CRISPR Therapeutics AG — Q1 2019 Form 10-Q
Reporting period: Three months ended March 31, 2019. The unaudited statements are prepared under U.S. GAAP. CRISPR Therapeutics is a clinical-stage gene-editing company; it had no product sales, and all reported revenue was collaboration revenue.
Key financial metrics
| Metric | Q1 2019 | Q1 2018 or period-end comparison |
|---|---|---|
| Collaboration revenue | $0.3 million | $1.4 million |
| Research and development expense | $33.8 million | $19.5 million |
| General and administrative expense | $14.9 million | $8.8 million |
| Operating loss | $48.4 million | $27.0 million |
| Net loss | $48.4 million | $28.3 million |
| Basic and diluted loss per share | $0.93 | $0.62 |
| Operating cash used | $43.7 million | $22.7 million |
| Cash and cash equivalents | $437.5 million at March 31 | $456.6 million at December 31, 2018 |
| Total assets / shareholders’ equity | $497.9 million / $379.8 million | $489.0 million / $392.2 million at December 31, 2018 |
Cash, cash equivalents and restricted cash totaled $440.7 million at quarter-end. Investing activities used $1.1 million; financing activities provided $25.7 million, principally from ATM share sales and option exercises. The company reported $36.6 million of operating lease liabilities and $57.8 million of non-current deferred revenue. No borrowings are identified in the filing. Gross margin is not meaningful because the company reported no product sales.
Changes versus the prior-year quarter
- Revenue declined by about $1.0 million, primarily because of reduced research conducted under the Casebia joint venture.
- R&D expense increased $14.3 million, mainly from higher employee and headcount costs, variable research and license costs, and facility expenses. G&A expense rose $6.1 million, principally from staffing and professional and consulting fees.
- Net loss widened by $20.1 million. Management attributed higher cash use principally to increased clinical and preclinical program spending and payroll-related costs.
- The company raised $23.9 million net through its at-the-market (ATM) offering during Q1, versus $122.6 million of share issuance proceeds in Q1 2018.
Business, outlook and notable items
- CTX001, developed with Vertex, was in Phase 1/2 trials for transfusion-dependent beta thalassemia and severe sickle cell disease. The first patient had been treated in the beta thalassemia trial and the first patient enrolled in the sickle cell trial. The program’s net profits and losses are shared equally with Vertex. CTX001 had FDA Fast Track Designation for both indications.
- The FDA approved the IND for the company’s wholly owned CTX110 CAR-T candidate, and Health Canada approved its clinical trial application.
- Management expected existing cash to fund operating expenses and capital expenditures for at least 24 months, excluding potential additional collaboration or financing proceeds. This estimate depends on assumptions that may prove incorrect; the company expected expenses and losses to rise as development programs advance and noted that additional financing may be needed over the longer term.
- The ATM agreement permits up to $125 million of gross share sales. After quarter-end, the company sold 493,017 additional shares through April 29, generating approximately $18.7 million net.
- Adoption of ASC 842 on January 1, 2019 added lease assets and liabilities; management said the change did not affect net loss or cash flows. Lease liabilities were $36.6 million at quarter-end.
- Casebia’s losses exceeded the company’s equity-method investment; $51.9 million of losses were unrecognized at March 31. The company stated it had no further contractual cash-funding obligation to Casebia.
- Research agreements included committed payments of $2.1 million in 2019 and $1.9 million in 2020. The filing reported no legal or arbitration proceedings expected to significantly affect financial position, no material change to previously disclosed risk factors, and no off-balance-sheet arrangements.
Important facts for investors to verify
- Clinical progress, safety and efficacy data, enrollment, and regulatory timing for CTX001 and CTX110.
- The assumptions underlying the stated 24-month cash runway, future cash burn, and potential need for additional capital or dilution.
- Vertex and Casebia collaboration economics, including cost sharing, milestone conditions, and any changes in collaboration activity.
- ATM issuance after quarter-end and remaining capacity under the $125 million agreement.
- Lease commitments, research-agreement payments, and the extent of Casebia losses not recognized under equity-method accounting.