Total other income, net

 

 

6,284

 

 

 

1,759

 

Net loss

 

$

(51,975

)

 

$

(30,166

)

Net loss per common share, basic and diluted

 

$

(0.84

)

 

$

(0.62

)

Weighted-average common shares used in net loss per share, basic and diluted

 

 

61,787,403

 

 

 

48,571,214

 

Comprehensive Loss:

 

 

 

 

 

 

Net loss

 

$

(51,975

)

 

$

(30,166

)

Other comprehensive gain (loss):

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

 

457

 

 

 

(504

)

Comprehensive loss

 

$

(51,518

)

 

$

(30,670

)

 

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

2


 

Verve Therapeutics, Inc.

Condensed consolidated statements of stockholders’ equity

 

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share amounts)
(unaudited)

 

Shares

 

 

Amount

 

 

Additional
paid-in
capital

 

 

Accumulated
other
comprehensive
income (loss)

 

 

Accumulated
deficit

 

 

Total
stockholders’
equity

 

Balance at December 31, 2021

 

 

48,511,735

 

 

$

49

 

 

$

544,381

 

 

$

(228

)

 

$

(186,850

)

 

$

357,352

 

Exercise of stock options

 

 

143,506

 

 

 

 

 

 

505

 

 

 

 

 

 

 

 

 

505

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

(504

)

 

 

 

 

 

(504

)

Stock-based compensation

 

 

 

 

 

 

 

 

4,203

 

 

 

 

 

 

 

 

 

4,203

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,166

)

 

 

(30,166

)

Balance at March 31, 2022

 

 

48,655,241

 

 

$

49

 

 

$

549,089

 

 

$

(732

)

 

$

(217,016

)

 

$

331,390

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

 

 

61,730,816

 

 

$

62

 

 

$

895,801

 

 

$

(694

)

 

$

(344,237

)

 

$

550,932

 

Exercise of stock options

 

 

29,010

 

 

 

 

 

 

116

 

 

 

 

 

 

 

 

 

116

 

Issuance of common stock from At-the-Market offering, net of issuance costs of $126

 

 

103,184

 

 

 

 

 

 

1,922

 

 

 

 

 

 

 

 

 

1,922

 

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

457

 

 

 

 

 

 

457

 

Stock-based compensation

 

 

 

 

 

 

 

 

8,024

 

 

 

 

 

 

 

 

 

8,024

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(51,975

)

 

 

(51,975

)

Balance at March 31, 2023

 

 

61,863,010

 

 

$

62

 

 

$

905,863

 

 

$

(237

)

 

$

(396,212

)

 

$

509,476

 

 

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

3


 

Verve Therapeutics, Inc.

Condensed consolidated statements of cash flows

 

 

 

Three months ended March 31,

 

(unaudited, in thousands)

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(51,975

)

 

$

(30,166

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

1,127

 

 

 

514

 

Non-cash lease expense

 

 

1,632

 

 

 

499

 

Net amortization of premium (accretion of discount) on marketable securities

 

 

(3,855

)

 

 

730

 

Stock-based compensation

 

 

8,024

 

 

 

4,203

 

Change in fair value of success payments liabilities

 

 

(738

)

 

 

(1,677

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(949

)

 

 

1,149

 

Accounts payable

 

 

1,485

 

 

 

(5,105

)

Accrued expenses and other liabilities

 

 

(2,283

)

 

 

(3,131

)

Operating lease liabilities

 

 

(1,564

)

 

 

(523

)

Net cash used in operating activities

 

 

(49,096

)

 

 

(33,507

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(3,375

)

 

 

(2,908

)

Purchases of marketable securities

 

 

(133,755

)

 

 

 

Maturities of marketable securities

 

 

152,522

 

 

 

63,000

 

Net cash provided by investing activities

 

 

15,392

 

 

 

60,092

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

1,987

 

 

 

 

Proceeds from exercise of stock options

 

 

116

 

 

 

505

 

Payment of financing costs

 

 

(65

)

 

 

 

Net cash provided by financing activities

 

 

2,038

 

 

 

505

 

Increase (decrease) in cash, cash equivalents and restricted cash

 

 

(31,666

)

 

 

27,090

 

Cash, cash equivalents and restricted cash—beginning of period

 

 

120,236

 

 

 

69,567

 

Cash, cash equivalents and restricted cash—end of period

 

$

88,570

 

 

$

96,657

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

Property and equipment additions included in accounts payable and accrued expenses

 

$

1,657

 

 

$

2,017

 

 

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

4


 

Verve Therapeutics, Inc.

Notes to condensed consolidated financial statements (unaudited)

1. Nature of the business and basis of presentation

Organization

Verve Therapeutics, Inc. (the “Company” or “Verve”) is a clinical-stage genetic medicines company pioneering a new approach to the care of cardiovascular disease, transforming treatment from chronic management to single-course gene editing medicines. The Company was incorporated on March 9, 2018 as Endcadia, Inc., a Delaware corporation, and began operations shortly thereafter. In January 2019, the Company amended its certificate of incorporation to change its name to Verve Therapeutics, Inc. The Company’s principal offices are located in Boston, Massachusetts.

Liquidity and capital resources

Since its inception, the Company has devoted its efforts principally to research and development and raising capital. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

In July 2022, the Company entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC (“Jefferies”) as agent pursuant to which the Company is entitled to offer and sell, from time to time at prevailing market prices, shares of its common stock. The Company agreed to pay Jefferies a commission of up to 3.0% of the aggregate gross sale proceeds of any shares sold by Jefferies under the Sales Agreement. Any sales under the Sales Agreement will be made pursuant to the Company's registration statement on Form S-3 (File No 333-267578), which became effective on September 23, 2022, with an aggregate offering price of up to $200.0 million. During the three months ended March 31, 2023, the Company sold 103,184 shares of its common stock under the Sales Agreement for aggregate net proceeds of $2.0 million, after deducting commissions and offering expenses payable by the Company.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company expects that its cash, cash equivalents and marketable securities of $508.7 million as of March 31, 2023 will be sufficient to fund its operations and capital expenditure requirements beyond the next 12 months from the date of issuance of these financial statements. The Company will need additional financing to support its continuing operations and pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed could have a negative impact on the Company’s financial condition and its ability to pursue its business strategy. The Company will need to generate significant revenue to achieve profitability, and it may never do so.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed

5


 

consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of March 31, 2023, the results of its operations and comprehensive loss for the three months ended March 31, 2023 and 2022, stockholders’ equity for the three months ended March 31, 2023 and 2022 and cash flows for the three months ended March 31, 2023 and 2022. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 2023 are not necessarily indicative of the results for the year ending December 31, 2023, or for any future period. These interim financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2022, and the notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2023.

2. Summary of significant accounting policies

The Company's significant accounting policies are disclosed in Note 2, "Summary of significant accounting policies," in the audited consolidated financial statements for the year ended December 31, 2022, and notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2023. Since the date of those financial statements, there have been no changes to the Company's significant accounting policies.

Cash, cash equivalents and restricted cash

Restricted cash represents collateral provided for letters of credit issued as security deposits in connection with the Company’s leases of its corporate facilities. A reconciliation of the cash, cash equivalents, and restricted cash reported within the balance sheet that sum to the total of the same amounts shown in the statement of cash flows is as follows:

 

 

 

March 31,

 

 

March 31,

 

(in thousands)

 

2023

 

 

2022

 

Cash and cash equivalents

 

$

83,746

 

 

$

91,420

 

Restricted cash

 

 

4,824

 

 

 

5,237

 

Total cash, cash equivalents and restricted cash

 

$

88,570

 

 

$

96,657

 

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establishes additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, this standard requires allowances to be recorded instead of reducing the amortized cost of the investment. The Company adopted the new standard on January 1, 2023. Based upon the Company's analysis, the adoption of this new standard did not have a material impact on the Company's financial statements.

3. Marketable securities

Marketable securities by security type consisted of the following:

 

 

March 31, 2023

 

(in thousands)

 

Amortized
cost

 

 

Gross
unrealized
gains

 

 

Gross
unrealized
losses

 

 

Fair
value

 

U.S. treasury bills and notes

 

$

201,301

 

 

$

57

 

 

$

(41

)

 

$

201,317

 

U.S. agency securities

 

 

223,877

 

 

 

67

 

 

 

(320

)

 

 

223,624

 

Total

 

$

425,178

 

 

$

124

 

 

$

(361

)

 

$

424,941

 

 

 

December 31, 2022

 

(in thousands)

 

Amortized
cost

 

 

Gross
unrealized
gains

 

 

Gross
unrealized
losses

 

 

Fair
value

 

U.S. treasury bills and notes

 

$

228,432

 

 

$

13

 

 

$

(301

)

 

$

228,144

 

U.S. agency securities

 

 

211,658

 

 

 

68

 

 

 

(474

)

 

 

211,252

 

Total

 

$

440,090

 

 

$

81

 

 

$

(775

)

 

$

439,396

 

 

The remaining contractual maturities of all marketable securities were less than 18 months as of March 31, 2023 and December 31, 2022.The gross unrealized losses on the Company’s marketable securities of $0.4 million and $0.8 million as of March 31, 2023 and December 31, 2022, respectively, were caused by interest rate increases which resulted in the decrease in market value of these securities. Because the decline in fair value is attributable to changes in interest rates

6


 

and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those marketable securities to be impaired at March 31, 2023 or December 31, 2022. The Company has not recorded any allowance for credit losses. None of the Company’s marketable securities have been in a continuous unrealized loss position for 12 months or greater as of March 31, 2023 or December 31, 2022.

4. Property and equipment, net

Property and equipment, net, consisted of the following:

 

(in thousands)

 

March 31, 2023

 

 

December 31, 2022

 

Lab equipment

 

$

23,781

 

 

$

20,379

 

Leasehold improvements

 

 

266

 

 

 

266

 

Furniture and fixtures

 

 

2,294

 

 

 

2,294

 

Computer equipment

 

 

826

 

 

 

826

 

Total property and equipment

 

 

27,167

 

 

 

23,765

 

Less accumulated depreciation

 

 

(6,114

)

 

 

(4,987

)

Property and equipment, net

 

$

21,053

 

 

$

18,778

 

 

The following table summarizes depreciation expense incurred:

 

 

Three months ended March 31,

 

(in thousands)

 

2023

 

 

2022

 

Depreciation expense

 

$

1,127

 

 

$

514

 

 

5. fair value of financial instruments

The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds, marketable securities, and a derivative liability (success payment liability) pursuant to the Company’s license agreement with the President and Fellows of Harvard College ("Harvard") and The Broad Institute, Inc. (“Broad”), which license agreement is referred to herein as the Harvard/ Broad License Agreement. The following tables set forth the fair value of the Company’s financial instruments by level within the fair value hierarchy:

 

 

 

As of March 31, 2023

 

(in thousands)

 

Fair
value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

69,990

 

 

$

69,990

 

 

$

 

 

$

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury bills and notes

 

 

201,317

 

 

 

 

 

 

201,317

 

 

 

 

U.S. agency securities

 

 

223,624

 

 

 

 

 

 

223,624

 

 

 

 

Total assets

 

$

494,931

 

 

$

69,990

 

 

$

424,941

 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Success payment liability

 

$

2,147

 

 

$

 

 

$

 

 

$

2,147

 

Total liabilities

 

$

2,147

 

 

$

 

 

$

 

 

$

2,147

 

 

 

 

As of December 31, 2022

 

(in thousands)

 

Fair
value

 

 

Level 1

 

 

Level 2