PRME Filings — Prime Medicine, Inc.

PRME Filings — Prime Medicine, Inc. - FilingSpy

10-Q · Quarter ended Jun 30, 2026 · SEC filing ↗

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Original filing text

Management's Discussion and Analysis

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, 2025, filed with the SEC on March 3, 2026. 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, 2025. 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 focused on developing a new class of genetic medicines designed to provide durable, and potentially curative, treatment options for patients with diseases driven by defined genetic alterations, acquired cellular dysfunction, or dysregulated gene expression. We are advancing our in vivo programs to cure two of the largest genetic liver diseases, Wilson disease and AATD. In June 2026, we received clearance of the CTA for PM577a, an investigational Prime Editor for Wilson disease, in New Zealand, representing the first clinical authorization for one of our in vivo Prime Editing therapies and enabling the initiation of our global Phase 1/2 clinical trial. In July 2026, the FDA cleared our IND application for PM577a. The IND clearance opens participation in our global Phase 1/2 clinical trial to patients in the United States, where H1069Q is the single most common pathogenic variant causing Wilson disease. Additionally, we are on track for IND application submission and/or CTA filing in the third quarter of 2026 for PM647 in AATD. We intend to leverage the modularity of our platform to expeditiously and efficiently develop these programs supported by our universal liver lipid nanoparticle along with potential regulatory, clinical and other synergies from our modular technology. We also continue to advance our in vivo Cystic Fibrosis program with support from Cystic Fibrosis Foundation and our efforts to develop Prime Edited CAR-T products for hematology, immunology, and oncology in partnership with BMS. In addition, we will continue to pursue additional business development opportunities to accelerate innovation, ensure the broadest application of Prime Editing, and further bolster our financial resources. In August 2025, we announced additional data from the first patient dosed and initial data from the second patient dosed in our Phase 1/2 trial in CGD. We continue to engage in regulatory dialogue with the FDA toward a Biologics License Application submission for PM359, which is planned for the first half of 2027. In June 2026, the FDA granted RMAT designation for PM359, which provides opportunities for intensive FDA guidance and potential expedited review during the program’s development. Components of Our Results of Operations Revenues To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products for the foreseeable future. Our revenues to date have been generated through research collaboration and license agreements. We recognize revenue over the expected performance period under each agreement. We expect that our revenue for the next several years will be derived primarily from our current collaboration agreements and any additional collaborations that we may enter into in the future. To date, we have not received any royalties under any of our existing collaboration agreements. 22 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: •personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation for employees engaged in manufacturing, and research and development functions; •expenses incurred in connection with continuing our current research programs and preclinical and clinical 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 and clinical studies; •laboratory supplies and research materials; •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; •the cost allocated to acquire in-process research and development, with no alternative future use associated with asset acquisitions or transactions to license intellectual property, such as our Broad License Agreement; and •expenses incurred in connection with our Pledge to Broad Institute. 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. In the future, external research and development costs for any individual product candidate will be tracked commencing upon product candidate nomination. 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. 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 expect our research and development expenses may continue to increase in the future with our planned 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, and with our obligations under the BMS Collaboration Agreement. General and Administrative Expenses General and administrative expenses consist 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 if 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. 23 Other Income (Expense) Other income (expense), net primarily consists of interest and amortization related to our short-term investments. Results of Operations Comparison of the Three Months Ended June 30, 2026 and 2025 Operating Expenses Research and Development Expenses Three Months Ended June 30, (in thousands) 2026 2025 Change Research and development expenses: Personnel expenses $ 10,800 $ 14,448 $ (3,648) Facility related 10,577 13,765 (3,188) Research costs 6,158 8,116 (1,958) Clinical expenses 2,102 574 1,528 Professional and consultant fees 2,010 1,660 350 License, intellectual property fees, and other 1,750 2,812 (1,062) Total research and development expenses $ 33,397 $ 41,375 $ (7,978) The $8.0 million decrease in research and development expenses for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily driven by: •$3.6 million decrease in personnel expenses, driven primarily by fewer personnel-related costs resulting from the workforce reduction announced in May 2025; •$3.2 million decrease in facility costs primarily related to cost savings realized from bringing our vivarium in-house; •$2.0 million decrease in research costs as we advance our in vivo liver franchise from research towards IND application submission and potential clinical trials; and •$1.1 million decrease in license and IP costs primarily due to license fees recognized in the second quarter of 2025. These were offset by a $1.5 million increase in clinical expenses as we advance our Wilson disease and AATD programs. General and Administrative Expenses Three Months Ended June 30, (in thousands) 2026 2025 Change General and administrative expenses: Personnel expenses $ 5,559 $ 7,082 $ (1,523) Facility related and other 2,983 2,079 904 Professional and consultant fees 2,500 3,956 (1,456) Total general and administrative expenses $ 11,042 $ 13,117 (2,075) 24 The $2.1 million decrease in general and administrative expenses for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily driven by: •$1.5 million decrease in personnel expenses, driven primarily by fewer personnel-related costs resulting from the workforce reduction announced in May 2025 and a decrease in stock compensation expense of $0.8 million; and •$1.5 million decrease in professional and consultant fees primarily related to lower corporate legal fees. Other Income (Expense) Three Months Ended June 30, (in thousands) 2026 2025 Change Other income: Interest income $ 788 $ 743 $ 45 Accretion (amortization) of investments 333 530 (197) Change in fair value of short-term investment — related party — (505) 505 Other income, net 55 18 37 Total other income, net $ 1,176 $ 786 $ 390 Comparison of the Six Months Ended June 30, 2026 and 2025 Operating Expenses Research and Development Expenses Six Months Ended June 30, (in thousands) 2026 2025 Change Research and development expenses: Personnel expenses $ 21,853 $ 29,248 $ (7,395) Facility related 20,843 24,734 (3,891) Research costs 13,418 19,152 (5,734) Clinical expenses 4,468 1,747 2,721 Professional and consultant fees 3,920 2,819 1,101 License, intellectual property fees, and other 3,000 4,237 (1,237) Total research and development expenses $ 67,502 $ 81,937 $ (14,435) The $14.4 million decrease in research and development expenses for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily driven by: •$7.4 million decrease in personnel expenses, driven primarily by fewer personnel-related costs resulting from the workforce reduction announced in May 2025; •$5.7 million decrease in research costs as we advance our in vivo liver franchise from research towards IND application submission and potential clinical trials; •$3.9 million decrease in facility costs primarily related to cost savings realized from bringing our vivarium in-house and due to moving expensed incurred in 2025; and •$1.2 million decrease in license and IP costs primarily due to license fees recognized in the second quarter of 2025. 25 These were offset by: •$2.7 million increase in clinical expenses as we advance our Wilson disease and AATD programs; and •$1.1 million increase in professional and consultant fees related to our in-house vivarium. General and Administrative Expenses Six Months Ended June 30, (in thousands) 2026 2025 Change General and administrative expenses: Professional and consultant fees $ 11,445 $ 7,228 $ 4,217 Personnel expenses 11,091 14,238 (3,147) Facility related and other 5,911 4,935 976 Total general and administrative expenses $ 28,447 $ 26,401 $ 2,046 The $2.0 million increase in general and administrative expenses for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily driven by a $4.2 million increase in professional and consultant fees, a majority of which are arbitration-related legal expenses. This was offset by a $3.1 million decrease in personnel expenses driven primarily by fewer personnel-related costs resulting from the workforce reduction announced in May 2025 and a decrease in stock compensation expense of $1.4 million. Other Income (Expense) Six Months Ended June 30, (in thousands) 2026 2025 Change Other income: Interest income $ 1,809 $ 1,925 $ (116) Accretion (amortization) of investments 793 869 (76) Change in fair value of short-term investment — related party — (1,561) 1,561 Other income, net 106 55 51 Total other income, net $ 2,708 $ 1,288 $ 1,420 Change in Fair Value of Short-Term Investment — Related Party The change in fair value of related party short-term investment for the six months ended June 30, 2025 was the result of Beam’s stock price movement. 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 advance the preclinical development of our current research programs, commence the clinical development of any product candidates we may identify, 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 public offerings and through payments from our collaboration partners. As of June 30, 2026, we had cash, cash equivalents, and investments of $95.1 million, excluding our restricted cash, or $108.8 million, including restricted cash. In March 2026, we converted our automatic shelf registration statement on Form S-3ASR (File No. 333-291348), originally filed with the SEC on November 7, 2025, to a non-automatic shelf registration statement on Form S-3, or the Registration Statement, by post-effective amendments, for the issuance and sale of up to $500.0 million of our 26 common stock, preferred stock, debt securities, warrants and/or units or any combination thereof. The Registration Statement was declared effective by the SEC on March 4, 2026. In November 2023, we entered into the Sales Agreement with Jefferies under which we may, from time to time, issue and sell shares of our common stock having an aggregate sales proceeds of up to $300.0 million, in a series of one or more at-the-market equity offerings as part of our 2023 ATM Program. Any shares will be sold pursuant to the Registration Statement and the sales agreement prospectus filed therewith, which covers the offer and sale of shares of our common stock under the 2023 ATM Program having an aggregate offering price of up to $200.0 million of the $300.0 million authorized under the Sales Agreement. If we wish to offer and sell additional shares of our common stock under the Sales Agreement in excess of the $200.0 million registered under the Registration Statement, for up to an additional $100.0 million, we must file with the SEC one or more additional prospectus supplements to register under the Securities Act, the offer and sale of any such additional shares of our common stock we wish to offer and sell from time to time under the Sales Agreement. Jefferies is not required to sell any specific share amounts but acts as our sales agent, using commercially reasonable efforts consistent with its normal trading and sales practices. We will pay Jefferies a commission equal to 3.0% of the aggregate gross proceeds we receive from each sale of our shares of common stock. Our common stock will be sold at prevailing market prices at the time of the sale, and as a result, prices may vary. Going Concern Since our inception, we have incurred substantial losses. As of June 30, 2026, we had an accumulated deficit of $979.6 million and we expect to generate operating losses and negative operating cash flows for the foreseeable future. As stated above, as of June 30, 2026, we maintained cash, cash equivalents, and short-term investments of $95.1 million. In accordance with ASC 205-40, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date on which this Quarterly Report on Form 10-Q is filed. Based on our cash, cash equivalents, and short-term investments as of June 30, 2026, our current and forecasted level of operations and forecasted cash flows, our ability to continue as a going concern is dependent upon our ability to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management plans to provide for capital requirements through financing or other transactions, and selling shares under our “at the market offering” program. There can be no assurance that we will be able to raise additional capital to fund operations with terms acceptable to us, or at all. Because certain elements of our plans to mitigate the conditions that raised substantial doubt about our ability to continue as a going concern are outside of our control, including the ability to raise capital through an equity or other financing, those elements cannot be considered probable according to ASC 205-40, and therefore cannot be considered in the evaluation of mitigating factors. As a result, we concluded that substantial doubt exists about our ability to continue as a going concern for 12 months from the date these condensed consolidated financial statements are issued. The condensed consolidated financial statements as of June 30, 2026 have been prepared under the assumption that we will continue as a going concern for the next 12 months and that contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. Our ability to continue as a going concern is dependent upon our uncertain ability to obtain additional capital, reduce expenditures and/or execute on our business plan. These condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 27 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) 2026 2025 Net change in cash, cash equivalents and restricted cash: Net cash used in operating activities $ (83,756) $ (90,269) Net cash provided by (used in) investing activities 67,421 (44,971) Net cash provided by financing activities 754 6,197 Net change in cash, cash equivalents, and restricted cash $ (15,581) $ (129,043) Operating Activities Net cash used in operating activities for the six months ended June 30, 2026 was driven primarily by the following uses of cash: •$91.2 million net loss; •$3.9 million change in lease liabilities; •$3.6 million change in accrued expenses and other current liabilities; •$3.0 million change in accounts payable; and •$2.0 million change in deferred revenue — related party. These were offset by: •$18.1 million of non-cash amounts included in net loss, which primarily consisted of stock-based compensation expense, non-cash lease expense, and depreciation expense; and •$1.9 million change in prepaid expenses and other current assets. Net cash used in operating activities for the six months ended June 30, 2025 was driven primarily by the following uses of cash: •$104.5 million net loss; •$2.4 million change in deferred revenue — related party; •$2.1 million change in lease liabilities; •$1.7 million change in accrued expenses and other current liabilities; and •$1.5 million change in accounts payable. These were offset by $21.3 million of non-cash amounts included in net loss, which primarily consisted of stock-based compensation expense, non-cash lease expense, depreciation expense, and change in fair value of short-term investment — related party. Investing Activities Net cash provided by investing activities for the six months ended June 30, 2026 was driven primarily by $67.7 million of maturities of investments, net of purchases. 28 Net cash used in investing activities for the six months ended June 30, 2025 was driven primarily by the following: •$41.0 million of purchases of investments, net of maturities; and •$4.0 million of purchases of property and equipment. Financing Activities Net cash provided by financing activities for the six months ended June 30, 2025 was driven by $6.0 million of proceeds received under our agreement with Cystic Fibrosis Foundation. 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, 2025, 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 2027. 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; •develop, maintain, expand and protect our intellectual property portfolio and defend intellectual property-related claims; •maintain existing collaborations or strategic relationships and identify and enter into future license agreements and collaborations with third parties; •initiate preclinical testing and clinical trials for our future product candidates we identify; •further develop our Prime Editing platform; and •hire additional personnel to support our strategic priorities. 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 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 and 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 29 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, 2026, except for the minimum lease commitments disclosed in Note 6, 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, 2025. 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 U.S. 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, 2026, there were no material changes to our critical accounting policies and significant judgments 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, 2025. 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, 2025, and notes thereto, included in our Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q. Emerging Growth Company and Smaller Reporting 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 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 30 early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. We are also a “smaller reporting company” meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

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, 2025. There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025, except as set forth below. If conflicts arise between us and our collaborators or strategic partners, these parties may act in a manner adverse to us and could limit our ability to implement our strategies or we could lose license rights that are important to our business. We are, and expect to continue to be, reliant upon certain patent rights and proprietary technology we have licensed from third parties that may be important or necessary to the development of our Prime Editing technology and product candidates. If conflicts arise between our corporate or academic collaborators or strategic partners and us, the other party may act in a manner adverse to us and could limit our ability to implement our strategies or we could lose license rights that are important to our business. For instance, we have entered into license and collaboration agreements with Beam and Broad Institute related to the research, development, delivery, manufacturing, and commercialization of Prime Editing technology and certain product candidates we may develop. Moreover, disputes over intellectual property that we have licensed could prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms. If we are unable to maintain such arrangements, we may be unable to successfully develop or commercialize the affected product candidates. Any termination of, or dispute relating to, our intellectual property licenses could result in the loss of our ability to develop and commercialize product candidates or the loss of other significant rights, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. For example, we were engaged in arbitration proceedings with Beam regarding the Beam Collaboration Agreement. A dispute arose between us and Beam following our March 18, 2025 announcement that we were developing a Prime Editing-based treatment for AATD. On April 16, 2025, Beam filed an arbitration demand with the AAA, alleging that we had breached the Beam Collaboration Agreement by developing a product for the treatment of AATD and by allegedly not complying with certain obligations to transfer technical information to Beam pursuant to the Beam Collaboration Agreement. On April 18, 2025, we filed an arbitration demand with the AAA seeking a declaration that our AATD program was within our “Field” as defined by the Beam Collaboration Agreement. On July 6, 2026, we received the Final Award from the Tribunal, which declared that PM647, our development candidate for the treatment of AATD, is within our "Field" under the Beam Collaboration Agreement and that we therefore did not breach the agreement. Consequently, the Tribunal denied Beam's requests for damages and injunctive relief based on Beam's assertion that 33 we breached the Beam Collaboration Agreement. The Tribunal denied the remaining claims brought by Beam and us. Although the arbitration was resolved in our favor, disputes with collaborators, licensors or strategic partners may arise in the future regarding the scope of our rights or obligations under our agreements, and any such disputes could have a material adverse effect on our business, financial condition, results of operations and prospects. For more information regarding our agreement with Beam, see the risk factor entitled “Our rights to develop and commercialize our Prime Editing platform technology and product candidates are subject to the terms and conditions of licenses granted to us by others. If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.” Our collaborators or strategic partners could also develop competing products, preclude us from entering into collaborations with their competitors, fail to obtain timely regulatory approvals, prevent us from obtaining timely regulatory approvals, terminate their agreements with us prematurely or fail to devote sufficient resources to the collaboration efforts, including development, delivery, manufacturing and commercialization of products. Any of these developments could harm our company and product development efforts. Our rights to develop and commercialize our Prime Editing platform technology and product candidates are subject to the terms and conditions of licenses granted to us by others. If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business. We do not currently own any issued patents and are heavily reliant upon certain patent rights and proprietary technology we have licensed from third parties that are important or necessary to the development of our Prime Editing technology and product candidates. For example, we are a party to two license agreements with Broad Institute. In September 2019, we entered into a license agreement with Broad Institute, or the Broad License Agreement, and in May 2020, February 2021, December 2022, September 2024, and September 2025, we entered into amendments to such license agreement. In December 2022, we entered into a new license agreement with Broad Institute, or the 2022 Broad License Agreement. Under the amended Broad License Agreement and the 2022 Broad License Agreement, Broad Institute grants us certain rights and licenses under certain patent rights it owns or controls relating to our Prime Editing technology and product candidates. Each license agreement imposes various diligence, milestone payment, royalty, insurance and other obligations on us. Our licenses are subject to Broad Institute’s inclusive innovation model, pursuant to which Broad Institute retains the right, in certain circumstances, to grant to third parties (other than specified competitors of ours) licenses under the licensed patent rights that would otherwise fall within the scope of the exclusive license granted to us. All gene targets, which are any human genes to which a program is directed, are subject to Broad Institute’s march-in license, which means Broad Institute has the right to terminate our license to gene targets under certain conditions and could make one or more gene targets unavailable to us. However, if we initiate a program for a gene target, in accordance with the terms of each license agreement, we may block a march-in request by making certain showing and by continuing to use commercially reasonable efforts to continue to progress such development. Internally, we determine when a program for a gene target has been initiated by considering factors such as whether a gene target has been identified as the subject of a program, how much time or resources have been dedicated to researching, developing, and/or designing and using reagents for a program, and the amount of preclinical testing in process for such program. If we fail to comply with these or other obligations in our current or future license agreements, our licensors may have the right to terminate our license, in which event we would not be able to develop or market our Prime Editing technology or any other technology or product candidates covered by the intellectual property licensed under this agreement. Our business would be seriously harmed if any current or future licenses terminate, if our licensors fail to abide by the terms of the license, if our licensors fail to enforce licensed patents against infringing third parties, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms. If our license agreements terminate, or we experience a reduction or elimination of licensed rights under these agreements, we may have to negotiate new or reinstated licenses with less favorable terms or we may not have sufficient intellectual property rights to operate our business. Moreover, if certain of our license agreements terminate, we may be required to continue to license or assign certain of our intellectual property to the applicable counterparty. 34 Certain of the patent rights that we license from Broad Institute under the Broad License Agreement are co-owned by Broad Institute with Harvard and certain of the licensed patent rights under the Broad License Agreement are co-owned by Broad Institute, Harvard, and MIT. The patent rights that we license from Broad Institute under the 2022 Broad License Agreement are co-owned by Broad Institute with Harvard, Princeton, and the University of California. In addition, some of the inventors of the licensed patent and patent applications are or were employees of HHMI, which retains certain rights to patents and patent applications invented by their employees. Our rights to our in-licensed patents and patent applications from Broad Institute are dependent, in part, on inter-institutional or other operating agreements between Broad Institute, Harvard, MIT, University of California, Princeton and HHMI. If Broad Institute, Harvard, MIT, University of California, Princeton or HHMI breaches or terminates such inter-institutional or operating agreements, our rights to such in-licensed patents and patent applications may be adversely affected. We have also licensed certain improvements to Prime Editing from Dr. Liu’s laboratory at Broad Institute. For example, Dr. Liu’s laboratory at Broad Institute developed engineered pegRNAs, or epegRNAs, which we have exclusively in-licensed. Additionally, in September 2019, we established a strategic relationship with Beam, a biotechnology company developing gene editing products using its proprietary base editing technology. Under the Beam Collaboration Agreement, each party grants to the other certain exclusive and non-exclusive licenses and rights to certain Prime Editing, CRISPR and delivery technologies for use in certain specified fields. Activities performed by Prime and Beam under the Beam Collaboration Agreement may lead to co-owned patents and patent applications. These and other licenses may not provide exclusive rights to use such intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our Prime Editing technology and product candidates in the future. Some licenses granted to us are expressly subject to certain preexisting rights held by the licensors or certain third parties. As a result, we may not be able to prevent third parties from developing and commercializing competitive products in certain territories or fields. For example, the rights granted to us under each license agreement are subject to certain retained rights of, among others, Broad Institute, MIT, Harvard, Princeton, University of California, HHMI and the U.S. federal government, and the rights granted to us under the Beam Collaboration Agreement are subject to certain third party agreements and certain rights retained by third parties. Additionally, each license agreement with Broad Institute provides that our field of use is limited to the field of prevention or treatment of human disease, and most licenses granted to us under each license agreement with Broad Institute are further limited to the prevention or treatment of human disease by editing (including modifying or converting) or targeting DNA ex vivo, in vivo, or through xeno-transplantation methods and includes other specified exclusions. If we determine that rights to additional fields, including the specifically excluded fields, are necessary to commercialize our product candidates or maintain our competitive advantage, we may need to obtain a license from Broad Institute and/or other third parties in order to continue developing, manufacturing or marketing our product candidates. We may not be able to obtain such a license on an exclusive basis, on commercially reasonable terms, or at all, which could prevent us from commercializing our product candidates or allow our competitors or other third parties the chance to access technology that is important to our business. We do not control the preparation, filing, prosecution and maintenance of the patents and patent applications covering the technology that we license from Broad Institute or Beam. For example, pursuant to our licenses with Broad Institute and Beam, our licensors retain control of preparation, filing, prosecution and maintenance of their wholly-owned patents and patent applications. We rely on such licensors to determine inventorship and perfect priority of their patent applications. We cannot be certain that these patents and patent applications will be prepared, filed, prosecuted, maintained and defended in a manner consistent with the best interests of our business. If Broad Institute or Beam fails to prosecute or maintain such patents and patent applications or loses rights to such patents and patent applications, the rights we have licensed may be reduced or eliminated, our right to develop and commercialize any of our product candidates we may develop that are the subject of such licensed rights could be adversely affected and we may not be able to prevent third parties from making, using and selling competing products. In addition, we do not control all enforcement of the patents and patent applications we license from Broad Institute. It is possible that our licensors’ enforcement of patents against infringers or defense of such patents against challenges of validity or claims of enforceability may be less vigorous than if we had conducted them ourselves, or may not be conducted in accordance with our best interests. 35 Our licensors may have relied on third-party consultants or collaborators or on funds from third parties such that our licensors are not the sole and exclusive owners of the patent rights we have in-licensed. If other third parties have ownership rights to our in-licensed issued patents and patent applications, the license granted to us in jurisdictions where the consent of a co-owner is necessary to grant such a license may not be valid, and such co-owners for which we do not secure exclusive licenses may be able to license such patent rights to third parties, including our competitors, and such third parties may be able to market competing products and technology. Furthermore, inventions contained within some of our in-licensed issued patents and patent applications were made using U.S. government funding. We rely on our licensors to ensure compliance with applicable obligations arising from such funding, such as timely reporting, an obligation associated with our in-licensed patents and patent applications. The failure of our licensors to meet their obligations may lead to a loss of rights or the unenforceability of relevant patents that may issue from such applications. For example, the U.S. government could have certain rights in such in-licensed issued patent and patent applications, including a non-exclusive license authorizing the U.S. government to use the invention or to have others use the invention on its behalf. If the U.S. government decides to exercise these rights, it is not required to engage us as its contractor in connection with doing so. The U.S. government’s rights may also permit it to disclose the funded inventions and technology to third parties and to exercise march-in rights to use or allow third parties to use the technology we have licensed that was developed using U.S. government funding. The U.S. government may also exercise its march-in rights if it determines that action is necessary because we or our licensors failed to achieve practical application of the U.S. government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S. industry. For example, if the U.S. government determines it is necessary, the U.S. government may exercise its march-in rights and license to third-party manufacturers any or all of our future products or current or future product candidates covered by in-licensed patents and patent applications made using U.S. government funding. In addition, our rights in such in-licensed U.S. government-funded inventions may be subject to certain requirements to manufacture product candidates embodying such inventions in the United States. Any of the foregoing could harm our business, financial condition, results of operations, and prospects significantly. In the event that any of our third-party licensors determines that, in spite of our efforts, we have materially breached a license agreement or have failed to meet certain obligations thereunder, it may elect to terminate the license agreement or, in some cases, one or more license(s) under the applicable license agreement and such termination would result in us no longer having the ability to develop and commercialize product candidates and technology covered by that license agreement or license. In the event of such termination of a third-party in-license, or if the underlying patent rights under a third-party in-license fail to provide the intended exclusivity, third parties may be able to seek regulatory approval of, and to market, products identical to ours. Moreover, our licensors may own or control intellectual property that has not been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing or otherwise violating the licensor’s rights. Any of these events could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects. Pursuant to our license agreements with Beam and Broad Institute, we are generally responsible for bringing any actions against any third party for infringing on certain of the patent rights we have licensed from such counterparty, subject to certain conditions. Certain provisions of each license agreement with Broad Institute also require us to meet development thresholds within specified timeframes to maintain the license, including establishing a set timeline for developing and commercializing products, while some provisions of the Beam Collaboration Agreement require us to use commercially reasonable efforts to conduct development activities for collaboration products. In spite of our efforts, Broad Institute, Beam, or any future licensor from whom we may seek to license intellectual property rights might conclude that we have materially breached our obligations under such license agreements and might therefore terminate the license agreements, thereby removing or limiting our ability to develop and commercialize products and technology covered by these license agreements. If these licenses agreements are terminated, or if the underlying patent rights fail to provide the intended exclusivity, competitors or other third parties may be able to seek regulatory approval of, and to market, products identical to ours and we may be required to cease our development and commercialization of our Prime Editing technology or product candidates. Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, results of 36 operations and growth prospects. Disputes may arise regarding intellectual property subject to a licensing agreement, including: •the scope of rights granted under the license agreement and other interpretation-related issues; •the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; •the sublicensing of patent rights to third parties under our collaborative development relationships; •our diligence obligations under the license agreement with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates and what activities satisfy those diligence obligations; •the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensor and us and our partners; and •the priority of invention of patented technology. In addition, the agreements under which we currently license intellectual property rights from Beam and Broad Institute are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise under our existing license agreements or future license agreements into which we may enter could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology or broaden what we believe to be the scope of the licensor’s rights to our intellectual property and technology, or increase what we believe to be our financial or other obligations under the relevant agreement, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. For example, we have exclusively licensed and sublicensed certain of our owned and licensed intellectual property rights to Beam pursuant to the Beam Collaboration Agreement in certain fields. In July 2026, we received the Final Award from the Tribunal, which declared that PM647 is within our "Field" under the Beam Collaboration Agreement and that we therefore did not breach the agreement. Consequently, the Tribunal denied Beam's requests for damages and injunctive relief based on Beam's assertion that we breached the Beam Collaboration Agreement. The Tribunal denied the remaining claims brought by Beam and us. Although the arbitration was resolved in our favor, future disputes regarding the interpretation of our license agreements or the scope of rights granted thereunder could arise and could adversely affect our business, financial condition, results of operations and prospects. For more information, see the risk factor entitled “If conflicts arise between us and our collaborators or strategic partners, these parties may act in a manner adverse to us and could limit our ability to implement our strategies or we could lose license rights that are important to our business.” Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates. As a result, any termination of or disputes over our intellectual property licenses could result in the loss of our ability to develop and commercialize our Prime Editing technology or other product candidates or we could lose other significant rights, any of which could have a material adverse effect on our business, financial conditions, results of operations and prospects. It is also possible that a third party could be granted limited licenses to some of the same technology, in certain circumstances.

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Management's Discussion and Analysis

Quantitative and Qualitative Disclosures About Market Risk

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Risk Factors