Business context and reporting period
Caribou Biosciences, Inc. filed this Form 10-K for the fiscal year ended December 31, 2021. The company is a clinical-stage genome-editing biotechnology business developing off-the-shelf CAR-T and CAR-NK cell therapies using its CRISPR chRDNA platform. It had no approved products and generated no product-sale revenue. The filing also reports unaudited fourth-quarter results.
Caribou completed its IPO in July 2021, raising approximately $321.0 million in net proceeds. Its lead candidate, CB-010, was in a Phase 1 trial for relapsed or refractory B-cell non-Hodgkin lymphoma; CB-011 and CB-012 were preclinical CAR-T programs, and CB-020 was an early CAR-NK program.
Key financial metrics
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Licensing and collaboration revenue | $9.6 million | $12.4 million |
| Research and development expense | $52.3 million | $34.4 million |
| General and administrative expense | $24.3 million | $14.1 million |
| Operating loss | $67.0 million | $36.1 million |
| Net loss | $66.9 million | $34.3 million |
| Net loss per share, basic and diluted | $2.11 | $4.01 |
| Cash used in operating activities | $32.5 million | $33.2 million |
Fourth-quarter 2021 revenue was $2.6 million and net loss was $18.5 million. No commercial-product gross margin was reported; with no product sales, operating and net losses are the more informative measures.
At year-end, cash, cash equivalents, and marketable securities totaled $413.5 million, compared with $16.0 million of cash and cash equivalents at year-end 2020. Current assets were $391.2 million and current liabilities were $25.8 million. Total liabilities were $54.5 million. The $1.6 million Paycheck Protection Program loan was forgiven in May 2021; no PPP loan balance remained at year-end. The company reported a $4.1 million MSKCC success-payment liability, which is contingent rather than conventional debt.
FY 2021 investing cash outflow was $176.4 million, primarily reflecting $173.3 million of marketable-security purchases, rather than operating consumption. Financing cash inflow was $433.4 million, principally IPO proceeds and $108.8 million net proceeds from the Series C preferred-stock financing. The company reported $41.8 million of minimum payments remaining under its principal facility lease; a separate lease signed in January 2022 carries $9.2 million of minimum payments.
Material changes versus the prior comparable period
- Revenue decreased $2.8 million, mainly because $7.5 million of revenue from a related-party licensee and $0.8 million from Genus did not recur. This was partly offset by $4.0 million recognized under the new AbbVie collaboration.
- R&D expense rose $17.8 million, reflecting increased clinical and contract-manufacturing activity, other research spending, hiring, and facilities costs. G&A expense increased $10.3 million, including higher personnel, public-company, recruiting, insurance, and facilities costs.
- Net loss widened by $32.6 million as operating expenses grew. Net loss per share decreased from $4.01 to $2.11, while weighted-average shares increased substantially following the IPO and preferred-stock conversion; this per-share change should not be read as improved underlying profitability.
- Operating cash use was broadly similar year over year despite the larger net loss, supported in part by a $29.6 million increase in deferred revenue, principally related to AbbVie.
Outlook, risks, contingencies, and unusual items
- Management expected year-end liquidity to fund its current operating plan for at least 12 months from issuance of the financial statements, while noting that estimates depend on assumptions and additional financing will ultimately be needed if the company does not generate product revenue.
- Management expected initial CB-010 clinical data in 2022, an IND submission for CB-011 in 2022, an IND submission for CB-012 in 2023, and CB-020 target selection in 2022. These are plans and expectations, not assured outcomes.
- The AbbVie agreement provided a $30.0 million upfront payment and reimbursement for specified work; Caribou recognized $4.0 million of AbbVie revenue in 2021 and carried $30.7 million of total deferred revenue at year-end. Potential development, regulatory, and sales milestones and royalties depend on future events and AbbVie’s activities.
- Key risks include clinical safety, efficacy and enrollment; the novelty of genome editing and allogeneic cell therapies; manufacturing and supplier dependence; competition; and the need for future financing. COVID-19 previously delayed donor-cell supply, though the company said supply issues were largely resolved in 2021.
- Patent position is a material uncertainty: in February 2022, the USPTO Patent Trial and Appeal Board ruled that Broad Institute inventors were first to invent CRISPR-Cas9 editing in eukaryotic cells in a proceeding involving the foundational CVC patent portfolio. The CVC owners planned to appeal. Caribou warned that related proceedings could affect licensing revenue and future licensing opportunities.
- Unusual FY 2021 items included a $1.6 million gain from PPP loan forgiveness and a $1.4 million expense from remeasurement of the MSKCC success-payment liability. The 2020 period included a $7.5 million noncash related-party license payment in preferred shares.
- Caribou said disclosure controls were effective at the reasonable-assurance level as of December 31, 2021. The 10-K did not include management’s assessment or auditor attestation of internal control over financial reporting under the transition relief for newly public companies.
Most important facts for investors to verify
- Whether the CB-010 trial produces sufficiently durable safety and efficacy data, and whether the stated 2022 data timing was achieved.
- Progress and timing of CB-011 and CB-012 IND submissions and CB-020 target selection, including the cash required to advance each program.
- Cash burn, marketable-security liquidity, and runway against management’s stated operating plan; distinguish operating cash use from investment purchases.
- AbbVie program progress, reimbursements, deferred-revenue recognition, and the conditions for potential milestones and royalties.
- Status and outcome of the CVC/Broad patent appeal and other CRISPR intellectual-property proceedings, including their effects on licensing income and product rights.
- Manufacturing capacity and reliance on external suppliers and contract manufacturers, as well as the impact of new lease commitments and potential contingent payments.