Intellia Therapeutics, Inc. — Q3 2018 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2018. Intellia is a preclinical genome-editing company; all revenue to date was from collaborations, not product sales. Financial amounts below are in U.S. dollars.
Financial performance and liquidity
| Metric | Q3 2018 | Q3 2017 | Nine months 2018 | Nine months 2017 |
|---|---|---|---|---|
| Collaboration revenue | $7.4 million | $7.3 million | $22.6 million | $19.4 million |
| Research and development expense | $23.2 million | $17.5 million | $69.2 million | $46.5 million |
| General and administrative expense | $8.3 million | $5.7 million | $23.5 million | $17.8 million |
| Operating loss | $(24.1) million | $(15.9) million | $(70.1) million | $(44.8) million |
| Net loss | $(22.7) million | $(15.4) million | $(66.3) million | $(43.6) million |
| Net loss per share, basic and diluted | $(0.53) | $(0.44) | $(1.55) | $(1.25) |
Cash and cash equivalents were $293.2 million at September 30, 2018, down from $340.7 million at December 31, 2017. Nine-month operating cash use was $52.7 million; investing cash use was $4.8 million; financing provided $10.1 million. Current assets were $298.8 million and current liabilities $25.9 million. Deferred revenue totaled $46.3 million. No borrowings or debt are reported on the balance sheet. The filing gives no gross-margin measure; the company remained loss-making.
Changes versus the prior comparable periods
- Nine-month revenue rose $3.1 million, primarily from greater Regeneron-related research and development services for the TTR program. Q3 revenue was nearly flat year over year.
- Nine-month operating expenses increased $28.4 million, mainly from higher research materials and services, personnel costs, and laboratory-equipment depreciation. Management expected both R&D and G&A expenses to continue increasing through 2018.
- Nine-month net loss widened by $22.7 million. Higher interest income partly offset increased operating costs.
- Cash declined $47.4 million during the first nine months. The company received $9.5 million from option exercises and $0.6 million through its employee stock purchase plan.
- Intellia adopted ASC 606 on January 1, 2018. The change increased Q3 revenue by $0.3 million versus legacy accounting but reduced nine-month revenue by $0.9 million; reported 2018 and 2017 revenue are therefore not fully comparable.
Outlook, programs, and key risks
- Management estimated that September 30 cash, together with expected Novartis technology-access fees and research funding, would fund operating expenses and capital expenditures through mid-2020. This estimate excluded potential collaboration milestones and depended on assumptions that could prove wrong.
- Intellia said optimization work on its LNP-CRISPR/Cas9 delivery system could move the expected ATTR IND submission from 2019 to 2020. The company reported encouraging non-human-primate results, including TTR reductions, but these were preclinical findings, not evidence of human safety or efficacy.
- In July 2018, Intellia and Regeneron entered a co-development/co-promotion agreement for ATTR; Intellia is the clinical and commercial lead, and Regeneron funds 50% of specified program R&D costs.
- On October 12, 2018, after quarter-end, Intellia filed a shelf registration and entered an at-the-market agreement allowing up to $100 million of common-stock sales, subject to the registration statement and its limitations. The sales agent’s commission is 3% of gross proceeds; sales could dilute existing holders.
- On October 17, 2018, Intellia initiated arbitration against Caribou over whether two guide-RNA patent families fall within Intellia’s exclusive human-therapeutics license. Caribou disputes that interpretation. The outcome and financial impact are uncertain.
- The Federal Circuit affirmed termination of the UC/Vienna/Charpentier–Broad patent interference on September 10, 2018; the proceeding did not decide which party invented the disputed technology first.
- Principal risks include the unproven nature of CRISPR-based human therapeutics, uncertain delivery, efficacy and safety, regulatory and clinical-development uncertainty, manufacturing and funding needs, dependence on collaborators, and significant patent ownership and licensing disputes. Intellia reported no product revenue and expected continuing losses.
Investor facts to verify
- Track ATTR IND-enabling work and whether the target submission timing remains 2020; distinguish preclinical results from clinical evidence.
- Monitor cash use, collaboration receipts, and management’s mid-2020 runway assumptions.
- Check whether Intellia uses the $100 million ATM facility and assess resulting dilution and proceeds.
- Follow the Caribou arbitration and broader CRISPR patent proceedings for effects on licensed rights, development plans, and potential costs.
- Review subsequent Regeneron and Novartis program progress, funding, target selections, and any changes to collaboration arrangements.