CRISPR Therapeutics AG — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020; fourth-quarter figures are also shown where disclosed. The company is a clinical-stage gene-editing biotechnology company with no approved products or product-sale revenue. Its lead program, CTX001, is being developed with Vertex for transfusion-dependent beta thalassemia (TDT) and severe sickle cell disease (SCD).
Financial performance and liquidity
| Metric | FY2020 | FY2019 |
|---|---|---|
| Total revenue | $0.7 million | $289.6 million |
| Research and development expense | $266.9 million | $179.4 million |
| General and administrative expense | $88.2 million | $63.5 million |
| Operating income (loss) | $(354.4) million | $46.7 million |
| Net income (loss) | $(348.9) million | $66.9 million |
| Basic and diluted EPS | $(5.29) | $1.23 basic; $1.17 diluted |
| Cash from (used in) operations | $(238.4) million | $56.7 million |
| Cash, cash equivalents and marketable securities at year-end | $1,690.3 million | $943.8 million |
| Working capital at year-end | $1,622.4 million | $930.4 million |
Fourth-quarter 2020 revenue was $0.4 million, operating expenses were $108.1 million, net loss was $107.0 million, and basic and diluted loss per share was $1.50. Product gross margin is not meaningful because the company had no product sales; the filing does not provide a product margin measure.
Cash used in investing activities was $541.2 million, primarily reflecting net purchases of marketable securities ($522.8 million) and property and equipment purchases ($18.4 million). Financing activities provided $1,016.2 million, primarily from common-share issuances. The company reported $163.7 million in total liabilities, including $61.4 million of operating lease liabilities. The filing does not identify borrowings or financial debt as a material funding source. Management expects available cash and investments to fund its current operating plan for at least 24 months from year-end 2020, subject to assumptions and without relying on additional financing.
Material changes versus the prior comparable period
- Revenue fell by $288.9 million, from $289.6 million in 2019 to $0.7 million in 2020. The 2019 result included substantial revenue from Vertex license transactions; 2020 revenue was mainly collaboration services and a small grant amount.
- The company shifted from 2019 net income of $66.9 million to a 2020 net loss of $348.9 million. The 2019 result included $202.4 million of revenue from DMD and DM1 licenses, $76.7 million from exercised collaboration-target options, and a $16.0 million gain associated with consolidating Casebia.
- R&D expense increased 48.8% to $266.9 million, driven by higher employee costs, variable R&D spending and facilities costs. G&A expense increased 38.9% to $88.2 million, including higher compensation, facilities and intellectual-property costs.
- Operating cash flow moved from $56.7 million provided in 2019 to $238.4 million used in 2020. Year-end cash, cash equivalents and marketable securities increased 79.1%, supported substantially by equity issuance.
- Common shares outstanding increased during 2020 through public and at-the-market offerings, increasing shareholder dilution.
Outlook, developments and risks
- Management expects significant expenses and operating losses to continue for the foreseeable future; it did not provide earnings or revenue guidance. It expects continued investment in clinical development, research, facilities and manufacturing capacity and may pursue additional financing.
- CTX001 Phase 1/2 trials remained ongoing. Preliminary data reported in December 2020 covered seven TDT patients and three SCD patients with at least three months of follow-up. All seven TDT patients were transfusion-independent at last analysis; all three SCD patients had experienced no vaso-occlusive crises since infusion at the reported cutoff. These small, early datasets are not proof of durability or approval prospects.
- Safety observations included serious events in CTX001 patients in the setting of myeloablative conditioning. In the TDT group, one patient experienced serious events in the context of hemophagocytic lymphohistiocytosis; the events resolved. The SCD patients’ reported serious events resolved and were not considered related to CTX001.
- In the CTX110 CAR-T trial, early responses were reported among 11 assessed patients. One patient treated at the highest dose developed HHV-6 encephalitis and died 52 days after infusion; the filing reports the patient’s other clinical course and treatment. This is a significant safety event to monitor.
- COVID-19 could disrupt trial enrollment and dosing, clinical-site operations, suppliers, manufacturing, research activities and regulatory review. The company had paused some CTX001 dosing when healthcare resources were constrained and said further pauses could occur.
- Manufacturing scale-up, product safety and efficacy, regulatory uncertainty, competition, and complex CRISPR patent disputes remain material risks. The company disclosed ongoing U.S. patent interferences and European patent opposition proceedings; adverse outcomes could restrict its ability to develop or commercialize products.
- The company entered into a Boston lease for a planned 263,500-square-foot facility, expected to commence in the first half of 2022, with at least $292.5 million in rent over 152 months. It is also developing a Framingham cell-therapy manufacturing facility, which was not yet operational.
Key facts investors should verify
- Review the complete audited statements and notes for cash composition, spending, lease commitments, equity issuance and potential dilution.
- Track updated CTX001 and CTX110 clinical data, including longer follow-up, patient counts, durability, adverse events and any regulatory changes.
- Check whether clinical-trial, manufacturing or regulatory timelines have been affected by COVID-19 or other operational constraints.
- Monitor the CRISPR patent interferences and opposition proceedings, and assess their potential implications for intellectual-property rights and freedom to operate.
- Reassess the stated 24-month cash runway against actual cash burn, planned facility spending and subsequent financing; the company raised additional capital through ATM offerings in early 2021.