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LENZ Therapeutics, Inc. (GRPH)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 marked a transformative quarter: LENZ completed the reverse recapitalization with Graphite Bio and a $53.5M PIPE, ended with $213.3M in cash and marketable securities, and reported positive Phase 3 CLARITY topline data selecting LNZ100 as the lead presbyopia candidate with NDA submission anticipated mid-2024 .
  • Financially, operating expenses rose as LENZ scaled for commercialization; net loss was $16.6M ($-3.53 per share) versus $12.7M ($-6.50) a year ago, mainly on higher SG&A tied to pre-launch activities and merger-related non-cash stock comp; R&D was stable year over year .
  • The CLARITY program achieved all primary/secondary endpoints with rapid onset and sustained duration, reinforcing best-in-class positioning and feeding launch preparedness workstreams (third-party logistics in Q1, KOL campaigns) for a potential H2 2025 U.S. commercialization if approved .
  • Guidance catalysts: NDA mid-2024; KOL event on June 18, 2024; commercial build-out continues. Management expects the current cash runway to extend the company to post-launch positive operating cash flow if LNZ100 is approved and commercialized .
  • Wall Street consensus estimates via S&P Global were unavailable for GRPH due to mapping changes post-merger; estimate-based beat/miss cannot be determined for Q1 2024 (explicitly noted below) [GetEstimates error].

What Went Well and What Went Wrong

What Went Well

  • CLARITY topline: LNZ100 met primary endpoint; 71% of participants achieved ≥3-line near vision improvement at 3 hours, with rapid onset (71% at 30 minutes) and long duration (40% at 10 hours); no treatment-related serious AEs across 30,000+ treatment days .
  • Strategic execution: Completed reverse recapitalization and concurrent $53.5M PIPE; secured $213.3M cash/marketable securities and finished third-party logistics contracting, advancing commercial readiness .
  • Management tone: “We believe LNZ100 can provide a meaningful therapeutic option… and significant value creation for shareholders,” highlighting broad inclusion criteria and potential $3B+ U.S. market opportunity .

Quotes:

  • “Our Phase 3 CLARITY study achieved all primary and secondary endpoints… 84% participants achieving at least four (4) lines of near vision improvement at some point during the day” — CEO Eef Schimmelpennink .
  • “We believe these data support LNZ100 as a potential best-in-class therapy” — CEO Eef Schimmelpennink .
  • “The statistically significant data and clinically meaningful outcomes… support the potential paradigm-shifting impact LNZ100 can have” — CMO Marc Odrich .

What Went Wrong

  • Higher SG&A: SG&A expenses increased 142% YoY to $5.6M due to pre-launch spending, legal/professional services, and a one-time non-cash stock-based compensation charge associated with the merger, pressuring quarterly loss .
  • Net loss expanded: Net loss widened to $16.6M (vs. $12.7M YoY), reflecting scale-up and merger-related items; other expense included a $1.0M non-recurring non-cash preferred warrant fair value change at merger close .
  • Estimates unavailable: Wall Street consensus from S&P Global could not be retrieved for GRPH post-merger, limiting beat/miss assessment and potentially constraining short-term price discovery around the print [GetEstimates error].

Financial Results

MetricQ1 2023Q1 2024
Revenues ($USD Millions)$0.00 (no product revenue) $0.00 (no product revenue)
Net Loss ($USD Millions)$(12.67) $(16.65)
Diluted EPS ($)$-6.50 $-3.53
Research & Development ($USD Millions)$10.33 $10.54
SG&A ($USD Millions)$2.29 $5.55
Total Operating Expenses ($USD Millions)$12.62 $16.09
Other Income (Expense), net ($USD Millions)$(0.05) $(0.56)

KPIs and Balance Sheet

MetricQ1 2023Q1 2024
Cash & Cash Equivalents ($USD Millions)$44.44 (beginning Q1 2023; ending cash and restricted cash $114.82) $200.36 cash; marketable securities $12.92; total $213.28
Total Assets ($USD Millions)$70.38 (Dec 31, 2023) $217.32 (Mar 31, 2024)
Total Liabilities ($USD Millions)$19.70 (Dec 31, 2023) $19.16 (Mar 31, 2024)
Stockholders’ Equity ($USD Millions)$(92.71) (Dec 31, 2023) $198.17 (Mar 31, 2024)
Cash From Financing ($USD Millions)$83.18 (Q1 2023) $171.27 (Q1 2024; includes Merger cash + PIPE)

Notes:

  • Segment breakdown: Company operates a single segment focused on ophthalmic pharmaceuticals in the U.S. .
  • No product revenue expected until regulatory approval and commercialization of LNZ100 .

Estimate Comparison (S&P Global)

  • EPS Consensus (Q1 2024): Unavailable (post-merger mapping issue) [GetEstimates error].
  • Revenue Consensus (Q1 2024): Unavailable (post-merger mapping issue) [GetEstimates error].

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NDA submission timing (LNZ100)Mid-2024Not previously public pre-CLARITYMid-2024 submission planned Introduced
U.S. Commercial Launch Timing (subject to approval)H2 2025Not previously specifiedAs early as H2 2025 Introduced
Cash RunwayThrough post-launch positive operating cash flowNot previously quantified in public merger contextAnticipated to extend to post-launch positive operating cash flow Reiterated/Expanded
KOL Event (capstone CLARITY data)June 18, 2024N/AScheduled Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q1 2024)Trend
Presbyopia clinical efficacyN/A (pre-topline)LNZ100 met primary endpoint; strong onset/duration; broad inclusion criteria Positive inflection
Safety/tolerabilityPhase 2 backgroundNo treatment-related serious AEs across 30,000+ treatment days; mild AEs Strengthening profile
Commercial readinessEarly groundworkThird-party logistics completed; “Eye Am...” campaign; KOL network expanding Accelerating
Market opportunityPrior market research$3B+ U.S. opportunity; 128M presbyopes; patient survey (90% noticed, 75% want to continue) Confidence building
Financial runwayN/A$213.3M cash/marketable; runway to post-launch positive OCF Improved visibility
Vuity competitive contextMentioned in risk factorsECP/patient adoption barriers; LENZ positioning for improved duration/response vs perceived Vuity limitations Competitive narrative sharpened

Management Commentary

  • Prepared remarks emphasized execution and best-in-class ambitions for LNZ100: “We believe these data support LNZ100 as a potential best-in-class therapy… focus towards our NDA submission in mid-2024… preparations for commercialization in second half of 2025” — CEO Eef Schimmelpennink .
  • Clinical framing: “Robust safety and efficacy… paradigm-shifting impact LNZ100 can have as an alternative and convenient therapeutic option to reading glasses” — CMO Marc Odrich .
  • Strategic ambition and market scope: “With… 128 million presbyopes in the United States… estimated U.S. market opportunity in excess of $3 billion… significant value creation for shareholders” — CEO Eef Schimmelpennink .

Q&A Highlights

  • Refill rate and sampling strategy: Management highlighted a strong upfront sampling plan to improve refill rates by letting patients validate efficacy and fit before recurring purchases, aligning with market research and CLARITY survey signals .
  • Adoption barriers: Discussion acknowledged some consumers may be satisfied with bifocals or cost-sensitive, but emphasized that discontinuation drivers are not inherently due to product performance per se, suggesting targeted commercial tactics (sampling, education) can address these segments .
  • Near-term catalysts: June KOL event and NDA timeline reiterated as potential stock-moving milestones (call logistics announced publicly) .

Estimates Context

  • S&P Global (Capital IQ) consensus estimates for Q1 2024 EPS and Revenue were unavailable due to a CIQ mapping issue following the Graphite Bio to LENZ transition (ticker change), preventing a formal beat/miss determination for this quarter [GetEstimates error].
  • Given no product revenue and scaling SG&A ahead of commercialization, Street models (once mapped) will likely focus on opex trajectory, cash runway, and clinical/commercial milestones timing rather than near-term P&L results .

Key Takeaways for Investors

  • Clinical de-risking: LNZ100’s strong Phase 3 efficacy (rapid onset, sustained duration) and clean safety across extensive exposure strengthens the NDA case and commercial narrative .
  • Execution advantage: Commercial infrastructure build (3PL, KOL engagement, campaign) underway, indicating capable launch readiness for a potential H2 2025 introduction if approved .
  • Balance sheet strength: $213.3M liquidity supports regulatory and launch activities; management’s runway view extends to post-launch positive operating cash flow (approval-dependent) .
  • Competitive positioning: LENZ is targeting the perceived gaps in Vuity’s duration/effectiveness, with CLARITY survey data and efficacy profile suggesting a differentiated value proposition .
  • Near-term catalysts: June 18 KOL capstone data, NDA submission mid-2024, potential FDA decisions thereafter—key stock reaction points to monitor .
  • Model focus: Expect Street to recalibrate opex and cash burn paths; with no revenue pre-approval, investment case hinges on regulatory timing, launch execution quality, and adoption dynamics .
  • Risk factors: Regulatory uncertainty (NDA review), commercialization adoption, and competitive responses remain central; LENZ notes potential market acceptance and third-party manufacturing dependencies .

Sources:

  • Q1 2024 8-K press release and Item 2.02:
  • Q1 2024 10-Q (financials, MD&A, risk factors):
  • April 3, 2024 CLARITY topline 8-K and exhibits:
  • Earnings call transcript references: