SEC Filing | Sana Biotechnology, Inc

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2024


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

For the transition period from to

Commission File Number: 001-39941

Sana Biotechnology, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	83-1381173
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
188 East Blaine Street, Suite 400 Seattle, Washington	98102
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (206) 701-7914

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, $0.0001 par value per share	SANA	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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, 2024, the registrant had 222,465,934 shares of common stock, $0.0001 par value per share, outstanding.

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Loss	7
	Condensed Consolidated Statements of Stockholders’ Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	111
Item 3.	Defaults Upon Senior Securities	111
Item 4.	Mine Safety Disclosures	111
Item 5.	Other Information	112
Item 6.	Exhibits	113
	Signatures	114

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (Quarterly Report) contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report could be deemed forward-looking statements, including those statements highlighted below. In some cases, you can identify these statements by forward-looking words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should,” “would,” or “will,” the negative of these terms, and other comparable terminology. These forward-looking statements, which are subject to risks, include, but are not limited to, statements about:

•

our expectations regarding the potential market size and size of the potential patient populations for our product candidates and any future product candidates, if approved for commercial use;

•

our clinical and regulatory development plans;

•

our expectations with regard to our preclinical studies, clinical trials, and research and development programs, including the impact, timing, and availability of data from such studies and trials;

•

the timing of commencement of future preclinical studies, clinical trials, and research and development programs;

•

our ability to acquire, discover, and develop product candidates and timely advance them into and through clinical data readouts and successful completion of clinical trials;

•

our expectations regarding the potential safety, efficacy, or clinical utility of our product candidates;

•

our intentions with respect to and our ability to establish collaborations or partnerships;

•

the timing or likelihood of regulatory filings and approvals for our product candidates;

•

our commercialization, marketing, and manufacturing expectations, including with respect to the buildout of our manufacturing facility and capabilities and the timing thereof;

•

impact of future regulatory, judicial, and legislative changes or developments in the United States and foreign countries;

•

our intentions with respect to the commercialization of our product candidates;

•

the pricing and reimbursement of our product candidates, if approved;

•

the potential effects of public health crises on our preclinical and clinical programs and business;

•

our expectations regarding the impact of global events and macroeconomic conditions on our business;

•

the implementation of our business model and strategic plans for our business and product candidates, including additional indications that we may pursue;

•

our ability to effectively manage our growth, including our ability to retain and recruit personnel and maintain our culture;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates, including the projected terms of patent protection;

•

estimates of our expenses, future revenue, capital requirements, needs for additional financing, and ability to obtain additional capital;

•

our expected use of proceeds from our initial public offering and our existing cash, cash equivalents, and marketable securities;

•

the performance of our third-party suppliers and manufacturers;

•

our future financial performance;

•

our expectations regarding the duration for which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (JOBS Act); and

•

developments and projections relating to our competitors and our industry, including competing products.

We have based these forward-looking statements largely on our current expectations, estimates, forecasts, and projections about future events, our business, the industry in which we operate, and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur in a timely manner or at all. You should refer to the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Other sections of this Quarterly Report may include additional factors that could harm our business and financial performance. New risk factors may emerge from time to time, and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

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

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Sana Biotechnology, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)


	June 30, 2024			December 31, 2023
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	134,958		$	133,517
Marketable securities		116,685			71,678
Restricted cash		3,832			3,832
Prepaid expenses and other current assets		7,978			4,488
Total current assets		263,453			213,515
Property and equipment, net		85,909			70,689
Operating lease right-of-use assets		63,154			74,903
Intangible asset		59,195			59,195
Goodwill		140,627			140,627
Other non-current assets		6,329			6,370
TOTAL ASSETS	$	618,667		$	565,299
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	3,817		$	4,108
Accrued compensation		15,581			23,722
Accrued expenses and other current liabilities		21,293			23,462
Operating lease liabilities		9,998			13,195
Total current liabilities		50,689			64,487
Operating lease liabilities, net of current portion		88,559			90,901
Contingent consideration		111,621			109,606
Success payment liabilities		20,847			12,799
Other non-current liabilities		7,302			-
Total liabilities		279,018			277,793
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock, $0.0001 par value; 50,000 shares authorized; zero shares issued and outstanding as of June 30, 2024 and December 31, 2023		-			-
Common stock, $0.0001 par value; 750,000 shares authorized; 222,209 and 197,857 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		22			20
Additional paid-in capital		1,835,503			1,625,637
Accumulated other comprehensive loss		(19	)		(60	)
Accumulated deficit		(1,495,857	)		(1,338,091	)
Total stockholders' equity		339,649			287,506
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	618,667		$	565,299

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Operating expenses:
Research and development	$	60,874		$	73,044		$	117,322		$	140,210
Research and development related success payments and contingent consideration		(27,944	)		26,679			10,063			26,799
General and administrative		16,442			16,566			32,711			33,332
Total operating expenses		49,372			116,289			160,096			200,341
Loss from operations		(49,372	)		(116,289	)		(160,096	)		(200,341	)
Interest income, net		3,202			2,374			6,236			4,350
Other expense, net		(4,121	)		(84	)		(3,906	)		(131	)
Net loss	$	(50,291	)	$	(113,999	)	$	(157,766	)	$	(196,122	)
Net loss per common share – basic and diluted	$	(0.21	)	$	(0.59	)	$	(0.70	)	$	(1.02	)
Weighted-average number of common shares – basic and diluted		234,440			192,540			225,872			191,888

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

(in thousands)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Net loss	$	(50,291	)	$	(113,999	)	$	(157,766	)	$	(196,122	)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on marketable securities, net		(4	)		1,274			41			3,462
Total comprehensive loss	$	(50,295	)	$	(112,725	)	$	(157,725	)	$	(192,660	)

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands)


	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital			Loss			Deficit			Equity
Balance as of December 31, 2023		197,857	$	20	$	1,625,637		$	(60	)	$	(1,338,091	)	$	287,506
Issuance of common stock from at the market offering, net of issuance costs of $113		150		-		1,037			-			-			1,037
Issuance of common stock from follow-on offering and accompanying pre-funded warrants, net of issuance costs of $9,741		21,773		2		180,006			-			-			180,008
Vesting of restricted stock		386		-		-			-			-			-
Exercise of stock options		1,120		-		4,929			-			-			4,929
Stock-based compensation expense		-		-		9,092			-			-			9,092
Unrealized gain on marketable securities, net		-		-		-			45			-			45
Net loss		-		-		-			-			(107,475	)		(107,475	)
Balance as of March 31, 2024		221,286	$	22	$	1,820,701		$	(15	)	$	(1,445,566	)	$	375,142
Fees incurred related to common stock financings		-		-		(16	)		-			-			(16	)
Vesting of restricted stock		52		-		-			-			-			-
Exercise of stock options		548		-		2,361			-			-			2,361
Issuance of common stock related to employee stock purchase plan		323		-		1,077			-			-			1,077
Stock-based compensation expense		-		-		11,380			-			-			11,380
Unrealized loss on marketable securities, net		-		-		-			(4	)		-			(4	)
Net loss		-		-		-			-			(50,291	)		(50,291	)
Balance as of June 30, 2024		222,209	$	22	$	1,835,503		$	(19	)	$	(1,495,857	)	$	339,649


	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital			Loss			Deficit			Equity
Balance as of December 31, 2022		191,022	$	19	$	1,558,459		$	(4,327	)	$	(1,054,836	)	$	499,315
Fees incurred related to issuance of common stock from at the market offering		-		-		(200	)		-			-			(200	)
Vesting of restricted stock		154		-		-			-			-			-
Exercise of stock options		233		-		331			-			-			331
Stock-based compensation expense		-		-		8,751			-			-			8,751
Unrealized gain on marketable securities, net		-		-		-			2,188			-			2,188
Net loss		-		-		-			-			(82,123	)		(82,123	)
Balance as of March 31, 2023		191,409	$	19	$	1,567,341		$	(2,139	)	$	(1,136,959	)	$	428,262
Issuance of common stock from at the market offering, net of issuance costs of $985		4,586		1		27,247			-			-			27,248
Vesting of restricted stock		119		-		-			-			-			-
Exercise of stock options		357		-		691			-			-			691
Issuance of common stock related to employee stock purchase plan		409		-		1,705			-			-			1,705
Stock-based compensation expense		-		-		9,848			-			-			9,848
Unrealized gain on marketable securities, net		-		-		-			1,274			-			1,274
Net loss		-		-		-			-			(113,999	)		(113,999	)
Balance as of June 30, 2023		196,880	$	20	$	1,606,832		$	(865	)	$	(1,250,958	)	$	355,029

See accompanying notes.

Sana Biotechnology, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


	Six Months Ended June 30,
	2024			2023
OPERATING ACTIVITIES:
Net loss	$	(157,766	)	$	(196,122	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		7,641			8,794
Stock-based compensation expense		20,472			18,599
Change in the estimated fair value of contingent consideration		2,015			11,355
Change in the estimated fair value of success payment liabilities		8,048			15,444
Non-cash expense for operating lease right-of-use assets		5,387			6,755
Other non-cash items, net		(4,858	)		(6,088	)
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(7,459	)		5,428
Operating lease right-of-use assets and liabilities		7,426			1,444
Accounts payable		(397	)		87
Accrued expenses and other liabilities		(4,682	)		(3,769	)
Net cash used in operating activities		(124,173	)		(138,073	)
INVESTING ACTIVITIES:
Purchases of marketable securities		(177,018	)		(71,267	)
Proceeds from maturities of marketable securities		134,509			180,374
Purchases of property and equipment		(28,901	)		(3,753	)
Net cash provided by (used in) investing activities		(71,410	)		105,354
FINANCING ACTIVITIES:
Proceeds from employee stock purchase plan and exercise of stock options		8,367			2,727
Proceeds from issuance of common stock from equity financings, net		181,029			27,014
Proceeds from tenant improvement loan, net		7,628			-
Net cash provided by financing activities		197,024			29,741
Net increase (decrease) in cash, cash equivalents, and restricted cash		1,441			(2,978	)
Cash, cash equivalents, and restricted cash at beginning of period		137,349			187,273
Cash, cash equivalents, and restricted cash at end of period	$	138,790		$	184,295
SUPPLEMENTAL CASH FLOW INFORMATION:
Operating lease right-of-use assets obtained in exchange for lease obligations	$	-		$	8,984
Purchases of property and equipment included in accounts payable and accrued liabilities	$	3,376		$	1,953
Cash received for tenant improvement allowances	$	7,344		$	1,198
Derecognition of operating lease right-of-use asset for lease modification	$	(6,362	)	$	-

See accompanying notes.

Sana Biotechnology, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization

Sana Biotechnology, Inc. (the Company or Sana) is a biotechnology company focusing on utilizing reengineered cells as medicines. The Company’s operations to date have included identifying and developing potential product candidates, executing preclinical studies, establishing manufacturing capabilities, preparing for and executing clinical trials of its product candidates and supporting clinical trials of product candidates developed using its technologies, acquiring technologies, staffing the Company, business planning, establishing and maintaining the Company’s intellectual property portfolio, raising capital, and providing general and administrative support for these operations.

Liquidity and capital resources

The Company is subject to a number of risks and uncertainties similar to other biotechnology companies in the development stage, including, but not limited to, those related to the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its product candidates, building out internal and external manufacturing capabilities, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s products, the need to protect the Company’s intellectual property and proprietary technologies, and the need to attract and retain key scientific and management personnel. If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations with the proceeds from additional equity or debt financings or capital obtained in connection with strategic collaborations or licensing or other arrangements. In the event that additional financing is required, the Company may not be able to raise capital on terms acceptable to it or at all.

In February 2024, the Company completed an underwritten public offering pursuant to which it sold 21.8 million shares of its common stock, including 4.5 million shares pursuant to the full exercise of the underwriters' option to purchase additional shares, and pre-funded warrants to purchase 12.7 million shares of its common stock for net proceeds of approximately $180.0 million, after deducting underwriting discounts and commissions and offering expenses.

In August 2022, the Company entered into a sales agreement with Cowen and Company, LLC (Cowen), acting as sales agent, pursuant to which it may offer and sell through Cowen up to $150.0 million in shares of the Company’s common stock from time to time in a series of one or more at the market equity offerings (collectively, the ATM facility). As of June 30, 2024, the Company has sold an aggregate of 4.9 million shares of the Company's common stock under the ATM facility for net proceeds of $28.6 million, after deducting commissions and expenses.

The Company has incurred operating losses each year since inception and expects such losses to continue for the foreseeable future. As of June 30, 2024, the Company had cash, cash equivalents, and marketable securities of $251.6 million, and an accumulated deficit of $1.5 billion, which includes cumulative non-cash charges related to the revaluation of the success payment liabilities and contingent consideration of $18.5 million and $60.4 million, respectively.

2. Summary of significant accounting policies

Basis of presentation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, and have been prepared in accordance with generally accepted accounting principles in the United States (GAAP). Certain prior period amounts have been reclassified to conform to current period presentation.

The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (SEC) on February 29, 2024 (2023 Annual Report).

Significant accounting policies

The significant accounting policies used in the preparation of these condensed consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 are consistent with those discussed in Note 2 in the 2023 Annual Report.

Use of estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates. The most significant estimates in the Company’s condensed consolidated financial statements relate to success payment liabilities, contingent consideration, business combinations, accrued expenses, and operating lease right-of-use assets and liabilities.

Recent accounting pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard-setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed, the Company does not believe that the adoption of any recently issued standards has had or may have a material impact on its condensed consolidated financial statements or disclosures.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. This ASU is effective for the Company's fiscal year 2025. Early adoption is permitted. The Company is currently evaluating income tax disclosures related to its annual report for fiscal year 2025.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements. This update is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

3. Acquisitions

Cobalt Biomedicine, Inc.

In February 2019, the Company acquired 100% of the outstanding equity of Cobalt Biomedicine, Inc. (Cobalt), a privately held early-stage biotechnology company developing a platform technology using its fusogen technology to specifically and consistently deliver various biological payloads to cells (the Cobalt acquisition).

As part of the Cobalt acquisition, the Company recorded an intangible asset of $59.2 million, which consists of in-process research and development that is classified as indefinite-lived until the successful completion of the associated research and development technology, at which point it becomes a finite-lived asset and will be amortized over its estimated useful life. If the research and development technology is abandoned, an impairment charge will be recorded. The Company is actively developing the fusogen technology and, accordingly, the intangible asset is not complete. Amortization will begin when regulatory approval of a product candidate developed using the fusogen technology is obtained in a major market, typically either the United States or the European Union.

The Company recognized $140.6 million of goodwill as a result of the Cobalt acquisition, which is primarily attributable to the value the acquisition provides the Company by complementing the Company’s ex vivo portfolio with in vivo fusogen cell engineering technology and furthering the Company’s research in using engineered cells as medicines. The goodwill is not deductible for income tax purposes. There were no impairments of the intangible asset or goodwill since the acquisition.

Pursuant to the terms and conditions in the Cobalt acquisition agreement, the Company has an obligation to pay to certain former Cobalt stockholders contingent consideration (Cobalt Contingent Consideration) of up to an aggregate of $500.0 million upon the achievement of certain specified development milestones and a success payment (Cobalt Success Payment) of up to $500.0 million, each of which is payable in cash or stock. The Cobalt Success Payment is payable if, at pre-determined valuation measurement dates, the Company’s market capitalization equals or exceeds $8.1 billion, and the Company is advancing a program based on the fusogen technology in a clinical trial pursuant to an investigational new drug application, or has filed, or received approval for, a biologics license application or new drug application for a product developed using the fusogen technology. The Cobalt Success Payment can be achieved over a maximum of 20 years from the date of the acquisition, but this period could be shorter upon the occurrence of certain events. A valuation measurement date would also be triggered upon a change of control of the Company if at least one of the Company’s programs based on the fusogen technology is an active research program at the time of such change of control. If the Company’s market capitalization is below $8.1 billion as of the date of a change of control, the amount of the potential Cobalt Success Payment will decrease, and the amount of potential Cobalt Contingent Consideration will increase. As of June 30, 2024, a Cobalt Success Payment had not been triggered.

The following table sets forth various thresholds for the Company’s market capitalizations as of the date of a change of control and the resulting potential Cobalt Success Payment and additional potential Cobalt Contingent Consideration:


Sana market capitalization upon a change of control and resulting impact to Cobalt Success Payment and additional potential Cobalt Contingent Consideration	Cobalt Success Payment		Additional potential Cobalt Contingent Consideration
	(in millions)
Equal to or exceeds $8.1 billion	$	500	$	-
Equal to or exceeds $7.4 billion, but less than $8.1 billion		150		350
Equal to or exceeds $6.8 billion, but less than $7.4 billion		100		400
Less than $6.8 billion		-		500

The Cobalt Success Payment and Cobalt Contingent Consideration liabilities are carried at fair value, with changes in fair value recognized in research and development related success payments and contingent consideration. As of June 30, 2024 and December 31, 2023, the estimated fair value of the Cobalt Success Payment liability was $18.4 million and $11.2 million, respectively, and was recorded in long-term liabilities. In connection with the change in the estimated fair value of the Cobalt Success Payment, the Company recognized a gain of $20.7 million and an expense of $18.5 million for the three months ended June 30, 2024 and 2023, respectively, and expenses of $7.2 million and $13.7 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024 and December 31, 2023, the estimated fair value of the Cobalt Contingent Consideration was $111.6 million and $109.6 million, respectively, and was recorded in long-term liabilities. In connection with the change in the estimated fair value of the Cobalt Contingent Consideration, the Company recognized a gain of $3.4 million and an expense of $5.9 million for the three months ended June 30, 2024 and 2023, respectively, and expenses of $2.0 million and $11.4 million for the six months ended June 30, 2024 and 2023, respectively.

4. License and collaboration agreements

Beam Therapeutics Inc.

In October 2021, the Company entered into an option and license agreement with Beam Therapeutics Inc. (Beam), pursuant to which the Company was granted a non-exclusive license to use Beam’s proprietary CRISPR Cas12b nuclease editing technology to research, develop, and commercialize engineered cell therapy products that (i) are directed to certain antigen targets, with respect to the Company’s allogeneic T cell programs, or (ii) comprise certain human cell types, with respect to the Company’s stem cell-derived programs. The Company made an upfront payment of $50.0 million to Beam, which was recorded in research and development expense for the year ended December 31, 2021. Additionally, under the terms of the agreement, the Company may be obligated to pay up to $65.0 million in specified developmental and commercial milestone payments and royalties on licensed products for each licensed product. At the time of the entry into the option and license agreement, a member of the Company’s board of directors was a beneficial owner of greater than 10% of the outstanding shares of Beam. This director is also affiliated with a member of the board of directors of Beam.

President and Fellows of Harvard College

In March 2019, the Company entered into an exclusive license agreement with the President and Fellows of Harvard College (Harvard) to access certain intellectual property for the development of hypoimmune-modified cells.

Under the terms of the agreement, the Company paid to Harvard aggregate consideration of $12.0 million, comprising $9.0 million in common stock and $3.0 million in cash. Additionally, the Company may be required to pay to Harvard up to an aggregate of $175.0 million in success payments, payable in cash, based on increases in the fair value of the Company’s common stock (Harvard Success Payments). The potential Harvard Success Payments are based on multiples of increased value ranging from 5x to 40x, based on a comparison of the fair market value of the Company’s common stock relative to the original issuance price of $4.00 per share at ongoing pre-determined valuation measurement dates. The Harvard Success Payments can be achieved over a maximum of 12 years from the effective date of the agreement. If a higher success payment tier is first met at the same time a lower tier is first met, both tiers will be owed. Any previous success payments made to Harvard would be credited against the success payment owed as of any valuation measurement date so that Harvard does not receive multiple success payments in connection with the same threshold. As of June 30, 2024, a Harvard Success Payment had not been triggered.

The following table summarizes the potential success payments and common stock price required for payment:


Multiple of Equity Value at Issuance	5x		10x		20x		30x		40x
Per share common stock price required for payment	$	20.00	$	40.00	$	80.00	$	120.00	$	160.00
Success payment(s) (in millions)	$	5.0	$	15.0	$	30.0	$	50.0	$	75.0

The Harvard Success Payment liabilities are carried at fair value, with the initial value and changes in fair value recognized in research and development related success payments and contingent consideration. As of June 30, 2024 and December 31, 2023, the estimated fair value of the Harvard Success Payment liability was $2.5 million and $1.6 million, respectively, and was recorded in long-term liabilities. In connection with the change in the estimated fair value of the Harvard Success Payment liability, the Company recognized a gain of $3.9 million and an expense of $2.3 million for the three months ended June 30, 2024 and 2023, respectively, and expenses of $0.8 million and $1.7 million for the six months ended June 30, 2024 and 2023, respectively.

5. Restricted cash

The Company maintains standby letters of credit that are collateralized with a bank account at a financial institution in accordance with certain lease agreements. The aggregate amount of such standby letters of credit was $3.8 million as of each of June 30, 2024 and December 31, 2023.

6. Fair value measurements

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy:


		June 30, 2024
	Valuation Hierarchy	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
		(in thousands)
Financial assets:
Cash equivalents:
Money market funds	Level 1	$	68,489	$	-	$	-		$	68,489
U.S. government and agency securities	Level 2		32,053		-		-			32,053
Total cash equivalents			100,542		-		-			100,542
Short-term marketable securities:
U.S. government and agency securities	Level 2		104,940		1		(19	)		104,922
Corporate debt securities	Level 2		11,764		1		(2	)		11,763
Total short-term marketable securities			116,704		2		(21	)		116,685
Total financial assets		$	217,246	$	2	$	(21	)	$	217,227
Financial liabilities:
Long-term financial liabilities:
Contingent consideration	Level 3		111,621		-		-			111,621
Success payment liabilities	Level 3		20,847		-		-			20,847
Total long-term financial liabilities			132,468		-		-			132,468
Total financial liabilities		$	132,468	$	-	$	-		$	132,468


		December 31, 2023
	Valuation Hierarchy	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
		(in thousands)
Financial assets:
Cash equivalents:
Money market funds	Level 1	$	70,315	$	-	$	-		$	70,315
U.S. government and agency securities	Level 2		33,091		3		-			33,094
Corporate debt securities	Level 2		1,062		-		-			1,062
Total cash equivalents			104,468		3		-			104,471
Short-term marketable securities:
U.S. government and agency securities	Level 2		57,924		7		(78	)		57,853
Corporate debt securities	Level 2		13,817		9		(1	)		13,825
Total short-term marketable securities			71,741		16		(79	)		71,678
Other assets	Level 3		359		-		-			359
Total financial assets		$	176,568	$	19	$	(79	)	$	176,508
Financial liabilities:
Long-term financial liabilities:
Contingent consideration	Level 3		109,606		-		-			109,606
Success payment liabilities	Level 3		12,799		-		-