CRISPR Therapeutics AG — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unaudited consolidated financial statements prepared under U.S. GAAP. The company develops CRISPR/Cas9-based gene-editing therapies and reports as one operating segment.
Financial performance and position
Amounts below are in millions of U.S. dollars, except per-share data. Revenue is not yet generated from product sales.
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Total revenue | $0.1 | $0.8 | $1.2 | $902.1 |
| Research and development expense | $116.6 | $83.5 | $358.1 | $237.5 |
| General and administrative expense | $27.0 | $23.7 | $81.3 | $76.0 |
| Collaboration expense, net | $38.9 | $22.5 | $103.4 | $69.4 |
| Net income (loss) | $(174.5) | $(127.2) | $(539.6) | $518.9 |
| Basic and diluted EPS | $(2.24) | $(1.67) | $(6.96) | $6.85 basic; $6.44 diluted |
| Operating cash flow | Not stated quarterly | $(382.4) | $625.0 |
- At September 30, cash, cash equivalents and marketable securities totaled approximately $1,973.1 million; total assets were $2,353.4 million and shareholders’ equity was $1,954.0 million.
- Cash, cash equivalents and restricted cash declined by $429.6 million during the first nine months to $510.3 million. Investing activities used $83.1 million and financing activities provided $36.1 million.
- No interest-bearing borrowings are listed on the balance sheet. Operating lease liabilities were $242.2 million in total; these are lease obligations, not reported borrowings.
- Marketable securities had $22.1 million of gross unrealized losses at quarter-end; the company reported a $17.0 million nine-month unrealized loss in comprehensive income and said it intended and was able to hold the securities until recovery.
Changes versus the prior comparable periods
- Nine-month revenue fell by $900.9 million, primarily because 2021 included Vertex’s $900 million upfront payment related to the amended exa-cel development and commercialization agreement. The 2022 revenue total was not material.
- The company shifted from $518.9 million of net income in the first nine months of 2021 to a $539.6 million net loss in 2022. The prior-year result principally reflected the Vertex upfront payment; 2022 expenses increased as programs advanced.
- Nine-month R&D expense increased $120.6 million, mainly from external research and clinical/manufacturing costs, higher employee costs, and facility costs associated primarily with the Boston headquarters.
- Nine-month net collaboration expense increased $34.1 million, mainly from manufacturing and pre-commercial costs under the Vertex collaboration.
- Operating cash flow changed from $625.0 million provided to $382.4 million used, largely reflecting the reversal from prior-year collaboration-related net income to current-year losses.
Outlook, management commentary and risks
- Management expected existing cash resources to fund operating expenses and capital expenditures for at least 24 months from the report date, excluding potential future Vertex proceeds and additional financing. Management cautioned that this estimate depends on assumptions and cash could be used sooner.
- The company expects continued losses and potentially increased R&D spending. It may seek additional capital through equity, debt, collaborations or other sources; equity financing could dilute shareholders, while collaborations could require granting rights to technology or candidates.
- Exa-cel: enrollment was complete in the adult Phase 3 TDT and SCD trials, and pediatric Phase 3 trials had begun. FDA rolling review was granted; submissions were expected to begin in November 2022 and be completed by the end of Q1 2023. European and UK marketing applications were described as on track for submission by year-end 2022. These were forward-looking expectations, not completed submissions or approvals.
- Pipeline updates included FDA clearance of the CTX112 investigational new drug application, a planned pivot from CTX120 to next-generation CTX121, and Canadian clearance of the VCTX211 clinical trial application.
- Clinical success, regulatory review, manufacturing and supply, intellectual-property rights, collaborator relationships, and access to financing remain material uncertainties. The filing also discusses possible COVID-19-related disruption. Management reported no material changes to the previously disclosed risk factors and no pending legal claim it considered likely to have a material adverse effect.
- For exa-cel, CRISPR’s prospective share of net profits and losses is 40%, with Vertex controlling development and commercialization. The company may defer a portion of its exa-cel costs after exceeding specified annual spending limits; deferred amounts are offset against future program profitability, subject to caps.
Important facts for investors to verify
- Whether exa-cel regulatory submissions proceeded on the stated timelines and the status of subsequent regulatory decisions.
- Whether the 24-month cash runway estimate remains reasonable given operating cash use, clinical/manufacturing spending, and any changes in capital plans.
- The pace and cost of clinical development, including R&D and Vertex collaboration expense, and any use of the cost-deferral provision.
- Progress, safety and efficacy data for exa-cel and other clinical programs, alongside manufacturing readiness and commercialization responsibilities.
- Potential dilution from the 2021 at-the-market program: as of September 30, 2022, the company reported 1.1 million shares sold for $178.8 million in aggregate proceeds, net of issuance costs.
- Exposure to intellectual-property proceedings and the outcome of the disclosed patent-priority appeal; the filing notes related legal and licensing risks.