Editas Medicine, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Editas is a clinical-stage genome-editing company with no product sales; reported revenue is collaboration and research revenue. Financial amounts below are in U.S. dollars.
Financial results and position
| Metric | Q1 2022 | Q1 2021 / prior period |
|---|---|---|
| Collaboration and other R&D revenue | $6.8 million | $6.5 million; up 4% |
| Research and development expense | $38.0 million | $41.9 million; down 9% |
| General and administrative expense | $19.5 million | $21.4 million; down 9% |
| Total operating expenses | $57.5 million | $63.4 million; down 9% |
| Operating loss | $50.8 million | $56.9 million |
| Net loss | $50.5 million | $56.7 million |
| Basic and diluted net loss per share | $0.74 | $0.86 |
| Net cash used in operations | $49.2 million | $49.5 million |
| Cash, cash equivalents and marketable securities | $566.4 million | $619.9 million at December 31, 2021 |
| Total assets | $623.1 million | $677.5 million at December 31, 2021 |
| Total liabilities | $110.3 million | $123.8 million at December 31, 2021 |
| Stockholders’ equity | $512.8 million | $553.6 million at December 31, 2021 |
Cash and cash equivalents were $210.9 million and marketable securities totaled $355.5 million at quarter-end. The filing reports no borrowings or conventional debt; operating lease liabilities were $23.2 million, including $10.2 million current. Future minimum operating lease payments were $25.4 million, including $8.3 million payable in 2022. The company reported an accumulated deficit of $908.2 million. No meaningful product gross margin is reported because the company has no product revenue.
Investing activities provided $56.4 million, primarily from marketable-security maturities, partly offset by purchases. Financing activities provided $0.2 million from option exercises; the prior-year quarter included $249.5 million of net public-offering proceeds. Cash, cash equivalents and restricted cash increased $7.4 million during Q1 2022.
Material changes and drivers
- Net loss narrowed by $6.2 million year over year, while revenue rose $0.3 million. The company attributed the R&D expense decline mainly to $8.0 million less in sublicense and license fees, reflecting success payments made in Q1 2021 with no comparable Q1 2022 payment. This was partly offset by higher employee, external R&D, and facility costs.
- G&A expense fell $1.9 million, mainly due to lower patent-related fees, employee costs, and stock-based compensation, partly offset by higher professional-service expenses.
- Unrealized losses on marketable debt securities were $2.0 million in Q1 2022, versus $0.03 million in Q1 2021; comprehensive loss was $52.5 million versus $56.8 million.
- Revenue recognized in Q1 2022 was primarily related to BMS exercising an option to an additional program. Deferred revenue was $66.7 million at quarter-end, primarily associated with the BMS collaboration.
Outlook, programs and risks
- Management expects existing cash, cash equivalents, marketable securities, and anticipated interest income to fund operating expenses and capital needs into early 2024. The company expects continued losses and does not expect profitability in 2022 or the foreseeable future; substantial additional capital will be needed.
- EDIT-101: The company expected to establish registrational-trial endpoints by year-end 2022 and provide a BRILLIANCE trial update in the second half of 2022. It reported in April 2022, after quarter-end, that the first patient had been treated in the pediatric mid-dose cohort; dosing was expected to finish in the first half of 2022, with a pediatric high-dose cohort planned later in 2022.
- EDIT-301: The RUBY sickle-cell trial was enrolling, with initial dosing expected in the first half of 2022 and initial results expected by year-end. Before a registrational trial, the company said it would need to develop a potency assay in response to an FDA partial clinical hold. For TDT, it expected to dose the first patient in 2022.
- EDIT-202, an iPSC-derived NK-cell candidate, was advancing toward IND-enabling studies. Other research programs remained preclinical or earlier-stage.
- Key risks include clinical and regulatory uncertainty, funding needs and possible dilution or unfavorable financing terms, and dependence on uncertain collaboration or milestone payments. The filing describes multiple CRISPR/Cas9 patent interference, opposition, and validity proceedings; adverse outcomes could narrow or jeopardize licensed rights, require additional licenses, or disrupt development. Broad and Harvard patent-prosecution reimbursements were $2.1 million in Q1 2022, and the ultimate commitment for certain proceedings was not determinable.
- Management reported no significant COVID-19 impact on financial condition, results, or liquidity during the quarter, but noted continuing uncertainty about potential business and clinical-development disruptions. A 100-basis-point interest-rate change was not expected to materially affect investment fair value; management reported no material foreign-currency exposure.
Important facts for investors to verify
- Whether clinical timelines and trial updates for EDIT-101 and EDIT-301 were achieved, and how the FDA partial hold and potency-assay requirement affect development.
- Whether the early-2024 cash runway remains supportable as R&D spending and clinical activity increase, and what additional financing may be required.
- Developments in the CRISPR/Cas9 patent proceedings, including appeals and potential effects on the company’s licensed intellectual property and related costs.
- The timing and amount of future BMS option, milestone, or other collaboration payments, and the pace at which deferred revenue is recognized.
- Potential dilution from future equity financing, including use of the $300 million ATM facility; no shares had been sold under it as of March 31, 2022.