Editas Medicine, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Financial statements are unaudited. Editas is a clinical-stage genome-editing company with no product sales to date.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Collaboration and other R&D revenue | $0.4 million | $10.7 million | $6.9 million | $16.5 million |
| Research and development expense | $33.8 million | $28.0 million | $75.7 million | $62.6 million |
| General and administrative expense | $22.0 million | $14.1 million | $43.5 million | $31.9 million |
| Operating loss | $55.4 million | $31.3 million | $112.3 million | $78.0 million |
| Net loss | $55.3 million | $23.6 million | $112.0 million | $61.3 million |
| Basic and diluted loss per share | $0.81 | $0.43 | $1.67 | $1.12 |
| Operating cash used | — | — | $88.4 million | $84.9 million |
- At June 30, cash and cash equivalents were $337.8 million; marketable securities totaled $360.3 million. Combined cash, cash equivalents and marketable securities were $698.1 million. Total assets were $755.9 million and total liabilities were $142.5 million.
- Cash, cash equivalents and restricted cash increased by $198.2 million in the first half, primarily reflecting $278.6 million of financing cash flow, including $249.5 million net proceeds from a public offering and $28.6 million from option exercises. Investing activities provided $8.0 million.
- The filing reports no product revenue and no debt balance. Liabilities included operating leases and deferred revenue; no profit margin was reported, and profitability is not expected in 2021 or the foreseeable future.
Material changes and drivers
- Q2 revenue fell 96% year over year, mainly because the prior-year period included $7.6 million from an out-license and revenue under the Allergan alliance. First-half revenue declined 58%; the 2021 amount included $6.3 million recognized from the Juno collaboration.
- First-half operating expenses rose 26%. R&D expense increased 21%, reflecting higher license and sublicense fees, staffing, stock compensation and facility costs. G&A increased 36%, principally due to stock compensation, including former CEO separation-related award acceleration and awards to the new CEO and other employees.
- Net loss increased year over year in both periods. Lower collaboration revenue and lower other income contributed alongside higher expenses. Prior-year other income included unrealized gains on corporate equity securities.
- Shares outstanding increased to 68.2 million at June 30 from 62.6 million at year-end 2020, reflecting the public offering, option exercises and other equity awards.
Outlook, programs and risks
- Management expects existing cash, cash equivalents, marketable securities and anticipated interest income to fund operating and capital needs well into 2023. The company nevertheless expects substantial additional capital will be required; its May 2021 ATM facility permits up to $300 million in gross sales, but no shares had been sold under it by June 30.
- For EDIT-101, the company began enrolling patients in the adult high-dose and first planned pediatric cohorts in Q2. It expected to complete dosing of the adult high-dose and pediatric mid-dose cohorts in the first half of 2022, with initial data from the first two cohorts planned for September 2021.
- For EDIT-301, the RUBY sickle-cell trial was screening patients, with first dosing expected by year-end 2021. The FDA had imposed a partial clinical hold and requested development of a potency assay. The company remained on track to submit an IND for beta-thalassemia by year-end 2021.
- Key risks include clinical and regulatory uncertainty, the need for future financing and possible dilution, and extensive CRISPR patent priority and validity disputes. Five parallel U.S. patent interference proceedings involving Broad, CVC, ToolGen and Sigma-Aldrich were underway; outcomes and timing were uncertain. Certain in-licensed European patents had also been revoked or amended, with appeals pending.
- The company reported no significant financial or operating impact from COVID-19 in the first half, but noted uncertainty about potential effects on trials, operations and access to capital. It anticipated a full facility reopening in Q3 2021 under a hybrid work model.
- Broad and Harvard patent-cost reimbursements were $3.4 million in Q2 and $7.2 million in the first half; the total future commitment related to proceedings was not determinable. Contractual obligations listed $35.7 million of operating lease payments, excluding certain reimbursable costs and contingent license, milestone and royalty obligations.
Investor verification priorities
- Check subsequent disclosures for EDIT-101 cohort dosing and the planned initial clinical data presentation.
- Monitor the EDIT-301 potency-assay requirement, any change in the partial clinical hold, first-patient dosing and the planned beta-thalassemia IND.
- Track cash burn against management’s “well into 2023” runway estimate, future financing needs and any ATM share sales or dilution.
- Follow the CRISPR patent proceedings and related license-cost exposure, including whether any outcome affects the company’s intellectual property rights.