CRISPR Therapeutics AG — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. The company develops CRISPR/Cas9 gene-editing therapies and has no product sales to date. Financial amounts below are in U.S. dollars.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Total revenue | $0.2 million | $900.7 million | $1.1 million | $901.2 million |
| Research and development | $123.2 million | $82.3 million | $241.5 million | $154.0 million |
| General and administrative | $26.3 million | $28.8 million | $54.3 million | $52.3 million |
| Collaboration expense, net | $33.9 million | $26.9 million | $64.6 million | $46.9 million |
| Net income (loss) | $(185.8) million | $759.2 million | $(365.1) million | $646.1 million |
| Operating cash flow | Not separately presented for the quarter | $(277.2) million | $706.3 million |
- The prior-year revenue and profit comparisons were dominated by Vertex’s $900 million upfront payment, recognized in Q2 2021 for an exa-cel license. 2022 collaboration revenue was not material; Q2 revenue was $158,000.
- Cash, cash equivalents and marketable securities totaled $2.074 billion at June 30, 2022, versus $2.379 billion at year-end 2021. Cash, cash equivalents and restricted cash declined by $426.9 million during the first half.
- Six-month investing cash use was $170.6 million, primarily reflecting net purchases of marketable securities and property and equipment; financing provided $21.0 million, mainly from option exercises and employee share purchases.
- Total liabilities were $372.5 million, including $242.4 million of operating lease liabilities; the filing reports no conventional borrowings. Current assets were $2.107 billion and current liabilities $120.0 million.
- No product gross margin is reported because the company has not generated product sales. The filing does not provide a meaningful operating margin for its development-stage business.
Material changes and business developments
- Six-month R&D expense increased $87.5 million year over year, mainly from external research and clinical/manufacturing costs, Boston facility expenses and increased headcount. Collaboration expense, net, rose $17.7 million, principally from manufacturing and pre-commercial costs.
- Exa-cel, developed with Vertex for transfusion-dependent beta thalassemia and severe sickle cell disease, was in Phase 3 trials; enrollment was complete in the adult trials, and two pediatric Phase 3 trials had begun. The company reported presenting updated data from 44 TDT and 31 SCD patients, but this filing text does not give clear efficacy or safety results.
- Q2 updates included initial CTX130 data from 18 patients in the lymphoma study and preliminary data from 14 patients in the renal cell carcinoma study; this filing text does not provide clear outcome values. The company also said it planned to shift from CTX120 to next-generation BCMA candidate CTX121.
- Accumulated deficit grew to $561.0 million from $195.9 million at year-end 2021. The share count outstanding was 77.8 million at June 30 and 78.0 million as of August 4, 2022.
Outlook, risks and unusual items
- Management expected existing cash to fund operating expenses and capital expenditures for at least 24 months, excluding additional Vertex proceeds and future capital raises. The estimate depends on assumptions that may prove incorrect; management expects continued losses and rising development costs.
- The company may defer part of its exa-cel collaboration costs after reaching specified annual spending thresholds; deferred amounts are recoverable by Vertex only as an offset against future program profitability, subject to caps. Vertex’s share of exa-cel net profits and losses is 60%, versus 40% for CRISPR Therapeutics, prospectively from July 2021.
- Potential Vertex milestones include a $200 million payment upon first marketing approval for exa-cel and other development, regulatory and commercial milestones. These amounts are contingent, and remaining milestones were fully constrained for revenue recognition at June 30, 2022.
- Marketable securities had $20.3 million of gross unrealized losses at June 30, 2022; the company reported a $15.2 million six-month unrealized loss in comprehensive income and no material credit risk or credit-impairment charge.
- Risks include clinical and regulatory uncertainty, manufacturing and commercialization challenges, dependence on collaborators, intellectual-property disputes, potential financing needs and possible COVID-19-related disruption. Management reported no material changes to previously disclosed risk factors and no pending legal matters it believed likely to have a material adverse effect.
Investor verification priorities
- Review the underlying exa-cel and CTX130 clinical data for patient follow-up, safety, efficacy and trial progress; the filing’s narrative does not quantify results.
- Assess the assumptions supporting the stated 24-month cash runway against the continuing operating cash burn and expected R&D, manufacturing and facility spending.
- Confirm the timing, conditions and economic allocation of Vertex milestones, cost deferrals and any future exa-cel commercialization proceeds.
- Monitor intellectual-property proceedings and other contingent commitments, including potential milestone and royalty obligations under licenses and collaborations.
- Track marketable-security valuation changes and future share issuance or financing activity, including use of the available at-the-market program.