CRISPR Therapeutics AG — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Amounts below are U.S. dollars; financial figures are in millions unless stated otherwise.
Business context
CRISPR Therapeutics is a gene-editing biotechnology company with clinical programs in hemoglobinopathies, oncology, regenerative medicine and rare diseases. It has no product sales to date. Its lead candidate, CTX001, is being developed with Vertex for transfusion-dependent beta thalassemia and severe sickle cell disease. CTX110, CTX120 and CTX130 are investigational allogeneic CAR-T programs.
Financial highlights
| Metric | Q3 2021 | Nine months 2021 | Comparable 2020 period |
|---|---|---|---|
| Revenue | $0.8 | $902.1 | $0.1 Q3; $0.3 nine months |
| Operating expenses | $129.7 | $382.8 | $92.5 Q3; $247.0 nine months |
| Operating income (loss) | ($128.8) | $519.2 | ($92.4) Q3; ($246.7) nine months |
| Net income (loss) | ($127.2) | $518.9 | ($92.4) Q3; ($241.8) nine months |
| Operating cash flow | Not separately provided | $625.0 | ($157.2) nine months |
- Nine-month collaboration revenue included a $900.0 million upfront payment from Vertex under the amended CTX001 agreement; it is not recurring product revenue. Q3 revenue remained minimal.
- Q3 R&D expense rose 48% to $105.3 million; nine-month R&D rose 65% to $304.2 million. Increases reflected program spending, staffing, stock compensation and facilities.
- Q3 G&A increased to $24.4 million from $21.5 million; nine-month G&A increased to $78.7 million from $62.4 million.
- Cash, cash equivalents and marketable securities totaled $2,477.4 million at September 30, 2021, including approximately $729.6 million held outside the U.S. The company reported an accumulated deficit of $54.7 million.
- Nine-month investing cash outflow was $1,026.7 million, mainly reflecting purchases of marketable securities and $72.5 million of property and equipment. Financing cash inflow was $244.6 million, including ATM share sales and option/ESPP proceeds.
- No borrowings are listed on the balance sheet; liabilities were $308.8 million, including operating lease liabilities. Current assets were $2,518.9 million versus current liabilities of $96.2 million.
- Profit margins are not representative of recurring operations given the large, one-time collaboration payment and the absence of product sales.
Material changes and outlook
- Under the Vertex amended and restated agreement, Vertex received an exclusive license and prospective control of CTX001 development and commercialization. The company received $900.0 million upfront and is eligible for a one-time $200.0 million payment upon first FDA or European Commission marketing approval of the initial product candidate.
- For CTX001, net profits and losses shifted from equal sharing to 40% for CRISPR Therapeutics and 60% for Vertex beginning July 1, 2021. The agreement also includes transition services and cost-sharing terms.
- Management expects existing cash to fund operating expenses and capital expenditures for at least 24 months from the filing’s assessment, excluding additional collaboration proceeds or future financing. Management cautions that this estimate depends on assumptions and cash could be used sooner.
- The company expects continued operating losses and rising R&D, G&A and capital spending, including construction of its Boston research headquarters and Framingham cell-therapy manufacturing facility. It does not expect to sustain the reported nine-month profitability.
- Boston office and laboratory lease commencement in Q2 2021 added a $149.8 million right-of-use asset and $147.9 million lease liability before tenant incentives. The lease runs to October 2034; the company expects to vacate its prior Cambridge premises around July 2022.
- COVID-19 could disrupt site access, patient dosing, trial timelines, regulatory review, suppliers and manufacturing. Other principal risks include clinical and regulatory uncertainty, manufacturing scale-up, intellectual-property disputes, financing and potential dilution. The company reported no pending legal matter management considered likely to have a material adverse effect.
Important facts for investors to verify
- How the $900.0 million Vertex payment is reflected in revenue and how much of future performance depends on collaboration milestones or royalties.
- Clinical progress, safety, efficacy and timelines for CTX001 and the CTX110, CTX120 and CTX130 trials, including any effects from COVID-19.
- The 40%/60% CTX001 economics, Vertex’s control rights, and the conditions for the potential $200.0 million approval milestone.
- Whether the 24-month cash runway estimate remains valid as trial, staffing, facility and manufacturing costs increase.
- Further ATM share issuance and dilution, facility commitments, and potential milestone, royalty and intellectual-property obligations.