10-Q 1 ntla-20220331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

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: 001-37766

 

INTELLIA THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

36-4785571

(State or Other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification No.)

 

 

40 Erie Street, Suite 130, Cambridge, Massachusetts

02139

(Address of Principal Executive Offices)

(Zip Code)

857-285-6200

(Registrant’s Telephone Number, Including Area Code)

 

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of each Class

Trade Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

NTLA

The Nasdaq Global Market

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. Yes ☒ No ☐

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). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

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 Act). Yes No ☒

The number of shares outstanding of the registrant’s common stock as of April 28, 2022: 75,853,870 shares.

 

 


 

 

PART I - FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements (unaudited)

 

 

 

Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

3

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2022 and 2021

4

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021

5

 

 

Notes to Condensed Consolidated Financial Statements

6

 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

22

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

34

 

 

Item 4. Controls and Procedures.

35

 

 

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

36

 

 

Item 1A. Risk Factors

36

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

83

 

Item 6. Exhibits

84

 

 

Signatures

85

 

 

2


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

INTELLIA THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets (unaudited)

(Amounts in thousands except share and per share data)

 

 

 

March 31,
2022

 

 

December 31,
2021

 

ASSETS

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

133,382

 

 

$

123,406

 

Marketable securities

 

 

721,869

 

 

 

625,282

 

Accounts receivable ($0 million and $0.1 million, respectively, from related party)

 

 

1,801

 

 

 

2,031

 

Prepaid expenses and other current assets

 

 

18,315

 

 

 

18,584

 

Total current assets

 

 

875,367

 

 

 

769,303

 

Marketable securities - noncurrent

 

 

139,486

 

 

 

337,361

 

Property and equipment, net

 

 

23,697

 

 

 

20,968

 

Operating lease right-of-use assets

 

 

76,473

 

 

 

79,143

 

Equity method investment

 

 

52,272

 

 

 

58,131

 

Investments and other assets ($10.0 million at the end of each period from related party)

 

 

35,493

 

 

 

29,558

 

Total Assets

 

$

1,202,788

 

 

$

1,294,464

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

10,138

 

 

$

9,653

 

Accrued expenses ($0.2 million and $0 million, respectively, from related party)

 

 

42,876

 

 

 

43,309

 

Current portion of operating lease liability

 

 

9,338

 

 

 

9,112

 

Current portion of deferred revenue ($41.2 million at the end of each period from related party)

 

 

63,759

 

 

 

63,759

 

Total current liabilities

 

 

126,111

 

 

 

125,833

 

Deferred revenue, net of current portion ($11.4 million and $19.9 million, respectively, from related party)

 

 

49,481

 

 

 

63,476

 

Long-term operating lease liability

 

 

62,480

 

 

 

64,911

 

Other long-term liabilities

 

 

10,962

 

 

 

-

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

Common stock, $0.0001 par value; 120,000,000 shares authorized;
  
75,624,167 and 74,485,883 shares issued and outstanding at
  March 31, 2022 and December 31, 2021, respectively

 

 

8

 

 

 

7

 

Additional paid-in capital

 

 

1,811,681

 

 

 

1,745,870

 

Accumulated other comprehensive loss

 

 

(8,062

)

 

 

(2,632

)

Accumulated deficit

 

 

(849,873

)

 

 

(703,001

)

Total stockholders’ equity

 

 

953,754

 

 

 

1,040,244

 

Total Liabilities and Stockholders’ Equity

 

$

1,202,788

 

 

$

1,294,464

 

 

See notes to condensed consolidated financial statements.

 

3


 

INTELLIA THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)

(Amounts in thousands except per share data)

 

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Collaboration revenue (1)

 

$

11,252

 

 

$

6,445

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

133,095

 

 

 

39,276

 

General and administrative

 

 

22,403

 

 

 

13,594

 

Total operating expenses

 

 

155,498

 

 

 

52,870

 

Operating loss

 

 

(144,246

)

 

 

(46,425

)

Other (expense) income, net:

 

 

 

 

 

 

Interest income

 

 

540

 

 

 

220

 

Loss from equity method investment

 

 

(2,745

)

 

 

-

 

Change in fair value of contingent consideration

 

 

(421

)

 

 

-

 

Total other (expense) income, net

 

 

(2,626

)

 

 

220

 

Net loss

 

$

(146,872

)

 

$

(46,205

)

Net loss per share, basic and diluted

 

$

(1.96

)

 

$

(0.69

)

Weighted average shares outstanding, basic and
   diluted

 

 

74,751

 

 

 

67,183

 

Other comprehensive loss:

 

 

 

 

 

 

Unrealized loss on marketable securities

 

 

(5,128

)

 

 

(13

)

Other comprehensive loss from equity method investment

 

 

(302

)

 

 

-

 

Comprehensive loss

 

$

(152,302

)

 

$

(46,218

)

 

 

 

 

 

 

 

(1) Including the following revenue from related party (see Notes 7 and 8):

 

$

5,384

 

 

$

-

 

 

See notes to condensed consolidated financial statements.

 

4


 

INTELLIA THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows (unaudited)

(Amounts in thousands)

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(146,872

)

 

$

(46,205

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,754

 

 

 

1,591

 

Equity-based compensation

 

 

18,491

 

 

 

6,424

 

Amortization of investment premiums

 

 

2,426

 

 

 

1,209

 

Loss from equity method investment

 

 

2,745

 

 

 

-

 

Deferral of equity method investment intra-entity profit on sales

 

 

2,812

 

 

 

-

 

Change in fair value of contingent consideration

 

 

421

 

 

 

-

 

In-process research and development charge

 

 

55,990

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

230

 

 

 

1,177

 

Prepaid expenses and other current assets

 

 

422

 

 

 

(5,448

)

Operating lease right-of-use assets

 

 

2,671

 

 

 

1,596

 

Other assets

 

 

(918

)

 

 

(255

)

Accounts payable

 

 

(57

)

 

 

(917

)

Accrued expenses

 

 

(3,717

)

 

 

(4,588

)

Deferred revenue

 

 

(13,995

)

 

 

(5,558

)

Operating lease liabilities

 

 

(2,204

)

 

 

(1,402

)

Net cash used in operating activities

 

 

(79,801

)

 

 

(52,376

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,429

)

 

 

(2,412

)

Purchases of marketable securities

 

 

-

 

 

 

(148,330

)

Maturities of marketable securities

 

 

93,734

 

 

 

125,200

 

Acquired in-process research and development, net of cash acquired of $287

 

 

(44,832

)

 

 

-

 

Net cash provided by (used in) investing activities

 

 

47,473

 

 

 

(25,542

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from issuance of common stock through at-the-market offerings,
   net of issuance costs

 

 

38,885

 

 

 

45,255

 

Proceeds from options exercised

 

 

8,435

 

 

 

13,340

 

Net cash provided by financing activities

 

 

47,320

 

 

 

58,595

 

Net increase (decrease) in cash and cash equivalents and restricted cash equivalents

 

 

14,992

 

 

 

(19,323

)

Cash and cash equivalents and restricted cash equivalents, beginning of
   period

 

 

125,486

 

 

 

164,606

 

Cash and cash equivalents and restricted cash equivalents, end of period

 

$

140,478

 

 

$

145,283

 

 

 

 

 

 

 

 

Reconciliation of cash and cash equivalents and restricted cash
   equivalents to condensed consolidated balance sheet:

 

 

 

 

 

 

Cash and cash equivalents

 

$

133,382

 

 

$

141,538

 

Restricted cash equivalents, included in investments and other assets

 

 

7,096

 

 

 

3,745

 

Total cash and cash equivalents and restricted cash equivalents

 

$

140,478

 

 

$

145,283

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

Purchases of property and equipment unpaid at period end

 

$

3,721

 

 

$

901

 

Right-of-use assets acquired under operating leases

 

 

-

 

 

 

40,394

 

Contingent consideration liability assumed in asset acquisition

 

 

10,541

 

 

 

-

 

 

 

See notes to condensed consolidated financial statements.

 

5


 

INTELLIA THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements (unaudited)

1. Overview and Basis of Presentation

Intellia Therapeutics, Inc. (“Intellia” or the “Company”) is a leading clinical-stage genome editing company, focused on developing novel, potentially curative CRISPR/Cas9-based therapeutics. CRISPR/Cas9, an acronym for Clustered, Regularly Interspaced Short Palindromic Repeats (“CRISPR”)/CRISPR associated 9 (“Cas9”), is a technology for genome editing, the process of altering selected sequences of genomic deoxyribonucleic acid (“DNA”). To realize the transformative potential of CRISPR/Cas9-based technologies, Intellia is building a full-spectrum genome editing company, by leveraging its modular platform, to advance in vivo and ex vivo therapies for diseases with high unmet need. For the Company's in vivo programs to address genetic diseases, intravenously administered CRISPR is used as the therapy, in which the Company's proprietary delivery technology enables highly precise editing of disease-causing genes directly within specific target tissues. For the Company's ex vivo programs to address immuno-oncology and autoimmune diseases, CRISPR is used to create the therapy by engineering cells outside of the body. The Company's deep scientific, technical and clinical development experience, along with its robust intellectual property (“IP”) portfolio, enables it to unlock broad therapeutic applications of CRISPR/Cas9 and related technologies to create new classes of genetic medicine.

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 (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. 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 (“Annual Report”) for the year ended December 31, 2021.

On February 2, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with RW Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), Rewrite Therapeutics, Inc., a Delaware corporation (“Rewrite”) and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative of the Rewrite Holders (as defined below). On the effective date of the Merger Agreement, Merger Sub merged with and into Rewrite, with Rewrite surviving as a wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, and subject to the terms and conditions thereof, the Company paid Rewrite’s former stockholders and optionholders (the “Rewrite Holders”) upfront consideration in an aggregate amount of approximately $45.0 million payable in cash, excluding customary purchase price adjustments. In addition, the Rewrite Holders will be eligible to receive up to an additional $155.0 million in milestone payments upon the achievement of certain pre-specified research and regulatory approval milestones, payable through a mixture of $130.0 million in cash and $25.0 million in shares of common stock, par value $0.0001 per share (“Common Stock”) of the Company. The shares of Common Stock will be valued using the volume-weighted average price of Common Stock of the Company over the ten consecutive trading day period ending on and including the trading day that is two trading days immediately prior to the issuance of the consideration issued in connection with the applicable milestone.

The unaudited condensed consolidated financial statements include the accounts of Intellia Therapeutics, Inc. and its wholly- owned subsidiaries, Intellia Securities Corp. and Rewrite Therapeutics, Inc. All intercompany balances and transactions have been eliminated in consolidation. Comprehensive loss is comprised of net loss, unrealized gain/loss on marketable securities and other comprehensive loss from equity method investment.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates in these condensed consolidated financial statements have been made in connection with the calculation of revenues, research and development expenses, valuation of equity and fair value method investments, contingent consideration and equity-based compensation expense. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances at the time such estimates are made. Actual results could differ from those estimates. The Company periodically reviews its estimates in light of changes in circumstances, facts and experience. The extent of the impact of the coronavirus disease 19 (“COVID-19”) pandemic on the Company’s operational and financial performance will depend on certain developments, including the length and severity of this pandemic, as well as its effect on the

 

6


 

Company’s employees, collaborators and vendors, all of which are uncertain and cannot be predicted. The Company cannot reasonably estimate the extent to which the disruption may materially impact its consolidated results of operations or financial position.

The effects of material revisions in estimates are reflected in the condensed consolidated financial statements prospectively from the date of the change in estimate.

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 results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

Liquidity

Since its inception through March 31, 2022, the Company has raised an aggregate of approximately $1,859.3 million to fund its operations through its initial public offering (“IPO”) and concurrent private placements, follow-on public offerings, at-the-market offerings and the sale of convertible preferred stock, as well as through its collaboration agreements. The Company expects that its cash, cash equivalents and marketable securities as of March 31, 2022 will enable the Company to fund its ongoing operating expenses and capital expenditure requirements for at least the twelve-month period following the issuance of these condensed consolidated financial statements.

2. 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 for the year ended December 31, 2021. There have been no material changes during the three months ended March 31, 2022 except for the following.

Asset acquisitions

At the time of acquisition, the Company determines if a transaction should be accounted for as a business combination or acquisition of assets. The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes transaction costs, and the consideration is allocated to the items acquired based on a relative fair value methodology. Goodwill is not recognized in asset acquisitions. In an asset acquisition, the cost allocated to acquire in-process research and development with no alternative future use is charged to research and development expense at the acquisition date.

 

Contingent consideration

The Company accounts for contingent consideration identified in an asset acquisition, that is payable in cash and does not meet the definition of a derivative under Accounting Standard Codification (“ASC”) 815, Derivatives and Hedging, when the contingency is resolved and the consideration is paid or becomes payable.

 

The Company accounts for contingent consideration identified in an asset acquisition that is settled in shares of common stock under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). The contingent consideration liability will be recorded at fair value at the end of each reporting period with changes in estimated fair values recorded in other (expense) income in the condensed consolidated statements of operations and comprehensive loss.

 

The estimated fair value of the contingent consideration liability related to the Rewrite acquisition (see Notes 4 and 9) is determined based on a probability adjusted discounted cash flow model that includes significant estimates and assumptions pertaining to research and development. Significant changes in any of the probabilities of success or in the probabilities as to the periods in which the milestone would be achieved would result in a significantly higher or lower fair value measurement. The Company will continue to adjust the liability for changes in fair value until the obligation is settled or the research is abandoned.

 

7


 

3. Marketable Securities

The following table summarizes the Company’s available-for-sale marketable securities as of March 31, 2022 and December 31, 2021 at net book value:

 

 

 

March 31, 2022

 

 

 

Amortized
Cost

 

 

Gross Unrealized
Gains

 

 

Gross Unrealized
Losses

 

 

Estimated Fair
Value

 

 

 

(In thousands)

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and other government securities

 

$

296,113

 

 

$

-

 

 

$

(3,640

)

 

$

292,473

 

Financial institution debt securities

 

 

380,575

 

 

 

-

 

 

 

(2,068

)

 

 

378,507

 

Corporate debt securities

 

 

52,837

 

 

 

-

 

 

 

(662

)

 

 

52,175

 

Other asset-backed securities

 

 

139,083

 

 

 

-

 

 

 

(883

)

 

 

138,200

 

Total

 

$

868,608

 

 

$

-

 

 

$

(7,253

)

 

$

861,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

Amortized
Cost

 

 

Gross Unrealized
Gains

 

 

Gross Unrealized
Losses

 

 

Estimated Fair
Value

 

 

 

(In thousands)

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and other government securities

 

$

301,493

 

 

$

-

 

 

$

(1,016

)

 

$

300,477

 

Financial institution debt securities

 

 

441,068

 

 

 

-

 

 

 

(652

)

 

 

440,416

 

Corporate debt securities

 

 

62,500

 

 

 

-

 

 

 

(151

)

 

 

62,349

 

Other asset-backed securities

 

 

159,707

 

 

 

-

 

 

 

(306

)

 

 

159,401

 

Total

 

$

964,768

 

 

$

-

 

 

$

(2,125

)

 

$

962,643

 

 

The amortized cost of available-for-sale securities is adjusted for amortization of premiums and accretion of discounts to maturity. At March 31, 2022 and December 31, 2021, the balance in the Company’s accumulated other comprehensive loss was composed of activity related to the Company’s available-for-sale marketable securities and equity method investment. There were no realized gains or losses in the three months ended March 31, 2022 or for the year ended December 31, 2021. The Company did not reclassify any amounts out of accumulated other comprehensive loss during this period. The Company generally does not intend to sell any investments prior to recovery of their amortized cost basis for any investment in an unrealized loss position. As such, the Company has classified these losses as temporary in nature.

The Company's available-for-sale securities that are classified as short-term marketable securities in the condensed consolidated balance sheet mature within one year or less as of the balance sheet date. Available-for-sale securities that are classified as noncurrent in the condensed consolidated balance sheet are those that mature after one year but within five years from the balance sheet date and that the Company does not intend to dispose of within the next twelve months. At March 31, 2022 and December 31, 2021, the Company did not hold any investments that matured beyond five years of the balance sheet date.

 

8


 

4. Fair Value Measurements

The Company classifies fair value-based measurements using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1, quoted market prices (unadjusted) in active markets for identical assets or liabilities; Level 2, observable inputs other than quoted market prices included in Level 1, such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data; and Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of March 31, 2022 and December 31, 2021, the Company’s financial assets and liabilities recognized at fair value on a recurring basis consisted of the following:

 

 

Fair Value as of March 31, 2022

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(In thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents and restricted cash equivalents

 

$

138,269

 

 

$

138,269

 

 

$

-

 

 

$

-

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and other government securities

 

 

292,473

 

 

 

277,345

 

 

 

15,128

 

 

 

-

 

Financial institution debt securities

 

 

378,507

 

 

 

-

 

 

 

378,507

 

 

 

-

 

Corporate debt securities

 

 

52,175

 

 

 

-

 

 

 

52,175

 

 

 

-

 

Other asset-backed securities

 

 

138,200

 

 

 

-

 

 

 

138,200

 

 

 

-

 

Total marketable securities

 

 

861,355

 

 

 

277,345

 

 

 

584,010

 

 

 

-

 

Total Assets

 

$

999,624

 

 

$

415,614

 

 

$

584,010

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration liability - research

 

$

10,962

 

 

$

-

 

 

$

-

 

 

$

10,962

 

Total Liabilities

 

$

10,962

 

 

$

-

 

 

$

-

 

 

$

10,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value as of December 31, 2021

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(In thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents and restricted cash equivalents

 

$

124,636

 

 

$

124,636

 

 

$

-

 

 

$

-

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and other government securities

 

 

300,477

 

 

 

280,085

 

 

 

20,392

 

 

 

-

 

Financial institution debt securities

 

 

440,416

 

 

 

-

 

 

 

440,416

 

 

 

-

 

Corporate debt securities

 

 

62,349

 

 

 

-

 

 

 

62,349

 

 

 

-

 

Other asset-backed securities

 

 

159,401

 

 

 

-

 

 

 

159,401

 

 

 

-

 

Total marketable securities

 

 

962,643

 

 

 

280,085

 

 

 

682,558

 

 

 

-

 

Total Assets

 

$

1,087,279

 

 

$

404,721

 

 

$

682,558

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certain of the Company’s financial assets, including cash equivalents, restricted cash equivalents and marketable securities, have been initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third party pricing services or other observable market data. The pricing services utilize industry standard valuation models and observable market inputs to determine value. After completing its validation procedures, the Company did not adjust or override any fair value measurements provided by the pricing services as of March 31, 2022 or December 31, 2021.

Other financial instruments, including accounts receivable, accounts payable and accrued expense, are carried at cost, which approximates fair value due to the short duration and term to maturity.

The Company's investment in AvenCell Therapeutics, Inc. (“AvenCell”) was recorded at fair value, determined according to Level 3 inputs in the fair value hierarchy described above. Refer to Note 8 for further details.

 

9


 

The Company's investment in SparingVision SAS (“SparingVision”) was recorded at fair value, determined according to Level 3 inputs in the fair value hierarchy described above. The Company's investment in Kyverna Therapeutics, Inc. (“Kyverna”) was recorded at cost, which is representative of fair value. Refer to Note 8 for further details. The SparingVision and Kyverna investments (the “investments”) are included in “Investments and other assets” on the condensed consolidated balance sheet. There were no changes in observable prices of these investments as of March 31, 2022.

As discussed further in Note 9, Rewrite Acquisition, under the Merger Agreement, the Rewrite Holders are eligible to receive up to an additional $25.0 million in research milestone payments, payable in the Company’s common stock valued using the volume-weighted average price of the Company’s stock over the ten-day trading period ending two trading days prior to the date on which the applicable milestone is achieved. As such research milestone is payable in the Company’s common stock, the milestone payment results in liability classification under ASC 480. This contingent consideration liability is 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. The contingent consideration liability, which is recorded in "Other long-term liabilities" on the condensed consolidated balance sheet, is classified within Level 3 of the fair value hierarchy.

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

 

 

For the quarter ended March 31, 2022

 

Balance at February 2, 2022 (at inception)

$

10,541

 

Change in fair value

 

421

 

Balance at March 31, 2022

$

10,962

 

 

 

As of inception (February 2, 2022)

For the quarter ended March 31, 2022

Discount rate

7%

8%

Probability of achievement

50%

50%

Projected year of achievement

2023-2024

2023-2024

 

5. Accrued Expenses

Accrued expenses consisted of the following:

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(In thousands)

 

Accrued research and development

 

$

21,376

 

 

$

16,979

 

Employee compensation and benefits

 

 

11,150

 

 

 

20,359

 

Accrued legal and professional expenses

 

 

3,683

 

 

 

3,100

 

Accrued other

 

 

6,667

 

 

 

2,871

 

Total accrued expenses

 

$

42,876

 

 

$

43,309

 

 

6. Commitments and Contingencies

Litigation

There have been no material changes to any of the outstanding litigation, nor is the Company a party to any new litigation, since December 31, 2021, except as described below. For further information please see the notes to the consolidated financial statements included in the Company’s Annual Report for the year ended December 31, 2021.

License Agreements

The Company is party to license agreements, which include contingent payments. These payments will become payable if and when certain development, regulatory and commercial milestones are achieved. As of March 31, 2022, the satisfaction and timing of the contingent payments is uncertain and not reasonably estimable.

 

10


 

7. Collaborations and Other Arrangements

To accelerate the development and commercialization of CRISPR/Cas9-based products in multiple therapeutic areas, the Company has formed, and intends to seek other opportunities to form, strategic alliances with collaborators who can augment its leadership in CRISPR/Cas9 therapeutic development. As of March 31, 2022, the Company’s accounts receivable were related to its collaboration with Regeneron Pharmaceuticals, Inc. (“Regeneron”), and the Company's contract liabilities were related to its collaborations with Regeneron, AvenCell, SparingVision and Kyverna. As of December 31, 2021, the Company’s accounts receivable were related to its collaborations with Regeneron and AvenCell and the Company's contract liabilities were related to its collaborations with Regeneron, AvenCell, SparingVision and Kyverna.

The following table presents changes in the Company’s accounts receivable and contract liabilities during the three months ended March 31, 2022 and 2021 (in thousands):

 

 

 

Balance at
Beginning of
Period

 

 

Additions

 

 

Deductions

 

 

Balance at End
of Period

 

Three Months Ended March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

$

2,031

 

 

$

1,801

 

 

$

(2,031

)

 

$

1,801

 

Contract liabilities - Deferred revenue

 

$

127,235

 

 

$

-

 

 

$

(13,995

)

 

$

113,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at
Beginning of
Period

 

 

Additions

 

 

Deductions