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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 June 30, 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 001-41536
Prime Medicine, Inc.
(Exact name of registrant as specified in its charter)
Delaware
84-3097762
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
21 Erie Street, Cambridge, MA
02139
(Address of principal executive offices)
(Zip code)
(617) 564-0013
(Registrant’s telephone number, including area code)
Not Applicable
(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 sharePRMENasdaq Global 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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting 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 July 31, 2023, the registrant had 97,300,310 shares of common stock, par value $0.00001 per share, outstanding.



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. These statements involve substantial risks, assumptions and uncertainties. All statements, other than statements of historical fact, contained herein, 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,” “estimate,” “expect,” “goal,” “hope,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “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 statements about:
the initiation, timing, progress and results of our research and development programs, preclinical studies and future clinical trials;
our ability to demonstrate, and the timing of, preclinical proof-of-concept in vivo for multiple programs;
our ability to advance any product candidates that we may identify and successfully complete any clinical studies, including the manufacture of any such product candidates;
our ability to pursue our four strategic indication categories: immediate target indications, differentiation target indications, “blue sky” indications and “march up the chromosome” approaches;
our ability to quickly leverage programs within our initial target indications and to progress additional programs to further develop our pipeline;
the timing of our investigational new drug applications submissions;
the ability of our Prime Editing technology to address unmet medical needs in patients;
the implementation of our strategic plans for our business, programs and technology;
the scope of protection we are able to establish and maintain for intellectual property rights covering our Prime Editing technology;
developments related to our competitors and our industry;
our ability to leverage the clinical, regulatory, and manufacturing advancements made by gene therapy and gene editing programs to accelerate our clinical trials and approval of product candidates;
our ability to identify and enter into future license agreements and collaborations;
developments related to our Prime Editing technology;
regulatory developments in the United States and foreign countries;
our ability to attract and retain key scientific and management personnel;
our estimates of our expenses, capital requirements, and needs for additional financing; and
general economic, industry and market conditions, including rising interest rates and inflation.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and these statements may be affected by inaccurate assumptions or by known or unknown risks and uncertainties. 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 and in subsequent SEC filings, 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. Unless otherwise disclosed, 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 herein and have filed as exhibits to our other filings with the Securities and Exchange Commission (the “SEC”) 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 hereof, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise after the date of such statements, except as required by applicable law.
This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for our product candidates. Such information is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this data from our own internal estimates and research as well as from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. While we are not aware of any misstatements regarding any third-party information presented in this Quarterly Report on Form 10-Q, their estimates, in particular as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties and are subject to change based on various factors, including those discussed under the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q, if any, our Annual Report on Form 10-K that was filed with the SEC on March 9, 2023, and in other SEC filings.



PRIME MEDICINE, INC.
FORM 10-Q
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023
TABLE OF CONTENTS

Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
4


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
PRIME MEDICINE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)June 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents$120,577 $187,620 
Short-term investments80,645 98,467 
Short-term investment — related party6,396 7,834 
Prepaid expenses and other current assets10,872 2,697 
Total current assets218,490 296,618 
Property and equipment, net20,558 19,009 
Operating lease right-of-use assets26,505 29,545 
Restricted cash13,496 13,496 
Other assets1,816 1,646 
Total assets$280,865 $360,314 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$5,490 $4,332 
Accrued expenses and other current liabilities (1)
9,723 10,688 
Operating lease liability13,509 11,694 
Total current liabilities28,722 26,714 
Operating lease liability, net of current11,933 17,051 
Non current deferred tax liability108 279 
Total liabilities40,763 44,044 
Commitments and contingencies
Stockholders’ equity
Common stock, par value of $0.00001 per share; 775,000,000 shares authorized; 97,269,915 and 97,209,213 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively
2 2 
Additional paid-in capital615,347 609,849 
Accumulated other comprehensive loss(268)(384)
Accumulated deficit(374,979)(293,197)
Total stockholders’ equity240,102 316,270 
Total liabilities and stockholders’ equity$280,865 $360,314 
(1) Includes related party amount of $0.3 million as of June 30, 2023 and December 31, 2022.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5



PRIME MEDICINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except share and per share amounts)2023202220232022
Operating expenses:
Research and development (1)
$34,599 $18,940 $65,479 $32,617 
General and administrative10,658 7,365 19,811 13,586 
Total operating expenses45,257 26,305 85,290 46,203 
Loss from operations(45,257)(26,305)(85,290)(46,203)
Other income (expense):
Change in fair value of short-term investment — related party263 (3,723)(1,438)(8,208)
Other income, net2,640 238 4,775 249 
Total other income (expense), net2,903 (3,485)3,337 (7,959)
Net loss before income taxes(42,354)(29,790)(81,953)(54,162)
(Provision for) benefit from income taxes(31)442 171 974 
Net loss$(42,385)$(29,348)$(81,782)$(53,188)
Cumulative dividend on preferred stock (6,293) (12,517)
Net loss attributable to common stockholders$(42,385)$(35,641)$(81,782)$(65,705)
Net loss per share attributable to common stockholders, basic and diluted$(0.47)$(1.76)$(0.91)$(3.31)
Weighted-average common shares outstanding, basic and diluted90,467,298 20,227,343 89,769,970 19,871,750 
Comprehensive loss:
Net loss$(42,385)$(29,348)$(81,782)$(53,188)
Change in unrealized loss on investments, net of tax(63)(118)116 (123)
Comprehensive loss$(42,448)$(29,466)$(81,666)$(53,311)
(1) Includes related party amount of $0.3 million and $0.6 million for the three and six months ended June 30, 2023, respectively.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6


PRIME MEDICINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive
Losses
Accumulated
Deficit
Total
Stockholders'
Equity
(in thousands, except share amounts)SharesAmount
Balance as of December 31, 202297,209,213 $2 $609,849 $(384)$(293,197)$316,270 
Issuance of common stock upon exercise of stock options18,596 — 68 — — 68 
Stock-based compensation expense— — 1,681 — — 1,681 
Change in unrealized loss on investments, net of tax— — — 179 — 179 
Net loss— — — — (39,397)(39,397)
Balance as of March 31, 202397,227,809 2 611,598 (205)(332,594)278,801 
Issuance of common stock upon exercise of stock options42,106 — 166 — — 166 
Stock-based compensation expense— — 3,583 — — 3,583 
Change in unrealized loss on investments, net of tax— — — (63)— (63)
Net loss— — — — (42,385)(42,385)
Balance as of June 30, 202397,269,915 $2 $615,347 $(268)$(374,979)$240,102 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7


PRIME MEDICINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE AND CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
(Unaudited)
Redeemable Convertible Preferred StockConvertible Preferred StockCommon StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive
Losses
Accumulated
Deficit
Total
Stockholders'
Deficit
(in thousands, except share amounts)SharesAmountSharesAmountSharesAmount
Balance as of December 31, 2021115,761,842 $196,157 45,658,957 $199,643 32,413,860 $ $15,162 $(27)$(171,376)$(156,241)
Reclassification of forward contract — related party— — — — 1,101,525 — 12,020 — — 12,020 
Stock-based compensation expense— — — — — — 1,123 — — 1,123 
Net loss— — — — — — — — (23,840)(23,840)
Change in unrealized loss on investments, net of tax— — — — — — — (5)— (5)
Balance as of March 31, 2022115,761,842 196,157 45,658,957 199,643 33,515,385  28,305 (32)(195,216)(166,943)
Repurchase of unvested restricted common stock— — — — (3,116)— — — — — 
Stock-based compensation expense— — — — — — 1,346 — — 1,346 
Net loss— — — — — — — — (29,348)(29,348)
Change in unrealized loss on investments, net of tax— — — — — — — (118)— (118)
Balance as of June 30, 2022115,761,842 $196,157 45,658,957 $199,643 33,512,269 $ $29,651 $(150)$(224,564)$(195,063)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PRIME MEDICINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
(in thousands)20232022
Cash flows used in operating activities:
Net loss$(81,782)$(53,188)
Adjustments to reconcile net loss to net cash used in operating activities
Non cash lease expense6,304 4,222 
Stock-based compensation expense5,264 2,468 
Depreciation expense2,170 723 
Change in fair value of short-term investment — related party1,438 8,208 
Amortization of premiums and discount on short-term investments(1,403)249 
Deferred income taxes(171)(974)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets(5,299)(43)
Accounts payable1,104 2,428 
Accrued expenses and other current liabilities(3,438)(30,851)
Lease liabilities(6,569)(4,258)
Net cash used in operating activities(82,382)(71,016)
Cash flows provided by (used in) investing activities:
Maturities of investments65,000 62,000 
Purchases of investments(45,659)(74,744)
Purchases of property and equipment(3,975)(6,490)
Payments of security deposits(170)(664)
Net cash provided by (used in) investing activities15,196 (19,898)
Cash flows provided by (used in) financing activities:
Payments of deferred offering costs (1,896)
Net proceeds from stock option exercises143  
Net cash provided by (used in) financing activities143 (1,896)
Net change in cash, cash equivalents, and restricted cash(67,043)(92,810)
Cash, cash equivalents, and restricted cash at beginning of period201,116 198,545 
Cash, cash equivalents, and restricted cash at end of period$134,073 $105,735 
Reconciliation of cash, cash equivalents and restricted cash:
Cash, cash equivalents, and restricted cash at end of period$134,073 $105,735 
Less: restricted cash13,496 13,496 
Total cash, and cash equivalents$120,577 $92,239 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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PRIME MEDICINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
(in thousands)20232022
Supplemental cash flow information:
Right-of-use assets obtained in exchange for new operating lease liabilities$3,265 $28,573 
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued expenses$712 $2,583 
Settlement of forward contract — related party$ $12,020 
Deferred offering costs included in accounts payable and accrued expenses$ $244 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PRIME MEDICINE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Nature of the Business and Basis of Presentation
Prime Medicine, Inc., together with its consolidated subsidiary (the “Company”) is a biotechnology company committed to deliver genetic therapies to address diseases by deploying gene editing technology, Prime Editing. The company is deploying Prime Editing technology, a versatile, precise, efficient and broad gene editing technology, which is designed to make only the right edit at the right position within a gene. With the theoretical potential to repair approximately 90 percent of known disease-causing genetic mutations across many organs and cell types, medicines based on Prime Editing, if approved, could offer a one-time curative genetic therapeutic option to a broad set of patients. The Company was incorporated in the State of Delaware in September 2019.
Reverse Stock Split
On October 12, 2022, in connection with the Company’s initial public offering (“IPO”), the Company effected a 1-for-3.10880 reverse stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios of each series of the Company’s preferred stock. Accordingly, all share and per share amounts for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this stock split and adjustment of the preferred stock conversion ratios.
Liquidity and Capital Resources
Since its inception, the Company has devoted substantially all of our resources to building its Prime editing platform and advancing development of our portfolio of programs, establishing and protecting our intellectual property, conducting research and development activities, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations. 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. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.
In connection with its IPO, completed in October 2022, the Company issued and sold 11,721,456 shares of its common stock, including 1,427,338 shares pursuant to the exercise of the underwriters’ option to purchase additional shares, at a price to the public of $17.00 per share. As a result of the IPO, the Company received $180.2 million in net proceeds, after deducting underwriting discounts, commissions and offering costs of $19.1 million. In connection with the IPO, all outstanding shares of redeemable convertible preferred stock converted into 51,923,758 shares of the Company’s common stock.
Risks and Uncertainties
The Company is subject to risks and uncertainties common to early stage companies in the biotechnology industry, including, but not limited to, completing preclinical studies and clinical trials, obtaining regulatory approval for product candidates, market acceptance of products, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, reliance on third-party organizations, protection of proprietary technology, compliance with government regulations, and the ability to raise additional capital to fund operations. The Company’s product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and
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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.
Since its inception, the Company has incurred substantial losses and as of June 30, 2023, the Company had an accumulated deficit of $375.0 million. The Company expects to generate operating losses and negative operating cash flows for the foreseeable future. The Company expects that its cash, cash equivalents, and investments as of June 30, 2023 of $207.6 million will be sufficient to fund its operations for at least the next twelve 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 would 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 reflect the operations of the Company and its wholly-owned subsidiary. Intercompany balances and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). 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 Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).
The accompanying condensed consolidated financial statements of Prime Medicine, Inc. are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2023, the results of its operations for the three and six months ended June 30, 2023 and 2022, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2023 and 2022, and its cash flows for the six months ended June 30, 2023 and 2022. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2023 and 2022 are also unaudited. The results for the three and six months ended June 30, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period. The condensed consolidated balance sheet data as of December 31, 2022 was derived from our audited financial statements, but does not include all disclosures required by U.S. GAAP. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2022, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (the “SEC”) on March 9, 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 that was filed with the SEC on March 9, 2023. Since the date of those financial statements, there have been no material changes to its significant accounting policies.
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and
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assumptions reflected within these condensed consolidated financial statements include, but are not limited to the valuation of the Company’s common stock and stock-based awards, and the valuation of the related party forward contract liability. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, as there are changes in circumstances, facts and experience. Actual results may differ materially from those estimates or assumptions.
Recently Issued Accounting Pronouncements Not Yet Adopted
Accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption.
3.Fair Value Measurements and Investments
The following tables present the Company’s fair value hierarchy for its assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair value:
As of June 30, 2023:
(in thousands)Level 1Level 2Level 3Total
Cash equivalents:
Money market funds$ $18,776 $ $18,776 
U.S. Treasury bills and government securities 100,886  100,886 
Short-term investments:
U.S. Treasury bills and government securities 80,645  80,645 
Related party short-term investment:
Beam equity securities6,396   6,396 
Total cash equivalents and investments$6,396 $200,307 $ $206,703 
As of December 31, 2022:
(in thousands)Level 1Level 2Level 3Total
Cash equivalents:
Money market funds$ $120,511 $ $120,511 
Short-term investment:
U.S. Treasury securities $98,467  98,467 
Related party short-term investment:
Beam equity securities7,834   7,834 
Total cash equivalents and short-term investments$7,834 $218,978 $ $226,812 
The Company classifies its U.S. Treasury as short-term based on each instrument’s underlying contractual maturity date. The fair value of the Company’s U.S. Treasury securities and money market funds are classified as Level 2 because they are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency and U.S. Treasury securities.
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Investments in Debt Securities
Unrealized gains and losses of investments in debt securities consisted of the following:
As of June 30, 2023:
(in thousands)Amortized CostUnrealized GainsUnrealized LossesFair Value
Short-term investments in debt securities:
U.S. Treasury bills and government securities$80,920 $ $(275)$80,645 
Total short-term investments in debt securities$80,920 $ $(275)$80,645 
As of December 31, 2022:
(in thousands)Amortized CostUnrealized GainsUnrealized LossesFair Value
Short-term investments:
U.S. Treasury bills and government securities$98,851 $ $(384)$98,467 
Total short-term investments in debt securities$98,851 $ $(384)$98,467 
The contractual maturities of the Company’s investments in debt securities held were as follows:
(in thousands)June 30,
2023
December 31,
2022
Due within one year$80,645 $98,467 
Marketable securities in unrealized loss positions consisted of the following:
As of June 30, 2023:
(in thousands, except number of securities)Number of SecuritiesFair ValueGross Unrealized Losses
Investments in continuous loss position for less than 12 months:
U.S. Treasury bills and government securities26 $80,645 $(275)
Based on factors such as historical experience, market data, issuer-specific factors, and current economic conditions, the Company did not record an allowance for credit losses as of June 30, 2023 related to these investments. Further, given the lack of significant change in the credit risk, the Company does not consider these investments to be impaired.
4.Property and Equipment, Net
Property and equipment, net consisted of the following:
(in thousands)June 30,
2023
December 31,
2022
Property and equipment:
Laboratory equipment$22,323 $19,422 
Leasehold improvement578 564 
Furniture and Fixture278 235 
Computer hardware and software11 11 
Construction in progress2,369 1,608 
Total property and equipment25,559 21,840 
Less: Accumulated depreciation(5,001)(2,831)
Total property and equipment, net$20,558 $19,009 
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Depreciation expense related to property and equipment is as follows:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2023202220232022
Depreciation Expense$1,118 $430 $2,170 $723 
5.Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
(in thousands)June 30,
2023
December 31,
2022
Accrued expenses and other current liabilities
Accrued employee compensation and benefits$4,460 $6,529 
Accrued professional fees3,514 2,162 
Lab-related supplies and services693 1,219 
Accrued license feerelated party
250 329 
Other806 449 
Total accrued expenses and other current liabilities$9,723 $10,688 
6.Stock-Based Compensation
2019 Equity Incentive Plan
The Company’s 2019 Stock Option and Grant Plan (the “2019 Plan”) provides for the Company to grant incentive stock options (“ISO”), non-qualified stock options, unrestricted stock awards, restricted stock awards (“RSA”) and other stock-based awards (collectively, the “Awards”) to the officers, employees, consultants and other key persons of the Company. The 2019 Plan was administered by the Board of Directors, or at the discretion of the Board of Directors, by a committee of the Board of Directors. The exercise prices, vesting and other restrictions are determined at the discretion of the Board of Directors, or its committee if so delegated.
In October 2022, in connection with the closing of the Company’s IPO, the Board of Directors determined that no further awards would be granted under the 2019 Plan.
2022 Stock Option and Incentive Plan
On February 9, 2022, the Company’s Board of Directors adopted, and on October 10, 2022 its stockholders approved, the 2022 Stock Option and Incentive Plan (the “2022 Plan”), which became effective immediately preceding the date on which the registration statement for the Company’s IPO was declared effective by the SEC. The 2022 Plan allows the Company to make equity-based and cash-based incentive awards to its officers, employees, directors, and consultants. The 2022 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards.
The shares of common stock underlying any awards under the 2022 Plan and the 2019 Plan that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of stock, expire, or are otherwise terminated (other than by exercise) will be added back to the shares of common stock available for issuance under the 2022 Plan. The number of shares reserved and available for issuance under the 2022 Plan increased on January 1, 2023 and will increase on each January 1 hereafter, by five percent of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Compensation Committee. On January 1, 2023, the annual increase resulted in an additional 4,860,461 shares authorized being added to the 2022 Plan. As of June 30, 2023, the Company had 16,788,508 shares reserved under the 2022 Plan and the 2019 Plan, and 9,172,130 shares available for issuance under the 2022 Plan.
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2022 Employee Stock Purchase Plan
On February 9, 2022, the Company’s Board of Directors adopted, and on October 10, 2022 its stockholders approved, the 2022 Employee Stock Purchase Plan (the “2022 ESPP”), which became effective immediately preceding the date on which the registration statement for the Company’s IPO was declared effective by the SEC.
The number of shares of common stock that may be issued under the 2022 ESPP cumulatively increased beginning on January 1, 2023 and shall increase on each January 1 hereafter through January 1, 2032, by the least of (i) 971,350 shares of common stock, (ii) one percent of the outstanding number of shares of common stock on the immediately preceding December 31, or (iii) such number of shares of common stock as determined by the administrator of the 2022 ESPP. On January 1, 2023, the annual increase resulted in an additional 971,350 shares authorized being added to the 2022 Plan. As of June 30, 2023, the Company had 1,942,700 shares available for issuance under the 2022 Plan.
No shares of the Company’s common stock were issued during the six months ended June 30, 2023 related to the 2022 ESPP.
Stock Options
The following table summarizes the Company’s stock option activity for the six months ended June 30, 2023:
Number of SharesWeighted-Average Exercise Price
Outstanding at December 31, 20223,954,265 $6.43 
Granted3,504,319 12.76 
Exercised(60,702)3.87 
Cancelled or forfeited(193,234)8.36 
Outstanding at June 30, 20237,204,648 $9.48 
Options vested and exercisable at June 30, 20231,528,964 $5.64 
Options vested and expected to vest at June 30, 20237,204,648 $9.48 
As of June 30, 2023, there was $44.3 million of total unrecognized compensation cost related to time-based unvested stock options the Company expects to recognize such amount over a remaining weighted-average period of 3.0 years.
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Performance-Based Stock Options
The following table summarizes the Company’s performance-based stock option activity for the six months ended June 30, 2023:
Number of SharesWeighted-Average
Grant Date Fair
Value
Outstanding at December 31, 2022411,730 $6.65 
Granted  
Exercised  
Cancelled or forfeited  
Outstanding at June 30, 2023411,730 $6.65 
Vested and exercisable at June 30, 2023121,160 $5.11 
As of June 30, 2023, there was $2.3 million of total unrecognized compensation cost related to performance-based stock options.
Restricted Common Stock Awards
The Company awarded restricted common stock to employees and non-employees under its 2019 Plan. The vesting of these restricted stock awards are time-based or performance-based.
Time-Based Restricted Common Stocks
The following table summarizes the Company’s time-based restricted common stock activity for the six months ended June 30, 2023:
Number of SharesWeighted-Average Grant-Date Fair Value
Outstanding at December 31, 20225,015,034 $0.10 
Issued  
Vested(2,706,997)0.08 
Repurchased  
Outstanding at June 30, 20232,308,037 $0.12 
As of June 30, 2023, there was $0.3 million of total unrecognized compensation cost related to unvested time-based restricted common stock which the Company expects to recognize over a weighted-average period of 0.8 years.
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Performance-Based Restricted Common Stock
The following table summarizes the Company’s performance-based restricted common stock activity for the six months ended June 30, 2023:
Number of SharesWeighted-Average Grant-Date Fair Value
Outstanding at December 31, 20223,832,769 $0.07 
Issued  
Vested  
Repurchased  
Outstanding at June 30, 20233,832,769 $0.07 
As of June 30, 2023, there was $0.3 million of total unrecognized compensation cost related to unvested performance-based restricted common stock.
Stock-Based Compensation
The following table below summarizes the classification of the Company’s stock-based compensation expense related to stock options and restricted common stock awards in the condensed consolidated statements of operations and comprehensive loss:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2023202220232022
Stock-based compensation expense:
Research and development$2,164 $889 $3,334 $1,647 
General and administrative1,419 456 1,930 821 
Total stock-based compensation expense$3,583 $1,345 $5,264 $2,468 
7.Leases
In April 2023, the Company entered into an amendment to its operating lease (the “Amended Lease”) for additional office and laboratory space at 21 Erie Street, Cambridge, Massachusetts. The Amended Lease is subject to fixed-rate rent escalations. The 23-month lease term of the Amended Lease, over which the Company is obligated to pay approximately $3.7 million, commenced in April 2023. Upon the commencement of the Amended Lease, the Company recorded a lease liability and a right-of-use asset of $3.3 million.
The Company’s building leases consist of office and laboratory space under non-cancelable operating leases. Future annual lease payments under non-cancelable operating leases as of June 30, 2023 were as follows:
(in thousands)Undiscounted
Amounts
Undiscounted lease payments:
Remaining in 2023$6,465 
202414,960 
20253,915 
20261,683 
2027567 
Total undiscounted lease payments27,590 
Less: imputed interest(2,148)
Total operating lease liability$25,442 
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The Company is party to a lease for office and laboratory space at 60 First Street, Cambridge, Massachusetts, with the rent commencement date expected to occur in the first quarter of 2024, subject to any credits pursuant to the terms of the lease. Also subject to any credits pursuant to the terms of the lease, the Company expects to pay up to approximately $208.7 million over the ten-year lease term. As of June 30, 2023, the lease has not commenced in accordance with ASC 842, Leases; accordingly, the operating lease liabilities and operating lease right-of-use assets on the condensed consolidated balance sheet through June 30, 2023, and the table above, exclude any amounts related to this lease.
8.License and Collaboration Agreements
The Company’s significant license agreements are disclosed in Note 11, License and Collaboration Agreements, in the audited consolidated financial statements for the year ended December 31, 2022, and notes thereto, included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 9, 2023. Since the date of those financial statements, there have been no changes to its license agreements except as otherwise described herein.
9.Net Loss per Share
Basic and diluted net loss per common share attributable to common stockholders was calculated as follows:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except share and per share amounts)2023202220232022
Numerator:
Net loss$(42,385)$(29,348)$(81,782)$(53,188)
Cumulative dividend on preferred stock (6,293) (12,517)
Net loss attributable to common stockholders$(42,385)$(35,641)$(81,782)$(65,705)
Denominator:
Weighted-average common shares outstanding, basic and diluted90,467,298 20,227,343 89,769,970 19,871,750 
Net loss per share attributable to common stockholders, basic and diluted$(0.47)$(1.76)$(0.91)$(3.31)
Diluted net loss per share available to common stockholders was computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period. For purposes of this calculation, preferred stock, unvested restricted stock and stock options to purchase common stock were considered common stock equivalents but had been excluded from the calculation of diluted net loss per share available to common stockholders as their effect was anti-dilutive. In periods in which the Company reports a net loss available to common stockholders, diluted net loss per share available to common stockholders is the same as basic net loss per share available to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
The following common stock equivalents were excluded from the calculation of diluted net loss per share applicable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:
As of June 30,
20232022
Anti-dilutive common stock equivalents:
Stock Options to purchase common stock7,325,808 3,593,533 
Unvested restricted common stock6,140,806 11,995,985 
Convertible preferred stock (as converted to common stock) 51,923,764 
Total anti-dilutive common stock equivalents:13,466,614 67,513,282 
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10.Related Party Transactions
Founder Consulting Services
For both the three months ended June 30, 2023 and 2022, the Company made payments of $37,500 in each period, and for the six months ended June 30, 2023 and 2022, the Company made payments of $75,000 in each period to one of the co-founder stockholders for scientific consulting and other expenses. As of June 30, 2023 and December 31, 2022, there were no amounts included within accounts payable.
Myeloid Therapeutics
In December 2021, the Company and Myeloid Therapeutics, Inc. (“Myeloid”) entered into the Myeloid Collaboration Agreement and Myeloid Subscription Agreement. The Company and Myeloid have one common board member, who is also an affiliate of Newpath, one of the Company’s holders of its common stock. The Company provided notice to Myeloid of its intent to terminate the Myeloid Collaboration Agreement during the second quarter of 2023. As of June 30, 2023 and December 31, 2022, there was $0.3 million related to license fees included within accrued expenses and other current liabilities.
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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 our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 9, 2023. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, intentions, or projections, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022, and the “Risk Factors” section of subsequent Quarterly Reports on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Overview
We are a biotechnology company committed to delivering a new class of differentiated one-time curative genetic therapies to address the widest spectrum of diseases. We are deploying Prime Editing technology, which we believe is a versatile, precise, efficient and broad gene editing technology designed to make only the right edit at the right position within a gene.
To maximize the potential of our Prime Editing technology to provide one-time curative genetic therapies to the broadest set of diseases possible, we have purposefully built a diversified portfolio of 18 investigational therapeutic programs organized around four strategic indication categories, each set of indications chosen to deliver a different strategic goal:
Immediate target indications: Deliberately chosen as potentially the fastest, most direct path to demonstrate technological success of Prime Editing in patients. We are initially focusing on diseases of the blood via ex vivo delivery to hematopoietic stem cells and on diseases of the liver, the eye and the ear.
Differentiation target indications: Aimed to create therapeutics to address the underlying cause of severe genetic diseases with therapeutics that we believe could not have been created before, especially using other gene-editing approaches. These include repeat expansion diseases and conditions where expansion of pathological DNA repeats results in serious disease.
“Blue sky” indications: Intended to push new and innovative technological developments in Prime Editing and extend its application beyond rare genetic diseases and towards our goal of more broadly addressing human disease. These programs remain in the early stages of conception and will become an increasing focus over the next few years.
“March up the chromosome” approaches: Represents opportunities to deliver upon our overarching vision to ultimately treat all patients with a disease and correct the full set of mutations in a particular gene. This category may overlap with other strategic indication categories, where most of our disclosed indications could accommodate expansion opportunities to address additional mutations in that disease.
We believe our Prime Editing programs are well-positioned to leverage the clinical, regulatory, and manufacturing advancements made to date across gene therapy, gene editing, and delivery modalities to accelerate progression to clinical trials and potential approval.
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Components of Our Results of Operations
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred in connection with the development and research of our immediate target indications and our differentiation target indications. These expenses include:
the cost allocated to acquire in-process research and development (“IPR&D”), with no alternative future use associated with asset acquisitions or transactions to license intellectual property, such as our Broad License Agreement;
expenses incurred in connection with our Pledge to Broad Institute;
personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation for employees engaged in manufacturing, research and development functions;
expenses incurred in connection with continuing our current research programs and preclinical development of any product candidates we may identify, including under agreements with third parties, such as consultants and contractors;
the cost of developing and validating our manufacturing process for use in our preclinical studies and future clinical trials;
laboratory supplies and research materials; and
facilities, depreciation and other expenses related to research and development activities, which include direct or allocated expenses for rent and maintenance of facilities, and utilities.
Upfront and milestone payments made are accrued for and expensed when the achievement of the milestone is probable up to the point of regulatory approval. Milestone payments made upon regulatory approval will be capitalized and amortized over the remaining useful life of the related product.
We expense all research and development costs in the periods in which they are incurred. Most of our research and development expenses have been related to early stage development activities. We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our platform and, as such, are not separately classified.
We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing any future product candidates, including investments in manufacturing, as we advance any product candidates we may identify and begin to conduct clinical trials.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and personnel-related costs, including stock-based compensation, for our personnel in executive, legal, finance and accounting, human resources and other administrative functions. General and administrative expenses also include legal fees relating to patents and corporate matters; professional fees paid for accounting, auditing, consulting and tax service; insurance costs; office and information technology costs; and facilities, depreciation and other general and administrative expenses, which include direct or allocated expenses for rent and maintenance of facilities and utilities.
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support research and development activities; increased accounting, legal, insurance, and investor and public relations costs as we continue to operate as a public company; and additional intellectual property-related expenses as we file patent applications to protect innovations arising from our research and development activities.
22


Other Income (Expense)
Other income (expense), net primarily consists of the change in the fair value of our short-term investment in Beam Therapeutics Inc. (“Beam”), a related party, in connection with the Beam Collaboration Agreement, which is discussed in greater detail in Note 11, License and Collaboration Agreements, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022.
Results of Operations
Comparison of the Three Months Ended June 30, 2023 and 2022
The following table summarizes our results of operations for the three months ended June 30, 2023 and 2022:
Three Months Ended June 30,
(in thousands, except share and per share amounts)20232022Change
Operating expenses:
Research and development$34,599 $18,940 $15,659 
General and administrative10,658 7,365 3,293 
Total operating expenses45,257 26,305 18,952 
Loss from operations(45,257)(26,305)(18,952)
Other income (expense):
Change in fair value of short-term investment — related party263 (3,723)3,986 
Other income, net2,640 238 2,402 
Total other income (expense), net2,903 (3,485)6,388 
Net loss before income taxes(42,354)(29,790)(12,564)
(Provision for) benefit from income taxes(31)442 (473)
Net loss$(42,385)$(29,348)$(13,037)
Operating Expenses
Research and Development Expenses
Three Months Ended June 30,
(in thousands)20232022Change
Research and development expenses:
Lab supplies$13,048 $5,940 $7,108 
Personnel expenses12,596 7,481 5,115 
Facility related and other6,021 3,836 2,185 
License, intellectual property fees, and other1,500 1,255 245 
Professional and consultant fees1,434 428 1,006 
Total research and development expenses$34,599 $18,940 $15,659 
The $15.7 million increase in research and development expense for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 was primarily driven by:
$7.1 million increase in lab supplies expense due to continued discovery efforts and expansion of our research and development activities, including ongoing IND-enabling activities, and increased personnel in our R&D function;
23


$5.1 million increase in personnel expense, including an increase in stock-based compensation expense of $1.3 million, and $1.0 million increase in professional and consultant fees, both driven by our increased headcount as we continue to build out our research and development function; and
$2.2 million increase in facility-related expense primarily due to the expansion and build out of our office and laboratory space.
General and Administrative Expenses
Three Months Ended June 30,
(in thousands, except share and per share amounts)20232022Change
General and administrative expenses:
Professional and consultant fees$4,241 $2,783 $1,458 
Personnel expenses4,144 3,020 1,124 
Facility related and other2,272 1,562 710 
Total general and administrative expenses$10,657 $7,365 $3,292 
The $3.3 million increase in general and administrative expense for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 is primarily driven by $1.5 million increase in professional and consultant fees and $1.1 million increase in personnel expenses, both driven by growth in personnel as we operate as a public company and to support our growing research and development function.
Other Income (Expense)
Three Months Ended June 30,
(in thousands, except share and per share amounts)20232022Change
Other income (expense):
Change in fair value of short-term investment — related party$263 $(3,723)$3,986 
Other income, net2,640 238 2,402 
Total other income (expense), net$2,903 $(3,485)$6,388 
Change in Fair Value of Related Party Short-Term Investment
The change in fair value of related party short-term investment for each of the periods presented is a result of Beam’s stock price movement.
Other Income, Net
Other income, net for the three months ended June 30, 2023 primarily consists of interest income from the Company’s short-term investments.
24


Comparison of the Six Months Ended June 30, 2023 and 2022
The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022:
Six Months Ended June 30,
(in thousands, except share and per share amounts)20232022Change
Operating expenses:
Research and development$65,479 $32,617 $32,862 
General and administrative19,811 13,586 6,225 
Total operating expenses85,290 46,203 39,087 
Loss from operations(85,290)(46,203)(39,087)
Other income (expense):
Change in fair value of short-term investment — related party(1,438)(8,208)6,770 
Other income, net4,775 249 4,526 
Total other income (expense), net3,337 (7,959)11,296 
Net loss before income taxes(81,953)(54,162)(27,791)
(Provision for) benefit from income taxes171 974 (803)
Net loss$(81,782)$(53,188)$(28,594)
Operating Expenses
Research and Development Expenses
Six Months Ended June 30,
(in thousands)20232022Change
Research and development expenses:
Lab supplies$23,912 $9,932 $13,980 
Personnel expenses23,790 13,034 10,756 
Facility related and other11,325 6,301 5,024 
License, intellectual property fees, and other3,375 2,630 745 
Professional and consultant fees3,077 720 2,357 
Total research and development expenses$65,479 $32,617 $32,862 
The $32.9 million increase in research and development expense for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 was primarily driven by:
$14.0 million increase in lab supplies expense due to continued discovery efforts and expansion of our research and development activities, including ongoing IND-enabling activities, and increased personnel in our R&D function;
$10.8 million increase in personnel expense, including an increase in stock-based compensation expense of $1.7 million, and $2.4 million increase in professional and consultant fees, both driven by our increased headcount as we continue to build out our research and development function; and
$5.0 million increase in facility-related expense primarily due to the expansion and build out of our office and laboratory space.
25


General and Administrative Expenses
Six Months Ended June 30,
(in thousands)20232022Change
General and administrative expenses:
Professional and consultant fees$8,210 $5,701 $2,509 
Personnel expenses7,209 5,456 1,753 
Facility related and other4,391 2,429 1,962 
Total general and administrative expenses$19,810 $13,586 $6,224 
The $6.2 million increase in general and administrative expense for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 is primarily driven by:
$2.5 million increase in professional and consultant fees and $1.8 million increase in personnel expenses, which includes an increase in stock-based compensation expense of $1.1 million, both driven by growth in personnel as we operate as a public company and to support our growing research and development function; and
$2.0 million increase in facility related expenses primarily due to the expansion and build out of our office space.
Other Income (Expense)
Six Months Ended June 30,
(in thousands)20232022Change
Other income (expense):
Change in fair value of short-term investment — related party$(1,438)$(8,208)$6,770 
Other income, net4,775 249 4,526 
Total other income (expense), net$3,337 $(7,959)$11,296 
Change in Fair Value of Related Party Short-Term Investment
The change in fair value of related party short-term investment for each of the periods presented is a result of Beam’s stock price movement.
Other Income, Net
Other income, net for the six months ended June 30, 2023 primarily consists of interest income from the Company’s short-term investments.
Liquidity and Capital Resources
Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we commence the clinical development of our programs and continue our platform development and early-stage research activities. We have not yet commercialized any products and we do not expect to generate revenue from sales of products for several years, if at all. To date, we have funded our operations primarily with proceeds from sales of preferred stock and from our initial public offering. As of June 30, 2023, we had cash, cash equivalents, and investments of $207.6 million, excluding our restricted cash, or $221.1 million, including restricted cash.
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Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented:
Six Months Ended June 30,
(in thousands)20232022
Net change in cash, cash equivalents and restricted cash:
Net cash used in operating activities$(82,382)$(71,016)
Net cash provided by (used in) investing activities15,196 (19,898)
Net cash provided by (used in) financing activities143 (1,896)
Net change in cash, cash equivalents, and restricted cash$(67,043)$(92,810)
Operating Activities
Net cash used in operating activities for the six months ended June 30, 2023 was driven primarily by the following uses of cash:
$81.8 million net loss;
$6.6 million change in lease liabilities;
$5.3 million change in prepaid and other current assets; and
$3.4 million change in accrued expenses and other current liabilities.
These were offset by:
$13.6 million of non-cash amounts included in net loss, which primarily consisted of non-cash lease expense, stock-based compensation expense, change in fair value of short-term investment — related party, and depreciation and amortization expense; and
$1.1 million change in accounts payable.
Net cash used in operating activities for the six months ended June 30, 2022 was driven primarily by the following uses of cash:
$53.2 million net loss;
$30.9 million change in accrued expenses and other current liabilities; and
$4.3 million change in lease liabilities.
These were offset by:
$14.9 million of non-cash amounts included in net loss, which primarily consisted of change in fair value of short-term investment — related party, non-cash lease expense, and stock-based compensation expense; and
$2.4 million change in accounts payable.
27


Investing Activities
Net cash provided by investing activities for the six months ended June 30, 2023 was driven primarily by the following uses of cash:
$19.3 million of maturities of marketable securities, net of purchases; offset by
$4.0 million of purchases of property and equipment.
Net cash used in investing activities for the six months ended June 30, 2022 was driven primarily by the following:
$12.7 million of purchases of marketable securities, net of maturities; and
$6.5 million of purchases of property and equipment.
Financing Activities
Net cash used in financing activities for the six months ended June 30, 2022 was driven by payment of deferred financing costs related to our IPO.
Funding Requirements
To date, we have not generated any revenue from product sales. We do not expect to generate revenue from product sales unless and until we successfully complete preclinical and clinical development of, receive regulatory approval for, and commercialize a product candidate and we do not know when, or if at all, that will occur. We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and studies and initiate clinical trials. In addition, if we obtain regulatory approval for any product candidates, we expect to incur significant expenses related to product sales, marketing, and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Further, we have incurred, and expect to continue to incur, costs associated with operating as a public company. The timing and amount of our operating expenditures will depend largely on the factors set out above. For more information, refer to the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, and the “Risk Factors” section of subsequent Quarterly Reports on Form 10-Q.
We believe our existing cash, cash equivalents, and investments will be sufficient to fund our operating expenses and capital expenditure requirements into 2025. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. We expect that we will require additional funding to:
continue our current research development activities;
identify product candidates;
initiate preclinical testing and clinical trials for our future product candidates we identify;
develop, maintain, expand and protect our intellectual property portfolio;
further develop our Prime Editing platform; and
hire additional research, clinical and scientific personnel.
If we receive regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize ourselves.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of private and public equity offerings, debt financings, additional collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties. To the extent that we raise additional capital
28


through the sale of equity or convertible debt securities, ownership interest may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or marketing, or distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, any future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Contractual Obligations and Other Commitments
We enter into contracts in the normal course of business with contract organizations and other vendors to assist in the performance of our research and development activities, and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancellable contracts and not included in the table of contractual obligations and commitments.
During the six months ended June 30, 2023, except for the minimum rental commitments disclosed in Note 7, Leases, to the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q, there were no significant changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022.
Critical Accounting Policies and Significant Judgments and 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 generally accepted accounting principles in the United States, or GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses incurred during the reporting periods. We base our estimates on historical experience, known trends and events, and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities recorded revenues and expenses that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates.
During the six months ended June 30, 2023, there were no material changes to our critical accounting policies and significant judgements described under Management’s Discussion and Analysis of Critical Accounting Policies and Significant Judgments and Estimates which are included in our Annual Report on Form 10-K for the year ended December 31, 2022.
Recently Issued and Adopted Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, Summary of Significant Accounting Policies, to our audited financial statements for the year ended December 31, 2022, and notes thereto, included in the Company’s Annual Report on Form 10-K.
Emerging Growth Company Status
The Jumpstart Our Business Startups Act of 2012 permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different
29


application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. As a result of this election, our condensed consolidated financial statements may not be comparable to other public companies that comply with new or revised accounting pronouncements as of public company effective dates. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
We are exposed to market risk related to changes in interest rates of our investment portfolio of cash equivalents and investments. As of June 30, 2023, we held cash, cash equivalents, investments, and restricted cash of $221.1 million, which consisted of cash, money market funds, equity securities, and U.S. Treasuries. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. The fair value of our cash equivalents, consisted of our money market funds, and U.S. Treasuries are subject to change as a result of potential changes in market interest rates. Due to the short-term maturities of our cash equivalents and U.S. Treasuries and the low risk profile of our investments, an immediate 10 percent change in interest rates would not have a material effect on the fair market value of our cash equivalents or U.S. Treasuries.
Effects of Inflation
Inflation generally affects us by increasing our cost of labor and research and development costs. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates continue to rise) due to an impact on the costs to conduct research and development, labor costs we incur to attract and retain qualified personnel, and other operational costs. Inflationary costs could adversely affect our business, financial condition and results of operations.
Item 4. Controls and Procedures
We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including the principal executive officer (our Chief Executive Officer) and principal financial officer (our interim Chief Financial and Chief Accounting Officer), to allow timely decisions regarding required disclosure. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Internal Control over Financial Reporting
Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal 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 (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives.
Changes in Internal Control Over Financial Reporting
30


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, that occurred during the fiscal quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
31


Part II - Other Information
Item 1. Legal Proceedings
From time to time, we may become involved in litigation or other legal proceedings. While the outcome of any such proceedings cannot be predicted with certainty, as of June 30, 2023 we were not a party to any litigation or legal proceedings that, in the opinion of our management, are probable to have a material adverse effect on our business.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. For a detailed discussion of the risks and uncertainties related to our business, please refer to the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, and the “Risk Factors” section of subsequent Quarterly Reports on Form 10-Q. There have been no material changes from the risk factors set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Set forth below is information regarding shares of equity securities sold, and options granted, by us during the three months ended June 30, 2023 that were not registered under the Securities Act.
Recent Sales of Unregistered Equity Securities
None.
Use of Proceeds From Registered Securities
In October 2022, we completed our IPO. In connection with our IPO, we issued and sold 11,721,456 shares of our common stock, including 1,427,338 shares pursuant to the exercise of the underwriters’ option to purchase additional shares, at a price to the public of $17.00 per share. As a result of the IPO, the Company received $180.2 million in net proceeds, after deducting underwriting discounts, commissions and offering costs of $19.1 million. All of the shares issued and sold in the IPO were registered under the Securities Act pursuant to a Registration Statement on Form S-1 (File No. 333-267579), which was declared effective by the SEC on October 19, 2022 and a Registration Statement on Form S-1 MEF (File No. 333-267954) filed pursuant to Rule 462(b) of the Securities Act.
No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning 10.0% or more of any class of our equity securities or to any other affiliates. There has been no material change in our planned use of the net proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on October 21, 2022.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
(a)Exhibits.
Exhibit numberExhibit table
3.1
3.2
10.1*
10.2*
10.3*
10.4*
10.5*
31.1*
31.2*
32.1**
32.2**
101.INS*Inline XBRL Instance Document
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*Cover Page Interactive Data File (embedded within the Inline XBRL document)
__________________
*Filed herewith.
**    The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.

33


(b)Financial Statement Schedules.
None.
34


Signatures
Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Prime Medicine, Inc.
Date: August 07, 2023By:/s/ Keith Gottesdiener
Keith Gottesdiener
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 07, 2023By:/s/ Carman Alenson
Carman Alenson
Interim Chief Financial Officer and Chief Accounting Officer
(Principal Accounting Officer and Principal Financial Officer)


35
q22023ex10-1
Exhibit 10.1 60 FIRST STREET CAMBRIDGE, MASSACHUSETTS 02141 LEASE AGREEMENT BETWEEN NW CAMBRIDGE PROPERTY OWNER LLC, a Delaware limited liability company, AS LANDLORD AND PRIME MEDICINE, INC. a Delaware corporation, AS TENANT


 
i LEASE AGREEMENT TABLE OF CONTENTS 1. Basic Lease Information ..................................................................................................... 1 2. Lease Grant. ........................................................................................................................ 4 3. Term and Commencement Date. ........................................................................................ 5 4. Rent. .................................................................................................................................... 6 5. Compliance with Laws; Use. .............................................................................................. 7 6. Letter of Credit. ................................................................................................................... 9 7. Building Services. ............................................................................................................... 9 8. Alterations ......................................................................................................................... 11 9. Repairs and Maintenance. ................................................................................................. 13 10. Entry by Landlord. ............................................................................................................ 14 11. Assignment and Subletting. .............................................................................................. 14 12. Notices. ............................................................................................................................. 16 13. Indemnity and Insurance. .................................................................................................. 16 14. Casualty Damage. ............................................................................................................. 19 15. Condemnation. .................................................................................................................. 20 16. Events of Default. ............................................................................................................. 20 17. Limitation of Liability....................................................................................................... 23 18. Holding Over. ................................................................................................................... 24 19. Surrender of Premises. ...................................................................................................... 24 20. Subordination; Estoppel Certificate. ................................................................................. 24 21. Miscellaneous. .................................................................................................................. 25


 
1 LEASE AGREEMENT This Lease Agreement (this “Lease”) is made and entered into as of November 22, 2021 (the “Effective Date”), by and between NW CAMBRIDGE PROPERTY OWNER LLC, a Delaware limited liability company (“Landlord”), and PRIME MEDICINE, INC., a Delaware corporation (“Tenant”). 1. Basic Lease Information. 1.01 “Building” shall mean the building located at 60 First Street, Cambridge, Massachusetts. The “Rentable Floor Area of the Building” is approximately 220,000 rentable square feet. 1.02 “Property” means the Building and the parcel(s) of land on which it is located, as more particularly described on Exhibit A-1 to this Lease. 1.03 “Premises” shall mean the areas shown on Exhibit A-2 to this Lease. The Premises consists of the entirety of the third (3rd), fourth (4th) and fifth (5th) floors of the Building and includes Tenant’s Proportionate Share of the chemical storage area and designated “control areas” on the first (1st) floor of the Building, if any, described on Exhibit “A-2”. 1.04 “Rentable Floor Area of the Premises”: Approximately 148,941 rentable square feet, which includes Tenant’s Proportionate Share of the areas in the Building available for the use of Building tenants from time to time, including the chemical storage areas and the roof and penthouse areas available for Building tenant use. 1.05 “Landlord’s Contribution”: $38,724,660.00 1.06 “Term Commencement Date”: See Section 3.01. 1.07 “Rent Commencement Date”: The date immediately following the expiration of ten (10) months following the Term Commencement Date, subject to Landlord Delay (as hereinafter defined) and to Force Majeure events. 1.08 “Term Expiration Date”: The last day of the 120th full calendar month following the Rent Commencement Date. 1.09 “Base Rent”: Period Annual Base Rent Monthly Base Rent Lease Year 1*: 18,617,625.00 1,551,468.75 Lease Year 2: 19,176,153.80 1,598,012.82 Lease Year 3: 19,751,438.40 1,645,953.20 Lease Year 4: 20,343,981.50 1,695,331.79


 
2 Lease Year 5: 20,954,301.00 1,746,191.75 Lease Year 6: 21,582,930.00 1,798,577.50 Lease Year 7: 22,230,417.90 1,852,534.82 Lease Year 8: 22,897,330.40 1,908,110.87 Lease Year 9: 23,584,250.30 1,965,354.19 Lease Year 10: 24,291.777.80 2,024,314.82 *Subject to and in accordance with Section 4.01 below, Monthly Base Rent shall be partially waived by Landlord and partially abated during the first four (4) months in the total amount of $4,733,437.50 to be applied to the first payments of Base Rent payable for such period. As used above, the first “Lease Year” shall commence on the Rent Commencement Date and end on the last day of the 12th full calendar month following the Rent Commencement Date, and each subsequent Lease Year shall mean each successive period of twelve (12) calendar months following the first Lease Year during the initial Term. Note: If Tenant shall lease any portion of the roof penthouse, there shall be no increase in the Base Rent or in the Landlord Contribution except that if Tenant shall lease more than its Proportionate Share thereof, Base Rent shall be increased to reflect such additional penthouse space. Tenant shall further be allowed to use its Proportionate Share of the portions of the roof, penthouse, bike areas, showers, storage, generator or other equipment and/or similar space made available for use by Building tenants, as further described in Section 2.02 below. 1.10 “Tenant’s Proportionate Share” shall mean 67.7%, as such percentage may be adjusted from time to time to reflect changes in the Premises or the Building. 1.11 Additional Provisions: See Exhibit F 1. Parking 2. Hazardous Materials 3. Roof Rights 4. Negative Conditions 1.12 “Security Deposit” shall mean the letter of credit initially in the amount equal to $13,125,000.00, as provided in Section 6 and Exhibit G attached hereto. Provided Tenant has not been in monetary Default at any time and is not then in any other Default under this Lease, (i) such sum shall be reduced to an amount equal to $10,208,333.33 upon Substantial Completion of the Initial Tenant Work and the issuance of a


 
3 certificate of occupancy, and (ii) such sum shall be reduced to an amount equal to $4,780,680.63 at the third (3rd) anniversary of the Rent Commencement Date. 1.13 “Broker”: CBRE 1.14 “Permitted Use”: Subject to applicable Laws (as defined below), including applicable City of Cambridge zoning rules and regulations, and the terms set forth herein, general office, research and development, laboratory, vivarium and not more than Tenant’s Proportionate Share of building floor area (as defined in the Cambridge Zoning Code) of manufacturing related to such research and development activities, including, without limitation, cGMP manufacturing of biologic materials suitable for human use and commercial distribution uses. Notwithstanding anything to the contrary in this Lease, under no circumstances shall Tenant use or occupy the Premises or any part thereof, nor shall Landlord use or permit any use or occupancy of any other portion of the Building, in a manner that includes activities that would qualify or be characterized or categorized as any laboratory biosafety level (“BSL”) other than BSL1 or BSL2. 1.15 “Notice Address(es)”: For Landlord: For Tenant: NW Cambridge Property Owner LLC c/o Northwood Investors LLC 1819 Wazee Street, 2nd Floor Denver, CO 80802 Attn: With a copy to: Anchor Line Partners, LLC One Post Office Square, 36th Floor, Boston, Massachusetts 02109 Attn. Andrew J. Maher With a copy to: Nutter, McClennen & Fish, LLP 155 Seaport Boulevard Boston, MA 02210 Attn: Michael F. Burke, Esq. Prior to the Term Commencement Date: 21 Erie Street Cambridge, MA 02139 Attention: Keith Gottesdiener, CEO and after occupancy of the Premises: 60 First Street Cambridge, MA 02139 Attention: Keith Gottesdiener, CEO With a copy in both instances to the same address, Attn: Karen Brown, General Counsel, and also to: Eckert Seamans Cherin & Mellott, LLC Two International Place, 16th Floor Boston, MA 02110 Attention: Stuart A. Offner email: soffner@eckertseamans.com 1.16 “Business Day(s)” are Monday through Friday of each week, exclusive of New Year’s Day, Presidents Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day (“Holidays”). Landlord may designate additional Holidays that are commonly recognized by other office buildings in the area where the Building is located. “Building Service Hours” are 8:00 a.m. to 6:00 p.m. on Business Days.


 
4 1.17 Other Defined Terms: Other capitalized terms shall have the meanings set forth in the Lease and its Exhibits below. References in this Lease to numbered Sections shall be deemed to refer to the numbered Sections of this Lease, unless otherwise specified. 1.18 Exhibits: The following exhibits and attachments are incorporated into and made a part of this Lease: Exhibit A-1 (Description of Property) Exhibit A-2 (Outline and Location of Premises) Exhibit B (Expenses and Taxes) Exhibit C (Work Letter) Exhibit D (Commencement Letter) Exhibit E (Building Rules and Regulations) Exhibit F (Additional Provisions) Exhibit G (Letter of Credit) Exhibit H (Form of SNDA) Exhibit I (Option) Exhibit DC (Delivery Conditions) 2. Lease Grant. 2.01 Premises. Landlord hereby leases the Premises to Tenant and Tenant hereby leases the Premises from Landlord. The Premises exclude the exterior faces of exterior walls, the common stairways and stairwells, elevators and elevator wells, fan rooms, electric and telephone closets, janitor closets, freight elevator vestibules, and pipes, ducts, conduits, wires and appurtenant fixtures serving other parts of the Building (exclusively or in common), and other Common Areas (as defined below) of the Building. If the Premises include the entire rentable area of any floor, the common corridors, elevator lobby, and restroom facilities located on such full floor(s) shall be considered part of the Premises. If Landlord and Tenant shall agree to add to the Premises space in the penthouse or on the first floor of the Building, the Base Rent for such space shall be determined at the same rentable square foot rate as for the initial Premises. 2.02 Appurtenant Rights. During the Term, Tenant shall have, as appurtenant to the Premises, (A) the non-exclusive rights to use in common (subject to any reasonable rules of general applicability to tenants and other users of the Building from time to time made by Landlord): (a) the common lobbies, corridors, stairways, tenant elevators, tenant freight or service elevator(s) and the temporary or permanent loading platform of the Building, and the pipes, ducts, conduits, wires and appurtenant meters and equipment serving the Premises in common with others; (b) common driveways and walkways necessary for access to the Building; (c) if the Premises include less than the entire rentable floor area of any floor, the common corridors, elevator lobby, and restroom facilities located on such floor; and (d) all other areas or facilities in or about the Building from time to time designated for general use in common by Tenant, other Building tenants, and Landlord (collectively, the “Common Areas”), and (B) the exclusive right to the use of not more than Tenant’s Proportionate Share of the storage, penthouse, generator locations and other areas outside the Premises which are made available for use by Building tenants in such locations as may be mutually agreed upon by Landlord and Tenant in connection with the plans for Initial Tenant Work. Common Areas may also include areas, facilities (including parking facilities) and amenities located outside the Property which are subject to a reciprocal or other agreement benefiting the Property and other properties (the “REA”) that are designated for the general non-exclusive use and convenience of tenants and users of the Building and the other properties subject to the REA.


 
5 3. Term and Commencement Date. 3.01 Term. The “Term” of this Lease shall begin at 12:01 a.m. on the later of (a) August 1, 2022 and (b) the following date (the “Term Commencement Date”): The Substantial Completion date (as defined in Exhibit C) of the Base Building Work pursuant to Exhibit C, provided that Tenant shall have been given not less than 30 days’ prior notice that such date is scheduled to occur. The Term of this Lease shall end at 11:59 p.m. on the Term Expiration Date set forth in Section 1, unless sooner terminated in accordance with the provisions of this Lease. Promptly after the determination of the Term Commencement Date, Landlord and Tenant shall execute and deliver a commencement letter in the form attached as Exhibit D (the “Commencement Letter”). 3.02 Initial Tenant Work. As used herein, the “Initial Tenant Work” shall mean all Alterations (as defined in Section 8) performed, or to be performed, in or about the Premises that upon substantial completion of the Base Building Work are required initially to put the Premises in condition suitable for Tenant’s use and occupancy, including, without limitation, any work desired by Tenant that is listed in the “Tenant” responsibility column on the Base Building Matrix attached hereto as Schedule C-3 (the “Responsibility Matrix”). Landlord and Tenant shall together coordinate and cooperate so that the Initial Tenant Work shall be performed in accordance with, and subject to, the provisions of Exhibit C and the Responsibility Matrix attached hereto, which shall be mutually agreed upon by Landlord and Tenant in order to minimize any delay or interference with the performance of the Base Building Work and to minimize any delay or interference with the performance of the Initial Tenant Work. Subject to Landlord’s obligations as expressly provided in Exhibit C, the Premises shall be leased by Tenant in good condition and configuration to permit Tenant to perform the Tenant improvements contemplated hereby. As used in this Lease, “Landlord Delay” shall mean any delay in the performance of the work required by Tenant pursuant to this Section 3.02 arising out of or resulting from the following: (i) any delay and/or default on the part of Landlord or its agents, engineers, architects, or contractors, (ii) any interference with Tenant’s performance of the Tenant Improvements by Landlord or any of its agents, engineers, architects, or contractors, (iii) any delay by Landlord in the approval of plans; (iv) any errors or omissions in the Base Building Work; or (v) any other action or inaction by Landlord or any of Landlord’s agents, engineers, architects, or contractors causing a delay in the completion of the Initial Tenant Work. 3.03 Delivery. Notwithstanding anything to the contrary herein, Landlord’s Base Building Work described in Exhibit C shall be completed in a good and workmanlike manner to the reasonable satisfaction of Tenant, with new materials of first-class quality, lien-free and in compliance with all governmental requirements and regulations. Landlord shall use commercially reasonable efforts to deliver possession of the Premises with Landlord’s Base Building Work substantially complete on or before August 1, 2022. For purposes of this Lease the term “substantially complete” shall mean that the “Delivery Conditions” set forth on Exhibit “DC” shall have been satisfied. Subject to Tenant Delays or a force majeure event and provided Tenant shall have received a building permit for the Initial Tenant Work (unless Tenant shall be unable to obtain such building permit because the Base Building Work is not sufficiently complete, in which event Tenant shall otherwise be ready to commence the Initial Tenant Work), if Landlord shall fail to deliver possession of the Premises to Tenant within thirty (30) days following November 1, 2022 (the “Outside Delivery Date”), then in addition to the delay in the Term Commencement Date and the Rent Commencement Date, Tenant shall be entitled to a Base Rent credit equal to one (1) day of free Base Rent for each day that the Commencement Date is delayed beyond the Outside Delivery Date, and two (2) days of free Base Rent for each day that the Commencement Date is delayed more than ninety (90) days after the Outside Delivery Date. Notwithstanding anything to the contrary above, if Landlord shall fail to deliver possession of the Premises to Tenant within one hundred eighty (180) days of the


 
6 Outside Delivery Date (the “Drop Dead Date”), subject to extension for Tenant Delays or a Force Majeure event, Tenant shall have the right to terminate this Lease by giving notice to Landlord of Tenant’s desire to do so at any time after the Drop Dead Date (as the same may have been so extended) and, upon the giving of such notice, the Lease Term shall cease and come to an end without further liability or obligation on the part of either party, unless, within sixty (60) days after Landlord receives such notice, Landlord shall cause the Term Commencement Date to occur. By taking possession of the Premises, Tenant agrees that the Premises are in good order and satisfactory condition, subject to the completion of all punch list items, and all of the Landlord’s responsibilities and warranties as described in Exhibit C. Landlord agrees to assign to Tenant all assignable construction warranties resulting from agreements with third parties applicable solely to the Premises provided that Landlord shall retain the right also to enforce the same, and Landlord shall protect Tenant’s interest in all such warranties and shall take no action nor commit an act or omission that renders such warranties void or voidable. Except as provided herein, any delay in the delivery of the Premises or in the occurrence of the Term Commencement Date shall not give rise to any liability or default by Landlord or affect any of the terms of this Lease or Tenant’s obligation to accept the Premises when delivered. Except for Tenant’s entry into the Premises for planning and design and verification of the progress of the Base Building Work, which entry shall not interfere with the progress of the Base Building Work, Tenant shall not be permitted to take possession of or enter the Premises before the Term Commencement Date without Landlord’s permission. If Tenant takes possession of or enters the Premises before the Term Commencement Date, Tenant’s possession or entry before the Term Commencement Date shall be subject to the terms and conditions of this Lease; provided, however, except for the cost of services used or requested by Tenant, Tenant shall not be required to pay Rent for any such possession or entry before the Term Commencement Date during which Tenant, with Landlord’s approval, has entered, or is in possession of, the Premises for the sole purpose of performing improvements or installing furniture, equipment or other personal property. 3.04 Completion Guaranty. Landlord represents to Tenant that an affiliate of Landlord has provided a guaranty of completion of the Base Building Work to Landlord’s construction lender. Tenant understands and acknowledges that such guaranty is not enforceable by Tenant. 4. Rent. 4.01 Base Rent and Additional Rent. Tenant hereby covenants and agrees to pay to Landlord (a) commencing on the Rent Commencement Date all Base Rent (as provided in Section 1) (but subject to the following subparagraph of this Section 4.01 below) and (b) commencing on the Rent Commencement Date (i) Tenant’s Proportionate Share of Expenses and Taxes (as provided in Exhibit B attached hereto), and (ii) all other Additional Rent due for the Term (collectively referred to as “Rent”). “Additional Rent” means all sums (exclusive of Base Rent) that Tenant is required to pay to Landlord from time to time under this Lease. All Rent shall be paid without any setoff or deduction (except to the extent expressly set forth in this Lease). Notwithstanding the foregoing, Landlord waives payment and Tenant shall have no obligation to pay a total of $4,733,437.50 applicable to the first payments of Base Rent following the Rent Commencement Date as provided in Section 1.09. 4.02 Manner and Timing of Payments. Base Rent and other recurring monthly charges of Additional Rent shall be due and payable in advance on the first day of each calendar month without notice or demand. All other items of Rent shall be due and payable by Tenant within thirty (30) days after billing by Landlord. Rent shall be made payable to the entity, and sent to the address, that Landlord from time to time designates for such purposes and shall be paid by Tenant by good and sufficient check payable in United States of America currency or by electronic or wire transfer to an account from time to time designated by Landlord. Landlord’s acceptance of less than the entire amount of Rent shall be considered,


 
7 unless otherwise specified by Landlord, a payment on account of the oldest obligation due from Tenant hereunder, notwithstanding any statement to the contrary contained on or accompanying any such payment from Tenant. Rent for any partial month during the Term shall be prorated on a per diem basis. Tenant shall pay and be liable for all rental, sales and use taxes (but excluding income taxes), if any, imposed upon or measured by Rent. No endorsement or statement on a check or letter accompanying payment shall be considered an accord and satisfaction. 5. Compliance with Laws; Use. Tenant shall use the Premises only for the Permitted Use and shall not use or permit the use of the Premises for any other purpose. Tenant shall comply with all statutes, codes, ordinances, orders, rules and regulations of any municipal or governmental entity whether in effect now or later, including without limitation, the Environmental Health and Safety Laws (as defined in Exhibit F attached hereto) and the Americans with Disabilities Act (“Law(s)”), regarding the operation of Tenant’s business and the use, condition, configuration and occupancy of the Premises and the Building systems located in or exclusively serving the Premises. Without limiting the generality of the foregoing, Tenant shall be solely responsible for complying with all Laws that relate to operations of Tenant’s laboratory and vivarium uses, and all Laws pertaining to equipment, installations and improvements used or required in connection with the operations of Tenant’s laboratory and vivarium uses. Tenant acknowledges and agrees that the vivarium shall be installed at Tenant’s sole cost and expense as further discussed in Exhibit F. The vivarium will be permitted to be operated only in the portion of the Premises shown on plans approved by Landlord in accordance with Exhibit F attached hereto, and shall be used for biomedical research, development, handling and testing of the Permitted Animals (as hereinafter defined) (“Animal Use”). Tenant shall not use any animals other than mice, rats, zebra fish and such other animals as are lawfully reasonably and customarily used in laboratories in Cambridge Massachusetts (the “Permitted Animals”) in its operations. In addition, Tenant shall promptly take any reasonable actions necessary to resolve any picketing or public relations issues arising from Tenant’s Animal Use. Animal Use, solely of the Permitted Animals, shall be permitted subject to the following: (i) all research, development, handling and testing shall be conducted in strict compliance with all applicable Laws and with good scientific and medical practice; (ii) all dead animals, any part thereof or any waste products related thereto, shall be disposed of, at Tenant's sole cost and expense, in strict compliance with all applicable Laws and with good scientific and medical practice; (iii) no odors, noises or any similar nuisance shall be permitted to emanate from or permeate outside the vivarium; and (iv) Tenant's use of the vivarium shall not interfere with the peaceable and quiet use and enjoyment by other tenants or occupants of the Property. Landlord’s permission in connection with any of the above shall not be unreasonably withheld, conditioned or delayed. Upon written request, Tenant shall procure and deliver to Landlord copies of all necessary permits and approvals necessary for the use and operation of the vivarium before allowing any actual Permitted Animals onto the Premises and shall maintain such permits and approvals during the Term. Tenant shall comply with applicable laboratory practices, (including the use of safety equipment) and policies established by the Center for Disease Control and Prevention (the “CDC”), and in no event shall Tenant’s use of the Premises exceed BSL-2 requirements and protocols in effect with respect to Tenant’s use from time to time. In addition, Tenant shall comply with all Good Manufacturing Practices (GMP) in order to conform to the guidelines recommended by agencies that control the authorization and licensing of the manufacture and sale of biologic, pharmaceutical, medical and other similar products. Tenant shall store, use and dispose of Hazardous Materials in compliance with all applicable Environmental, Health and Safety Laws and shall comply with all Laws applicable to the handling, use or


 
8 disposition of any Hazardous Materials. Landlord shall also comply with all of the foregoing requirements, and shall make the same applicable to all tenants and occupants of the Building. In addition, Tenant shall, at its sole cost and expense, promptly comply with any Laws that relate to the Base Building (defined below), but only to the extent such obligations are triggered by Tenant’s use of the Premises (other than for general office use) or any Alterations in or about the Premises performed or requested by Tenant. “Base Building” shall include the structural portions of the Building, the common restrooms, the Building mechanical, electrical, and plumbing systems and equipment located in the internal core of the Building on the floor or floors on which the Premises are located. Tenant shall promptly provide Landlord with copies of any notices it receives regarding an alleged violation of Law. Except as otherwise provided herein, Tenant shall be solely responsible, at Tenant’s sole cost and expenses, for obtaining all operational permits, licenses and approvals required in order for Tenant to use the Premises for the Permitted Use (excluding any permits, licenses, and approvals required for the construction of the Base Building Work, which shall be Landlord’s responsibility). If any governmental license or permit required to be obtained by Tenant shall be required for the proper and lawful conduct of Tenant’s business at the Premises, (including, without limitation, all permits and approvals required for the use and operation of any required wastewater treatment operator license and vivarium use), Tenant, at Tenant’s expense, shall duly procure and thereafter maintain such license and submit the same to inspection by Landlord. Tenant, at Tenant’s expense, shall at all times comply in all material respects with the terms and conditions of each such license or permit. Upon written request, Tenant shall provide Landlord with copies of all such licenses, permits and approvals required for Tenant’s use, including any Environmental Health and Safety permits, licenses and registrations that are obtained or renewed during the Term. Without limiting the generality of the foregoing, if required by applicable Laws, Tenant shall apply for, obtain, strictly comply with, and keep in force any discharge permits required by the Massachusetts Water Resources Authority (the “MWRA Permits”) covering any Hazardous Materials and processes used by Tenant in its business operations at the Premises. Upon written request, Tenant shall provide a copy of each such MWRA Permit to Landlord, together with a written description and detailed guidelines of any laboratory operating conditions required pursuant to such MWRA Permit, within ten (10) business days after the issuance of such MWRA Permit or any amendment to modification thereto. As part of the Landlord’s performance of the Base Building Work, Landlord shall tie the Premises into the existing base building pH neutralization system (the “pH Neutralization System”), in accordance with any MWRA Permits. To the extent required for Tenant’s use, Tenant shall obtain a wastewater treatment operator license from the Commonwealth of Massachusetts. The monitoring, repair and maintenance costs of the pH Neutralization System shall be passed through to Tenant on a pro-rata basis, based upon the proportion that the Rentable Floor Area of the Premises bears to the total rentable floor area of all tenant-occupied space tied into the pH Neutralization System. Tenant shall not exceed the standard density limit for the Building. Tenant shall not use or permit the use of any portion of the Premises or any equipment installed by Tenant or any party acting under or through Tenant in a manner that results in objectionable noise, odors, or vibrations emanating from the Premises and shall prevent the emanation of noxious odors, smoke, vibration, noise, water or other effects which constitute a nuisance or otherwise materially interfere with the safety or comfort of Landlord or of any of the other occupants of the Building. Tenant shall comply with the rules and regulations of the Building attached as Exhibit E and such other reasonable rules and regulations adopted by Landlord from time to time, including rules and regulations for the performance of Alterations, provided that such rules and regulations are uniformly enforced against all the tenants of the Building. In the event of any conflict between the terms of this Lease and the rules and regulations, the terms of this Lease shall control. If the


 
9 Premises or any portion thereof are located on a multi-tenant floor, Tenant shall cause all portions of such Premises that are visible from the Common Areas on such floors to be arranged, furnished, and lighted in a manner in which such Premises appears at all times to be occupied for the Permitted Use. Notwithstanding anything to the contrary contained in this Lease, during the Term, Tenant shall be entitled to the allocation of Tenant’s Proportionate Share of the maximum allowable chemical quantities (both in use and in storage) permitted by MAQ Codes (defined below) including in the chemical storage area on the first floor of the Building, subject to Tenant maintaining all licenses, permits and approvals required therefor. As used herein, “MAQ Codes” shall mean 780 CMR – Massachusetts State Building Code 9th Edition, 527 CMR – Massachusetts Comprehensive Fire Safety Code, and NEPA 45 – Standard on Fire Protection for Laboratories Using Chemicals, 2011 Edition. Tenant shall have the appurtenant right to use any fire control areas made available to tenants on any floor of the Premises. 6. Letter of Credit. Concurrently with Tenant’s execution and delivery of this Lease, Tenant shall deliver to Landlord the Security Deposit, in the form of a clean, irrevocable letter of credit in the amount set forth in Section 1, which shall comply with, and may be drawn by Landlord in accordance with, the provisions of Exhibit G attached hereto (such letter of credit, together with any renewal or replacement thereof in accordance herewith, being referred to herein as the “Letter of Credit”). 7. Building Services. 7.01 Building Services. Landlord shall furnish Tenant with the following services (the costs of which shall be included in Expenses, except for such costs that are separately metered or check metered for the Premises, all of which separately metered or check metered costs shall be paid by Tenant as provided below): (a) reasonable quantities of hot and cold water for use in the Base Building restrooms and reasonable quantities of cold water for use in the Premises; (b) customary heat and air conditioning in season; (c) standard janitorial service for the Common Areas nightly on Business Days (it being acknowledged and agreed that Tenant shall be solely responsible for all cleaning and janitorial services for the Premises per Section 9.01 of this Lease); (d) elevator service; (e) electricity in accordance with the terms and conditions in Section 7.02; (f) access to the Building for Tenant and its employees 24 hours per day/7 days per week, subject to the terms of this Lease and such protective services or monitoring systems, if any, as Landlord may from time to time impose, including, without limitation, sign-in procedures and/or presentation of identification cards; (g) maintenance of the exterior areas of the Property, including sweeping, landscaping and snow and ice removal; and (h) such other services as Landlord reasonably determines are necessary or appropriate for the Property. Landlord warrants and represents that to the best of Landlord’s knowledge all utilities required by this Lease are presently available at the Premises. To the extent that any of the foregoing utility services for the Premises are separately metered, Tenant shall timely pay the separate charges for such services directly to the applicable utility company. To the extent that any of the foregoing utility services for the Premises (including, without limitation, air handling units or other HVAC equipment serving the Premises) or any other equipment serving the Premises, whether exclusively or in common, is not metered directly by the utility company to the Premises, Tenant shall pay to Landlord, as Additional Rent, the costs of such utility service (without mark-up) by a separate charge payable by Tenant to Landlord based on evidence from the check-meters installed for the Premises or equipment serving the Premises or, for any portion of the Premises or equipment that from time to time does not have operational check-meters, based on reasonable allocations prepared by Landlord’s building engineer for the space and period in question. Tenant shall make estimated monthly payments for any utility charges payable to Landlord hereunder, in advance on the first day of each month or partial month of the Term, based on amounts estimated by Landlord from time to time for such utility charges and provided to Tenant in writing, subject to periodic reconciliations based on actual check-meter readings and utility rates for the


 
10 space and period in question. If Tenant is permitted to connect any supplemental HVAC units to the Building’s condenser water loop or chilled water line, such permission shall be conditioned upon Landlord having adequate excess capacity from time to time and such connection and use shall be subject to Landlord’s reasonable approval and reasonable restrictions imposed by Landlord, and Landlord shall have the right to charge Tenant a reasonable connection fee and/or a monthly usage fee, as reasonably determined by Landlord. If, at Tenant’s request, Landlord, or an affiliated or third party service provider, provides any services that are not Landlord’s express obligation under this Lease, including, without limitation, any repairs which are Tenant’s responsibility pursuant to Section 9 below, Tenant shall pay to the applicable service provider the cost of such services plus a reasonable administrative charge. 7.02 Tenant Electricity. Tenant shall pay to Landlord, as Additional Rent, the costs of electricity used in or for the Premises (including, without limitation, air handling units or other HVAC equipment serving the Premises) and, if applicable, for any special equipment installed by or for Tenant elsewhere in the Building, by a separate charge payable by Tenant to Landlord based on check-meters installed for the Premises (or for any applicable portion thereof or equipment serving the Premises) or, for any portion of the Premises or equipment that from time to time does not have operational check-meters, based on reasonable allocations prepared by Landlord’s building engineer for the space and period in question. Tenant shall make estimated monthly payments for the electricity charges hereunder, in advance on the first day of each month or partial month of the Term, based on amounts estimated by Landlord from time to time for such electricity charges, subject to periodic reconciliations based on actual check-meter readings and utility rates for the space and period in question. Without the consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, Tenant’s use of electrical service shall not exceed the Building standard usage, per square foot, as reasonably determined by Landlord, based upon the Building standard electrical design load and shall comply with any sustainability initiative standards for the Building, including as set forth on Exhibit F hereto. Landlord shall have the right to measure electrical usage by commonly accepted methods, including the installation of measuring devices such as submeters and check-meters, which to the extent not in place prior to the Effective Date shall be installed at Landlord’s expense. If it is determined, for any electrical service that is not separately check-metered to Tenant, that Tenant is using electricity in such quantities or during such periods as to cause the total cost of Tenant’s electrical usage, on a monthly, per-rentable-square-foot basis, to materially exceed that which Landlord reasonably deems to be standard for the Building, Tenant shall pay Landlord Additional Rent for the cost of such excess electrical usage and, if applicable, for the cost of purchasing and installing the measuring device(s). Notwithstanding the foregoing, to the extent any electricity service is from time to time metered directly by the utility company to the Premises, Tenant shall timely pay the separate charges for such electricity service directly to the applicable utility company and, if requested by Landlord from time to time, provide copies of such utility company invoices and evidence of such payments. Notwithstanding anything to the contrary above, Landlord shall, at its sole expense, provide for direct metering of the Premises as part of Landlord’s Work. 7.03 Interruption of Services. Landlord’s failure to furnish, or any interruption, diminishment or termination of services due to the application of Laws, the failure of any equipment, the performance of maintenance, repairs, improvements or alterations, utility interruptions or the occurrence of an event of Force Majeure (defined in Section 21.06) (collectively a “Service Failure”) shall not render Landlord liable to Tenant, constitute a constructive eviction of Tenant, give rise to an abatement of Rent, nor relieve Tenant from the obligation to fulfill any covenant or agreement, except as provided in the next sentence. If the Premises, or a material portion of the Premises, are made untenantable for a period in excess of seven (7) consecutive Business Days after written notice thereof from Tenant to Landlord, as a result of a Service Failure that is reasonably within the control of Landlord to correct, then Tenant, as its sole remedy, shall be entitled to receive an abatement of Rent payable hereunder during the period following such seven(7)- Business-Day period and ending on the day the service has been restored. If the entire Premises has not been rendered untenantable by the Service Failure, the amount of abatement shall be equitably


 
11 prorated. This Section shall not apply to any Service Failure arising from a casualty event governed by Section 14 below. 7.04 Reservations. Without limiting the generality of the foregoing, Landlord reserves the right from time to time to modify components of the access procedures for the Building or other portions of the Property, to change the number of lobby attendants, or to institute, modify, supplement, or discontinue any particular access control procedures or equipment for the Building, whether during or after business hours, provided that any such changes do not materially interfere with Tenant’s business operations at the Premises. Landlord does not warrant or guarantee the effectiveness of any such system or procedures. Tenant expressly disclaims any such warranty, guarantee, or undertaking by Landlord with respect thereto and acknowledges that access control procedures from time to time in effect are solely for the convenience of tenants generally and are not intended to secure the Premises or to guarantee the physical safety of any persons in or about the Premises or the Property. Tenant shall be responsible for securing the Premises, including without limitation by Tenant’s installation of access card readers or other security equipment for the Premises in accordance with Section 8 and by restricting or monitoring access into and from the Premises by its employees or other invitees. At the time that any Tenant employee (or other person acting under or through Tenant) who has been issued a Building access card is terminated or otherwise ceases to work at the Premises, Tenant shall retrieve and destroy the Building access card for such person and, in accordance with the Building’s standard procedures, notify the Building’s property manager that such person should be removed from the active list for Building access cards. 8. Alterations 8.01 Alterations. Tenant shall have the right to make alterations, repairs, additions or improvements or install any Cable (collectively referred to as “Alterations”) in the Premises, subject to obtaining the written consent of Landlord in each instance, which consent shall not be unreasonably withheld or delayed. “Cable” shall mean and refer to any electronic, fiber, phone and data cabling and related equipment that is installed by or for the exclusive benefit of Tenant or any party acting under or through Tenant. Prior to starting work on any Alterations, Tenant shall furnish Landlord with plans and specifications (which shall be in CAD format if requested by Landlord); names of contractors reasonably acceptable to Landlord (provided that Landlord may designate specific contractors with respect to Base Building and vertical Cable, as may be described more fully below); required permits and approvals; evidence of contractor’s and subcontractor’s insurance in amounts reasonably required by Landlord and naming as additional insureds the Landlord, the managing agent for the Building, and such other Additional Insured Parties (as defined in Section 13) as Landlord may designate for such purposes; and any security for performance in amounts reasonably required by Landlord. Landlord shall review and provide a response to Tenant’s plans and specifications within five (5) Business Days, provided that the response periods for the Initial Tenant Work shall be governed by Exhibit C. Any disapproval by Landlord shall specify in reasonable detail the reasons for disapproval, with a recommended alternative or solution, if any. If Tenant does not receive a response from Landlord within the applicable time period in connection with the approval of plans and specifications, such request is to be deemed approved. Landlord may designate specific contractors with respect to oversight, installation, repair, connection to, and removal of vertical Cable. All Cable shall be clearly marked with adhesive plastic labels (or plastic tags attached to such Cable with wire) to show Tenant’s name, suite number, and the purpose of such Cable (i) outside the Premises (specifically including, but not limited to, the electrical room risers and any Common Areas), and (ii) at the termination point(s) of such Cable. Changes to the plans and specifications must also be submitted to Landlord for its approval, which approval shall not be unreasonably withheld, conditioned or delayed. Alterations shall be constructed in a good and workmanlike manner using materials of a quality reasonably approved by Landlord, and Tenant shall ensure that no Alteration impairs any Building system or Landlord’s ability to perform its obligations hereunder. Tenant shall reimburse Landlord only for its reasonable out-of-pocket expenses incurred for any necessary specialized review by Landlord’s architects


 
12 and engineers if needed in connection with its review of Tenant’s plans for any Alteration or the Initial Tenant Work, and, except as provided in Exhibit C, Landlord will not charge an administrative or oversight fee for any Alterations or the Initial Tenant Work. Upon completion, Tenant shall furnish “as-built” plans (in CAD format, if requested by Landlord) for Alterations, customary AIA completion affidavits, full and final waivers of lien, any applicable certificate of occupancy for the space affected by such Alterations, and any other items required under the Building’s construction rules and regulations for closing out the particular work in question. Landlord’s approval of an Alteration shall not be deemed to be a representation by Landlord that the Alteration complies with Law or will not adversely affect any Building system. If any Alteration requires any change to the Base Building, any Building system, or any Common Area, then such changes shall be made at Tenant’s sole cost and expense and performed, at Landlord’s election, either by Tenant’s contractor or a contractor engaged by Landlord. Notwithstanding the foregoing, Landlord’s consent shall not be required for any Alteration that satisfies all of the following criteria (a “Cosmetic Alteration”): (a) is of a cosmetic nature such as painting, wallpapering, hanging pictures and installing carpeting; (b) is not visible from the exterior of the Premises or Building; (c) will not adversely affect the Base Building (defined in Section 5); and (d) does not require a building permit or other governmental approval. Cosmetic Alterations shall be subject to all the other provisions of this Section 8.03, to the extent applicable thereto. 8.02 Liens. Tenant shall not cause or permit any mechanics’ or other liens to be placed upon the Property, the Premises, or Tenant’s leasehold interest hereunder in connection with any work or service done or purportedly done by or for the benefit of Tenant, its subtenants, or any other party acting under or through Tenant. Tenant shall give Landlord notice at least fifteen (15) days prior to the commencement of any work in the Premises to afford Landlord the opportunity, where applicable, to post and record notices of non-responsibility. Tenant, within forty-five (45) days after notice from Landlord, shall fully discharge any such lien by settlement, by bonding or by insuring over the lien in the manner prescribed by the applicable lien Law. If Tenant fails to discharge such lien within such period, Tenant shall be deemed in Default under this Lease and, in addition to any other remedies available to Landlord as a result of such Default by Tenant, Landlord, at its option, may bond, insure over or otherwise discharge the lien. Tenant shall reimburse Landlord for any amount paid by Landlord to discharge such lien, including, without limitation, reasonable attorneys’ fees. Landlord shall have the right to require Tenant to post a performance or payment bond in connection with any work or service done or purportedly done by or for the benefit of Tenant. Tenant acknowledges and agrees that all such work or service is being performed for the sole benefit of Tenant and not for the benefit of Landlord. 8.03 Leasehold Improvements. All leasehold improvements from time to time made in and to the Premises (collectively, “Leasehold Improvements”) shall, except as expressly provided in this Lease, remain upon the Premises at the end of the Term without compensation to Tenant. Landlord, by written notice to Tenant at least thirty (30) days prior to the Term Expiration Date, may require Tenant, at Tenant’s expense, to remove any Leasehold Improvements or other affixed installations that, in Landlord’s reasonable judgment, are of a nature that would require removal and repair costs that are materially in excess of the removal and repair costs associated with standard office improvements (“Required Removables”). Required Removables shall be limited to internal stairways, private baths and showers, vaults, or other items of an unusual nature not customarily found in office or lab or life science buildings. Tenant, at the time it requests approval for a proposed Alteration may request in writing that Landlord advise Tenant whether the Alteration or any portion thereof is a Required Removable. Within ten (10) Business Days after receipt of Tenant’s request, Landlord shall advise Tenant in writing as to which portions of the alteration or other improvements are Required Removables. The Required Removables shall be removed by Tenant before the expiration or earlier termination of this Lease in accordance with Section 19. or the cost therefor paid for after the Expiration Date if and when such items are removed


 
13 8.04 Signage. No signs, advertisements or notices shall be painted or affixed to windows, doors or other parts of the Building, except those of such color, size, style and in such places as are first approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. All tenant identifications, suite number and branding at the entrance to the Premises shall be subject to Landlord’s prior written approval in Landlord’s sole but reasonable discretion, and shall be installed by Landlord, at Tenant’s cost and expense, using the standard graphics for the Building. Landlord, at its sole cost, shall provide Tenant with Building standard signage on all existing tenant directories at the Building. Notwithstanding the above, Tenant shall have the right to install exterior signage as mutually agreed between Landlord and Tenant subject to compliance with all applicable legal requirements. No other tenant shall have the right to install exterior signage. In the event there is a change to Tenant’s name or logo in the future, Tenant shall have the ability to modify the exterior signage to similar specifications as previously mutually agreed with the Landlord and at Tenant’s sole cost and expense. 9. Repairs and Maintenance. 9.01 Tenant Obligations. Tenant, at its sole cost and expense, shall perform all maintenance and repairs to the Premises that are not Landlord’s express responsibility under this Lease, and keep the Premises in good condition and repair, reasonable wear and tear excepted. Tenant’s repair and maintenance obligations include, without limitation, repairs to: (a) floor covering; (b) interior partitions; (c) doors; (d) the interior side of demising walls; (e) Alterations (described in Section 8); (f) supplemental air conditioning units, kitchens, including hot water heaters, plumbing, and similar facilities exclusively serving the Premises or any portion thereof, whether such items are installed by Tenant or are currently existing in the Premises; and (g) any Cable. Tenant shall maintain in effect throughout the Term maintenance contracts for any such supplemental air conditioning units or other specialty equipment exclusively serving the Premises and, from time to time upon Landlord’s request, provide Landlord with a copy of such maintenance contract and reasonable evidence of its service record. All repairs and other work performed by Tenant or its contractors, including that involving Cable, shall be subject to the terms of Section 8.01 above. If Tenant fails to make any repairs to the Premises for more than fifteen (15) days after notice from Landlord (although notice shall not be required in an emergency), Landlord may make the repairs, and, within thirty (30) days after demand, Tenant shall pay to Landlord the reasonable cost of the repairs. Landlord shall have no obligation to provide any cleaning, janitorial or refuse or waste removal services in or to the Premises. Tenant shall be responsible, at its sole cost and expense, for providing cleaning and janitorial services to the Premises in a neat and first-class manner consistent with the cleaning standards generally prevailing in comparable buildings in the Greater Boston Metropolitan Area for laboratory and office space or as otherwise reasonably established by Landlord in writing from time to time, using an insured contractor or contractors selected by Tenant and approved in writing by Landlord and such provider shall not interfere with the use and operation of the Building or Property by Landlord or any other tenant or occupant thereof. Tenant shall also be responsible to arrange for, at Tenant’s sole cost and expense, any waste (including biomedical, hazardous and laboratory waste) and refuse removal services for Tenant’s operations at the Premises. All waste (including biomedical, hazardous and laboratory waste) and refuse removal shall be performed in compliance with applicable environmental Laws using licensed laboratory waste disposal companies. All ordinary trash (i.e., non-organic and non-controlled substances that do not constitute Hazardous Materials) may be stored in common trash dumpsters, but all biomedical, hazardous and laboratory waste and refuse shall be stored in the Premises and shall be removed on a daily basis. Tenant shall also cause all extermination of vermin in the Premises or resulting from Tenant’s use of the Premises to be performed by companies reasonably approved by Landlord in writing and shall contract and utilize pest extermination services as reasonably necessary or as requested by Landlord.


 
14 9.02 Landlord Obligations. Landlord shall keep and maintain in good repair and working order and perform maintenance upon (a) the structural elements of the Building; (b) the mechanical (including HVAC), electrical, plumbing and fire/life safety systems serving the Building in general; (c) the Common Areas; (d) the roof of the Building; (e) the exterior windows of the Building; and (f) the elevators serving the Building and the pH Neutralization System. Landlord shall provide and maintain a dumpster and/or compactor at the loading dock at the Building for tenants’ use and for the disposal of non-hazardous/non- controlled substances. 10. Entry by Landlord. Landlord may enter the Premises to inspect, show or clean the Premises or to perform or facilitate the performance of repairs, alterations or additions to the Premises or any portion of the Building. Except in emergencies or to provide Building services, Landlord shall provide Tenant with reasonable prior email or telephone notice of entry. In connection with any such entry for non-emergency work performed during Building Service Hours, Landlord shall use reasonable efforts not to unreasonably interfere with Tenant’s use of the Premises. If reasonably necessary, Landlord may temporarily close all or a portion of the Premises to perform repairs, alterations and additions provided that Landlord provides Tenant reasonable written notice of such closure and such closure does not unreasonably interfere with Tenant’s use of the Premises. Any such entry by Landlord shall not constitute a constructive eviction or entitle Tenant to an abatement or reduction of Rent. 11. Assignment and Subletting. 11.01 Transfers. Except in connection with a Permitted Transfer (defined in Section 11.04), Tenant shall not assign, sublease, transfer or encumber any interest in this Lease or allow any third party to use all or any portion of the Premises (in each such case, collectively or individually, a “Transfer” to a “Transferee”) without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, if Landlord does not exercise its recapture rights under Section 11.02. Without limitation, it is agreed that Landlord’s consent shall not be considered unreasonably withheld if the proposed Transferee (a) if Landlord then has comparable space available for lease in the Building, (i) is an occupant of the Building, or (ii) whether or not an occupant of the Building, has been in discussions with Landlord regarding the leasing of space within the Building within the preceding 6 months, (b) is incompatible with the character of occupancy of the Building or Property, or (c) would subject the Premises to a use which would: (i) violate any exclusive right granted to another tenant of the Building or Property; (ii) require any material addition to or modification of the Building in order to comply with building code or other governmental requirements; or (iii) involve a violation of the Permitted Use clauses of this Lease. If the entity(ies) that directly or indirectly controls the voting shares/rights of Tenant (other than through the ownership of voting securities listed on a recognized securities exchange) changes at any time, such change of ownership or control shall constitute a Transfer. Except for so long as Tenant’s stock is publicly traded (including, without limitation, the initial and follow-on offerings of Tenant’s stock) on a nationally recognized stock exchange and except as expressly permitted pursuant to Section 11.04 hereof, the foregoing prohibition includes any direct or indirect change in “control” of Tenant as a result of any assignment, subletting, or other transfer which would occur by operation of law, merger, consolidation, reorganization, acquisition, transfer, or other change of Tenant’s corporate, ownership, and/or proprietary structure, including, without limitation, a change in the partners of any partnership, a change in the members and/or managers of any limited liability company, and/or the sale, pledge, or other transfer of any of the issued or outstanding capital stock of any corporate Tenant. For purposes hereof, “control” shall be deemed to be the ability to control the majority voting interest of the controlled corporation or other business entity. Any Transfer in violation of this Section shall, at Landlord’s option, be deemed a Default by Tenant as described in Section 16.01, and shall be voidable by Landlord. In no event shall any Transfer, including a Permitted Transfer, release or relieve Tenant from any obligation under this Lease, and the Tenant


 
15 originally named in this Lease shall remain primarily liable for the performance of the tenant’s obligations under this Lease, as amended from time to time. 11.02 Recapture. In the event of (i) a proposed assignment of this Lease or subletting of all or part of the Premises for a sublease term for all or substantially all of the remainder of the Term, or (ii) if Tenant shall intend to offer to so assign the Lease or so sublet for all or substantially all of the remainder of the Term in advance of having identified an assignee or subtenant, Tenant shall give Landlord Notice thereof and within fifteen (15) business days after receipt of such notice, Landlord may give notice to Tenant, recapture the portion of the Premises that Tenant is proposing to Transfer. If Landlord exercises its right to recapture, this Lease shall automatically be amended (or terminated if the entire Premises is being assigned or sublet) to delete the applicable portion of the Premises effective on the proposed effective date of the Transfer, although Landlord may require Tenant to execute a reasonable amendment or other document reflecting such reduction or termination. Tenant shall pay to Landlord the reasonable costs and attorneys’ fees incurred by Landlord in connection with such requested Transfer. If Tenant shall have given advance notice of Tenant’s intention to assign or to sublease as provided in Section 11.02(ii) above, and Landlord shall not have elected to recapture at that time, then at such time as Tenant shall identify a proposed assignee or subtenant, Landlord shall again have the right of recapture with respect to such proposed transaction, but Landlord must exercise such right by giving Tenant notice of such exercise within five (5) business days after Tenant shall have given Landlord notice identifying such subtenant or assignee. 11.03 Process. Tenant shall provide Landlord with financial statements for the proposed Transferee (or, in the case of a change of ownership or control, for the proposed new controlling entity(ies)), a fully executed copy of the proposed assignment, sublease, or other Transfer documentation, and such other information as Landlord may reasonably request. Within fifteen (15) Business Days after receipt of the required information and documentation, Landlord shall either: (a) consent to the Transfer by execution of a consent agreement in a form reasonably designated by Landlord; or (b) reasonably refuse to consent to the Transfer in writing, setting forth in reasonable detail the reasons for such disapproval. Failure to approve or to disapprove within such period shall be deemed approval. 11.04 Excess Payments. In the event, if any, that (i) all rent and other consideration which Tenant receives as a result of a Transfer exceeds (ii) the Rent payable to Landlord for the portion of the Premises and Term covered by the Transfer, then Tenant shall, at Landlord’s election, pay to Landlord an amount equal to fifty percent (50%) of such excess, from time to time on a monthly basis upon Tenant’s receipt of such excess; provided that in determining any such excess, Tenant may deduct from the excess all reasonable and customary expenses directly incurred by Tenant in connection with such Transfer. If Tenant is in Default, Landlord may require that all sublease payments be made directly to Landlord, in which case Tenant shall receive a credit against Rent in the amount of Tenant’s share of payments received by Landlord. 11.05 Permitted Transfers. Tenant may assign this Lease to a successor to Tenant by merger, consolidation, or the purchase of all or substantially all of Tenant’s assets, or assign this Lease or sublet all or a portion of the Premises to an Affiliate (defined below), without the consent of Landlord, provided that all of the following conditions are satisfied (a “Permitted Transfer”): (a) Tenant must not be in Default; and (b) except in the case of a sublease to an Affiliate, the Net Worth Test (defined below) must be satisfied. Tenant shall give prior notice to Landlord of such transfer, which notice shall include information and documentation evidencing that the Transfers qualifies as a Permitted Transfer hereunder and that each of the above conditions has been satisfied. If requested by Landlord, Tenant’s successor shall sign and deliver to Landlord a commercially reasonable form of assumption agreement. “Affiliate” shall mean an entity controlled by, controlling or under common control with Tenant. The “Net Worth Test” shall be deemed satisfied if the successor to Tenant (or, Tenant, if, after the applicable transfer, Tenant remains the Tenant hereunder) has a tangible net worth computed in accordance with generally accepted accounting


 
16 principles at least equal to the greater of the tangible net worth of Tenant as of the Effective Date or the date immediately prior to the transfer. In the event that, at any time after a Permitted Transfer, the Affiliate to which the Permitted Transfer is made ceases to qualify as an Affiliate of the original Tenant, such event shall be deemed a Transfer that is subject to the provisions of Sections 11.01, 11.02, and 11.03 above. 11.06 Prohibited Matters. Without limiting Landlord’s right to withhold its consent to any transfer by Tenant, and regardless of whether Landlord shall have consented to any such transfer, neither Tenant nor any other person having an interest in the possession, use or occupancy of the Premises or any part thereof shall enter into any lease, sublease, license, concession, assignment or other transfer or agreement for possession, use or occupancy of all or any portion of the Premises which provides for rent or other payment for such use, occupancy or utilization based, in whole or in part, on the net income or profits derived by any person or entity from the space so leased, used or occupied, and any such purported lease, sublease, license, concession, assignment or other transfer or agreement shall be absolutely void and ineffective as a conveyance of any right or interest in the possession, use or occupancy of all or any part of the Premises. 12. Notices. All demands, approvals, consents or notices (collectively referred to as a “notice”) shall be in writing and delivered by registered, express, or certified mail, with return receipt requested or with delivery confirmation requested from the U.S. postal service, or sent by overnight or same day courier service at the party’s respective Notice Address(es) set forth in Section 1. In addition, if the Building is closed (whether due to emergency, governmental order or any other reason), then any notice address at the Building shall not be deemed a required notice address during such closure, and, unless Tenant has provided an alternative valid notice address to Landlord for use during such closure, any notices sent during such closure may be sent via any practical manner reasonably designed to ensure receipt by the intended recipient. Each notice shall be deemed to have been received on the earlier to occur of actual delivery or the date on which delivery is refused, or, if Tenant has vacated the Premises or any other Notice Address of Tenant without providing a new Notice Address, three (3) Business Days after notice is deposited in the U.S. mail or with a courier service in the manner described above. Either party may, at any time, change its Notice Address (other than to a post office box address) by giving the other party written notice of the new address. 13. Indemnity and Insurance. 13.01 Indemnification. Except to the extent caused by the negligence or willful misconduct of Landlord or any Landlord Related Parties (defined below), and to the maximum extent permitted under applicable law, Tenant shall indemnify, defend and hold Landlord and Landlord Related Parties harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys’ fees and other professional fees (collectively referred to as “Losses”), which may be imposed upon, incurred by or asserted against Landlord or any of the Landlord Related Parties by any third party and arising out of or in connection with any damage or injury occurring in the Premises or any acts or omissions (including violations of Law) of Tenant, its trustees, managers, members, principals, beneficiaries, partners, officers, directors, employees and agents (the “Tenant Related Parties”) or any of Tenant’s transferees, contractors or licensees, which indemnification hereunder, for the avoidance of doubt, shall also include such Losses by reason of any failure of Tenant to keep, observe or perform any of its obligations or by reason of any damage to any property (including but not limited to property of any Landlord Related Party) or any injury (including but not limited to death) to any person occurring in, on, or about the Building, to the extent that such injury or damage shall arise from the operation, maintenance, testing, refueling or cleaning of the Back-Up Power And Supplemental Components. To the maximum extent permitted under applicable law, Tenant hereby waives all claims against and releases Landlord and its trustees, managers, members, principals, beneficiaries, partners,


 
17 officers, directors, employees, Mortgagees (defined in Section 20) and agents (the “Landlord Related Parties”) from all claims for any injury to or death of persons, damage to property or business loss in any manner related to (a) Force Majeure, (b) acts of third parties, (c) the bursting or leaking of any tank, water closet, drain or other pipe, or (d) the inadequacy or failure of any security or protective services, personnel or equipment. To the fullest extent permitted by law, but excluding to the extent caused by the negligence of Tenant, Landlord agrees to indemnify and save harmless Tenant Related Parties from and against all third party claims of whatever nature in connection with this Lease and arising from any willful misconduct or negligence of Landlord Related Parties. Landlord shall pay such indemnified amounts as they are incurred by Tenant Related Parties. This indemnification shall not be construed to deny or reduce any other rights or obligations of indemnity that any of Tenant Related Parties may have under this Lease or common law. The foregoing indemnity and hold harmless agreement shall include indemnity for all reasonable costs, expenses and liabilities (including, without limitation, reasonable attorneys’ fees and disbursements) in