UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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
(Exact name of registrant as specified in its charter)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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.
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).
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.
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Non-accelerated filer | ◻ | Smaller reporting company | |
Emerging growth company |
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
The number of shares of Common Stock outstanding as of April 29, 2022 was
Editas Medicine, Inc.
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Editas Medicine, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(amounts in thousands, except share and per share data)
| March 31, |
| December 31, | |||
2022 | 2021 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Marketable securities | | | ||||
Accounts receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Marketable securities | | | ||||
Property and equipment, net |
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Right-of-use assets | | | ||||
Restricted cash and other non-current assets |
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Total assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | | $ | | ||
Accrued expenses |
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Deferred revenue, current | | | ||||
Operating lease liabilities | | | ||||
Total current liabilities |
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Operating lease liabilities, net of current portion | | | ||||
Deferred revenue, net of current portion | | | ||||
Total liabilities | | | ||||
Stockholders’ equity | ||||||
Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss | ( | ( | ||||
Accumulated deficit |
| ( |
| ( | ||
Total stockholders’ equity | | | ||||
Total liabilities and stockholders’ equity | $ | | $ | | ||
The accompanying notes are an integral part of the condensed consolidated financial statements.
3
Editas Medicine, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(amounts in thousands, except share and per share data)
Three Months Ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 | |||
$ | | $ | | |||
Operating expenses: | ||||||
Research and development |
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General and administrative |
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Total operating expenses |
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Operating loss |
| ( |
| ( | ||
Other income, net: | ||||||
Other (expense) income, net |
| ( |
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Interest income, net | | | ||||
Total other income, net |
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Net loss | $ | ( | $ | ( | ||
Net loss per share, basic and diluted | ( | ( | ||||
Weighted-average common shares outstanding, basic and diluted | | | ||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
4
Editas Medicine, Inc.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(unaudited)
(amounts in thousands)
Three Months Ended | ||||||
March 31, | ||||||
2022 | 2021 | |||||
Net loss | $ | ( | $ | ( | ||
Other comprehensive loss: | ||||||
Unrealized loss on marketable debt securities |
| ( |
| ( | ||
Comprehensive loss | $ | ( | $ | ( | ||
The accompanying notes are an integral part of the condensed consolidated financial statements.
5
Editas Medicine, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
(amounts in thousands, except share data)
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| Accumulated |
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Additional | Other | Other | Total | ||||||||||||||
Common Stock | Paid-In | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
Shares |
| Amount | Capital | Loss | Deficit | Equity | |||||||||||
Balance at December 31, 2021 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Exercise of stock options | | — | | — | — | | |||||||||||
Vesting of restricted common stock awards | | — | — | — | — | — | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized loss on marketable debt securities | — | — | — | ( | — | ( | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance at March 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||
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| Accumulated |
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| Additional | Other | Other | Total | |||||||||||||
| Common Stock | Paid-In | Comprehensive | Accumulated | Stockholders’ | ||||||||||||
| Shares |
| Amount | Capital | Loss | Deficit | Equity | ||||||||||
Balance at December 31, 2020 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Issuance of common stock for public offering | | | | — | — | | |||||||||||
Issuance of common stock for success payment | | — | | — | — | | |||||||||||
Exercise of stock options | | — | | — | — | | |||||||||||
Vesting of restricted common stock awards | | — | — | — | — | — | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized loss on marketable debt securities | — | — | — | ( | — | ( | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance at March 31, 2021 | $ | $ | $ | ( | $ | ( | $ | ||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
6
Editas Medicine, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(amounts in thousands)
Three Months Ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 | |||
Cash flow from operating activities | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Stock-based compensation expense |
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Depreciation |
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Other non-cash items, net |
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Changes in operating assets and liabilities: |
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Accounts receivable | ( | | ||||
Prepaid expenses and other current assets | ( | | ||||
Right-of-use assets | | ( | ||||
Other non-current assets | ( | ( | ||||
Accounts payable | ( | | ||||
Accrued expenses | ( | ( | ||||
Deferred revenue |
| ( |
| ( | ||
Operating lease liabilities |
| ( |
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Net cash used in operating activities |
| ( |
| ( | ||
Cash flow from investing activities | ||||||
Purchases of property and equipment |
| ( | ( | |||
Purchases of marketable securities | ( | ( | ||||
Proceeds from maturities of marketable securities | | | ||||
Net cash provided by investing activities |
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Cash flow from financing activities | ||||||
Proceeds from offering of common stock, net of issuance costs | — | | ||||
Proceeds from exercise of stock options | | | ||||
Net cash provided by financing activities |
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Net increase in cash, cash equivalents, and restricted cash |
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Cash, cash equivalents, and restricted cash, beginning of period |
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Cash, cash equivalents, and restricted cash, end of period | $ | | $ | | ||
Supplemental disclosure of cash and non-cash activities: | ||||||
Fixed asset additions included in accounts payable and accrued expenses | $ | | $ | | ||
Cash paid in connection with operating lease liabilities | | | ||||
Offering costs included in accounts payable and accrued expenses | — | | ||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
7
Editas Medicine, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Nature of Business
Editas Medicine, Inc. (the “Company”) is a leading, clinical stage genome editing company dedicated to developing potentially transformative genomic medicines to treat a broad range of serious diseases. The Company was incorporated in the state of Delaware in September 2013. Its principal offices are in Cambridge, Massachusetts.
Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and raising capital. The Company has primarily financed its operations through various equity financings, payments received under a research collaboration with Juno Therapeutics, Inc. a wholly-owned subsidiary of the Bristol-Myers Squibb Company (“BMS”), and payments received under a strategic alliance and option agreement with Allergan Pharmaceuticals International Limited (together with its affiliates, “Allergan”), which was terminated in August 2020.
The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations and ability to transition from pilot-scale manufacturing to large-scale production of products.
Liquidity
In May 2021, the Company entered into a common stock sales agreement with Cowen and Company, LLC (“Cowen”), under which the Company from time to time can issue and sell shares of its common stock through Cowen in at-the-market offerings for aggregate gross sale proceeds of up to $
In January 2021, the Company completed a public offering whereby it sold
The Company has incurred annual net operating losses in every year since its inception. The Company expects that its existing cash, cash equivalents and marketable securities at March 31, 2022 and anticipated interest income will enable it to fund its operating expenses and capital expenditure requirements into early 2024. The Company had an accumulated deficit of $
8
2. Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The condensed consolidated financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Annual Report”).
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Editas Securities Corporation. All intercompany transactions and balances of the subsidiary have been eliminated in consolidation. In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The three months ended March 31, 2022 and 2021 are referred to as the first quarter of 2022 and 2021, respectively. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are described in Note 2, “Summary of significant accounting policies,” to the consolidated financial statements included in the Annual Report. There have been no material changes to the significant accounting policies previously disclosed in the Annual Report.
3. Cash Equivalents and Marketable Securities
Cash equivalents and marketable securities consisted of the following at March 31, 2022 (in thousands):
Allowance | Gross | Gross | ||||||||||||||
Amortized | for Credit | Unrealized | Unrealized | Fair | ||||||||||||
March 31, 2022 | Cost | Losses | Gains | Losses | Value | |||||||||||
Cash equivalents and marketable securities: | ||||||||||||||||
Money market funds | $ | | $ | — | $ | — | $ | — | $ | | ||||||
U.S. Treasuries | | — | | ( | | |||||||||||
Government agency securities | | — | — | ( | | |||||||||||
Commercial paper | | — | — | ( | | |||||||||||
Corporate notes/bonds | | — | — | ( | | |||||||||||
Total | $ | | $ | — | $ | | $ | ( | $ | | ||||||
9
Cash equivalents and marketable securities consisted of the following at December 31, 2021 (in thousands):
Allowance | Gross | Gross | ||||||||||||||
Amortized | for Credit | Unrealized | Unrealized | Fair | ||||||||||||
December 31, 2021 | Cost | Losses | Gains | Losses | Value | |||||||||||
Cash equivalents and marketable securities: | ||||||||||||||||
Money market funds | $ | | $ | — | $ | — | $ | — | $ | | ||||||
U.S. Treasuries | | — | | ( | | |||||||||||
Government agency securities | | — | — | ( | | |||||||||||
Commercial paper | | — | | ( | | |||||||||||
Corporate notes/bonds | | — | — | ( | | |||||||||||
Total | $ | | $ | — | $ | | $ | ( | $ | | ||||||
As of March 31, 2022, the Company did
There were
4. Fair Value Measurements
Assets measured at fair value on a recurring basis as of March 31, 2022 were as follows (in thousands):
|
|
| Quoted Prices |
| Significant |
| ||||||
in Active | Other | Significant | ||||||||||
Markets for | Observable | Unobservable | ||||||||||
March 31, | Identical Assets | Inputs | Inputs | |||||||||
Financial Assets | 2022 | (Level 1) | (Level 2) | (Level 3) | ||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | | $ | | $ | — | $ | — | ||||
Marketable securities: | ||||||||||||
U.S. Treasuries | | | — | — | ||||||||
Government agency securities | | — | | — | ||||||||
Commercial paper | | — | | — | ||||||||
Corporate notes/bonds | | — | | — | ||||||||
Restricted cash and other non-current assets: | ||||||||||||
Money market funds | | | — | — | ||||||||
Total financial assets | $ | | $ | | $ | | $ | — | ||||
10
Assets measured at fair value on a recurring basis as of December 31, 2021 were as follows (in thousands):
|
| Quoted Prices |
| Significant |
| |||||||
in Active | Other | Significant | ||||||||||
Markets for | Observable | Unobservable | ||||||||||
December 31, | Identical Assets | Inputs | Inputs | |||||||||
Financial Assets | 2021 | (Level 1) | (Level 2) | (Level 3) | ||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | | $ | | $ | — | $ | — | ||||
Marketable securities: | | | ||||||||||
U.S. Treasuries | | | — | — | ||||||||
Government agency securities | | — | | — | ||||||||
Commercial paper | | — | | — | ||||||||
Corporate notes/bonds | | — | | — | ||||||||
Restricted cash and other non-current assets: | | | ||||||||||
Money market funds | | | — | — | ||||||||
Total financial assets | $ | | $ | | $ | | $ | — | ||||
5. Accrued Expenses
Accrued expenses consisted of the following (in thousands):
As of | ||||||
March 31, | December 31, | |||||
| 2022 |
| 2021 | |||
Employee related expenses | $ | | $ | | ||
External research and development expenses | | | ||||
Intellectual property and patent related fees | | | ||||
Professional service expenses | | | ||||
Other expenses | | | ||||
Total accrued expenses | $ | | $ | | ||
11
6. Property and Equipment, net
Property and equipment, net consisted of the following (in thousands):
| As of | |||||
March 31, | December 31, | |||||
| 2022 |
| 2021 | |||
Laboratory equipment | $ | | $ | | ||
Leasehold improvements | | | ||||
Construction-in-progress |
| |
| | ||
Computer equipment | | | ||||
Furniture and office equipment | | | ||||
Software |
| |
| | ||
Total property and equipment |
| |
| | ||
Less: accumulated depreciation |
| ( |
| ( | ||
Property and equipment, net | $ | | $ | | ||
7. Commitments and Contingencies
The Company is a party to a number of license agreements under which the Company licenses patents, patent applications and other intellectual property from third parties. As such, the Company is obligated to pay licensors for various costs including upfront licenses fees, annual license fees, certain licensor expense reimbursements, success payments, research funding payments, and milestones triggerable upon certain development, regulatory, and commercial events as well as royalties on future products. These contracts are generally cancellable, with notice, at the Company’s option and do not have significant cancellation penalties. The terms and conditions as well as the accounting analysis for the Company’s significant commitments and contingencies are described in Note 8, “Commitments and Contingencies” to the consolidated financial statements included in the Annual Report. There have been no material changes to the terms and conditions, or the accounting conclusions, previously disclosed in the Annual Report.
Licensor Expense Reimbursement
The Company is obligated to reimburse The Broad Institute, Inc. (“Broad”) and the President and Fellows of Harvard College (“Harvard”) for expenses incurred by each of them associated with the prosecution and maintenance of the patent rights that the Company licenses from them pursuant to the license agreement by and among the Company, Broad and Harvard, including the interference and opposition proceedings involving patents licensed to the Company under the license agreement, and other license agreements between the Company and Broad. As such, the Company anticipates that it has a substantial commitment in connection with these proceedings until such time as these proceedings have been resolved, but the amount of such commitment is not determinable. The Company incurred an aggregate of $
8. Collaboration and Profit-Sharing Agreements
The Company has entered into multiple collaborations, out-licenses and strategic alliances with third parties that typically involve payments to or from the Company, including up-front payments, payments for research and development services, option payments, milestone payments and royalty payments to or from the Company. The terms and conditions as well as the accounting analysis for the Company’s significant collaborations, out-licenses and strategic alliances are described in Note 9, “Collaboration and Profit-Sharing Agreements” to the consolidated financial statements included in the Annual Report. There have been no material changes to the terms and conditions, or the accounting conclusions, previously disclosed in the Annual Report.
12
Collaboration Revenue
As of March 31, 2022, the Company’s contract liabilities were primarily related to the Company’s collaboration with BMS.
For the three months ended March 31, 2022 | Balance at December 31, 2021 | Additions | Deductions | Balance at March 31, 2022 | |||||||
Accounts receivable | $ | | $ | | $ | — | $ | | |||
Contract liabilities: | |||||||||||
Deferred revenue | $ | | $ | | $ | ( | $ | | |||
During the three months ended March 31, 2022, the Company recognized the following collaboration revenue (in thousands):
Three Months Ended | ||
Revenue recognized in the period from: | March 31, 2022 | |
Amounts included in deferred revenue at the beginning of the period | $ | |
Performance obligations satisfied in previous periods | $ | — |
9. Stock-based Compensation
Total compensation cost recognized for all stock-based compensation awards in the condensed consolidated statements of operations was as follows (in thousands):
|
| |||||
Three Months Ended | ||||||
March 31, | ||||||
2022 | 2021 | |||||
Research and development | $ | | $ | | ||
General and administrative |
| |
| | ||
Total stock-based compensation expense | $ | | $ | | ||
Restricted Stock and Restricted Stock Unit Awards
The following is a summary of restricted stock and restricted stock unit awards activity for the three months ended March 31, 2022:
|
| Weighted | |||
Average | |||||
Grant Date | |||||
Fair Value | |||||
Shares | Per Share | ||||
Unvested restricted stock and restricted stock unit awards as of December 31, 2021 |
| | $ | | |
Issued |
| | $ | | |
Vested |
| ( | $ | | |
Forfeited | ( | $ | | ||
Unvested restricted stock and restricted stock unit awards as of March 31, 2022 |
| | $ | | |
The restricted stock and restricted stock units granted in the three months ended March 31, 2022 include
As of March 31, 2022, total unrecognized compensation expense related to unvested restricted stock and restricted stock unit awards was $
13
Stock Options
The following is a summary of stock option activity for the three months ended March 31, 2022:
|
| Weighted Average |
| Remaining |
| Aggregate Intrinsic | ||||
Shares | Exercise Price | Contractual Life (years) | Value (in thousands) | |||||||
Outstanding at December 31, 2021 |
| | $ | | $ | | ||||
Granted | | $ | | |||||||
Exercised | ( | $ | | |||||||
Cancelled | ( | $ | | |||||||
Outstanding at March 31, 2022 |
| | $ | | $ | | ||||
Exercisable at March 31, 2022 |
| | $ | | $ | | ||||
As of March 31, 2022, total unrecognized compensation expense related to stock options was $
10. Net Loss per Share
Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period determined using the treasury stock and if converted methods. Contingently issuable shares are included in the calculation of basic loss per share as of the beginning of the period in which all the necessary conditions have been satisfied. Contingently issuable shares are included in diluted loss per share based on the number of shares, if any, that would be issuable under the terms of the arrangement if the end of the reporting period was the end of the contingency period, if the results are dilutive.
For purposes of the diluted net loss per share calculation, stock options are considered to be common stock equivalents, but they were excluded from the Company’s calculation of diluted net loss per share allocable to common stockholders because their inclusion would have been anti-dilutive. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented.
The following common stock equivalents were excluded from the calculation of diluted net loss per share allocable to common stockholders because their inclusion would have been anti-dilutive:
Three months ended | ||||
March 31, | ||||
| 2022 | 2021 | ||
Unvested restricted stock and restricted stock unit awards |
| | | |
Outstanding stock options |
| | | |
Total |
| | | |
14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission (“SEC”) on February 24, 2022 (the “Annual Report”).
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. All statements addressing our future operating performance and clinical development and regulatory timelines that we expect or anticipate will occur in the future, as well as expectations for cash runway, are forward-looking statements. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements, including uncertainties inherent in the initiation and completion of pre-clinical studies and clinical trials and clinical development of our product candidates; availability and timing of results from pre-clinical studies and clinical trials; whether interim results from a clinical trial will be predictive of the final results of the trial or the results of future trials; expectations for regulatory approvals to conduct trials or to market products and availability of funding sufficient for our foreseeable and unforeseeable operating expenses and capital expenditure requirements. These and other risks are described in greater detail in the Annual Report under the captions “Risk Factor Summary” and Part I, “Item 1A. Risk Factors,” as updated by our subsequent filings with the SEC. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.
You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
Overview
We are a leading, clinical stage genome editing company dedicated to developing potentially transformative gene editing medicines to treat a broad range of serious diseases. We have developed a proprietary gene editing platform based on CRISPR technology and we continue to expand its capabilities. Our product development strategy is to target diseases of high unmet need where we aim to make differentiated, transformational medicines using our gene editing platform. We are advancing in vivo gene editing medicines, in which the medicine is injected or infused into the patient to edit the cells inside their body, ex vivo gene edited cell medicines, in which cells collected from a patient are edited with our technology and then administered back to that same patient, and cellular therapy medicines, in which we use our technology to edit induced human pluripotent stem cells that are subsequently differentiated into effector cells, such as natural killer (“NK”) cells, to develop medicines that can be administered to a patient. While our discovery efforts have ranged across several diseases and therapeutic areas, the areas where our programs are more mature are in our in vivo gene editing medicines to treat ocular diseases, our ex vivo gene edited cell medicines to treat hemoglobinopathies, and our cellular therapy medicines to treat cancer.
In ocular diseases, our most advanced program is designed to address a specific genetic form of retinal degeneration called Leber congenital amaurosis 10 (“LCA10”), a CEP290-related retinal degenerative disorder for which we are not aware of any available therapies. In mid-2019, we initiated our Phase 1/2 BRILLIANCE clinical trial of EDIT-101, an experimental gene editing medicine to treat LCA10. The BRILLIANCE trial is designed to assess the safety, tolerability, and efficacy of EDIT-101. We initially planned to enroll up to 18 patients in the United States and Europe in up to five cohorts, and in 2021 completed dosing of the first three cohorts, the adult low-, mid- and high-dose
15
cohorts. We are expanding enrollment in one or more of the previously completed adult cohorts to explore dose response and support establishment of registrational trial endpoints. We anticipate establishing these registrational trial endpoints by the end of 2022. In April 2022, we announced the treatment of the first patient in the pediatric mid-dose cohort, and we expect to complete dosing of this cohort in the first half of 2022 and to initiate dosing of the pediatric high-dose cohort later in 2022.
In the third quarter of 2021, we released preliminary clinical data from the first six patients with LCA10 treated with EDIT-101 demonstrating a favorable safety profile and encouraging signals of clinical benefit. For additional information regarding these clinical data, please see Part I, “Item 1. Business—Our Gene Editing Medicine Programs—In Vivo Gene Editing Medicines - Ocular—Leber Congenital Amaurosis 10” in the Annual Report. We expect to provide a clinical update on the BRILLIANCE trial in the second half of 2022, including safety and efficacy assessments on all patients who have had at least six months of follow-up evaluations.
For our ex vivo gene-edited cell medicines, our lead program is EDIT-301, an experimental medicine to treat sickle cell disease, a severe inherited blood disease that causes premature death, and transfusion-dependent beta-thalassemia (“TDT”), the most severe form of beta-thalassemia, another inherited blood disorder characterized by severe anemia. In January 2021, the U.S. Food and Drug Administration (the “FDA”) cleared the start of enrollment and dosing of patients in the first phase of our Phase 1/2 clinical trial of EDIT-301, which we refer to as our RUBY trial, for the treatment of sickle cell disease. This study is designed to validate the safety and beneficial effects of the cell editing process. The RUBY trial is currently enrolling study participants and is on track to begin dosing in the first half of 2022 with initial clinical results expected by the end of 2022. Prior to initiating a registrational trial, in response to an FDA partial clinical hold, we will be required to develop a potency assay to ensure that the characteristics of the product released are as expected and confirmed by clinical data collected in the first patients treated. In November 2021, we filed an Investigational New Drug (“IND”) application for a Phase 1/2 clinical trial of EDIT-301 for the treatment of TDT, which was cleared by the FDA in December 2021. This trial, referred to as our EdiThal trial, is designed to assess the safety, tolerability, and preliminary efficacy of EDIT-301 for TDT. Preparations to initiate the trial are underway, and we expect to dose the first TDT patient in 2022.
In cellular therapy medicines, we continue to develop our capabilities to generate cells from induced human pluripotent stem cells to develop engineered cell medicines to treat cancer. We have advanced development of engineered iPSC-derived NK (“iNK”) cell medicines for solid tumors and generated edited NK cells from iPSCs with significantly increased anti-cancer activity. In December 2021, we declared a development candidate, referred to as EDIT-202, a highly differentiated iNK investigational medicine with double knock-in and double knock-out gene edits that are intended to enhance adaptive immune response and improve cell proliferation, cytolytic activity and persistence, as well as overcome suppressive tumor microenvironments. We are advancing EDIT-202 towards IND-enabling studies. We are also advancing alpha-beta T cell experimental medicines in collaboration with Bristol-Myers Squibb Company (“BMS”). In May 2015, we entered into a collaboration with Juno Therapeutics, Inc., a wholly-owned subsidiary of BMS (“Juno Therapeutics”), to develop novel engineered alpha-beta T cell therapies for cancer and autoimmune diseases, which was amended and restated in each of May 2018 and November 2019, at which time we also entered into a related license agreement with Juno Therapeutics, which we collectively refer to as our collaboration with BMS.
Since our inception in September 2013, our operations have focused on organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio, assembling our core capabilities in gene editing, seeking to identify potential product candidates, and undertaking preclinical studies. Except for EDIT-101 and EDIT-301, all of our research programs are still in the preclinical or research stage of development and the risk of failure of all of our research programs is high. We have not generated any revenue from product sales. We have primarily financed our operations through various equity financings and payments received under our research collaboration with BMS and our former strategic alliance with Allergan Pharmaceuticals International Limited (together with its affiliates, “Allergan”), which was terminated in August 2020.
Since inception, we have incurred significant operating losses. Our net losses were $50.5 million and $56.7 million for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, we had an accumulated deficit of $908.2 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future. Our net losses may fluctuate significantly from quarter to quarter and from year to year. We
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anticipate that our expenses will increase substantially as we continue our current research programs and our preclinical development activities; progress the clinical development of EDIT-101 and EDIT-301; seek to identify additional research programs and additional product candidates; initiate preclinical testing and clinical trials for other product candidates we identify and develop, including preparing for and initiating the clinical development of EDIT-301 for the treatment of TDT; maintain, expand, and protect our intellectual property portfolio, including reimbursing our licensors for such expenses related to the intellectual property that we in-license from such licensors; further develop our genome editing platform; hire additional clinical, quality control, and scientific personnel; and incur additional costs associated with operating as a public company. We do not expect to be profitable for the year ending December 31, 2022 or the foreseeable future.
Although we did not experience any significant impact on our financial condition, results of operations or liquidity due to the ongoing COVID-19 pandemic during the three months ended March 31, 2022, the pandemic has continuously evolved with new, more contagious, variants emerging from time to time, and near-term risks to our business remain. In response to COVID-19 and these variants, governments have implemented a variety of responses, including government-imposed quarantines, travel restrictions and other public health safety measures. As a result, the ultimate impact of the COVID-19 pandemic continues to be highly uncertain and we do not yet know the full extent of potential delays or impacts on our business, our ability to continue to raise additional capital, the EDIT-101 or EDIT-301 clinical trials, ongoing preclinical activities, or the global economy as a whole. We have taken steps in line with guidance from the U.S. Centers for Disease Control and Prevention and the Commonwealth of Massachusetts and the State of Colorado, the jurisdictions in which we primarily operate our business, to protect the health and safety of our employees and the community. In March 2020, in light of the COVID-19 pandemic, we implemented a work from home policy, and restricted on-site activities at our facilities in Massachusetts and Colorado to certain manufacturing, laboratory and related support activities. Under our return to onsite work plans, we gradually resumed manufacturing, laboratory and related support activities at our facilities in Massachusetts and Colorado, and fully reopened our facilities in the third quarter of 2021 using a hybrid work model. Since fully reopening our facilities, we have when needed temporarily reimposed the work from home policy and on-site activity restrictions in response to local increases in COVID-19 cases, and may do so again in the future as appropriate. We will continue to monitor and respond to the changing conditions created by the pandemic, with focus on prioritizing the health and safety of our employees and maintaining safe and reliable operations of our facilities.
Financial Operations Overview
Revenue
To date, we have not generated any revenue from product sales and we do not expect to generate any revenue from product sales for the foreseeable future. In connection with our collaboration with BMS, we have received an aggregate of $127.5 million in payments, which have primarily consisted of the initial upfront and amendment payments, development milestone payments, research funding support and certain opt-in fees. We no longer receive research funding support. As of March 31, 2022, we recorded $62.3 million of deferred revenue in relation to our collaboration with BMS, of which $56.7 million is classified as long-term on our condensed consolidated balance sheet. Under this collaboration, we will recognize revenue upon delivery of option packages to BMS or upon receipt of development milestone payments. We expect that our revenue will fluctuate from quarter-to-quarter and year-to-year as a result of the timing of when we deliver such option packages or receive such milestone payments.
For additional information about our revenue recognition policy related to the BMS collaboration, see Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Revenue Recognition” included in the Annual Report.
For the foreseeable future we expect substantially all of our revenue will be generated from our collaboration with BMS, and any other collaborations or agreements we may enter into.
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Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research, preclinical development, process and scale-up development, manufacture and clinical development of our product candidates, and development activities under our collaboration agreements. These costs are expensed as incurred and include:
| ● | employee-related expenses including salaries, benefits, and stock-based compensation expense; |
| ● | costs under clinical trial agreements with investigative sites; |
| ● | costs associated with conducting our preclinical, process and scale-up development, manufacturing, clinical and regulatory activities, including fees paid to third-party professional consultants, service providers and suppliers; |
| ● | costs of purchasing lab supplies and non-capital equipment used in our preclinical activities and in manufacturing preclinical and clinical study materials; |
| ● | costs for research and development activities under our collaboration agreements; |
| ● | facility costs, including rent, depreciation, and maintenance expenses; and |
| ● | fees for acquiring and maintaining licenses under our third-party licensing agreements, including any sublicensing or success payments made to our licensors. |
At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of any product candidates we may identify and develop. This is due to the numerous risks and uncertainties associated with developing such product candidates, including the uncertainty of:
| ● | successful completion of preclinical studies, IND-enabling studies and natural history studies; |
| ● | successful enrollment in, and completion of, clinical trials; |
| ● | receipt of marketing approvals from applicable regulatory authorities; |
| ● | establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; |
| ● | obtaining and maintaining patent and trade secret protection and non-patent exclusivity; |
| ● | launching commercial sales of a product, if and when approved, whether alone or in collaboration with others; |
| ● | acceptance of a product, if and when approved, by patients, the medical community, and third-party payors; |
| ● | effectively competing with other therapies and treatment options; |
| ● | a continued acceptable safety profile following approval; |
| ● | enforcing and defending intellectual property and proprietary rights and claims; and |
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| ● | achieving desirable medicinal properties for the intended indications. |
A change in the outcome of any of these variables with respect to the development of any product candidates we develop would significantly change the costs, timing, and viability associated with the development of that product candidate.
Research and development activities are central to our business model. We expect research and development costs to increase significantly for the foreseeable future as our development programs progress, including as we continue to progress the clinical development of EDIT-101 and EDIT-301 as well as supporting preclinical studies for our other research programs.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation for personnel in executive, finance, investor relations, business development, legal, corporate affairs, information technology, facilities and human resource functions. Other significant costs include corporate facility costs not otherwise included in research and development expenses, legal fees related to intellectual property and corporate matters, and fees for accounting and consulting services.
We anticipate that our general and administrative expenses will increase in the future to support continued research and development activities and potential commercialization of any product candidates we identify and develop. These increases will include increased costs related to the hiring of additional personnel and fees to outside consultants. We also anticipate increased expenses related to reimbursement of third-party patent-related expenses and expenses associated with operating as a public company, including costs for audit, legal, regulatory, and tax-related services, director and officer insurance premiums, and investor relations costs. With respect to reimbursement of third-party intellectual property-related expenses specifically, given the ongoing nature of the opposition and interference proceedings involving the patents licensed to us under our license agreement with The Broad Institute, Inc. and the President and Fellows of Harvard College, we anticipate general and administrative expenses will continue to be significant.
Other Income, Net
For the three months ended March 31, 2022 and 2021, other income, net consisted primarily of interest income, partially offset by accretion of discounts associated with other marketable securities.
Critical Accounting Policies 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 United States generally accepted accounting principles. The preparation of our condensed consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates, if any, will be reflected in the condensed consolidated financial statements prospectively from the date of change in estimates.
There have been no material changes to our critical accounting policies from those described in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Annual Report.
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Results of Operations
Comparison of the Three Months ended March 31, 2022 and 2021
The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021, together with the changes in those items in dollars (in thousands) and the respective percentages of change:
Three Months Ended | ||||||||||||
March 31, | ||||||||||||
| 2022 |
| 2021 |
| Dollar Change |
| Percentage Change | |||||
Collaboration and other research and development revenues | $ | 6,771 | $ | 6,499 | $ | 272 | 4 | % | ||||
Operating expenses: | ||||||||||||
Research and development |
| 37,976 |
| 41,937 |
| (3,961) | (9) | % | ||||
General and administrative |
| 19,545 |
| 21,445 |
| (1,900) | (9) | % | ||||
Total operating expenses |
| 57,521 |
| 63,382 |
| (5,861) | (9) | % | ||||
Other income, net: | ||||||||||||
Other (expense) income, net |
| (234) |
| 21 |
| (255) | n/m | |||||
Interest income, net |
| 469 |
| 134 |
| 335 | n/m | |||||
Total other income, net |
| 235 |
| 155 |
| 80 | 52 | % | ||||
Net loss | $ | (50,515) | $ | (56,728) | $ | 6,213 | (11) | % | ||||
For our results of operations, we have included the respective percentage of changes, unless greater than 100% or less than (100)%, in which case we have denoted such changes as not meaningful (n/m).
Collaboration and other research and development revenues
Collaboration and other research and development revenues increased by $0.3 million, to $6.8 million for the three months ended March 31, 2022, compared to $6.5 million for three months ended March 31, 2021. The revenue recognized during the first quarter of 2022 and 2021 is primarily related to BMS exercising its option to an additional program.
Research and development expenses