Editas Medicine, Inc. annual report, FY2022

Editas Medicine, Inc. — FY 2022 Form 10-K

Reporting period: Fiscal year ended December 31, 2022. This is an annual report; the supplied filing text does not provide separate fourth-quarter financial results. Editas is a clinical-stage genome-editing company, with no approved products and no product-sale revenue.

Financial performance and liquidity

Metric	FY 2022	FY 2021
Collaboration and other R&D revenue	$19.7 million	$25.5 million
Research and development expense	$175.0 million	$142.5 million
General and administrative expense	$70.7 million	$76.2 million
Operating loss	$226.0 million	$193.1 million
Net loss	$220.4 million	$192.5 million
Basic and diluted loss per share	$3.21	$2.85
Net cash used in operating activities	$177.3 million	$163.8 million

• Revenue fell 23%, primarily because fewer BMS programs were licensed in 2022. R&D expense rose 23%, mainly with EDIT-301 clinical and manufacturing development; total operating expenses increased 12%. Net loss widened 15%.
• At year-end, cash and cash equivalents were $141.5 million and marketable securities were $295.8 million, totaling $437.4 million. Current assets were $356.8 million versus current liabilities of $60.1 million.
• Operating cash outflow increased from 2021. Investing activities provided $114.1 million, primarily from marketable-security maturities; financing provided $1.3 million, compared with $282.1 million in 2021, when the company raised equity.
• No borrowings are reported in the supplied balance sheet. Operating lease liabilities totaled $43.9 million; future minimum lease payments were $54.0 million. The filing reports no conventional operating profit or product-based margins; those measures are not meaningful for this development-stage company.
• Management expects year-end 2022 cash, cash equivalents and marketable securities to fund operations and capital needs into 2025. The company expects continued losses and says substantial additional funding will be required.

Business developments and changes

• EDIT-301: The lead ex vivo gene-edited candidate for severe sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT). In the RUBY Phase 1/2 SCD trial, initial results from two patients showed successful neutrophil and platelet engraftment, no serious adverse events reported, and no vaso-occlusive events during the stated follow-up. At five months, the first patient had total hemoglobin of 16.4 g/dL, fetal hemoglobin (HbF) of 45.4%, and HbF-positive cells above 95%. Results are early and based on a very small patient sample.
• The FDA removed a partial clinical hold on RUBY in July 2022. Editas said it was on track to dose 20 patients by year-end 2023 and expected trial updates in mid- and late 2023. The company also expected to dose the first TDT patient in EDITHAL in Q1 2023 and report data by year-end 2023.
• EDIT-101: November 2022 BRILLIANCE data showed three of 14 treated patients met the responder threshold, with a favorable reported safety profile. Editas could not identify a sufficiently large responder population based on baseline characteristics other than zygosity, and paused enrollment and decided not to advance the program independently.
• Portfolio shift after year-end: In January 2023, Editas announced a strategic reprioritization toward hemoglobinopathies and in vivo editing, termination of its AAV inherited-retinal-disease platform, and sale of wholly owned oncology assets—including EDIT-202 and another iNK program—to Shoreline Biosciences. These are post-period developments, not FY 2022 operating results.
• The BMS collaboration had generated 11 programs. Editas recognized $18.8 million of BMS-related revenue in 2022 and reported $56.7 million of long-term deferred revenue at year-end. It may receive future milestones and royalties, but timing and achievement are uncertain.

Outlook, risks and unusual items

• Editas has incurred losses since inception, with a $1.1 billion accumulated deficit at December 31, 2022, and has never generated product-sale revenue. Its outlook depends substantially on EDIT-301 and continued access to capital; equity financing could dilute shareholders, while collaborations may require granting rights.
• Key development risks include clinical failure or delays, adverse or off-target editing effects, patient enrollment, complex manufacturing and third-party supply, evolving genetic-medicine regulation, reimbursement and pricing uncertainty, competition, and public acceptance of genome editing.
• Intellectual-property exposure is material: licensed CRISPR patents face multiple U.S. priority/validity proceedings and European opposition proceedings. The company also reimburses licensors’ patent costs; it recorded $8.8 million of such expense in 2022. Outcomes and total future costs are uncertain.
• Unrealized losses on marketable debt securities contributed $3.1 million of other comprehensive loss. Management said a 100-basis-point immediate rate change would not materially affect investment fair value, given short maturities and low-risk holdings.
• Income tax expense was zero in 2022. A $296.1 million valuation allowance was recorded against deferred tax assets; unrecognized tax benefits were $11.8 million at year-end. The filing also identifies the required capitalization and amortization of R&D costs under tax law as a tax-accounting matter.
• The independent auditor issued an unqualified opinion on the financial statements and internal control over financial reporting. The audit identified accrued R&D expense as a critical audit matter, involving estimates of vendor costs and work performed; it was not reported as a qualification of the audit opinion.

Important facts for investors to verify

• Progress, durability, safety and efficacy in larger RUBY cohorts, and whether the 2023 dosing and data-update targets were achieved.
• Whether EDITHAL began dosing as expected and what its initial TDT results show.
• Current cash consumption, updated runway assumptions, and the availability and potential dilution or terms of additional financing.
• Financial and contractual details of the Shoreline asset sale and any continuing obligations or retained rights.
• Developments in CRISPR patent disputes, related license costs, and the status of BMS programs, milestones and deferred revenue.