Editas Medicine, Inc. — Q3 2022 Form 10-Q
Business context and reporting period. Clinical-stage genome-editing company developing in vivo, ex vivo and cell-therapy medicines. This unaudited filing covers the quarter and nine months ended September 30, 2022. Editas had no product sales and remained dependent on financing and collaboration receipts.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Collaboration and other R&D revenue | $0.04 million | $6.20 million | $13.18 million | $13.08 million |
| Research and development expense | $41.33 million | $29.27 million | $122.96 million | $104.95 million |
| General and administrative expense | $16.24 million | $16.19 million | $52.72 million | $59.66 million |
| Operating loss | $57.52 million | $39.25 million | $162.50 million | $151.54 million |
| Net loss | $55.73 million | $39.08 million | $159.69 million | $151.07 million |
| Basic and diluted loss per share | $0.81 | $0.57 | $2.33 | $2.24 |
- Q3 revenue fell 99%, primarily because BMS exercised an option for an additional program in Q3 2021, with no corresponding revenue in Q3 2022. Nine-month revenue was broadly flat, including a license-agreement milestone payment.
- Q3 R&D expense rose 41%, mainly from external clinical and manufacturing development costs, staffing and facilities. Nine-month R&D rose 17%; G&A fell 12%, primarily due to lower stock-based compensation and patent-related fees.
- Interest income increased to $1.79 million in Q3 and $2.81 million for the nine-month period. The filing does not provide a meaningful operating-margin measure given minimal collaboration revenue and ongoing losses.
- At September 30, cash and cash equivalents were $210.7 million and marketable securities totaled $267.8 million, or $478.5 million combined. Total current assets were $426.6 million versus current liabilities of $42.3 million. Accumulated deficit was $1.02 billion.
- Operating cash outflow was $135.1 million for the first nine months, compared with $129.2 million a year earlier. Investing activities provided $141.6 million, mainly from securities maturities; financing provided $0.7 million, versus $281.0 million in 2021, which included public-offering proceeds.
- The filing reports no borrowings. Operating lease liabilities were $21.3 million, and future minimum non-cancelable lease payments were $23.0 million.
Material changes, outlook and risks
- Management expected existing cash, cash equivalents and marketable securities to fund operating and capital requirements into 2024, while cautioning that actual cash use and funding needs could differ. It does not expect profitability in 2022 or the foreseeable future and expects expenses to increase as programs advance.
- Clinical update: Editas remained on track to provide a BRILLIANCE trial update in November 2022, including safety data for dosed adult and pediatric patients and adult mid- and high-dose efficacy data. In the RUBY trial, the second EDIT-301 patient had been dosed; initial preliminary data were expected by year-end 2022. FDA removed the previously disclosed partial clinical hold on RUBY in July 2022. For EDIT-301 in TDT, the first patient’s cells had been edited and dosing was being scheduled.
- EDIT-202 remained in preclinical development, advancing toward IND-enabling studies. Most other research programs were preclinical or earlier, with substantial development and clinical risks.
- Key risks include trial, regulatory and product-development uncertainty; the need for substantial additional capital; and CRISPR patent priority, validity and opposition disputes. The filing describes multiple U.S. patent interferences and European patent challenges that could narrow or jeopardize licensed rights. Broad and Harvard-related patent proceedings also create substantial, indeterminable reimbursement commitments; $6.1 million was expensed for these reimbursements in the first nine months of 2022.
- Editas had an unused at-the-market facility permitting up to $300 million in gross sales. Management cited potential dilution or unfavorable financing terms if additional capital is raised. COVID-19 had not materially affected results or liquidity in the reported period, though near-term operational risks remained.
- Management concluded disclosure controls were effective as of September 30, 2022; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Whether the promised November 2022 BRILLIANCE update and year-end RUBY data were delivered, and what the complete safety and efficacy results showed.
- Actual cash use, subsequent financing, and whether the projected runway into 2024 remained achievable.
- Progress and dosing timing in the EDIT-301 TDT study, and progress toward IND-enabling work for EDIT-202.
- Developments and potential financial or intellectual-property consequences from the CRISPR interference, opposition and appeal proceedings.
- Future collaboration revenue timing, including BMS option or milestone activity, and the size and timing of ongoing patent-related reimbursement obligations.