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Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

4. fair value of financial instruments

The Company’s financial instruments that are measured at fair value on a recurring basis consist of cash equivalents, marketable securities, corporate equity securities, contingent consideration liabilities related to acquisitions, success payment derivative liabilities pursuant to the license agreement, or the Harvard License Agreement, between President and Fellows of Harvard University, or Harvard, and the Company, the license agreement, or the Broad License Agreement, between The Broad Institute, Inc., or Broad Institute, and the Company, and settlement payment derivative liabilities associated with a settlement agreement between the Company and a research institution.

The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at September 30, 2025 (in thousands):

 

 

Carrying
amount

 

 

Fair
value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

258,003

 

 

$

258,003

 

 

$

258,003

 

 

$

—

 

 

$

—

 

Commercial paper

 

 

9,957

 

 

 

9,957

 

 

 

—

 

 

 

9,957

 

 

 

—

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

 

329,181

 

 

 

329,181

 

 

 

—

 

 

 

329,181

 

 

 

—

 

Corporate notes

 

 

156,764

 

 

 

156,764

 

 

 

—

 

 

 

156,764

 

 

 

—

 

U.S. Treasury securities

 

 

284,278

 

 

 

284,278

 

 

 

—

 

 

 

284,278

 

 

 

—

 

U.S. Government securities

 

 

27,877

 

 

 

27,877

 

 

 

—

 

 

 

27,877

 

 

 

—

 

Corporate equity securities

 

 

8,910

 

 

 

8,910

 

 

 

8,910

 

 

 

—

 

 

 

—

 

Total assets

 

$

1,074,970

 

 

$

1,074,970

 

 

$

266,913

 

 

$

808,057

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Success payment liability – Harvard

 

$

2,900

 

 

$

2,900

 

 

$

—

 

 

$

—

 

 

$

2,900

 

Success payment liability – Broad Institute

 

 

3,600

 

 

 

3,600

 

 

 

—

 

 

 

—

 

 

 

3,600

 

Derivative settlement liability

 

 

6,654

 

 

 

6,654

 

 

 

—

 

 

 

—

 

 

 

6,654

 

Contingent consideration liability milestones

 

 

7,900

 

 

 

7,900

 

 

 

—

 

 

 

—

 

 

 

7,900

 

Total liabilities

 

$

21,054

 

 

$

21,054

 

 

$

—

 

 

$

—

 

 

$

21,054

 

 

The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy at December 31, 2024 (in thousands):

 

 

Carrying
amount

 

 

Fair
value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

281,786

 

 

 

281,786

 

 

$

281,786

 

 

$

—

 

 

$

—

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

 

181,296

 

 

 

181,296

 

 

 

—

 

 

 

181,296

 

 

 

—

 

Corporate notes

 

 

100,165

 

 

 

100,165

 

 

 

—

 

 

 

100,165

 

 

 

—

 

U.S. Treasury securities

 

 

164,770

 

 

 

164,770

 

 

 

—

 

 

 

164,770

 

 

 

—

 

U.S. Government securities

 

 

114,761

 

 

 

114,761

 

 

 

—

 

 

 

114,761

 

 

 

—

 

Corporate equity securities

 

 

7,781

 

 

 

7,781

 

 

 

7,781

 

 

 

—

 

 

 

—

 

Total assets

 

$

850,559

 

 

$

850,559

 

 

$

289,567

 

 

$

560,992

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Success payment liability – Harvard

 

$

3,900

 

 

$

3,900

 

 

$

—

 

 

$

—

 

 

$

3,900

 

Success payment liability – Broad Institute

 

 

4,500

 

 

 

4,500

 

 

 

—

 

 

 

—

 

 

 

4,500

 

Derivative settlement liability

 

 

5,404

 

 

 

5,404

 

 

 

—

 

 

 

—

 

 

 

5,404

 

Contingent consideration liability – Technology

 

 

496

 

 

 

496

 

 

 

—

 

 

 

—

 

 

 

496

 

Contingent consideration liability – Product

 

 

635

 

 

 

635

 

 

 

—

 

 

 

—

 

 

 

635

 

Total liabilities

 

$

14,935

 

 

$

14,935

 

 

$

—

 

 

$

—

 

 

$

14,935

 

Cash equivalents – Money market funds included within cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. Commercial paper and corporate notes are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.

Marketable securities – Marketable securities, excluding corporate equity securities, are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined using models or other valuation methodologies.

During the three months ended September 30, 2025, Eli Lilly and Company, or Lilly, completed its acquisition of Verve Therapeutics, Inc., or Verve. The Company received total proceeds of $5.7 million for its 546,970 shares of Verve and recorded a realized loss of $0.4 million during the three months ended September 30, 2025, presented in "Interest and other income (expense), net" in the

condensed consolidated statements of operations and other comprehensive loss. The shares were previously classified as marketable securities on the Company's condensed consolidated balance sheet and measured at fair value. There were no other realized gains or losses from the sale of marketable securities during the three or nine months ended September 30, 2025. Proceeds from the sale are reflected in investing activities on the condensed consolidated statements of cash flows.

As of September 30, 2025 the Company holds an investment in Prime Medicine, Inc., or Prime, consisting of 1,608,337 shares of Prime's common stock valued at $8.9 million, which is included in marketable securities in the condensed consolidated balance sheet.

Pursuant to ASC 825, Financial instruments, the Company records changes in the fair value of its investments in equity securities to other income (expense), in the Company’s condensed consolidated statements of operations.

The following table summarizes other income (expense) recorded due to changes in the fair value of corporate equity securities held (in thousands):

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Other income (expense)

 

$

4,937

 

 

$

(2,064

)

 

$

7,271

 

 

$

(13,003

)

Success payment liabilities – As discussed further in Note 7, License agreements, the Company is required to make payments to Harvard and Broad Institute based upon the achievement of specified multiples of the market value of the Company's common stock, at specified valuation dates. The Company’s liability for the share-based success payments under the Harvard License Agreement and the Broad License Agreement is carried at fair value. To determine the estimated fair value of the success payment liability, the Company uses a Monte Carlo simulation methodology, which models the future movement of stock prices based on several key variables.

The following variables were incorporated in the calculation of the estimated fair value of the Harvard and Broad Institute success payment liabilities:

 

 

 

Harvard

 

 

Broad Institute

 

 

 

September 30,
2025

 

 

December 31,
2024

 

 

September 30,
2025

 

 

December 31,
2024

 

Fair value of common stock (per share)

 

$

24.27

 

 

$

24.80

 

 

$

24.27

 

 

$

24.80

 

Expected volatility

 

 

74

%

 

 

78

%

 

 

75

%

 

 

81

%

Expected term (years)

 

0.02-3.74

 

 

0.03-4.49

 

 

0.02-4.61

 

 

0.03-5.36

 

 

The computation of expected volatility was estimated using available information about the historical volatility of stocks of similar publicly traded companies in addition to the Company's own data for a period matching the expected term assumption. In addition, the Company incorporated the estimated number, timing, and probability of valuation measurement dates in the calculation of the success payment liability.

The following table reconciles the change in the fair value of success payment liabilities based on Level 3 inputs (in thousands):

 

 

 

Nine Months Ended September 30, 2025

 

 

 

Harvard

 

 

Broad Institute

 

 

Total

 

Balance at December 31, 2024

 

$

3,900

 

 

$

4,500

 

 

$

8,400

 

Change in fair value

 

 

(1,000

)

 

 

(900

)

 

 

(1,900

)

Balance at September 30, 2025

 

$

2,900

 

 

$

3,600

 

 

$

6,500

 

 

Derivative settlement liability – On July 19, 2024, the Company entered into a settlement agreement with a research institution pursuant to which, in exchange for a release of claims in its favor, the Company agreed, among other things, to pay the research institution an upfront payment of $15.0 million and to make additional payments contingent upon the development and commercialization of BEAM-102 and BEAM-302. These contingent payments consist of certain development, regulatory, and sales-based milestone payments, as well as 1% royalty through 2038. Any amounts due must be settled in cash. The maximum amount of development and regulatory milestone payments under the settlement agreement is $15.0 million, and the maximum amount of sales milestone payments is $35.0 million, per program. The Company paid the $15.0 million upfront payment during the year ended December 31, 2024.

The contingent settlement payments are accounted for as a derivative under Accounting Standards Codification 815, Derivatives and Hedging, as the potential payments meet the definition of a derivative and are not subject to any scope exceptions. The derivative liability is recorded at fair value on the Company's balance sheet with changes in value recognized in interest and other income (expense) in the consolidated statement of operations and other comprehensive loss. To determine the estimated fair value of the liability, the Company applied a probability-based model, which utilized inputs based on the potential achievement and related timing of certain development, regulatory and sales-based milestones that were unobservable in the market. This derivative liability is classified within Level 3 of the fair value hierarchy above.

The following assumptions were incorporated in the calculation of the fair value of the derivative liability:

 

 

Milestones

 

 

 

September 30,
2025

 

 

December 31,
2024

 

Discount rate

 

 

10.00

%

 

 

10.00

%

Probability of achievement of settlement payments

 

3%-44%

 

 

3%-44%

 

Projected year of achievement of settlement payments

 

2026-2038

 

 

2027-2038

 

The following table reconciles the change in fair value of the derivative liability based on level 3 inputs (in thousands):

 

 

Nine Months Ended September 30, 2025

 

 

 

Total

 

Balance at December 31, 2024

 

$

5,404

 

Change in fair value

 

 

1,250

 

Balance at September 30, 2025

 

$

6,654

 

The following table summarizes the expense (income) resulting from the change in the fair value of the derivative settlement liability (in thousands):

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Change in fair value of derivative settlement liability

 

$

157

 

 

$

—

 

 

$

1,250

 

 

$

—

 

Contingent consideration liabilities – On July 1, 2025, the Company acquired an early-stage life sciences company, which was consolidated by the Company under ASC 810 as the Company determined that the acquiree is a variable interest entity and that the Company is the primary beneficiary through its 100% ownership interest. The total consideration paid was $14.5 million, which is comprised of an upfront payment of 403,128 shares of the Company’s common stock valued at $6.7 million, contingent consideration payments based on the achievement of certain development, clinical and commercial milestones valued at $7.7 million and $0.1 million of seller transaction expenses. The maximum amount of the milestone payments is $89.0 million. The primary asset acquired included in-process research and development valued at $14.5 million upon acquisition. As no alternative future use was identified for the acquired in-process research and development, the Company expensed the full fair value of the asset as research and development expense upon acquisition.

Milestone payments are payable at the Company’s sole discretion in cash or in shares of the Company's common stock (valued using a volume-weighted average price). As these milestones are payable with a variable number of shares of the Company’s common stock, the milestone payments result in liability classification under ASC 480, Distinguishing Liabilities from Equity. These contingent consideration liabilities are carried at fair value which was estimated by applying a probability-based model, which utilized inputs based on timing of achievement that were unobservable in the market. These contingent consideration liabilities are classified within Level 3 of the fair value hierarchy and had a fair value of $7.7 million as of the acquisition date.

The following variables were incorporated in the calculation of the estimated fair value of the contingent consideration liabilities:

 

 

Contingent consideration liability milestones

 

 

September 30,
2025

Discount rate

 

 

10.00

%

 

Probability of achievement

 

2-32%

 

 

Projected year of achievement

 

2026-2037

 

 

 

The following table reconciles the change in fair value of the contingent consideration liabilities based on level 3 inputs (in thousands):

 

 

Nine Months Ended September 30, 2025

 

 

 

Contingent consideration liability milestones

 

Balance at July 1, 2025 (inception)

 

$

7,715

 

Change in fair value

 

 

185

 

Balance at September 30, 2025

 

$

7,900

 

During the three months ended September 30, 2025, the Company assessed the fair value of the contingent consideration liabilities related to potential technology and product milestone payments from its prior acquisition of Guide Therapeutics, Inc. The Company determined that the fair value of the underlying technology and product milestones was zero and such milestones were removed from the Company's balance sheet as of September 30, 2025. The reduction in the fair value of the contingent consideration liabilities is presented on the Company's statements of operations and other comprehensive loss as "Change in fair value of contingent consideration liabilities".