Intellia Therapeutics, Inc. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020; filed May 7, 2020. Intellia is a preclinical-stage CRISPR/Cas9 genome-editing therapeutics company. It had no product sales; all revenue to date was collaboration revenue.
Financial performance and liquidity
| Metric | Q1 2020 | Q1 2019 / comparison |
|---|---|---|
| Collaboration revenue | $12.9 million | $10.4 million; up $2.5 million |
| Research and development expense | $34.7 million | $23.7 million; up 46% |
| General and administrative expense | $11.3 million | $10.5 million |
| Total operating expenses | $46.0 million | $34.2 million |
| Operating loss | $33.0 million | $23.8 million |
| Interest income | $1.2 million | $1.9 million |
| Net loss; loss per share | $31.8 million; $0.63 | $21.9 million; $0.49 |
| Cash used in operating activities | $38.5 million | $21.5 million |
Revenue growth reflected $4.8 million of Regeneron ATTR program research and development services and a $5.0 million Novartis milestone after FDA acceptance of Novartis’s IND for a sickle-cell disease cell therapy. The filing identifies no meaningful product gross margin; the company remained loss-making and dependent on collaborations and financing.
At March 31, 2020, cash and cash equivalents were $81.0 million and marketable securities were $169.3 million, totaling $250.3 million. Total current assets were $269.8 million versus current liabilities of $35.3 million. Total assets were $314.8 million and stockholders’ equity was $247.8 million. The filing reports no borrowings; liabilities included operating lease liabilities and deferred revenue. Accumulated deficit was $332.7 million.
Cash and cash equivalents increased $23.8 million during the quarter: operating activities used $38.5 million, investing activities provided $57.4 million, largely from net maturities of marketable securities, and financing activities provided $4.9 million. The company issued 351,252 shares through its at-the-market program for approximately $5.1 million net proceeds.
Material changes versus Q1 2019 and year-end 2019
- Net loss widened by $9.9 million as operating expenses grew faster than collaboration revenue. R&D spending rose $10.9 million, principally reflecting pipeline and platform development, manufacturing costs for NTLA-2001 and NTLA-5001, workforce growth, and facilities.
- Operating cash use increased $17.1 million year over year. Accounts receivable rose to $13.4 million from $4.6 million at year-end 2019, while cash and marketable securities together declined to $250.3 million from $284.5 million.
- Regeneron elected to reduce its share of ATTR worldwide development costs and profits from 50% to 25%, effective June 2020. Intellia remains the clinical and commercial lead party.
- Intellia extended its 130 Brookline lease through January 2031, recording approximately $7.3 million in new right-of-use assets and lease liabilities, and signed a lease for approximately 39,000 square feet at 281 Albany Street, expected to commence in October 2020.
Outlook, commentary and key risks
- Management expected R&D expense to increase during 2020 as it expanded development activities. It said cash, cash equivalents and marketable securities, together with Regeneron research and cost-reimbursement funding, were expected to fund operations and capital needs at least through the end of 2021, subject to assumptions and excluding certain potential milestone proceeds or strategic uses of capital. The liquidity note separately states funding for at least 12 months following issuance of the statements.
- At the filing date, management targeted an IND or equivalent submission for NTLA-2001 in mid-2020 and first-patient dosing in the second half of 2020, subject to COVID-19 impacts. It targeted an IND for NTLA-5001 in the first half of 2021 and for NTLA-2002 in the second half of 2021. NTLA-2002 was announced as a development candidate on May 7, 2020, after quarter-end.
- COVID-19 could disrupt research, manufacturing, clinical-site availability, supply chains, regulatory reviews and financing access. The company said it could not reasonably estimate the pandemic’s financial or operational impact.
- CRISPR/Cas9 therapeutics were unvalidated clinically; all lead programs remained preclinical, with substantial efficacy, safety, manufacturing, regulatory, commercialization and funding uncertainty. Intellia warned it may need additional capital, which could dilute shareholders or require reduced or delayed development.
- Intellectual-property uncertainty includes the Caribou arbitration and ongoing disputes over foundational CRISPR/Cas9 patent rights. The parties still had to negotiate or litigate terms of the arbitration panel’s award concerning specified guide-RNA modifications.
- Novartis’s research term ended in December 2019, though the agreement remains in effect and potential future milestones and royalties remain. Contingent license milestone payments were uncertain and not reasonably estimable.
Important facts for investors to verify
- Whether NTLA-2001’s planned IND filing and clinical start occurred, and how COVID-19 affected timelines and costs.
- Whether the stated runway through year-end 2021 remains supported by spending, collaboration funding and financing assumptions.
- The financial and development impact of Regeneron’s reduced ATTR cost and profit share beginning June 2020.
- Progress and potential exposure in the Caribou arbitration and broader CRISPR/Cas9 patent proceedings.
- Future cash burn, use of the remaining $140.0 million capacity under the 2019 at-the-market sales agreement, and associated dilution.
- Lease commencement, rent and build-out obligations for the new Albany Street facility.