Intellia Therapeutics, Inc. — Q3 2020 Form 10-Q
Reporting period: Three and nine months ended September 30, 2020. The filing was signed November 5, 2020. Intellia is a clinical-stage genome-editing company developing CRISPR/Cas9 therapeutics; it had no product sales, and all revenue to date was collaboration revenue.
Financial highlights
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Collaboration revenue | $22.2 million | $10.6 million | $51.4 million | $32.2 million |
| Research and development expense | $39.8 million | $27.5 million | $112.2 million | $76.7 million |
| General and administrative expense | $10.6 million | $8.4 million | $33.4 million | $32.1 million |
| Operating loss | $28.1 million | $25.3 million | $94.2 million | $76.6 million |
| Net loss | $27.8 million | $23.6 million | $92.0 million | $71.3 million |
| Basic and diluted loss per share | $0.47 | $0.49 | $1.70 | $1.53 |
At September 30, cash and cash equivalents were $179.7 million and marketable securities were $228.2 million, totaling approximately $407.9 million. Current assets were $416.3 million versus current liabilities of $55.9 million (about 7.5x current coverage). The balance sheet reports no borrowings; operating lease liabilities totaled $22.2 million. Accumulated deficit was $392.9 million. No gross profit or product margin is presented.
For the nine months, operating cash use was $9.7 million, compared with $74.6 million in 2019; investing cash use was $3.6 million, and financing provided $137.7 million. The lower operating cash use principally reflected Regeneron collaboration receipts and a $50.8 million increase in deferred revenue, rather than a reduction in operating losses. Financing included $107.7 million net from a June follow-on offering, $14.7 million from at-the-market sales, and $12.6 million recorded from Regeneron’s stock purchase. Common shares outstanding rose from 50.2 million at year-end 2019 to 58.8 million at September 30, 2020.
Changes and notable items
- Nine-month revenue increased 60% year over year, while net loss widened by $20.8 million. R&D expense rose 46%, driven by pipeline and platform work, clinical manufacturing preparation, preclinical studies, workforce growth, and facility costs.
- Revenue included an $8.4 million cumulative catch-up adjustment following the Regeneron amendment and $15.3 million recognized when the Factor VIII hemophilia A license transferred. These items make reported revenue less indicative of recurring operating revenue.
- Interest income fell to $2.1 million for the first nine months from $5.3 million, reflecting lower investment income and market rates.
- In May, Intellia amended and extended its Regeneron collaboration through April 2024, added five liver targets and an ex vivo license, and entered hemophilia A/B co-development agreements. Regeneron paid a $70 million upfront amount (including a $25 million term-extension fee) and purchased shares for $30 million. Hemophilia development costs and profits are split 35% to Intellia and 65% to Regeneron. For ATTR, Regeneron reduced its cost/profit share from 50% to 25%, effective mid-June 2020.
- Novartis’ research term had ended in December 2019, but downstream milestones and royalties remain possible. FDA acceptance of Novartis’ sickle-cell IND triggered a $5 million milestone recognized in Q1 2020.
Outlook, risks and contingencies
Management expected R&D expense to increase through 2020 as it expanded development work and advanced its programs. The filing describes the cash runway inconsistently: the financial-statement note says available cash, securities, and Regeneron funding were expected to cover at least 12 months after issuance, while MD&A says at least 24 months based on September 30 resources and Regeneron research and cost reimbursements. The 24-month estimate excluded potential milestones, extension fees, and strategic uses of capital and depended on assumptions that could prove incorrect.
- At the filing date, Intellia expected to dose the first NTLA-2001 ATTR trial patient in Q4 2020, subject to COVID-19 impacts; it was targeting an IND or equivalent submission for NTLA-5001 in the first half of 2021 and for NTLA-2002 in the second half of 2021.
- Management warned that COVID-19 could delay studies, site access, manufacturing, shipping, regulatory activity, and recruitment; the financial impact was not reasonably estimable.
- Material business risks include the unproven clinical safety and efficacy of CRISPR therapies, trial and manufacturing delays, dependence on collaborators and contract manufacturers, financing needs and potential dilution, competition, and regulatory and reimbursement uncertainty.
- Intellectual-property risks include the ongoing UC/Vienna/Charpentier–Broad patent interference and the Caribou arbitration over modified guide RNA rights. The filing reports no material change in litigation since year-end 2019 and no new litigation.
- License-related development, regulatory, and commercial milestone payments are contingent and their timing and amount were not reasonably estimable. No material off-balance-sheet arrangements were reported.
Key facts for investors to verify
- Reconcile the filing’s 12-month versus 24-month liquidity-runway statements and monitor cash use against the assumptions behind the longer estimate.
- Check the reported nine-month collaboration revenue of $51.4 million against the collaboration note’s stated $46.4 million recognized for the period; the $5 million Novartis milestone may explain the difference, but the presentation should be confirmed.
- Separate recurring collaboration activity from the $8.4 million catch-up adjustment and $15.3 million license-transfer revenue when assessing revenue trends.
- Track clinical and regulatory progress for NTLA-2001, NTLA-5001, and NTLA-2002, including any COVID-19-related changes to stated timelines.
- Monitor R&D spending, financing needs and dilution, Regeneron cost-sharing arrangements, and developments in the CRISPR intellectual-property proceedings.