UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of |
(I.R.S. Employer |
Incorporation or Organization) |
Identification No.) |
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(Address of Principal Executive Offices) |
(Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each Class |
Trade Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The number of shares outstanding of the registrant’s common stock as of May 3, 2024:
2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
INTELLIA THERAPEUTICS, INC.
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in thousands except share and per share data)
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March 31, |
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December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Accounts receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Marketable securities - noncurrent |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Equity method investment |
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Investments and other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Current portion of operating lease liability |
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Current portion of deferred revenue |
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Total current liabilities |
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Deferred revenue, net of current portion |
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Long-term operating lease liability |
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Total liabilities |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
3
INTELLIA THERAPEUTICS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
(Amounts in thousands except per share data)
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Three Months Ended March 31, |
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2024 |
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2023 |
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Collaboration |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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General and administrative |
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Total operating expenses |
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Operating loss |
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( |
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( |
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Other income (expense), net: |
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Interest income |
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Change in fair value of investments, net |
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( |
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Loss from equity method investment |
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( |
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Change in fair value of contingent consideration |
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( |
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Total other income (expense), net |
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Net loss |
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$ |
( |
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$ |
( |
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Net loss per share, basic and diluted |
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$ |
( |
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$ |
( |
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Weighted average shares outstanding, basic and |
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Other comprehensive (loss) gain: |
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Unrealized (loss) gain on marketable securities |
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( |
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Other comprehensive gain from equity method investment |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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See notes to condensed consolidated financial statements.
4
INTELLIA THERAPEUTICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity (unaudited)
(Amounts in thousands except share data)
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Additional |
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Accumulated Other |
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Total |
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Common |
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Paid-In |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balance at December 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock through |
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- |
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- |
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Exercise of stock options |
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- |
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- |
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- |
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Vesting of restricted stock units |
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- |
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- |
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- |
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- |
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- |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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Other comprehensive loss - unrealized loss on |
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- |
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- |
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- |
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( |
) |
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- |
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( |
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Reclassification of other comprehensive loss - |
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- |
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- |
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- |
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- |
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Net loss |
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- |
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- |
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- |
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- |
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( |
) |
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( |
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Balance at March 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Additional |
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Accumulated Other |
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Total |
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Common |
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Paid-In |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock through |
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- |
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- |
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- |
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Contingent consideration paid to Rewrite Holders |
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- |
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- |
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- |
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Exercise of stock options |
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- |
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- |
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- |
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Vesting of restricted stock units |
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- |
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- |
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- |
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- |
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- |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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Other comprehensive gain - unrealized gain on |
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- |
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- |
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- |
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- |
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Other comprehensive gain - equity method |
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- |
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- |
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- |
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- |
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Net loss |
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- |
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- |
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- |
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- |
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( |
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( |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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See notes to condensed consolidated financial statements.
5
INTELLIA THERAPEUTICS, INC.
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)
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Three Months Ended March 31, |
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2024 |
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2023 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Accretion of investment discounts and premiums |
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( |
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( |
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(Recognition) deferral of equity method investment intra-entity profit on sales |
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( |
) |
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Change in fair value of investments, net |
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Loss from equity method investment |
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Change in fair value of contingent consideration |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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Prepaid expenses and other current assets |
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( |
) |
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( |
) |
Operating lease right-of-use assets |
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Other assets |
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( |
) |
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Accounts payable |
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Accrued expenses |
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( |
) |
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( |
) |
Deferred revenue |
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( |
) |
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( |
) |
Operating lease liabilities |
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( |
) |
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( |
) |
Net cash used in operating activities |
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( |
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( |
) |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of property and equipment |
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( |
) |
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( |
) |
Purchases of marketable securities |
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( |
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( |
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Maturities of marketable securities |
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Net cash provided by (used in) investing activities |
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( |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Net proceeds from issuance of common stock through at-the-market offerings |
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Proceeds from options exercised |
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Net cash provided by financing activities |
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Net decrease in cash, cash equivalents and restricted cash equivalents |
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( |
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( |
) |
Cash, cash equivalents and restricted cash equivalents, beginning of period |
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Cash, cash equivalents and restricted cash equivalents, end of period |
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$ |
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$ |
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Reconciliation of cash, cash equivalents and restricted cash |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash equivalents, included in investments and other assets |
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Total cash, cash equivalents and restricted cash equivalents |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
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Purchases of property and equipment unpaid at period end |
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$ |
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$ |
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Shares issued for Rewrite contingent consideration |
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See notes to condensed consolidated financial statements.
6
INTELLIA THERAPEUTICS, INC.
Notes to Condensed Consolidated Financial Statements (unaudited)
1. Overview and Basis of Presentation
Intellia Therapeutics, Inc. (“Intellia” or the “Company”) is a leading clinical-stage gene editing company, focused on developing potentially curative therapeutics using CRISPR/Cas9-based technologies. CRISPR/Cas9, an acronym for Clustered, Regularly Interspaced Short Palindromic Repeats (“CRISPR”)/CRISPR associated 9 (“Cas9”), is a technology for genome editing, the process of altering selected sequences of genomic deoxyribonucleic acid (“DNA”). To fully realize the transformative potential of CRISPR/Cas9-based technologies, Intellia is building a full-spectrum gene editing company, by leveraging its modular platform, to advance in vivo and ex vivo therapies for diseases with high unmet need by pursuing two primary approaches. For in vivo applications to address genetic diseases, the Company deploys CRISPR/Cas9 as the therapy. The Company’s in vivo programs use CRISPR to enable precise editing of disease-causing genes directly inside the human body. In addition, the Company is advancing ex vivo applications to address immuno-oncology and autoimmune diseases, where it uses CRISPR/Cas9 as the tool to create the engineered cell therapy. For its ex vivo programs, CRISPR/Cas9 is used to engineer human cells outside the body. The Company’s deep scientific, technical and clinical development experience, along with its robust intellectual property (“IP”) portfolio, have enabled it to unlock broad therapeutic applications of CRISPR/Cas9 and related technologies to create new classes of genetic medicine.
The condensed consolidated financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2023.
The unaudited condensed consolidated financial statements include the accounts of Intellia Therapeutics, Inc. and its wholly- owned subsidiary, Intellia Securities Corp. All intercompany balances and transactions have been eliminated in consolidation. Comprehensive loss is comprised of net loss, unrealized gain/loss on marketable securities and other comprehensive gain/loss from equity method investment.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates in these condensed consolidated financial statements have been made in connection with the calculation of revenues, research and development expenses, valuation of equity and fair value method investments, contingent consideration and stock-based compensation expense. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances at the time such estimates are made. Actual results could differ from those estimates. The Company periodically reviews its estimates in light of changes in circumstances, facts and experience.
The effects of material revisions in estimates, if any, would be reflected in the condensed consolidated financial statements prospectively from the date of the change in estimate.
In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.
Liquidity
Since its inception through March 31, 2024, the Company has raised an aggregate of $
7
2. Summary of Significant Accounting Policies
The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies” to the consolidated financial statements included in the Annual Report for the year ended December 31, 2023. There have been no material changes to these policies during the three months ended March 31, 2024.
Recent Issued Accounting Pronouncements Not Yet Effective
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures.” The ASU requires disclosure of incremental segment information on an annual and interim basis and also requires companies with a single reportable segment to provide all disclosures required by this ASU and all existing segment disclosures in Accounting Standard Codification (“ASC”) 280, “Segment Reporting.” The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU updates income tax disclosure requirements primarily by requiring specific categories and greater disaggregation within the rate reconciliation and disaggregation of income taxes paid by jurisdiction. This ASU is effective for annual periods beginning after December 15, 2024 and is applicable to the Company’s fiscal year beginning January 1, 2025, with early application permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.
3. Marketable Securities
The following table summarizes the Company’s available-for-sale marketable securities as of March 31, 2024 and December 31, 2023:
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March 31, 2024 |
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Amortized |
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Gross Unrealized |
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Gross Unrealized |
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Estimated Fair |
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(In thousands) |
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Marketable securities: |
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U.S. Treasury and other government-backed securities |
|
$ |
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$ |
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$ |
( |
) |
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$ |
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Financial institution debt securities |
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( |
) |
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Corporate debt securities |
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( |
) |
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Other asset-backed securities |
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( |
) |
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Total |
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$ |
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$ |
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$ |
( |
) |
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$ |
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December 31, 2023 |
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Amortized |
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Gross Unrealized |
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Gross Unrealized |
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Estimated Fair |
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(In thousands) |
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Marketable securities: |
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U.S. Treasury and other government-backed securities |
|
$ |
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|
$ |
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|
$ |
( |
) |
|
$ |
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Financial institution debt securities |
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( |
) |
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Corporate debt securities |
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( |
) |
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Other asset-backed securities |
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( |
) |
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Total |
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$ |
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|
$ |
|
|
$ |
( |
) |
|
$ |
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|||
The amortized cost of available-for-sale securities is adjusted for amortization of premiums and accretion of discounts to maturity. There were
The Company’s available-for-sale securities that are classified as short-term marketable securities in the condensed consolidated balance sheet mature within one year or less as of the balance sheet date. Available-for-sale securities that are classified as noncurrent in the condensed consolidated balance sheet are those that mature after
8
4. Fair Value Measurements
The Company classifies fair value-based measurements using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1, quoted market prices (unadjusted) in active markets for identical assets or liabilities; Level 2, observable inputs other than quoted market prices included in Level 1, such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data; and Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
T
|
|
March 31, 2024 |
|
|||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents and restricted cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury and other government-backed securities |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|||
Financial institution debt securities |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Corporate debt securities |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Other asset-backed securities |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Total marketable securities |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|||
Investment in Kyverna Therapeutics, Inc. |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2023 |
|
|||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents and restricted cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
||
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury and other government-backed securities |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|||
Financial institution debt securities |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Corporate debt securities |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Other asset-backed securities |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Total marketable securities |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Certain of the Company’s financial assets, including cash equivalents, restricted cash equivalents and marketable securities, have been initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third party pricing services or other observable market data. The pricing services utilize industry standard valuation models and observable market inputs to determine value.
Other financial instruments, including accounts receivable, accounts payable and accrued expense, are carried at cost, which approximates fair value due to the short duration and term to maturity.
The Company has determined that the estimated fair value of its investment in Kyverna Therapeutics, Inc. (“Kyverna”), a publicly traded company, is reported as Level 1 as it is valued at a quoted market price in an active market. The investment in Kyverna is classified within “investments and other assets” in the condensed consolidated balance sheets. Refer to Note 8 for further details.
Other Investments
The Company’s other investments include investments in AvenCell Therapeutics, Inc. (“AvenCell”) and SparingVision Sas (“SparingVision”). These investments are accounted for under ASC 321, “Investments in Equity Securities” (“ASC 321”) using the measurement alternative at cost minus impairment with adjustments for changes in observable prices. The Company
9
previously accounted for the AvenCell investment under the equity method; refer to Note 8 for further details. The Company monitors any events or changes in circumstances that may have a significant effect on the fair value of investments, either due to impairment or based on observable price changes, and records adjustments as needed. These investments are classified as Level 3 assets and are not included in the fair value table above as they are not valued at fair value on a recurring basis.
5. Accrued Expenses
Accrued expenses consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(In thousands) |
|
|||||
Accrued research and development |
|
$ |
|
|
$ |
|
||
Employee compensation and benefits |
|
|
|
|
|
|
||
Accrued legal and professional expenses |
|
|
|
|
|
|
||
Accrued construction costs |
|
|
|
|
|
|
||
Accrued other |
|
|
|
|
|
|
||
Total accrued expenses |
|
$ |
|
|
$ |
|
||
6. Commitments and Contingencies
Litigation
There have been no material changes to any outstanding litigation, nor is the Company a party to any new litigation, since December 31, 2023. For further information please see the notes to the consolidated financial statements included in the Company’s Annual Report for the year ended December 31, 2023.
License Agreements
The Company is party to license agreements, which may include contingent payments. These payments will become payable if and when certain development, regulatory and commercial milestones are achieved. As of March 31, 2024, the satisfaction and timing of the contingent payments is uncertain and not reasonably estimable.
7. Collaborations and Other Arrangements
To accelerate the development and commercialization of CRISPR/Cas9-based products in multiple therapeutic areas, the Company has formed, and intends to seek other opportunities to form, strategic alliances with collaborators who can augment its leadership in CRISPR/Cas9 therapeutic development. As of March 31, 2024, the Company’s accounts receivable were related to its collaborations with Regeneron Pharmaceuticals, Inc. (“Regeneron”), SparingVision, Kyverna and AvenCell, and the Company’s contract liabilities were related to its collaborations with Regeneron and SparingVision. As of December 31, 2023, the Company’s accounts receivable were related to its collaborations with Regeneron, SparingVision, AvenCell and Kyverna and the Company’s contract liabilities were related to its collaborations with Regeneron and SparingVision.
The following table presents changes in the Company’s accounts receivable and contract liabilities during the three months ended March 31, 2024 and 2023 (in thousands):
|
|
Balance at |
|
|
Additions |
|
|
Deductions |
|
|
Balance at End |
|
||||
Three months ended March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Contract liabilities - deferred revenue |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Balance at |
|
|
Additions |
|
|
Deductions |
|
|
Balance at End |
|
||||
Three months ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Contract liabilities - deferred revenue |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
10
During the three months ended March 31, 2024 and 2023, the Company recognized the following revenues as a result of changes in the contract liability balance (in thousands):
|
|
Three Months Ended March 31, |
|
|||||
Revenue recognized in the period from: |
|
2024 |
|
|
2023 |
|
||
Amounts included in the contract liability at the beginning of the period |
|
$ |
|
|
$ |
|
||
The Company has not incurred significant expenses to obtain collaboration agreements and costs to fulfill those contracts do not generate or enhance resources of the Company. As such,
Regeneron Pharmaceuticals, Inc.
In April 2016, the Company entered into a license and collaboration agreement with Regeneron (as amended from time to time, the “2016 Regeneron Agreement”). In October 2023, Regeneron exercised its one-time option to extend the technology collaboration term for an additional
In 2018, the Company entered into a co-development and co-promotion (“Co/Co”) agreement with Regeneron for transthyretin (“ATTR”) amyloidosis (the “ATTR Co/Co”). In May 2020, the Company entered into co-development and co-funding agreements for the treatment of hemophilia A and hemophilia B (the “Hemophilia Co/Co”) agreements. In March 2024, the Company notified Regeneron that it is opting out of its hemophilia B Co/Co agreement. The Company will continue to have obligations under the hemophilia B Co/Co agreement until September 2024. In addition, after termination of the hemophilia B Co/Co agreement the Company will continue to support Regeneron with the development of gene editing products directed to hemophilia B, as applicable, under the 2016 Regeneron Agreement. That agreement will control the parties’ obligations to develop and commercialize gene editing products directed to hemophilia B. The Company may be eligible to receive up to $
Since December 31, 2023, there have been no material changes to the key terms of the 2016 Regeneron Agreement, ATTR Co/Co, Hemophilia Co/Co, or 2023 Regeneron Amendment (the “Regeneron Agreements”), other than as described above.
The Company recognized collaboration revenue of $
As of March 31, 2024, there was $
SparingVision SAS
In October 2021, the Company and SparingVision, a genomic medicine company developing vision saving treatments for ocular diseases, entered into a license and collaboration agreement (the “SparingVision LCA”) to develop novel genomic medicines utilizing CRISPR/Cas9 technology for the treatment of ocular diseases.
Since December 31, 2023, there have been no material changes to the key terms of the SparingVision LCA agreement.
The Company recognized collaboration revenue of $
11
December 31, 2023, the Company had deferred revenue of $
ReCode Therapeutics, Inc. (“ReCode”)
On February 14, 2024, the Company entered into a license, collaboration and option agreement with ReCode (the “ReCode LCA”), a clinical-stage genetic medicines company, to develop novel genomic medicines for the treatment of cystic fibrosis (“CF”). The ReCode LCA leverages the Company’s proprietary CRISPR-based gene editing platform, including its DNA writing technology, and ReCode’s proprietary Selective Organ Targeting (“SORT”) lipid nanoparticle delivery platform to precisely correct one or more CF disease-causing gene mutations. As part of the agreement, the companies will focus initial research efforts on therapeutic approaches that address CF for patients who have limited or no treatment options available, with the opportunity to expand the scope of the collaboration in later phases. The Company will be responsible for the design of the editing strategy and research-grade components for the investigational therapies. ReCode will lead the subsequent preclinical and clinical development and worldwide commercialization for certain programs arising from the collaboration. The Company also has an option to lead commercialization in the U.S. for certain programs (the “Co/Co option”).
The ReCode LCA did not include an exchange of upfront consideration between the parties. The Company will be eligible to receive pre-specified development and commercial milestone payments, up to $
Other Agreements
The Company has existing license and collaboration agreements with AvenCell, Kyverna, and ONK Therapeutics, Ltd (“ONK”). Since December 31, 2023, there have been no material changes to the key terms of the AvenCell, Kyverna and ONK license and collaboration agreements. During the three months ended March 31, 2024, the Company recognized $
8. Investments and Other Assets
Investments and other assets consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(In thousands) |
|
|||||
Investment in Kyverna |
|
$ |
|
|
$ |
|
||
Other investments |
|
|
|
|
|
|
||
Restricted cash, long-term |
|
|
|
|
|
|
||
Prepaid expenses and other assets, long-term |
|
|
|
|
|
|
||
Total investments and other assets |
|
$ |
|
|
$ |
|
||
Kyverna Therapeutics, Inc.
In February 2024, Kyverna completed an initial public offering of its common stock (the “Kyverna IPO”). Prior to the Kyverna IPO, the Company accounted for its investment in Kyverna using the measurement alternative as Kyverna was a private company with no readily observable transaction price, and the investment was valued at $
AvenCell Therapeutics, Inc.
As of December 31, 2023 and March 31, 2024, the Company holds a
12
conjunction with the completion of a debt financing, AvenCell increased the size of their board, with a single investor having control over AvenCell’s operational and financial decisions. As a result, the Company no longer has the ability to exercise significant influence over AvenCell, and therefore the Company’s investment in AvenCell is accounted for in accordance with ASC 321 as of March 31, 2024, and AvenCell is no longer considered to be a related party. The Company did
The transition from equity method accounting to ASC 321 required the Company to reclassify $
As of March 31, 2024, the carrying value of the Company’s investment in AvenCell was $
SparingVision SAS
As of March 31, 2024, the fair value of the Company’s investment in SparingVision was $
9. Leases
The Company leases approximately
10. Stock-Based Compensation
Stock-based compensation expense is classified in the condensed consolidated statements of operations and comprehensive loss as follows:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(In thousands) |
|
|||||
Research and development |
|
$ |
|
|
$ |
|
||
General and administrative |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Stock Option and Incentive Plan
In April 2016, the Company adopted the Amended and Restated 2015 Stock Option and Incentive Plan (the “2015 Plan”). The 2015 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and other stock-based awards. Recipients of incentive stock options and non-qualified stock options are eligible to purchase shares of the Company’s common stock at an exercise price equal to the fair value of such stock on the grant date.
13
The Company maintains a retirement policy for equity awards granted to all employees, which applies to all equity awards granted after July 1, 2022 to employees who meet certain retirement eligibility criteria.
As of March 31, 2024, there were
Restricted Stock Units
The following table summarizes the Company’s RSU activity for the three months ended March 31, 2024:
|
|
Number of |
|
|
Weighted |
|
||
Unvested restricted stock units as of December 31, 2023 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Cancelled |
|
|
( |
) |
|
|
|
|
Unvested restricted stock units as of March 31, 2024 |
|
|
|
|
$ |
|
||
Restricted Stock Units - Service Awards
The Company awards RSUs with a service condition to all employees upon hire and as part of their annual grant. RSUs with a service condition granted under the 2015 Plan in 2024 and 2023 generally vest as to one-third on the first anniversary of the original vesting date, with the balance vesting annually over the remaining two years.
In March 2024, the Company granted
In March 2023, the Company granted
Unvested restricted stock units as of March 31, 2024 in the table above includes
Restricted Stock Units - Market Awards
In March 2024, 2023 and 2022, market-based RSUs were granted to senior executives as part of their annual grant. These RSUs have the potential to vest after a period of
Unvested restricted stock units as of March 31, 2024 in the table above includes
Restricted Stock Units - Performance-Based Awards with TSR Multiplier
Also in March 2024,
14
PSUs, calculated using a Monte Carlo valuation model, was $
Unvested restricted stock units as of March 31, 2024 in the table above includes
Restricted Stock Units - Performance-Based Awards
In March 2022, the Company granted
Unvested restricted stock units as of March 31, 2024 in the table above includes
The weighted-average grant date fair value of all RSUs granted during the three months ended March 31, 2024 and 2023 was $
As of March 31, 2024, there was $
Stock Options
The weighted average grant date fair value of options, estimated as of the grant date using the Black-Scholes option pricing model, was $
|
|
Three Months Ended March 31, |
||
|
|
2024 |
|
2023 |
Risk-free interest rate |
|
|
||
Expected term |
|
|
||
Expected volatility of underlying stock |
|
|
||
Expected dividend yield |
|
|
||
Risk-free Interest Rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with maturities approximately equal to the option’s expected term.
Expected Term. The expected term represents the period that stock option awards are expected to be outstanding. For option grants that are considered to be “plain vanilla,” the Company determines the expected term using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate the expected term.
Expected Volatility. Expected volatility is estimated based on actual movements in the Company’s stock price over the most recent historical periods, over the expected term of their stock option grants.
Expected Dividend Yield. The Company has not paid cash dividends and has no intention to pay cash dividends in the future.
15
The following is a summary of stock option activity for the three months ended March 31, 2024:
|
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
|
|
|
|
|
|
|
|
(In years) |
|
|
(In thousands) |
|
||||
Outstanding at December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
|
|||||