Intellia Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021; unaudited. Intellia is a clinical-stage CRISPR/Cas9 genome-editing company developing in vivo and ex vivo therapies. It had no product sales; all reported revenue to date was collaboration revenue.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Collaboration revenue | $6.6 million | $16.3 million | $13.0 million | $29.2 million |
| Research and development | $58.9 million | $37.8 million | $98.2 million | $72.4 million |
| General and administrative | $16.7 million | $11.5 million | $30.3 million | $22.8 million |
| Operating loss | $(69.0) million | $(33.0) million | $(115.4) million | $(66.1) million |
| Net loss | $(68.8) million | $(32.4) million | $(115.0) million | $(64.2) million |
| Basic and diluted loss per share | $(1.01) | $(0.61) | $(1.70) | $(1.24) |
Margins: No product gross margin is reported; collaboration revenue is reported against operating expenses. The company remained loss-making, with operating expenses substantially exceeding revenue.
- Cash flow: Six-month operating cash use was $105.4 million, versus $18.9 million provided in 2020. Investing activities provided $7.7 million and financing activities provided $65.7 million. Cash, cash equivalents and restricted cash ended the period at $132.7 million.
- Liquidity: At June 30, cash and cash equivalents were $129.9 million and marketable securities totaled $421.4 million, or approximately $551.3 million combined. Current assets were $549.4 million and current liabilities $74.0 million.
- Debt and obligations: The balance sheet reports no borrowings. Operating lease liabilities totaled $70.7 million, including $7.4 million current; deferred revenue totaled $62.8 million. The company disclosed contingent license payments whose timing and amount were uncertain and not reasonably estimable.
- Subsequent financing: A July 2021 public offering of 4.76 million shares generated estimated net proceeds of $648.1 million. Management said cash, cash equivalents and marketable securities at June 30, together with the offering proceeds, were expected to fund operations and capital needs beyond 24 months, based on current assumptions.
Material changes versus prior periods
- Q2 revenue fell $9.7 million year over year; six-month revenue fell $16.2 million. Management attributed much of the decline to a prior-year $8.4 million cumulative catch-up adjustment under the Regeneron agreement and, for the six-month comparison, a $5.0 million Novartis milestone recognized in 2020.
- Q2 R&D increased 56% year over year and six-month R&D increased 36%, reflecting workforce growth, research materials and contracted services, higher stock-based compensation and facility costs. The 2021 expense included a one-time $10.0 million payment to Novartis related to a contract amendment.
- Six-month operating cash flow shifted from a $18.9 million source in 2020 to $105.4 million used in 2021. The prior period benefited from substantial collaboration payments, including a $70.0 million Regeneron upfront payment.
- Interest income declined to $0.2 million in Q2 and $0.4 million for the six months, from $0.6 million and $1.9 million, respectively, attributed to market conditions.
Outlook, developments and key risks
- Management expected R&D spending to rise during 2021 as it expanded development activities and advanced ATTR, HAE and AML programs. The company expects continued net losses and may need further financing; additional equity financing could dilute shareholders, while collaboration financing could require concessions of rights.
- NTLA-2001: Interim Phase 1 results from six ATTRv-PN patients showed mean serum TTR reductions of 52% at 0.1 mg/kg and 87% at 0.3 mg/kg at day 28. The six patients were generally well tolerated through day 28, with no serious adverse events reported in the interim analysis. Dose escalation was continuing, including a planned 1 mg/kg cohort; expansion was expected later in 2021, subject to identifying a recommended dose. These early results are limited and do not establish safety or efficacy in larger or later-stage studies.
- Other programs: The company had submitted a New Zealand clinical trial application for NTLA-2002 (HAE) and planned first-patient enrollment by year-end. It had submitted a UK application for NTLA-5001 (AML) to initiate a Phase 1 study.
- Collaborations and IP: A June 2021 agreement settled the Caribou arbitration. Intellia licensed back specified CRISPR/Cas9 IP for Caribou’s CB-010 program in return for an upfront payment, potential milestones and single-digit royalties. A June amendment to the Novartis agreement made certain CAR-T licenses non-exclusive and removed related diligence and reporting obligations; Intellia paid Novartis $10.0 million.
- NewCo: A venture with Cellex and Blackstone Life Sciences to develop universal CAR-T therapies closed in Q3 2021. Blackstone committed up to $250 million; Intellia, Cellex and Blackstone-related entities had equal ownership at initial closing. Subsequent collaboration and co-development agreements were entered into in July. Intellia cautioned that it shares control and may face execution, financial reporting and partner-dependence risks.
- Principal risks: CRISPR therapies remain clinically unvalidated and carry uncertain efficacy, safety, manufacturing and regulatory risks. Results from a small interim trial may not predict later outcomes. Other risks include clinical delays or failures, competition, reliance on Regeneron and Novartis, COVID-19 disruption, third-party manufacturing and supply, and significant CRISPR patent and licensing disputes. The filing describes ongoing patent interferences involving the foundational CRISPR/Cas9 IP.
- Other items: COVID-19’s operational and financial effects could not be reasonably estimated. The company reported effective disclosure controls as of June 30, 2021 and no material change in internal control over financial reporting.
Important facts for investors to verify
- Follow updated NTLA-2001 dose-escalation and expansion data, including durability, safety and clinically meaningful outcomes beyond the six-patient interim analysis.
- Track regulatory acceptance, trial initiation and enrollment for NTLA-2002 and NTLA-5001, and whether development timelines or spending change.
- Reconcile the stated runway of beyond 24 months with actual cash burn, the July offering proceeds, R&D growth and future financing needs.
- Review dilution from the July share issuance and equity compensation; shares outstanding were 68.3 million at June 30 and 73.5 million on July 30, 2021.
- Monitor the terms and performance of the Caribou, Regeneron, Novartis and NewCo arrangements, including contingent milestones, royalties, cost sharing and licensed-IP rights.
- Assess outcomes of CRISPR patent proceedings and any effects on Intellia’s ability to develop or commercialize its programs.