CRISPR Therapeutics AG — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter report. Amounts below are in U.S. dollars; financial statement figures are converted from thousands to millions where appropriate.
Business context
CRISPR Therapeutics develops CRISPR/Cas9-based gene-editing medicines. Its lead program, CASGEVY (exa-cel), became the first approved CRISPR-based therapy in 2023 and is developed and commercialized with Vertex. The broader pipeline spans hemoglobinopathies, immuno-oncology and autoimmune diseases, in vivo editing, and type 1 diabetes. The company reported 407 full-time employees at year-end.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Collaboration revenue | $370.0 million | $0.4 million |
| Grant revenue | $1.2 million | $0.8 million |
| Total revenue | $371.2 million | $1.2 million |
| Research and development expense | $387.3 million | $461.6 million |
| General and administrative expense | $76.2 million | $102.5 million |
| Collaboration expense, net | $130.3 million | $110.3 million |
| Loss from operations | $(222.5) million | $(673.2) million |
| Other income, net | $71.8 million | $22.7 million |
| Net loss | $(153.6) million | $(650.2) million |
| Basic and diluted loss per share | $(1.94) | $(8.36) |
| Net cash used in operating activities | $(260.4) million | $(495.7) million |
Revenue was not from product sales: the company reported no product-sales revenue. FY2023 collaboration revenue comprised a $200 million CASGEVY approval milestone, recorded as a year-end receivable, and $170 million in Vertex diabetes-license upfront and milestone payments. Gross margin is not meaningful for this period because there were no product sales; the filing does not provide a comparable product gross-margin measure.
Cash, cash equivalents and marketable securities totaled $1.696 billion at December 31, 2023, down from $1.868 billion a year earlier. Total assets were $2.230 billion, total liabilities $346.8 million, and shareholders’ equity $1.883 billion. The balance sheet lists operating lease liabilities of $238.6 million; it does not list financial borrowings. The company had an accumulated deficit of $999.7 million.
Operating cash use fell year over year, supported in part by the $170 million of Vertex diabetes-license payments and lower operating expenses. Investing activities provided $374.6 million, mainly reflecting maturities of marketable securities exceeding purchases; financing activities provided $62.7 million, including $32.7 million of net share proceeds. The filing states that available cash and marketable securities were expected to fund the current operating plan for at least 24 months, while cautioning that actual spending could exceed assumptions.
Material changes and unusual items
- Total revenue rose sharply from $1.2 million to $371.2 million, primarily because of collaboration milestones and license payments, rather than product commercialization.
- Net loss narrowed by $496.6 million, reflecting higher collaboration revenue, lower R&D and G&A expenses, and higher interest income. R&D expense declined $74.3 million, mainly on lower external research and manufacturing costs; collaboration expense increased $20.0 million, including a third-party-license cost allocation.
- Other income increased to $71.8 million, primarily due to higher interest rates. FY2023 included a $17.5 million unrealized gain on marketable securities, compared with a $10.5 million unrealized loss in FY2022.
- At December 31, 2023, $200 million due from Vertex for the CASGEVY FDA SCD approval milestone was recorded in accounts receivable. The filing says the payment was received in the first quarter of 2024.
- The company deferred $80.9 million of its share of specified CASGEVY costs in 2023, compared with $36.1 million in 2022. These amounts were not recognized as liabilities at year-end; repayment is conditional on future program profitability and subject to annual caps. A separate $20 million payment to Vertex under the December 2023 amendment was paid in the first quarter of 2024.
Outlook, programs and risks
- Management expects continued losses and substantial R&D and manufacturing investment. The company may need additional capital over the longer term; further equity financing could dilute shareholders. It had $385.6 million remaining under its ATM prospectus supplement at year-end.
- CASGEVY received U.S. approval for SCD in December 2023. U.S. approval for TDT followed in January 2024, after the reporting period. Vertex leads development, manufacturing and commercialization under the collaboration; CASGEVY program net profits and losses are allocated 40% to CRISPR Therapeutics and 60% to Vertex.
- Management planned to initiate a CTX112 systemic lupus erythematosus trial in the first half of 2024 and to expand CTX131 trials into hematologic malignancies. CTX112 and CTX131 were in clinical trials; CTX310 and CTX320 had entered Phase 1; CTX211 was in a Phase 1/2 trial for type 1 diabetes.
- ViaCyte elected to opt out of the diabetes collaboration in December 2023; the opt-out became effective in early February 2024. The ongoing collaboration assets, including CTX211, became wholly owned by CRISPR Therapeutics, subject to royalties on future sales.
- Key risks include the uncertain safety, efficacy and regulatory pathway for gene editing; potential off-target edits and delayed adverse effects; clinical-trial enrollment and manufacturing challenges; reimbursement and market acceptance; and reliance on Vertex for CASGEVY. The company also disclosed ongoing CRISPR/Cas9 patent disputes, including an appeal concerning the 2022 patent-priority decision favoring the Broad Institute over the CVC Group.
- Subsequent to year-end, on February 13, 2024, the company entered into a registered direct offering for approximately $280 million of common shares at $71.50 per share, subject to customary closing conditions.
Important facts for investors to verify
- Whether CASGEVY can scale patient access, treatment-center capacity and manufacturing, and what commercial revenue and net profits CRISPR Therapeutics actually receives under the 40%/60% arrangement.
- Cash burn and runway assumptions, including future R&D and commercialization spending, deferred CASGEVY costs, and the effect of the 2024 share offering and potential further dilution.
- Clinical updates and safety data for CTX112, CTX131, CTX310, CTX320 and CTX211, including whether planned trial starts and expansions occurred.
- Developments in the CRISPR/Cas9 patent proceedings and any effect on the company’s freedom to operate, licensing costs or ability to commercialize products.
- Recognition and collection of collaboration milestones and the company’s dependence on milestone and license revenue, given the absence of product-sales revenue in FY2023.