CRISPR Therapeutics AG — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; balance-sheet comparisons are to December 31, 2020. The company is a gene-editing biotechnology developer, with programs including CTX001, CTX110, CTX120 and CTX130. It reported no product sales and operates as a single segment.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Total revenue | $0.5 million | $0.2 million |
| Research and development expense | $90.6 million | $54.2 million |
| General and administrative expense | $24.5 million | $19.6 million |
| Operating loss | $114.5 million | $73.6 million |
| Net loss | $113.2 million; $1.51 per share | $69.7 million; $1.15 per share |
| Net cash used in operations | $100.7 million | $52.2 million |
Revenue consisted of $0.2 million of collaboration revenue and $0.3 million of grant revenue. The filing does not present a meaningful product gross margin; revenue was immaterial relative to operating costs. R&D expense rose $36.4 million, primarily from higher staffing and compensation, variable program costs and facilities. G&A expense increased $5.0 million, mainly from staffing and intellectual-property costs.
At March 31, cash and cash equivalents were $1.126 billion and marketable securities were $680.1 million, for combined cash, cash equivalents and marketable securities of $1.806 billion. Total current assets were $1.832 billion and current liabilities were $83.1 million. Total liabilities were $152.4 million; the filing reports no borrowings. Operating lease liabilities totaled approximately $61.5 million. Accumulated deficit was $686.7 million.
Cash used in investing activities was $167.9 million, principally reflecting marketable-security purchases and $7.0 million of property and equipment purchases. Financing provided $226.0 million, including $222.1 million net proceeds from common-share sales and $11.4 million from option exercises and employee share purchases. Cash, cash equivalents and restricted cash decreased $42.6 million to $1.143 billion.
Material changes and notable items
- Net loss increased $43.4 million year over year as operating expenses grew and other income declined.
- Common shares outstanding at March 31 were 75.7 million, up from 73.9 million at year-end, primarily reflecting ATM issuances and equity compensation.
- After quarter-end, on April 16, 2021, CRISPR and Vertex signed an amended and restated agreement covering CTX001 and other programs. Subject to required antitrust clearances and other conditions, CRISPR is to receive $900 million upfront and a one-time $200 million payment upon the first marketing approval of the initial product candidate. CTX001 profit and loss allocation is scheduled to change from equal sharing to 40% for CRISPR and 60% for Vertex from July 1, 2021, or a later date if specified clearance conditions are not met.
- The transaction had not closed as of the filing. The company cautioned that delay or failure to close could affect its share price, relationship with Vertex, costs and CTX001 development responsibilities.
Outlook, risks and commitments
Management estimated existing cash resources would fund operating expenses and capital expenditures for at least 24 months, excluding potential Vertex transaction proceeds and future financings. The estimate depends on assumptions that may prove incorrect. Management expects continuing losses and rising R&D, clinical-development and capital spending, including construction and build-out of Boston research facilities and a cell-therapy manufacturing facility.
- Clinical and regulatory success is uncertain across the pipeline; the filing highlights development, safety, manufacturing, enrollment, approval, intellectual-property and commercialization risks.
- COVID-19 could disrupt trial dosing, clinical sites, staffing, suppliers, manufacturing and timelines.
- The company has a $292.5 million minimum rental commitment over 152 months under its Boston lease, with commencement and rent expected in 2021 and 2022, respectively. A separate manufacturing lease commitment is expected to commence in Q2 2021, with annual rent of $3.9 million split equally with a partner for five years.
- Potential license and collaboration milestone and royalty payments are contingent. Litigation involving intellectual property and commercial matters may be costly, though management said no pending claim was likely to have a material adverse effect.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Key facts investors should verify
- Whether the Vertex agreement closed and whether the $900 million upfront payment and subsequent milestone conditions were met.
- Updated CTX001 clinical safety, efficacy, enrollment and regulatory timelines, alongside progress and data for CTX110, CTX120 and CTX130.
- Quarterly cash burn, capital expenditure needs, and whether the stated 24-month runway remains reasonable as programs and facilities expand.
- Future share issuance, dilution and ATM usage, as well as the timing and financial impact of lease and manufacturing commitments.
- Any material changes in COVID-19 effects, intellectual-property proceedings, collaboration terms or contingent milestone and royalty expectations.