CRISPR Therapeutics AG — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Amounts below are in U.S. dollars; financial statement amounts are converted from thousands to millions where appropriate. The company is a clinical-stage gene-editing biotechnology business and reported no product sales.
Business context and pipeline
The company is developing CRISPR/Cas9-based therapies across hemoglobinopathies, immuno-oncology, regenerative medicine and in vivo gene editing. Its lead program, exagamglogene autotemcel (exa-cel), is being developed with Vertex for severe sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT). Vertex leads global development, manufacturing and commercialization; net profits and losses are allocated 40% to CRISPR Therapeutics and 60% to Vertex, subject to the agreement’s terms.
Other programs include allogeneic CAR-T candidates CTX110, CTX112, CTX130 and CTX131; diabetes candidates VCTX210 and VCTX211; and in vivo programs CTX310 and CTX320. The filing says CTX310 had entered a Phase 1 trial.
Financial performance and position
| Metric | Q3 2023 | Nine months 2023 | Comparable 2022 |
|---|---|---|---|
| Revenue | $0 | $170.0 million | Q3: $0.1 million; nine months: $1.2 million |
| Operating expenses | $132.4 million | $462.1 million | Q3: $182.5 million; nine months: $542.8 million |
| Operating loss | $132.4 million | $292.1 million | Q3: $182.4 million; nine months: $541.6 million |
| Net loss | $112.2 million | $243.0 million | Q3: $174.5 million; nine months: $539.6 million |
| Other income, primarily investment interest | $20.7 million | $51.8 million | Q3: $7.3 million; nine months: $11.2 million |
| Net loss per share, basic and diluted | $1.41 | $3.07 | Q3: $2.24; nine months: $6.96 |
Nine-month 2023 revenue comprised a $100 million upfront payment from Vertex under the diabetes agreements and a $70 million research milestone recognized in Q2. There was no revenue under those agreements in Q3. Margins are not especially informative given the company’s development-stage business and zero Q3 revenue.
At September 30, 2023, cash and cash equivalents were $527.8 million and marketable securities were $1,212.1 million, totaling $1,739.8 million; restricted cash was another $11.8 million. Total assets were $2,086.8 million, total liabilities $359.0 million and shareholders’ equity $1,727.8 million. The balance sheet presents no borrowing or debt line; it reports operating lease liabilities of $241.6 million in total and deferred revenue of $19.3 million.
For the first nine months, operating cash use was $164.3 million, compared with $382.4 million in 2022. Investing activities provided $456.1 million, mainly reflecting marketable-security maturities exceeding purchases; financing activities provided $23.7 million, principally option exercises and employee share-plan contributions. Cash, cash equivalents and restricted cash increased $315.5 million to $539.6 million. Accumulated deficit was $1,089.0 million.
Material changes versus prior periods
- Q3 net loss narrowed by $62.4 million year over year, alongside a $50.1 million decrease in operating expenses and higher investment income.
- Nine-month net loss narrowed by $296.6 million, primarily reflecting the $170.0 million Vertex revenue and lower R&D and G&A spending, as well as higher investment income.
- R&D expense fell $65.9 million for the nine months, mainly from lower external research and manufacturing costs. G&A declined $21.6 million.
- Nine-month collaboration expense, net, rose $6.8 million to $110.3 million, reflecting increased exa-cel manufacturing and pre-commercial costs. In Q3 it was lower year over year, partly due to the timing of the cost-deferral threshold.
- Cash and cash equivalents rose from $211.9 million at year-end 2022, while marketable securities declined from $1,603.4 million to $1,212.1 million, reflecting portfolio maturities and cash management.
Outlook, risks and unusual items
Management expected existing cash, cash equivalents and marketable securities to fund operating expenses and capital expenditures for at least 24 months from the filing’s outlook, excluding potential additional Vertex receipts and future financings. Management cautioned that this estimate depends on assumptions that could prove incorrect, and anticipated continued losses and a need for additional capital over the longer term. No specific revenue or earnings guidance was provided.
At the filing date, exa-cel submissions were under review: FDA target action dates were December 8, 2023 for SCD (Priority Review) and March 30, 2024 for TDT (Standard Review). EU and UK reviews were also ongoing. These were pending regulatory decisions, not approvals.
CRISPR Therapeutics deferred $27.3 million of its 2023 share of specified exa-cel costs above the contractual threshold. Deferred amounts are payable to Vertex only as an offset against future program profitability, subject to contractual caps; no related liability had been recognized as of September 30 because recognition criteria were not met. Remaining development and commercial milestones under the Vertex agreements were generally constrained and not recognized as revenue. Under the diabetes license, up to $160 million of potential future milestones remained after the $70 million research milestone, plus potential low- to mid-single-digit royalties.
Key risks include clinical safety and efficacy, trial and regulatory timing, manufacturing and commercialization execution, intellectual-property disputes, collaboration dependence, and the possibility of needing further financing on unfavorable terms. Management reported no pending legal claims it believed likely to have a material adverse effect and no material changes to previously disclosed risk factors. Disclosure controls were assessed as effective.
Important facts for investors to verify
- Regulatory decisions and subsequent launch progress for exa-cel in SCD and TDT, including the status of the FDA and EU/UK reviews.
- Whether the 24-month liquidity estimate remains supported by cash burn, clinical and manufacturing spending, and future collaboration receipts.
- The accounting and eventual cash consequences of the $27.3 million deferred exa-cel costs and other collaboration cost-sharing obligations.
- Progress, safety, efficacy and enrollment across the clinical programs, particularly exa-cel, CTX310 and the allogeneic cell-therapy candidates.
- Achievement and recognition of remaining Vertex milestones, and the potential timing and value of any royalties or commercial revenue.