Caribou Biosciences, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Amounts below are in U.S. dollars; financial figures are in millions unless noted. Caribou is a clinical-stage CRISPR genome-editing company developing allogeneic CAR-T and CAR-NK therapies. It had no approved products and generated no product-sales revenue.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Licensing and collaboration revenue | $1.5 | $8.5 | $3.1 | $10.2 |
| Research and development expense | $12.3 | $7.6 | $22.5 | $16.2 |
| General and administrative expense | $5.1 | $3.2 | $9.7 | $6.6 |
| Operating loss | $16.0 | $2.3 | $29.1 | $12.7 |
| Net loss | $14.3 | $1.9 | $27.5 | $11.7 |
| Basic and diluted loss per share | $1.39 | $0.22 | $2.78 | $1.38 |
No product gross margin is reported because the company had no product sales. The filing does not provide a meaningful product-margin measure.
- At June 30, cash and cash equivalents were $129.5; total assets were $158.4 and total liabilities were $55.9. Current assets were $143.0 versus current liabilities of $26.0.
- Cash provided by operating activities was $3.8 for the six months, compared with $16.4 used in the prior-year period. The 2021 inflow included a $31.8 increase in deferred revenue, primarily from AbbVie; it should not be read as evidence of profitable operations.
- Financing activities provided $110.3, including $108.8 net proceeds from the Series C preferred-stock financing. The $1.6 PPP loan was forgiven in May, and the company recorded a corresponding gain; no PPP loan remained outstanding at June 30.
- Deferred revenue totaled $32.9 at June 30. The company reported $63.2 of remaining performance obligations, expecting to recognize about $8.7 within 12 months.
- Operating-lease commitments totaled $43.5, primarily for the Berkeley facility under a 10-year lease entered into in March 2021.
Changes versus the prior comparable period
- Revenue fell 83% year over year in Q2 and 70% for the first half. The main cause was the absence of $7.5 of revenue recognized in 2020 for a license to a related-party private company; 2020 also included Genus collaboration revenue. Q2 2021 included $0.5 of AbbVie revenue.
- Operating expenses increased 62% in Q2 and 41% for the first half, reflecting higher R&D and G&A spending. R&D increases included licensing and intellectual-property costs, preclinical materials, personnel, and the MSKCC success-payment valuation.
- Net loss widened substantially. The 2021 periods included a $1.6 PPP forgiveness gain, while 2020 included a $7.5 noncash license payment in preferred stock and, for the first half, a $0.7 fair-value loss on equity securities and a $1.3 tax benefit.
Outlook, commentary, and key risks
- Management expected cash at June 30 plus approximately $321.0 of IPO net proceeds to fund the current operating plan for at least 12 months from the filing’s issuance. The IPO closed after quarter-end: 19.0 million shares were sold in July and another 2.85 million in August, at $16 per share. Preferred shares converted into common stock upon the IPO closing.
- CB-010 entered Phase 1; the first patient was dosed in July 2021, with initial data expected in 2022. CB-011 remained preclinical, with an IND filing expected in 2022; CB-012 was preclinical, with an IND filing expected in 2023. CB-020 is an early CAR-NK program; no specific filing date is provided here.
- The AbbVie collaboration includes a $30.0 upfront payment, two initial program slots, potential expansion, development and commercial milestones, and royalties. Milestones were constrained from the recognized transaction price as of June 30.
- Management expects losses and R&D spending to increase as programs advance, and states that profitability may never be achieved. Continued financing may be required if plans or development costs change.
- Key risks include clinical and regulatory uncertainty, financing needs, reliance on third-party manufacturers and research providers, intellectual-property rights and disputes, cell-therapy safety and market acceptance, and potential COVID-19-related disruption. Caribou reported that the prior Intellia arbitration was resolved under a June 2021 license-back agreement and dismissed with prejudice in July; the agreement includes a $1.0 upfront payment, potential milestones, and royalties for CB-010.
- Management reported effective disclosure controls as of June 30, 2021 and no material change in internal control over financial reporting during the quarter. The filing reported no material pending legal proceeding.
Important facts for investors to verify
- How the IPO proceeds, conversion of preferred shares, and post-IPO share count affect cash runway and dilution.
- Whether CB-010 clinical progress and the stated CB-011 and CB-012 IND timelines are maintained, and what clinical data show about safety and efficacy.
- How much of future revenue depends on licensees and collaborations, including AbbVie, and the timing and conditions for milestone and royalty payments.
- Whether operating cash use rises as deferred AbbVie revenue is recognized and development spending expands.
- The financial impact of the new lease, intellectual-property obligations, Intellia agreement, and potential MSKCC success payments, which can total up to $35.0.