Editas Medicine, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023; financial statements are unaudited. Editas is a clinical-stage genome-editing company with no product sales to date.
Key financial results
Amounts in millions, except per-share data. The filing does not report product gross profit or gross margin; revenue is collaboration and other research and development revenue.
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Collaboration and other R&D revenue | $2.9 | $6.4 | $12.7 | $13.1 |
| Research and development expense | $29.8 | $43.7 | $67.6 | $81.6 |
| General and administrative expense | $17.2 | $16.9 | $40.2 | $36.5 |
| Operating loss | $(44.1) | $(54.2) | $(95.1) | $(105.0) |
| Net loss | $(40.3) | $(53.5) | $(89.3) | $(104.0) |
| Net loss per share, basic and diluted | $(0.56) | $(0.78) | $(1.27) | $(1.52) |
| Operating cash used | — | — | $(74.5) | $(87.1) |
Liquidity and capital
- At June 30, cash and cash equivalents were $220.8 million and marketable securities were $259.2 million, totaling $480.0 million. Total current assets were $441.0 million; total liabilities were $142.0 million.
- Cash, cash equivalents, and restricted cash increased $79.3 million in the first half, primarily reflecting $117.1 million net proceeds from a June public offering of 12.5 million shares. The company had not used its $300 million at-the-market facility.
- The filing reports no debt borrowings on the balance sheet. Lease liabilities were $37.2 million, including current and long-term amounts.
- Management expects existing cash, cash equivalents, and marketable securities to fund operating and capital requirements into the third quarter of 2025. The company expects continuing losses and says it will need substantial additional funding.
Material changes and operating developments
- Q2 revenue fell 55% year over year, principally because a BMS collaboration program opt-in occurred in Q2 2022 and had no comparable activity in 2023. First-half revenue decreased 3%.
- R&D expense declined 32% in Q2 and 17% for the first half, largely due to reprioritization and reduced external research spending, alongside lower license fees and reduced headcount-related costs. G&A rose 2% in Q2 and 10% for the first half, including higher professional-service spending for strategic business development. First-half stock-based compensation decreased.
- Higher interest income helped reduce net loss: first-half net interest income was $7.3 million versus $1.0 million in 2022. First-half net loss improved 14% year over year.
- The June offering increased shares outstanding to 81.6 million at June 30, from 68.8 million at December 31, 2022.
Outlook, programs, and risks
- EDIT-301: Management said it remained on track to dose 20 SCD patients in the RUBY trial by year-end 2023 and expected another clinical update by year-end. It also expected an additional EDITHAL TDT update by year-end. In June, the company reported early data from four RUBY patients and one EDITHAL patient, including increased fetal hemoglobin and no reported serious adverse events after infusion; the small early cohorts and myeloablative busulfan conditioning limit conclusions about longer-term safety and efficacy.
- The FDA granted EDIT-301 Orphan Drug Designation for SCD in April 2023. Other ongoing programs remain in research or preclinical stages, and the filing notes a high risk of program failure.
- The company does not expect to be profitable in 2023 or the foreseeable future. It anticipates increased expenses as it advances EDIT-301, expands manufacturing capacity, develops other programs, and supports intellectual-property and public-company costs.
- A manufacturing-space lease signed in Q2 provides for $87.8 million of payments over 10 years and is expected to commence in Q2 2024; it had not commenced for accounting purposes at June 30. Separately, existing non-cancelable operating leases had $45.3 million of future minimum payments.
- Patent opposition and interference proceedings involving licensed rights from Broad and Harvard create ongoing reimbursement costs that management says are substantial but not determinable. The company incurred $4.6 million of such expense in the first half of 2023.
- Key risks include clinical and regulatory uncertainty, the possibility that results will not predict later outcomes, manufacturing scale-up, intellectual-property disputes, and inability to obtain additional financing on acceptable terms. Management cautions that actual cash needs and runway may differ from its forecast.
Investor facts to verify
- Track RUBY and EDITHAL enrollment, durability of responses, safety, and the timing and content of promised year-end updates.
- Reconcile collaboration deferred-revenue disclosures: the balance sheet shows $68.9 million total deferred revenue ($60.7 million long-term), while MD&A separately cites $56.7 million related to BMS; the filing text does not clearly explain the difference.
- Assess cash burn, the assumptions behind the stated runway into Q3 2025, and the timing and terms of any future financing.
- Monitor the $87.8 million manufacturing lease commitment, existing lease obligations, and potentially unquantified patent-related payments.
- Consider dilution from the public offering and any future equity issuance; also note the filing states disclosure controls were effective and reports no material change in internal control over financial reporting.