CRISPR Therapeutics AG — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. CRISPR Therapeutics is a gene-editing biotechnology company whose programs remain principally in research and clinical development; it reported no product sales. Amounts below are in U.S. dollars.
Financial results and liquidity
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Revenue | $100.0 million | $0.9 million |
| Research and development expense | $99.9 million | $118.2 million |
| General and administrative expense | $22.4 million | $28.0 million |
| Collaboration expense, net | $42.2 million | $30.6 million |
| Operating loss | $64.5 million | $176.0 million |
| Other income, primarily investment interest | $12.7 million | $0.4 million |
| Net loss | $53.1 million | $179.2 million |
| Net loss per share, basic and diluted | $0.67 | $2.32 |
| Operating cash flow | $8.8 million provided | $135.2 million used |
| Cash, cash equivalents and marketable securities | $1,889.5 million at March 31, 2023 | $1,868.4 million at December 31, 2022 |
The $100.0 million collaboration revenue was an upfront payment from Vertex under March agreements relating to diabetes programs and a non-exclusive license. It is a one-time payment recognized when the license was delivered, not product revenue. Operating expenses totaled $164.5 million; the resulting operating loss was $64.5 million. Net loss was lower than operating loss partly because of investment income. The filing does not present conventional product gross margins.
At March 31, current assets were $1,908.0 million and current liabilities were $146.8 million. Total liabilities were $389.5 million, including operating lease liabilities; the filing reports no conventional borrowings in the presented balance sheet. Cash and cash equivalents were $344.4 million, marketable securities were $1,545.1 million in total, and restricted cash was $11.7 million. Accumulated deficit was $899.2 million.
Material changes versus the prior comparable period
- Revenue increased by $99.1 million, principally because of the Vertex upfront payment; Q1 2022 revenue was not material.
- Net loss narrowed by $126.2 million. Operating expenses fell $12.4 million overall, as lower R&D and G&A costs more than offset higher collaboration expense.
- R&D expense declined $18.3 million, primarily from lower external research and manufacturing costs, license fees, and stock-based compensation.
- Collaboration expense rose $11.5 million, mainly due to increased exa-cel manufacturing and other pre-commercial costs. The amount was net of $2.8 million of Vertex reimbursements, versus $7.4 million in Q1 2022.
- Operating cash flow improved to positive $8.8 million, substantially reflecting the upfront payment and changes in operating assets and liabilities. Investing cash flow was positive $117.8 million, mainly reflecting marketable-security maturities exceeding purchases.
Business developments, outlook and risks
- Exa-cel: The lead candidate for transfusion-dependent beta thalassemia and severe sickle cell disease is partnered with Vertex. Enrollment was complete in the two principal trials; rolling U.S. BLA submissions had been completed, and EU and UK marketing applications were under review. The filing describes ongoing pediatric studies and long-term follow-up.
- Other programs: The company reported ongoing clinical development of allogeneic CAR T candidates, diabetes cell-therapy candidates, and in vivo programs. The FDA cleared the CTX131 IND in Q1 2023; the candidate entered an ongoing Phase 1/2 trial.
- Diabetes agreements: The March 2023 agreements with Vertex and ViaCyte generated the $100.0 million upfront payment. CRISPR may receive up to $230.0 million in specified milestones and low-to-mid-single-digit royalties under the non-exclusive license; these milestones were fully constrained at quarter-end and royalties depend on qualifying sales.
- Runway: Management expected existing cash resources to fund operating expenses and capital expenditures for at least 24 months, excluding potential additional Vertex proceeds and future financings. This estimate depends on assumptions that may prove incorrect. The company expects continued losses and may seek additional capital.
- Contingencies and risk: Potential payments under collaborations and licenses include substantial milestone and royalty obligations; no contingent payments were accrued at March 31. Litigation and intellectual-property proceedings may arise in the ordinary course, but management said no pending claims were then likely to have a material adverse effect.
- Banking risk: The company added a risk factor concerning instability and failures in the banking system. Its exposure to SVB, Signature Bank, Silvergate Capital and other banks in financial difficulty was described as immaterial at the filing date, but future events could threaten access to cash and investments.
- Management reported no material impact from inflation or the coronavirus pandemic on Q1 results and said disclosure controls were effective as of March 31, 2023.
Most important facts for investors to verify
- Regulatory review timelines and eventual decisions for exa-cel in the United States, EU and UK, as well as clinical safety and efficacy updates.
- Whether the $100.0 million diabetes-related upfront payment is followed by milestone achievement, product development progress, and any eventual royalty-generating sales.
- Cash deployment, investment maturities and operating burn relative to management’s stated 24-month runway estimate.
- Changes in exa-cel collaboration costs, cost deferrals, and the effect of the agreement’s 40%/60% allocation of future exa-cel net profits or losses.
- Potential dilution from equity financing and share-based compensation; the company had 78,863,734 shares outstanding at March 31, 2023.
- Developments in banking-sector risk, intellectual-property disputes, and other contingent collaboration or license obligations.