Editas Medicine, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; unaudited consolidated results. Editas is a clinical-stage genome-editing company and has not generated product revenue.
Financial performance and liquidity
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Collaboration and other R&D revenue | $6.5 million | $5.7 million; up 14% |
| Research and development expense | $41.9 million | $34.6 million; up 21% |
| General and administrative expense | $21.4 million | $17.8 million; up 21% |
| Total operating expense | $63.4 million | $52.3 million |
| Operating loss | $56.9 million | $46.6 million |
| Net loss | $56.7 million | $37.7 million; loss widened 50% |
| Net loss per share, basic and diluted | $0.86 | $0.69 |
| Cash used in operating activities | $49.5 million | $54.1 million |
At March 31, 2021, cash and cash equivalents were $354.9 million and marketable securities totaled $368.3 million, or $723.2 million combined. Total assets were $780.3 million, total liabilities $142.3 million, and stockholders’ equity $638.0 million. Accumulated deficit was $721.9 million. The balance sheet presents no borrowings; liabilities include deferred revenue and operating lease liabilities. Gross margin is not presented, as the company has no product sales.
Cash, cash equivalents and restricted cash increased $215.2 million during the quarter, largely reflecting $261.5 million of financing cash flow. The January public offering and February underwriters’ option generated approximately $249.5 million net proceeds; the company also received $12.0 million from option exercises. Management expects existing cash, cash equivalents, marketable securities and anticipated interest income to fund operating and capital needs well into 2023, while noting that estimates may prove wrong and additional capital will be needed.
Material changes and notable items
- Revenue rose 14%, primarily from recognizing $5.7 million of previously deferred Juno collaboration revenue. Revenue remains collaboration-based, not product revenue; $89.4 million of deferred revenue remained at quarter-end.
- R&D expense increased chiefly due to approximately $9.0 million of sublicense and license fees, primarily success payments triggered by market-capitalization milestones. Lower external R&D costs, including costs associated with the former Allergan arrangement, partly offset the increase.
- G&A expense growth included a $5.1 million increase in stock-based compensation, associated with accelerated vesting of the former CEO’s awards and awards granted in connection with the new CEO’s February 2021 appointment.
- Q1 2020 included $7.3 million of gains on corporate equity securities; Q1 2021 did not. Total other income fell from $8.9 million to $0.2 million, contributing to the larger net loss.
- The company issued Broad 303,599 common shares to settle $27.5 million of payment obligations under license and research agreements. Broad/Harvard patent proceedings remain a source of costs; reimbursement commitments are substantial but not determinable.
Outlook, programs and risks
- Management expects expenses and operating losses to increase and does not expect profitability in 2021 or the foreseeable future. Funding needs depend on development, clinical, regulatory and intellectual-property costs; further equity financing could dilute shareholders.
- For EDIT-101, the LCA10 Phase 1/2 trial began dosing its adult mid-dose cohort in Q1. Initial data from the first two cohorts were expected by year-end 2021. COVID-19 slowed enrollment in 2020.
- For EDIT-301, the RUBY sickle-cell trial was active and recruiting, with dosing expected to begin by year-end 2021. The filing also says the FDA imposed a partial clinical hold and requested development of a potency assay. Editas planned to submit a beta-thalassemia IND by year-end 2021.
- COVID-19 had not materially affected Q1 financial condition, results or liquidity, but its ultimate effects on trials, operations and access to capital remained uncertain. Key risks include clinical and regulatory failure, trial delays, financing availability, competition and intellectual-property disputes.
- The filing reports no material changes to previously disclosed risk factors or contractual obligations, no off-balance-sheet arrangements, and effective disclosure controls as of March 31, 2021.
Important facts for investors to verify
- Whether EDIT-301’s partial clinical hold and potency-assay request affect the planned dosing timeline.
- Progress and data timing for EDIT-101, including the effects of trial enrollment and COVID-19 disruptions.
- Whether the stated funding runway through 2023 remains achievable as clinical and operating costs rise.
- The timing and likelihood of Juno milestones or other collaboration funding, given that contingent Juno payments were identified as the only significant committed potential external funding source.
- The continuing cost and outcome exposure from Broad and Harvard patent proceedings and license-related success payments.