Company: LENZ
Filing Date: 2025-07-30
Form Type: 10-Q
Source: 0001815776-25-000056
Chunk: 317

Company: LENZ Therapeutics, Inc.
Filing Date: 2025-07-30
Form: 10-Q
Item: Part I, Item 1
Chunk 317
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 Lotus License, the Company received a $5.0 million nonrefundable, non-creditable upfront payment, which represents the transaction price at inception, and is eligible to receive up to $120.0 million of regulatory and sales milestones, as well as tiered, double-digit royalties on future net sales in Southeast Asia. Additional consideration to be paid to the Company upon reaching regulatory and sales milestones is excluded from the transaction price. Future 

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milestone payments are fully contingent as the risk of significant revenue reversal will only be resolved depending on future regulatory approval and sales level outcomes. The sales-based royalty fee qualifies for the royalty constraint exception and does not require an estimate of the future transaction price. The sales-based royalty fee is considered variable consideration and will be recognized as revenue as such sales occur, if any.The Company assessed the promises made under the Lotus License and concluded the Lotus License comprises a single performance obligation providing the right to use functional intellectual property. The $5.0 million transaction price allocated to that single performance obligation was recognized upon transfer of the Lotus License during the three months ended June 30, 2025. The upfront payment was subject to a withholding tax in the Republic of Singapore, which the Company recorded as income tax expense during the three and six months ended June 30, 2025. Such withholding may be eligible to be recovered against future taxable income in the United States in the form of a foreign tax credit.  No regulatory or sales milestones were met under the Lotus License during the three months ended June 30, 2025.

10.     Related Party Transactions

Through the Subscription Agreement and March 2024 PIPE Financing executed in conjunction with the Merger, the Company issued 3,343,330 shares to investors that had designated members on the Company's board of directors.A member of the Company’s board of directors currently serves as a member of the board of directors of one of the Company’s vendors, and has served in that capacity since 2023. LENZ OpCo entered into a Master Services Agreement with this vendor in September 2023 to provide manufacturing services. Accordingly, the Company considers the vendor to be a related party. Fees incurred for services performed by the vendor for the three months ended June 30, 2025 and 2024 were $0.4 million and $0.1 million, respectively, and $0.7 million and $0.2 million for the six months ended June 30, 2025 and 2024, respectively, and