Caribou Biosciences, Inc. — Q3 2021 Form 10-Q
Business context and reporting period. The filing covers the three and nine months ended September 30, 2021. Caribou is a clinical-stage CRISPR genome-editing biotechnology company developing allogeneic CAR-T and CAR-NK therapies. It has no approved products and has not generated product-sales revenue; reported revenue is from licensing and collaborations.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Licensing and collaboration revenue | $4.0m | $1.2m | $7.0m | $11.4m |
| Research and development expense | $15.8m | $6.2m | $37.1m | $22.4m |
| General and administrative expense | $6.8m | $3.2m | $16.5m | $9.9m |
| Net loss | $21.0m | $7.9m | $48.4m | $19.6m |
| Net loss per share | $0.46 | $0.93 | $2.20 | $2.31 |
| Operating cash used | Not stated for quarter | Not stated for quarter | $11.1m | $25.1m |
At September 30, cash and cash equivalents were $435.3m, versus $16.0m at December 31, 2020; total assets were $462.0m and total liabilities $57.6m. Current assets were $449.0m and current liabilities $26.2m. The company reported no outstanding PPP loan or other promissory-note debt; its $1.6m PPP loan was forgiven in May 2021. It had $42.6m of future minimum operating lease payments, including a ten-year Berkeley facility lease.
Gross and operating margins are not meaningful for this pre-commercial business; the filing does not present product gross margin. The company reported an accumulated deficit of $79.3m. Nine-month cash from financing was $433.0m, mainly from $321.0m net IPO proceeds and $108.8m net Series C proceeds. Investing activities used $2.4m.
Material changes versus comparable periods
- Q3 revenue rose 232%, primarily from $2.3m recognized under the AbbVie collaboration and higher revenue from other licenses. Nine-month revenue fell 38%, largely because the prior-year period included $7.5m of non-cash revenue from a related-party license and $0.8m from Genus; AbbVie contributed $2.8m in the 2021 nine-month period.
- Q3 and nine-month R&D expenses rose 156% and 66%, respectively, driven by clinical and contract manufacturing activity, preclinical programs, payroll, and licensing-related costs. G&A rose 108% and 67%, respectively, including higher payroll, public-company, insurance, and facility costs.
- Net loss increased 164% in Q3 and 147% for the nine-month period. The 2021 nine-month loss included a $3.6m non-cash expense from revaluing the MSKCC success-payment liability and a $1.6m gain from PPP loan forgiveness. 2020 included a $1.5m income-tax benefit and $7.5m non-cash license revenue.
- The July 2021 IPO and full over-allotment raised $321.0m net. Preferred shares converted into common stock at the IPO; common shares issued and outstanding were approximately 60.0m at quarter-end.
Outlook, commentary, and risks
- Management expected September 30 cash to fund the current operating plan for at least 12 months from the financial statements’ issuance. The company expects substantial future losses and increased R&D, hiring, public-company, and manufacturing costs; additional capital may be needed.
- CB-010 entered a Phase 1 trial, with initial data expected in 2022. CB-011 remained preclinical, with an IND filing expected in 2022; CB-012 remained preclinical, with an IND filing expected in 2023. These are forward-looking expectations, not guaranteed outcomes.
- AbbVie selected its initial program slot under a collaboration with a $30m upfront payment. The agreement includes potential development and regulatory milestones of up to $150m and sales milestones of up to $200m per program slot, plus royalties; milestone consideration was constrained in the reported revenue accounting.
- Key risks include clinical, regulatory, and manufacturing uncertainty; reliance on third-party manufacturers and trial providers; intellectual-property disputes and license obligations; potential financing needs; and COVID-19-related supply or operating disruptions. The company said early donor-cell supply delays had largely eased but could recur.
- The MSKCC success-payment liability was $6.2m at September 30, measured using significant unobservable assumptions. The agreement permits success or change-of-control payments up to $35m in aggregate; the triggering period had not yet begun.
Most important facts for investors to verify
- Cash runway assumptions against planned clinical-trial, manufacturing, and hiring expenditures.
- CB-010 trial enrollment and the timing, quality, and interpretation of anticipated data; progress toward CB-011 and CB-012 IND filings.
- Revenue concentration and the timing and terms of collaboration payments, including AbbVie milestones and possible program expansion.
- Potential dilution from equity compensation and future fundraising, and the scale of contingent licensing, milestone, royalty, lease, and MSKCC obligations.
- Whether the reported $6.2m MSKCC liability changes materially as stock value and valuation assumptions change.