Editas Medicine, Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2021. The unaudited filing covers a clinical-stage genome-editing company with no product-sales revenue.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Collaboration and other R&D revenue | $6.2 million | $62.8 million | $13.1 million | $79.3 million |
| Research and development expense | $29.3 million | $33.9 million | $105.0 million | $96.5 million |
| General and administrative expense | $16.2 million | $19.9 million | $59.7 million | $51.8 million |
| Net income (loss) | $(39.1) million | $7.8 million | $(151.1) million | $(53.5) million |
| Basic loss per share | $(0.57) | $0.13 income | $(2.24) | $(0.93) |
- At September 30, cash and cash equivalents were $259.9 million and marketable securities were $397.2 million, totaling $657.0 million. The company reported $263.8 million of cash, cash equivalents and restricted cash at period-end.
- Current assets were $567.6 million and current liabilities $50.9 million. Total liabilities were $130.2 million, including deferred revenue and operating lease liabilities; the filing reports no borrowings. Operating lease obligations totaled $32.7 million.
- Operating cash use was $129.2 million for the nine months, compared with $139.7 million in 2020. Financing provided $281.0 million, principally from a $249.5 million net stock offering and $31.1 million from option exercises. Investing used $31.6 million.
- The company reported an accumulated deficit of $816.3 million and stockholders’ equity of $586.8 million. It expects existing cash, equivalents and securities, plus anticipated interest income, to fund operations and capital needs well into 2023.
Material changes and notable items
- Revenue fell sharply, mainly because the 2020 Allergan agreement termination triggered recognition of $59.9 million of deferred revenue in Q3 2020; no comparable amount was recognized in Q3 2021. Nine-month revenue also reflected 2020 Allergan-related deferred revenue recognition and out-license revenue.
- Nine-month operating expenses increased 11%. R&D expense rose 9%, driven mainly by license and sublicense success payments, higher staffing, stock compensation and facility costs. G&A rose 15%, largely from stock compensation, including accelerated vesting for the former CEO and awards for the new CEO; lower professional services partly offset the increase.
- The 2020 nine-month results included $13.1 million of gains on corporate equity securities in other income; 2021 other income was $0.5 million. This contributed to the year-over-year increase in net loss.
- In January and February 2021, the company raised approximately $249.5 million net through a public offering. A May 2021 ATM facility allows up to $300 million of gross sales; no shares had been sold under it by September 30.
Programs, outlook and risks
- EDIT-101: The company began dosing the adult high-dose cohort in Q3 and was enrolling in a pediatric cohort. Initial data announced in September covered six adults: no dose-limiting toxicities or serious adverse events were reported. Among five patients with at least three months’ follow-up, two of three in the mid-dose cohort showed early efficacy signals on one or more measures. These are preliminary observations, not established evidence of durable benefit. The company expected to complete dosing in the adult high-dose and pediatric mid-dose cohorts in the first half of 2022.
- EDIT-301: The RUBY trial for sickle cell disease was enrolling; dosing was expected to begin in the first half of 2022. The FDA had imposed a partial clinical hold requiring development of a potency assay before a registrational trial. The company remained on track to submit an IND for transfusion-dependent beta-thalassemia by year-end 2021.
- Management expects significant expenses and losses to continue and does not expect profitability in 2021 or the foreseeable future. Funding needs depend on clinical progress, regulatory outcomes, collaborations, intellectual-property costs and other factors. Additional capital may be required; equity financing could dilute shareholders, and other financing or partnering may not be available on acceptable terms.
- Key risks include clinical and regulatory uncertainty, the ability to manufacture and commercialize products, reliance on collaboration revenue, and ongoing patent priority and validity disputes. The filing describes five parallel U.S. patent interferences involving Broad, CVC, ToolGen and Sigma-Aldrich, as well as European patent oppositions; adverse outcomes could narrow or eliminate rights or require additional licenses.
- Patent expense reimbursements to Broad and Harvard were $1.8 million for Q3 and $9.0 million for the nine months. The company says its commitment related to these proceedings is substantial but cannot be determined. COVID-19 had not materially affected financial results or liquidity during the period, but management noted continuing uncertainty and potential operational and financing impacts.
Investor verification priorities
- Track subsequent EDIT-101 follow-up, safety and efficacy results, cohort enrollment, and whether early signals persist.
- Verify EDIT-301 trial dosing, potency-assay progress, and regulatory milestones against the company’s stated timelines.
- Monitor operating cash use, the assumptions supporting the runway into 2023, and any use of the $300 million ATM facility or other financing.
- Follow the outcomes and costs of patent interferences and oppositions, and assess their implications for the company’s intellectual-property position.
- Assess future collaboration revenue and deferred-revenue recognition separately from recurring product revenue, which the company had not generated.