What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-09 compared with 2021-11-09 · 475 added, 612 removed, 527 unchanged (67% of the section changed)

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(in thousands, except share and per share amounts)

September 30,

CURRENT ASSETS

Cash and cash equivalents

Marketable securities, short-term

Accounts receivable

Contract assets ($ 0 and $ 250 from related party, respectively)

Contract assets

Other receivables

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Total current assets

NON-CURRENT ASSETS

Investments in equity securities

PROPERTY AND EQUIPMENT—NET

LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’

EQUITY (DEFICIT)

Marketable securities, long-term

Property and equipment - net

Operating lease, right of use asset

LIABILITIES AND STOCKHOLDERS’

CURRENT LIABILITIES

Accounts payable ($ 0 and $ 500 to related party, respectively)

Accounts payable

Accrued expenses and other current liabilities

Promissory note —

Lease liabilities

Deferred revenue

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Deferred rent and lease incentive liability

Promissory note —

PPP Loan, net of current portion

MSKCC success payments liability

Lease liabilities, non-current

Other liabilities

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COMMITMENTS AND CONTINGENCIES (Note 9)

CONVERTIBLE PREFERRED STOCK, par value $ 0.0001 per share;

no shares authorized, issued, and outstanding at September 30, 2021;

7,766,582 shares authorized, issued, and outstanding at December 31, 2020

STOCKHOLDERS’

EQUITY (DEFICIT)

Common stock, par value $ 0.0001 per share 300,000,000 and 28,933,380 shares authorized at September 30, 2021 and December 31, 2020, respectively;

60,021,319 and 9,710,830 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized at March 31, 2022 and December 31, 2021;

no shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Common stock, par value $ 0.0001 per share, 300,000,000 shares authorized at March 31, 2022 and December 31, 2021, respectively;

60,689,609 and 60,263,158 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid-in-capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’

equity (deficit)

TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’

EQUITY (DEFICIT)

TOTAL LIABILITIES AND STOCKHOLDERS’

The accompanying notes are an integral part of these condensed consolidated financial statements.

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(in thousands, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Licensing and collaboration revenue (including $ 7,500 for nine months ended September 2020 from related party, and no ne for all other periods)

Three Months Ended March 31,

Licensing and collaboration revenue

Operating expenses:

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Other income (expense):

Interest income

Interest expense

Change in fair value of equity securities

Change in fair value of the MSKCC success payments liability

Gain on extinguishment of PPP Loan

Other income - net

Total other income (expense)

Net loss before provision for income taxes

Benefit from income taxes

Net loss and comprehensive loss

Other comprehensive loss:

Net unrealized loss on available-for-sale marketable securities, net of tax

Net comprehensive loss

Net loss per share, basic and diluted

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(in thousands, except share amounts)

Stockholders’

Convertible Preferred Stock

Additional Paid-In

Other Comprehensive

Retained Earnings (Accumulated

Total Stockholders’

Income (Loss)

BALANCE—December 31, 2021

Issuance of Series C convertible preferred stock, net of issuance costs of $ 6.2 million

Issuance of common stock on exercise of options

Stock-based compensation expense

Net loss and comprehensive loss

BALANCE—March 31, 2021

Stock-based compensation expense

Repayment of loan issued by stockholder

Issuance of common stock on exercise of options

Net loss and comprehensive loss

BALANCE—June 30, 2021

Stock-based compensation expense

Conversion of convertible preferred stock into common stock

Issuance of common stock upon initial public offering, net of issuance costs of $ 28.6 million

Issuance of common stock under employee stock plans

Issuance of common stock on exercise of options

Net loss and comprehensive loss

BALANCE—September 30, 2021

BALANCE—December 31, 2019

Stock-based compensation expense

Net loss and comprehensive loss

Net unrealized loss on available-for-sale marketable securities

BALANCE—March 31, 2022

Stock-based compensation expense

Issuance of restricted stock awards

BALANCE—December 31, 2020

Issuance of Series C convertible preferred stock, net of issuance costs of $ 6.2 million

Issuance of common stock on exercise of options

Net loss and comprehensive loss

BALANCE—June 30, 2020

Stock-based compensation expense

Issuance of common stock on exercise of options

Net loss and comprehensive loss

BALANCE—September 30, 2020

BALANCE—March 31, 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

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(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

Loss on disposal of fixed assets

Interest expense

Non-cash consideration for licensing and collaboration revenue

Change in fair value of equity securities

Non-cash consideration for licensing and collaboration revenue ($0 and $7,500 from related party, respectively)

Stock-based compensation expense

Change in fair value of MSKCC success payments liability

Acquired in-process research and development

Extinguishment of PPP Loan

Amortization of investment premiums

Non-cash lease expense

Changes in operating assets and liabilities:

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Deferred rent and lease incentive liability

Operating lease liabilities

Other liabilities

Deferred tax liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of equity securities

Maturities of marketable securities

Purchases of property and equipment

Proceeds from sale of property and equipment

Payments to acquire in-process research and development

Net cash provided by (used in) investing activities

Purchases of marketable securities

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from initial public offering of common stock, net of offering costs

Proceeds from issuance of Series C convertible preferred stock, net of issuance costs

Proceeds from exercise of stock options

Repayment of promissory note

Proceeds from exercise of stock options and purchases of common stock under employee stock purchase plan

Payments on capital lease

Proceeds from PPP Loan

Net cash provided by financing activities

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Cash paid for income taxes

Cash paid for interest

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Acquisition of property and equipment included in accrued expenses and other current liabilities

Extinguishment of PPP Loan

Non-cash consideration in exchange for licensing and collaboration revenue

Conversion of convertible preferred stock to common stock at closing of initial public offering

Deferred issuance costs related to initial public offering unpaid at period end

Series C convertible preferred stock issuance costs unpaid at period end

Right-of-use-assets obtained in exchange for new operating lease liabilities

The accompanying notes are an integral part of these condensed consolidated financial statements.

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(the “Company”

or “we”) is a clinical-stage CRISPR genome-editing biotechnology company.

We are developing an internal pipeline of off-the-shelf chimeric antigen receptor (“CAR”) T cell (“CAR-T”) and CAR-natural killer cell (“CAR-NK”) therapies.

The Company was incorporated in October 2011 as a Delaware corporation and is headquartered in Berkeley, California.

The Company has four wholly-owned subsidiaries:

or “we”) is a clinical-stage CRISPR genome-editing biopharmaceutical company dedicated to developing innovative, transformative therapies for patients with devastating diseases.

CRISPR is an acronym for C lustered R egularly I nterspaced S hort P alindromic R epeats.

Our novel CRISPR platform, C RISPR h ybrid R NA- DNA (“chRDNA,”

pronounced “chardonnay”), enables high genome-editing precision to develop cell therapies that are specifically engineered to target cancer and are armored for enhanced persistence.

We are advancing a pipeline of allogeneic, or off-the-shelf, chimeric antigen receptor (“CAR”)-T (“CAR-T”) and CAR-natural killer (“CAR-NK”) cell therapies for the treatment of patients with hematologic malignancies and solid tumors.

We incorporated in October 2011 as a Delaware corporation and are headquartered in Berkeley, California.

We have four wholly owned subsidiaries:

Antler Holdco, LLC, incorporated in Delaware in April 2019;

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and Biloba Holdco, LLC, incorporated in Delaware in April 2021.

Another subsidiary, Caribou Therapeutics Holdco, LLC, was incorporated in Delaware in July 2014 and dissolved in December 2020.

The Company’s wholly-owned subsidiaries hold interests in our equity investments and do not have operating activities.

Initial Public Offering

On July 22, 2021, the Company’

s registration statement on Form S-1 (File No.

333-257604) relating to its initial public offering (“IPO”) of common stock became effective.

The IPO closed on July 27, 2021, at which time we issued 19,000,000 shares of our common stock at a price of $ 16.00 per share.

On August 9, 2021, we issued and sold an additional 2,850,000 shares of our common stock to the IPO underwriters pursuant to the full exercise of their over-allotment option to purchase additional shares at the public offering price of $ 16.00 per share .

We received an aggregate of $ 349.6 million in gross proceeds and approximately $ 321.0 million in net proceeds from the IPO after deducting underwriting discounts and commissions and offering costs.

Upon closing of the IPO, all outstanding shares of our convertible preferred stock converted into 26,234,654 shares of our common stock.

In connection with the completion of our IPO, on July 27, 2021, our Certificate of Incorporation was amended and restated to provide for 300,000,000 authorized shares of common stock with a par value of $ 0.0001 per share and 10,000,000 authorized shares of preferred stock with a par value of $ 0.0001 per share.

Forward Stock Split

In July 2021, our board of directors (the “Board”) and stockholders approved an amendment to our Certificate of Incorporation to effect a forward split of the shares of our outstanding common stock at a ratio of 1.818 -for-1 (the “Forward Stock Split”) effective as of July 15, 2021.

The number of authorized shares was increased as a result of the Forward Stock Split, but the par values of the common stock and preferred stock were not adjusted.

All references to common stock, options to purchase common stock, common stock share data, per share data, and related information contained in the financial statements have been retrospectively adjusted to reflect the effect of the Forward Stock Split for all periods presented.

We have incurred net operating losses and negative cash flows from operations since our inception and we had an accumulated deficit of $ 79.3 million as of September 30, 2021.

During the nine months ended September 30, 2021, we incurred a net loss of $ 48.4 million and used $ 11.1 million of cash in operating activities.

Our wholly owned subsidiaries hold interests in our equity investments and do not have operating activities.

We have incurred net losses and negative cash flows from operations since our inception and we had an accumulated deficit of $ 116.9 million as of March 31, 2022.

During the three months ended March 31, 2022, we incurred a net loss of $ 19.1 million and used $ 21.7 million of cash in operating activities.

We expect to continue to incur substantial losses, and our ability to achieve and sustain profitability will depend on the successful development, approval, and commercialization of our product candidates and on our achievement of sufficient revenue to support our cost structure.

We may never achieve profitability and, unless and until we do, we will need to continue to raise additional capital.

Our management expects that existing cash and cash equivalents of $ 435.3 million as of September 30, 2021, including the IPO net proceeds of $ 321.0 million, will be sufficient to fund our current operating plan for at least the next 12 months from the date of issuance of our condensed consolidated financial statements.

Our management expects that existing cash, cash equivalents, and marketable securities of $ 390.8 million as of March 31, 2022, will be sufficient to fund our current operating plan for at least the next 12 months from the date of issuance of our condensed consolidated financial statements.

Summary of Significant Accounting Policies

There have been no changes to the significant accounting policies disclosed in Note 2 to the annual consolidated financial statements for the years ended December 31, 2019 and 2020 included in our final prospectus for our IPO (“Final Prospectus”) except as set forth below.

There have been no changes to the significant accounting policies disclosed in Note 2 to the annual consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K ( “Form 10-K”), other than changes to our leasing policy described below in connection with the adoption of the guidance under the Accounting Standards Codification (“ASC”) 842, Leases .

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Caribou Biosciences, Inc.

and its wholly-owned subsidiaries and have been prepared in accordance with U.S.

generally accepted accounting principles (“U.S.

GAAP”) and the requirements of the SEC for interim reporting.

As permitted under those rules, certain footnotes or other financial information that are normally required by U.S.

GAAP may be condensed or omitted.

Our condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements included in our Final Prospectus, except as noted below.

In the opinion of our management, the information furnished in our condensed consolidated financial statements reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the financial position and results of operations for the reported interim periods.

We consider 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.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.

GAAP”) and include the accounts of Caribou Biosciences, Inc.

and its wholly owned subsidiaries.

All intercompany accounts and transactions are eliminated in consolidation.

Use of Estimates

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the disclosure of contingent assets and liabilities at the date of our condensed consolidated financial statements;

and the reported amounts of revenue, income, and expenses during the reporting period.

On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, common stock valuation, stock-based compensation expense, accrued expenses related to research and development activities, valuation of the MSKCC success payments liability, and income taxes.

and the reported amounts of revenue, income, and expenses during the applicable reporting period.

Our management bases its estimates on historical experience and on various other assumptions that they believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ materially from those estimates.

We operate and manage our business as one reportable and operating segment, which is the business of developing an internal pipeline of off-the-shelf CAR-T and CAR-NK cell therapies.

Our chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating resources and evaluating financial performance.

We operate and manage our business as one reportable and operating segment, which is the business of developing a pipeline of allogeneic CAR-T and CAR-NK cell therapies.

Our president and chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating resources and evaluating financial performance.

All long-lived assets are maintained in the United States.

Concentrations of Credit Risk and Other Uncertainties

Financial instruments that potentially subject us to concentration of credit risk consist of cash and cash equivalents, accounts receivable, contract assets, other receivables, and investments in equity securities.

Substantially all our cash and cash equivalents were deposited in accounts at one financial institution, and account balances may at times exceed federally insured limits.

We believe the financial institution to be of high credit quality.

Licensees that represent 10% or more of our revenue and accounts receivable and contract assets were as follows:

Substantially all of our cash and cash equivalents are deposited in accounts at two financial institutions, and account balances may at times exceed federally insured limits.

We mitigate the risks by investing in high-grade instruments, limiting our exposure to one issuer, and we monitor the ongoing creditworthiness of the financial institutions and issuers.

We believe these financial institutions to be of high credit quality.

Licensees that represent 10% or more of our revenue and accounts receivable and contract assets are as follows:

Accounts Receivable and

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Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

September 30, 2021

March 31, 2022

March 31, 2021

March 31, 2022

December 31, 2021

Licensee C, related party

Licensee F, related party

*Less than 10%

We monitor economic conditions to identify facts or circumstances that may indicate if any of our accounts receivable are not collectible or if the contract assets should be impaired.

No allowance for doubtful accounts was recorded as of September 30, 2021 or December 31, 2020.

Restricted Cash

We define restricted cash as cash and cash equivalents that cannot be withdrawn or used for general operating activities.

Our restricted cash consists of a letter of credit with a financial institution related to our workers’

compensation insurance, which renews annually.

As of September 30, 2021, we had less than $ 0.1 million of restricted cash, which was recorded in other assets in our condensed consolidated balance sheets.

We did no t have any restricted cash as of December 31, 2020.

We expense costs as incurred for filing, prosecuting, and maintaining patents and patent applications, including certain of the patents and patent applications that we license from third parties.

We classify such costs as general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

In addition, we are entitled to receive reimbursement from third parties for a portion of the filing, prosecution, and maintenance costs for certain patents and patent applications.

We accrue for these reimbursements as the respective expenses are incurred, and we classify such reimbursements as a reduction of general and administrative expenses.

During each of the three months ended September 30, 2021 and 2020, we incurred gross patent costs of $ 2.8 million.

During the nine months ended September 30, 2021 and 2020, we incurred gross patent costs of $ 10.3 million and $ 7.3 million, respectively.

During the three months ended September 30, 2021 and 2020, we recorded $ 1.6 million and $ 1.5 million, respectively, of patent cost reimbursements as a credit to general and administrative expenses.

During the nine months ended September 30, 2021 and 2020, we recorded $ 6.1 million and $ 3.7 million, respectively, of patent cost reimbursements as a credit to general and administrative expenses.

No allowance for doubtful accounts was recorded as of March 31, 2022 or December 31, 2021.

We adopted the guidance under ASC 842 on January 1, 2022 using the modified retrospective approach with a cumulative-effect adjustment as of January 1, 2022 in accordance with the Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842).

We determine whether an arrangement is or contains a lease at the inception of the arrangement and whether such a lease is classified as a finance lease or operating lease at the commencement date of the lease.

Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities, and long-term lease liabilities.

We elected not to recognize the right-of-use assets and lease liabilities for leases with lease terms of 12 months or less (short-term leases).

Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term.

As the interest rate implicit in our lease contracts is not readily determinable, we utilize a collateralized incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments.

Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received and impairment charges if we determine the right-of-use asset is impaired.

There was no cumulative-effect adjustment recorded to retained earnings on January 1, 2022.

We consider the lease term to be the noncancellable period that we have the right to use the underlying asset, together with any periods where it is reasonably certain we will exercise an option to extend (or not terminate) the lease.

Periods covered by an option to extend (or not terminate) the lease in which the exercise of the option is controlled by the lessor are included in the lease term.

Rent expense for operating leases is recognized on a straight-line basis over the lease term and is presented in operating expenses on the statements of operations and comprehensive loss.

We have elected to not separate lease and non-lease components for our facilities leases and leases of electroporation devices and, instead, we account for each separate lease component and the non-lease components associated with that lease component as a single lease component.

Variable lease payments are recognized as incurred and are presented in operating expenses on the statements of operations and comprehensive loss.

As of March 31, 2022 and December 31, 2021, we had no finance leases.

For more information about the impact of adoption and disclosures on our leases, see Note 9.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “

FASB”) or other standard-setting bodies and adopted by us as of the specified effective date.

New Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued Accounting Standards Update (“ASU”) No.

FASB”) or other standard-setting bodies and are adopted by us as of the specified effective date.

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842).

This ASU requires a lessee to recognize in its statement of financial position a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term.

We may elect not to apply Topic 842 to short-term leases with a term of 12 months or less.

This ASU is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted.

We are in the process of completing a qualitative and quantitative assessment of our lease portfolio and implementing new processes and controls to account for leases in accordance with the new standard.

We believe the most significant changes to our financial statements will relate to the recognition of right-of-use assets and offsetting lease liabilities for operating leases in the consolidated balance sheet.

We do not expect the standard to have a material impact on cash flows or results of operations.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses:

This ASU requires a lessee to recognize in its statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.

We adopted the new standard as of January 1, 2022, using the modified retrospective approach.

Comparative periods were not adjusted and continue to be presented under the previous accounting guidance.

We elected the package of practical expedients permitted under the transition guidance, which allowed us to carry forward the historical lease classification of contracts entered into prior to January 1, 2022.

Our adoption of the new standard impacted the condensed consolidated balance sheets as follows (in thousands):

January 1, 2022

Pre-ASC 842 Balance

ASC 842 Adoption Impact

Post-ASC 842 Balance

Operating lease right-of-use assets

Accrued expenses and other current liabilities*

Long-term operating lease liabilities

Deferred rent and lease incentive liability

*Adjustment represents the current portion of operating lease liabilities of $ 0.8 million and reclassification of the current portion of the lease incentive liability of $ 0.1 million to reduce the operating lease right-of-use assets.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments –

Credit Losses:

Measurement of Credit Losses on Financial Instruments (Topic 326).

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Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, and interim periods therein.

We are currently evaluating the impact of adoption of this ASU on our condensed consolidated financial statements.

We are currently evaluating the impact of adoption of ASU 2016-13 on our condensed consolidated financial statements.

Fair Value Measurements and Fair Value of Financial Instruments

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Our assessment of the significance of a particular input to the fair value measurement in its entirety requires our management to make judgments and consider factors specific to the asset or liability.

Our financial instruments consist of Level 1 and Level 3 financial instruments.

Level 1 financial instruments are comprised of money market mutual funds.

Level 3 financial instruments are comprised of the success payments liability related to the Exclusive License Agreement (the “MSKCC Agreement”), dated November 13, 2020, by and between us and Memorial Sloan Kettering Cancer Center (“MSKCC”).

Our financial instruments consist of Level 1, Level 2, and Level 3 financial instruments.

We generally classify our marketable securities as Level 2.

Instruments are classified as Level 2 when observable market prices for identical securities that are traded in less active markets are used.

When observable market prices for identical securities are not available, such instruments are priced using benchmark curves, benchmarking of like securities, sector groupings, matrix pricing, and valuation models.

These valuation models are proprietary to the pricing providers or brokers and incorporate a number of inputs, including in approximate order of priority:

benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications.

For certain security types, additional inputs may be used, or some of the standard inputs may not be applicable.

Evaluators may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs listed are available for use in the evaluation process for each security evaluation on any given day.

Level 1 financial instruments are comprised of money market funds and U.S.

Treasury bills.

Level 2 financial instruments are comprised of commercial paper and corporate debt securities.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable.

Level 3 financial instruments consist of the MSKCC success payments liability.

The following table sets forth our financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

Fair Value Measurements as of September 30, 2021

Money market investments (included in cash and cash equivalents)

Fair Value Measurements as of March 31, 2022

Commercial paper ($ 46,516 included in cash and cash equivalents)

Treasury bills ($ 26,990 included in cash and cash equivalents)

Money market fund investments (included in cash and cash equivalents)

Corporate debt securities ($ 2,999 included in cash and cash equivalents)

government agency bonds ($ 6,395 included in cash and cash equivalents)

Total fair value of assets

MSKCC success payments liability

Total fair value of liabilities

Fair Value Measurements as of December 31, 2021

Money market investments (included in cash and cash equivalents)

Money market fund investments (included in cash and cash equivalents)

Commercial paper ($ 58,892 included in cash and cash equivalents)

Corporate debt securities

Treasury bills

government agency bonds

Total fair value of assets

MSKCC success payments liability

Total fair value of liabilities

The fair value and amortized cost of cash equivalents and available-for-sale marketable securities by major security type as of March 31, 2022 and December 31, 2021 are presented in the following tables (in thousands):

As of March 31, 2022

Commercial paper ($ 46,516 included in cash and cash equivalents)

Treasury bills ($ 26,990 included in cash and cash equivalents)

Money market investments (included in cash equivalents)

Corporate debt securities ($ 2,999 included in cash and cash equivalents)

government agency bonds ($ 6,395 included in cash and cash equivalents)

Total cash equivalents and marketable securities

Classified as:

Cash and cash equivalents

Marketable securities, short-term

Marketable securities, long-term

Total cash equivalents and marketable securities

As of December 31, 2021

Money market investments (included in cash equivalents)

Commercial paper ($ 58,892 included in cash equivalents)

government agency bonds

Corporate debt securities

Treasury bills

Total cash equivalents and marketable securities

Classified as:

Cash and cash equivalents

Marketable securities, short-term

Marketable securities, long-term

Total cash equivalents and marketable securities

The following table sets forth a summary of the changes in the fair value of our Level 3 financial liability (in thousands):

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Change in fair value

Balance at September 30, 2021

We recorded a $ 2.4 million change and a $ 3.6 million change in fair value of the MSKCC success payments liability in other income (expense) in our condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2021, respectively.

Our liability for the MSKCC success payments is carried at fair value and changes are recognized as expense or income as part of “other income (expense)”

until the success payments liability is paid or expires (Note 4).

Balance at March 31, 2022

Our liability for the MSKCC success payments is carried at fair value and changes are recognized as expense or income as part of other income (expense) until the success payments liability is paid or expires (Note 4).

We recorded $ 1.6 million and $ 0.7 million change in fair value of the MSKCC success payments liability in other income (expense) and research and development expense in our condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2022 and 2021, respectively.

We utilize a Monte Carlo simulation model that models the future movement of stock prices based on several key variables.

This model requires significant estimates and assumptions in determining the estimated success payments liability under the MSKCC Agreement and associated expense or income at each balance sheet date based on changes in the estimated success payments liability .

This model requires significant estimates and assumptions in determining the estimated fair value of the MSKCC success payments liability at each balance sheet date.

The assumptions used to calculate the fair value of the MSKCC success payments are subject to a significant amount of judgment including the expected volatility that was estimated using available information about the historical volatility of stocks of publicly traded companies that are similar to us, the estimated term, and the estimated number and timing of valuation measurement dates.

The table below summarizes key assumptions used in the valuation of MSKCC success payments liability:

September 30,

Fair value of common stock

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The computation of expected volatility was estimated using a combination of available information about the historical volatility of stocks of similar publicly traded companies for a period matching the expected term assumption and the historical and implied volatility of our stock.

The risk-free interest rate, expected volatility, and expected term assumptions depend on the estimated timing of our phase 1 clinical trial and U.S.

Food and Drug Administration (“FDA”) approval of one of our product candidates.

The risk-free interest rate, expected volatility, and expected term assumptions depend on the estimated timing of our phase 1 clinical trial for our CB-012 product candidate utilizing the know-how, biological materials, and intellectual property licensed under the MSKCC Agreement and the estimated timing of marketing approval for this product candidate from the U.S.

Food and Drug Administration (“FDA”).

In addition, we incorporated the estimated number and timing of valuation measurement dates in the calculation of the MSKCC success payments liability.

A small change in the assumptions and other inputs, such as the fair value of our common stock, may have a relatively large change in the estimated valuation and associated liability and expense or income.

The carrying value of the promissory note pursuant to the Paycheck Protection Program (“PPP”) administered by the Small Business Administration (the “SBA”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) approximates its fair value (Note 8).

Significant Agreements

The Regents of the University of California/University of Vienna

The Regents of the University of California and the University of Vienna

We entered into an Exclusive License Agreement, dated April 16, 2013 (as amended, the “UC/Vienna Agreement”) with The Regents of the University of California (“UC”) and the University of Vienna (“Vienna”) (together, “UC/Vienna”) wherein UC/Vienna granted us an exclusive worldwide license, with the right to sublicense, in all fields to the foundational CRISPR-Cas9 patent family co-owned by UC, Vienna, and Dr.

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If we do not include intellectual property owned or controlled by us in a sublicense to the CVC IP, we pay UC/Vienna 50% of sublicensing revenues received under the sublicense.

To date, we have entered into over 20 sublicensing agreements in a variety of fields such as human therapeutics, forestry, agriculture, research reagents, transgenic animals, certain livestock targets, internal research,

bioproduction, cell lines, and microbial applications that include the CVC IP as well as other Cas9 intellectual property owned or controlled by us.

To date, we have entered into over 25 sublicensing agreements in a variety of fields such as human therapeutics, forestry, agriculture, research reagents, transgenic animals, certain livestock targets, internal research, bioproduction, cell lines, and microbial applications that include the CVC IP as well as other Cas9 intellectual property owned or controlled by us.

We are obligated to reimburse UC for its prosecution and maintenance costs of the CVC IP.

For the three months ended September 30, 2021 and 2020, we incurred $ 0.3 million and $ 0.1 million, respectively, for payments we owe to UC related to sublicensing revenues, which were recorded in research and development expenses in our condensed consolidated statements of operations and comprehensive loss.

For the nine months ended September 30, 2021 and 2020, we incurred $ 1.3 million and $ 0.6 million, respectively, for payments we owe to UC related to sublicensing revenues, which were recorded in research and development expenses in our condensed consolidated statements of operations and comprehensive loss.

For the three months ended September 30, 2021 and 2020, we reimbursed UC $ 2.4 million and $ 2.3 million, respectively, for prosecution and maintenance costs of the CVC IP, which were recorded in general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

For the nine months ended September 30, 2021 and 2020, we reimbursed UC $ 8.9 million and $ 6.0 million, respectively, for prosecution and maintenance costs of the CVC IP, which were recorded in general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

For each of the three months ended March 31, 2022 and 2021, we incurred $ 0.3 million for payments we owe to UC related to sublicensing revenues, which we recorded in research and development expenses in our condensed consolidated statements of operations and comprehensive loss.

For the three months ended March 31, 2022 and 2021, we reimbursed UC $ 2.3 million and $ 3.2 million, respectively, for prosecution and maintenance costs of the CVC IP, which were recorded in general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

On December 15, 2016, we entered into a Consent to Assignments, Licensing and Common Ownership and Invention Management Agreement (“IMA”) relating to the CVC IP.

Under the IMA, CRISPR Therapeutics AG (“CRISPR”) reimburses us 50 % of the amounts we reimburse UC for patent prosecution and maintenance costs of the CVC IP.

For the three months ended September 30, 2021 and 2020, CRISPR reimbursed us $ 1.2 million and $ 1.1 million, respectively, which were recorded as reductions of general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

For the nine months ended September 30, 2021 and 2020, CRISPR reimbursed us $ 4.4 million and $ 2.6 million, respectively, which were recorded as reductions of general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

Memorial Sloan Kettering Cancer Center

Under the MSKCC Agreement, we exclusively licensed know-how, biological materials, and intellectual property relating to humanized single-chain variable fragments targeting CD371 for use in T cells, NK cells, and genome-edited induced pluripotent stem cells for allogeneic CD371-targeted cell therapy (currently used in our CB-012 product candidate).

For the three months ended March 31, 2022 and 2021, CRISPR reimbursed us $ 1.1 million and $ 1.6 million, respectively, which we recorded as reductions of general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

Memorial Sloan Kettering Cancer Center (“MSKCC”)

On November 13, 2020, we entered into an Exclusive License Agreement with MSKCC (the “MSKCC Agreement”), under which we exclusively licensed know-how, biological materials, and patent families relating to fully-human single-chain variable fragments targeting CD371 (also known as CLL-1) for use in T cells, NK cells, and genome-edited induced pluripotent stem cells (“iPSCs”) for allogeneic CD371-targeted cell therapies (currently used in our CB-012 product candidate).

We paid MSKCC an upfront payment of $ 0.5 million in cash and $ 2.1 million in stock.

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We are also responsible for paying a percentage of licensed patent costs.

The MSKCC Agreement includes certain diligence milestones that we must meet by specified dates, which dates may be extended upon payment of additional fees.

MSKCC is entitled to certain success payments if our common stock fair value increases by certain multiples of increasing value based on a comparison of the fair market value of our common stock with the split-adjusted initial stock price of our Series B convertible preferred stock financing of $ 5.1914 per share, as adjusted for any future stock splits (the “Initial Share Price”), during a specified time interval.

The MSKCC Agreement includes certain diligence milestones that we must meet by specified dates, which may be extended upon payment of additional fees.

MSKCC is entitled to certain success payments if our common stock fair value increases by certain multiples of increasing value based on a comparison of the fair market value of our common stock to $ 5.1914 per share, adjusted for any future stock splits (the “Initial Share Price”), during a specified time period.

Under the MSKCC Agreement, as a publicly traded company, our common stock fair value is determined by any given 45-day volume weighted-average trading price.

At our option, success payments to MSKCC may be made in cash or common stock.

The relevant time interval commences when the first patient is dosed with a licensed CD371 product candidate in the first phase 1 clinical trial and ends upon the earlier of the third anniversary from the approval of our, or our affiliate’s, or sublicensee’s, biologics license application by the FDA or 10 years from the date the first patient was dosed with a licensed CD371 product candidate in the first phase 1 clinical trial.

The relevant time period commences when the first patient is dosed with a licensed CD371 product candidate in the first phase 1 clinical trial and ends upon the earlier of the third anniversary from the approval of our, or our affiliate’s, or sublicensee’s, biologics license application (“BLA”) by the FDA or 10 years from the date the first patient was dosed with a licensed CD371 product candidate in the first phase 1 clinical trial.

The aggregate success payments will not exceed $ 35.0 million.

Additionally, if we undergo a change of control during the specified time interval, we may owe a change of control payment, depending upon the increase in our stock price due to the change of control and also to what extent success payments have already been paid by us to MSKCC.

Additionally, if we undergo a change of control during the specified time period, we may owe a change of control payment, depending upon the increase in our stock price due to the change of control and also to what extent success payments have already been paid by us to MSKCC.

In no event will the combination of success payments and the change of control payment owed to MSKCC exceed $ 35.0 million.

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prior written notice to MSKCC.

MSKCC may terminate in the event of our uncured material breach, bankruptcy, or criminal activity.

In the event that MSKCC materially breaches the MSKCC Agreement in certain circumstances ( e.g ., granting a third party a license in our field) then, during the time of such uncured breach, MSKCC will not be entitled to receive any success payments or any change of control payment.

As of September 30, 2021, the estimated fair value of the total success payments obligation to MSKCC was $ 6.2 million, which was included in long-term liabilities in our condensed consolidated balance sheets.

For the three and nine months ended September 30, 2021, we recognized $ 2.4 million and $ 3.6 million, respectively, of change in fair value of the MSKCC success payments liability, which were recorded in other income (expense) in our condensed consolidated statements of operations and comprehensive loss.

MSKCC may terminate the MSKCC Agreement in the event of our uncured material breach, bankruptcy, or criminal activity.

If MSKCC materially breaches the MSKCC Agreement in certain circumstances (e.g., granting a third party a license in our field) then, during the time of such uncured breach, MSKCC will not be entitled to receive any success payments or any change of control payment.

As of March 31, 2022, the estimated fair value of the total success payments obligation to MSKCC was $ 2.5 million, which was included in long-term liabilities in our condensed consolidated balance sheets.

For the three months ended March 31, 2022 and 2021, we recognized a $ 1.6 million and $ 0.7 million, respectively, change in fair value of the MSKCC success payments liability, which was recorded in other income (expense) in our condensed consolidated statements of operations and comprehensive loss.

Intellia Therapeutics, Inc.

On July 16, 2014, we entered into a License Agreement, as amended (the “Intellia License Agreement”) and a Services Agreement with Intellia, LLC, to which Intellia Therapeutics, Inc.

On July 16, 2014, we entered into a License Agreement (as amended, the “Intellia License Agreement”) with Intellia, LLC, to which Intellia Therapeutics, Inc.

(“Intellia”) is a successor in interest.

Under the Intellia License Agreement, we granted Intellia an exclusive worldwide license, with the right to sublicense, to certain CRISPR-Cas9 technology for a defined field of human therapeutics, including a license to certain of our future CRISPR-Cas9 intellectual property until our direct or indirect percentage of Intellia’s common stock dropped below 10 % (the “IP Cut-off Date”).

Intellia granted us an exclusive worldwide license, with the right to sublicense, to certain of its CRISPR-Cas9 technology for all fields outside of the defined field of human therapeutics, including a license to certain of Intellia’s future CRISPR-Cas9 intellectual property until the IP Cut-off Date.

Each party had the right to opt-in to any licenses in its field of use entered into by the other party prior to the IP Cut-off Date, subject to the terms and conditions of such license.

The IP Cut-off Date occurred on January 30, 2018.

Under the Intellia License Agreement, we granted Intellia an exclusive worldwide license, with the right to sublicense, to certain CRISPR-Cas9 technology for a defined field of human therapeutics.

Intellia granted us an exclusive worldwide license, with the right to sublicense, to certain of its CRISPR-Cas9 technology for all fields outside of the defined field of human therapeutics.

Under the Intellia License Agreement, each party is responsible for 30 % of the other party’s expenses for prosecution and maintenance of the licensed intellectual property.

For each of the three and nine months ended September 30, 2021 and 2020, we reimbursed Intellia less than $ 0.1 million, which was recorded as general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

During each of the three months ended September 30, 2021 and 2020, Intellia reimbursed us $ 0.4 million (including reimbursement for a portion of the patent prosecution and maintenance costs of the CVC IP paid to UC), which was recorded as reductions of general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

During the nine months ended September 30, 2021 and 2020, Intellia reimbursed us $ 1.7 million and $ 1.1 million, respectively (including reimbursement for a portion of patent prosecution and maintenance costs of the CVC IP paid to UC), which were recorded as reductions of general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

For the three months ended March 31, 2022 and March 31, 2021, we reimbursed Intellia less than $ 0.1 million, which was recorded as general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

During each of the three months ended March 31, 2022 and 2021, Intellia reimbursed us $ 0.3 million and $ 0.5 million, respectively (including reimbursement for a portion of the patent prosecution and maintenance costs of the CVC IP paid to UC), which were recorded as reductions of general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

The term of the Intellia License Agreement continues for the life of the licensed patents and patent applications;

provided, however, either party may terminate upon the occurrence of certain events.

On June 16, 2021, we and Intellia entered into a leaseback agreement (the “Leaseback Agreement”), which resolved the arbitration dispute between the parties (Note 9).

Pursuant to the Leaseback Agreement, in exchange for Intellia’s grant to us of an exclusive license to certain intellectual property relating to CRISPR-Cas9, including Cas9 chRDNAs, for use solely in the manufacture of our CB-010 product candidate, we agreed to make certain payments to Intellia, including $ 1.0 million paid to Intellia in July 2021.

We are also obligated to pay up to $ 23.0 million in potential future regulatory and sales milestones for our CB-010 product candidate if and when such milestones are achieved.

We will also pay Intellia low- to mid-single-digit percent royalties on net sales of our CB-010 product candidate sold by us, our affiliates, and sublicensees until the expiration, abandonment, or invalidation of the last patent within the intellectual property relating to certain CRISPR-Cas9, including those relating to Cas9 chRDNAs.

provided, however, either party may terminate the agreement upon the occurrence of certain events.

On June 16, 2021, we entered into a leaseback agreement with Intellia (the “Leaseback Agreement”).

Pursuant to the Leaseback Agreement, in exchange for Intellia’s grant to us of an exclusive license to certain intellectual property relating to CRISPR-Cas9, including Cas9 chRDNAs, for use solely in the manufacture of our CB-010 product candidate, we paid Intellia an upfront cash payment of $ 1.0 million and will pay up to $ 23.0 million in potential future regulatory and sales milestones.

Additionally, we will owe Intellia low- to mid-single-digit percent royalties on net sales of our CB-010 product candidate by us, our affiliates, and sublicensees until the expiration, abandonment, or invalidation of the last patent within the intellectual property relating to CRISPR-Cas9, including that relating to Cas9 chRDNAs (i.e., 2036, without patent term adjustment or patent term extension).

Pioneer Hi-Bred International, Inc.

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Pioneer granted us an exclusive worldwide license, with the right to sublicense, to its CRISPR intellectual property in the field of research tools, as well as a non-exclusive worldwide license to such intellectual property in human and animal therapeutics, industrial biotechnology, certain agriculture segments, and other fields;

and we granted Pioneer an exclusive worldwide license, with the right to sublicense, to our CRISPR intellectual property, including the CVC IP, in a defined field of agriculture relating to specified row crops, as well as a non-exclusive worldwide license to such intellectual property in other agricultural applications, industrial biotechnology, nutrition and health, and other fields.

and we granted Pioneer an exclusive worldwide license, with the right to sublicense, to our CRISPR intellectual property, including the CVC IP, in a defined field of agriculture relating to specified row crops, as well as a non-exclusive worldwide license to the intellectual property in other agricultural applications, industrial biotechnology, nutrition and health, and other fields.

The Pioneer Agreement continues until the expiration, abandonment, or invalidation of the last patent or patent application within the licensed intellectual property;

provided, however, that the parties may terminate the Pioneer Agreement by mutual consent or either party may unilaterally terminate the Pioneer Agreement in the event of an uncured breach of a payment obligation, bankruptcy, or failure to maintain or own licensed intellectual property by the other party in the event the

non-breaching party is materially adversely affected by such failure.

We are obligated to pay low-single-digit percent royalties to Pioneer for the sales of our products in the research tools field as well as certain sublicensing revenues in that field.

We are eligible to receive milestone payments from Pioneer in the event certain regulatory and commercial milestones are met related to specified row crops, for a total of up to $ 22.4 million, as well as to receive low-single-digit percent royalties for sales of defined agricultural products and certain sublicensing revenues in that field.

We are eligible to receive milestone payments from Pioneer if certain regulatory and commercial milestones are met related to specified row crops, for a total of up to $ 22.4 million, as well as to receive low-single-digit percent royalties for sales of defined agricultural products and certain sublicensing revenues in that field.

In March 2021, we received a milestone payment of $ 0.3 million from Pioneer.

Under the Pioneer Agreement, we and Pioneer also entered into a three-year collaboration, funded by Pioneer, which ended in 2016.

Initially, Pioneer owned the patents and patent applications developed under the collaboration, including the chRDNA patent family, and granted us an exclusive license to these patents and patent applications in the fields of research tools and therapeutics.

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up to $ 20.0 million in sales milestones over a total of four therapeutics products sold by us, our affiliates, or licensees that are covered by the chRDNA patent family;

and a low-single-digit percentage of licensing revenues received by us for licensing the chRDNA patent family after December 2020.

During the nine months ended September 30, 2021, we incurred $ 0.8 million for payments we owe to Pioneer related to licensing revenues, which were recorded as a research and development expense in our condensed consolidated statements of operations and comprehensive loss.

No licensing fees payments were incurred to Pioneer during the three months ended September 30, 2021 no r during the three and nine months ended September 30, 2020.

On May 12, 2016, we entered into a Research Collaboration and License Agreement, as amended (the “Genus Agreement”) with Genus plc (“Genus”) under which we granted Genus an exclusive worldwide license to certain CRISPR-Cas9 technology for the introduction of genetic traits into cattle and pigs raised to produce protein primarily for human consumption;

provided, however, that at the end of the four-year research collaboration, Genus was required to select a specified number of licensed products and our license to Genus is now limited to those particular products.

The Genus Agreement continues until the expiration, abandonment, or invalidation of the last patent or patent application within the licensed patent rights;

provided, however, that each party may terminate the Genus Agreement upon the occurrence of certain events, and Genus may terminate the Genus Agreement at its sole discretion upon written notice to us.

In addition to an upfront payment we received, we are eligible to receive milestone payments from Genus in the event certain regulatory and commercial milestones are met, for the selected licensed products, up to a total of $ 10.0 million.

We will also be eligible to receive either low- to mid-single-digit percent royalties or low-single to low-double-digit percent royalties on net sales of the licensed products.

Under the Genus Agreement, we and Genus entered into a four-year research collaboration, which was funded by Genus.

The collaboration ended in May 2020.

We did no t recognize any revenue in connection with the Genus Agreement for the three and nine months ended September 30, 2021.

During the three months ended September 30, 2020, we did no t recognize any revenue related to the Genus Agreement.

During the nine months ended September 30, 2020, we recognized revenue of $ 0.8 million related to the Genus Agreement.

Related Party Private Company

On May 15, 2020, we entered into an Exclusive License Agreement, as amended, with a related party private company (the “Private Company License Agreement”), under which we granted the private company an exclusive worldwide license to certain CRISPR intellectual property rights and know-how in a defined field.

We are eligible to receive milestone payments for licensed products following the first commercial sale of each licensed product in each of the United States and the first European country in which each licensed product is sold by the private company.

The private company may select one of several milestone payment amounts for each licensed product, which selection then dictates the applicable royalty rate for net sales of licensed products.

We are also eligible to receive a percentage of sublicensing revenues in the event the private company sublicenses the CRISPR intellectual property that we licensed to the private company.

The Private Company License Agreement will continue in force and effect until the expiration, abandonment, or invalidation of the last patent or patent application within the licensed patent rights.

The Private Company License Agreement may be terminated during the term by either party for an uncured material breach or bankruptcy.

Additionally, the private company may terminate the Private Company License Agreement upon 90 days’

written notice to us.

As consideration for the exclusive license, the private company issued to us 7,500,000 shares of convertible preferred stock with an estimated fair value of $ 7.5 million, which was the price paid for similar shares by another investor, and which was an arm’s length transaction.

We accounted for the grant of the license as a contract with a customer under Accounting Standards Codification (“ASC”) 606 and recognized $ 7.5 million as license and collaboration revenue in our condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2020.

We did no t recognize any revenue in connection with the Private Company License Agreement for the three and nine months ended September 30, 2021 nor for the three months ended September 30, 2020.

On May 15, 2020, we entered into a separate option agreement under which we granted the same private company a three-year option to negotiate an exclusive, royalty-bearing, worldwide license in a defined field to the CVC IP and certain other CRISPR-Cas9 patent rights controlled by us.

Through September 2021 , we received a total of $ 100,000 in upfront option payments and may receive an additional annual option fee and an option exercise fee.

We recorded the upfront payments received in long-term deferred revenue in our condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020.

and a low-single-digit percentage of licensing revenue we receive for licensing the chRDNA patent family after December 2020.

No licensing fee payments were incurred to Pioneer during the three months ended March 31, 2022.

During the three months ended March 31, 2021, we incurred $ 0.8 million for payments we owed to Pioneer related to licensing revenues, which were recorded as a research and development expense in our condensed consolidated statements of operations and comprehensive loss.

AbbVie Manufacturing Management Unlimited Company

On February 9, 2021, we entered into a Collaboration and License Agreement (the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”).

Pursuant to the AbbVie Agreement, AbbVie selects one target or, for a dual CAR-T product, two targets (each selection, a “Program Slot”) to develop collaboration CAR-T products (and corresponding licensed products).

For each of AbbVie’s two Program Slots (or up to four Program Slots, if AbbVie elects to expand the number as set forth below), we will collaborate to develop one or more collaboration allogeneic CAR-T products directed toward the single cancer target or target combination chosen by AbbVie as described in an applicable research plan, utilizing our Cas12a chRDNA genome-editing and cell therapy technologies.

We granted AbbVie an exclusive (even as to us), royalty-bearing, worldwide license, with the right to grant sublicenses, under our Cas12a chRDNA and cell therapy intellectual property, as well as certain genome-editing technology that we may gain rights to in the future and intellectual property that may be developed under the collaboration, solely for AbbVie to develop, commercialize, manufacture, and otherwise exploit the collaboration CAR-T products in the field of human diagnostics, prophylactics, and therapeutics.

Under the terms of the AbbVie Agreement, we will conduct certain preclinical research, development, and manufacturing activities under the collaboration, including certain activities for the manufacture and supply of licensed product for AbbVie’s phase 1 clinical studies.

AbbVie will reimburse us for all such activities, including reimbursement for time spent by employees at a designated FTE rate.

Pursuant to the AbbVie Agreement, AbbVie selects one target or, for a dual CAR-T cell product, two targets (each selection, a “Program Slot”) to develop collaboration CAR-T cell products (and corresponding licensed products).

For each of AbbVie’s two Program Slots (or up to four Program Slots, if AbbVie elects to expand the number as set forth below), we are collaborating to develop one or more collaboration allogeneic CAR-T cell products directed toward the single cancer target or target combination chosen by AbbVie as described in an applicable research plan, utilizing our Cas12a chRDNA genome-editing and cell therapy technologies.

We granted AbbVie an exclusive (even as to us), royalty-bearing, worldwide license, with the right to grant sublicenses, under our Cas12a chRDNA and cell therapy intellectual property, as well as certain genome-editing technology that we may gain rights to in the future and intellectual property that may be developed under the collaboration, solely for AbbVie to develop, commercialize, manufacture, and otherwise exploit the collaboration CAR-T cell products in the field of human diagnostics, prophylactics, and therapeutics.

Under the terms of the AbbVie Agreement, we conduct certain preclinical research, development, and manufacturing activities under the collaboration, including certain activities for the manufacture and supply of licensed product for AbbVie’s phase 1 clinical trials.

AbbVie reimburses us for all such activities, including reimbursement for time spent by employees at a designated FTE rate.

The duration of the collaboration is not fixed.

Under the terms of the AbbVie Agreement, AbbVie has selected its initial Program Slot and has reserved six additional targets, which AbbVie may choose to be used or substituted into the two Program Slots or used for the third or fourth Program Slots if AbbVie expands the number of Program Slots during the collaboration.

During the collaboration, AbbVie may expand from two Program Slots to a total of four Program Slots by paying us an additional $ 15.0 million for each Program Slot , provided that AbbVie must make such payment within the earlier of (a) 60 calendar days following completion of the phase 1 clinical studies for the initial collaboration CAR-T and (b) December 31, 2025.

During the collaboration, AbbVie may expand from two Program Slots to a total of four Program Slots by paying us an additional $ 15.0 million for each Program Slot, provided that AbbVie must make such payment within the earlier of (a) 60 calendar days following completion of the phase 1 clinical trials for the initial collaboration CAR-T cell product and (b) December 31, 2025.

Under the terms of the AbbVie Agreement, we are eligible to receive up to $ 150.0 million in future developmental and regulatory milestone payments for each Program Slot and up to $ 200.0 million in sales-based milestones for each Program Slot.

We are also eligible to receive global royalties on net sales of licensed products sold by AbbVie, its affiliates, and sublicensees in the high-single-digit to low-teens percent range, subject, in certain instances, to various reductions.

The term of the AbbVie Agreement will continue in force and effect until the date of expiration of the last royalty term of the last country in which a licensed product is exploited.

The term of the AbbVie Agreement continues in force and effect until the date of expiration of the last royalty term of the last country in which a licensed product is exploited.

On a licensed product-by-licensed product and country-by-country basis, the royalty term is the period of time beginning on the first commercial sale of a licensed product in a country and ending on the latest of the following three dates:

(a) the expiration, invalidation, revocation, cancellation, or abandonment date of the last patent that includes a valid claim to either (i) the collaboration CAR-T product in the licensed product or (ii) the method of making the collaboration CAR-T product in the licensed product in such country (in the case of (ii), only for so long as no biosimilar product is commercially available in such country);

(a) the expiration, invalidation, revocation, cancellation, or abandonment date of the last patent that includes a valid claim to either (i) the collaboration CAR-T cell product in the licensed product or (ii) the method of making the collaboration CAR-T cell product in the licensed product in such country (in the case of (ii), only for so long as no biosimilar product is commercially available in such country);

(b) 10 years from the date of the first commercial sale of such licensed product in such country;

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The AbbVie Agreement may be terminated during the term by either party for an uncured material breach or bankruptcy by the other party.

Additionally, AbbVie may terminate the AbbVie Agreement, in its entirety or on a licensed product-by-licensed product basis, effective immediately upon written notice to us,

if AbbVie in good faith believes that it is not advisable for AbbVie to continue to exploit the collaboration CAR-T products or licensed products as a result of a perceived serious safety issue.

Additionally, AbbVie may terminate the AbbVie Agreement, in its entirety or on a licensed product-by-licensed product basis, effective immediately upon written notice to us, if AbbVie in good faith believes that it is not advisable for AbbVie to continue to exploit the collaboration CAR-T cell products or licensed products as a result of a perceived serious safety issue.

AbbVie may also terminate the AbbVie Agreement in its entirety at its sole discretion upon 90 days’

prior written notice to us.

The transaction price we received under the AbbVie Agreement associated with the first two Program Slots consisted of the $ 30.0 million upfront cash payment and the estimated variable consideration related to our performance of preclinical, development, and manufacturing activities under the collaboration and the developmental and regulatory milestone payments.

The transaction price we received under the AbbVie Agreement associated with the first two Program Slots consisted of a $ 30.0 million upfront cash payment and the estimated variable consideration related to our performance of preclinical, development, and manufacturing activities under the collaboration and the developmental and regulatory milestone payments.

We constrain the estimated variable consideration if we assess that it is probable that a significant reversal in the amount of cumulative revenue recognized may occur in future periods.

We constrained all developmental and regulatory milestone payments as of September 30, 2021.

The transaction price will be reevaluated in each reporting period and as changes in circumstances occur.

We constrained all developmental and regulatory milestone payments as of March 31, 2022.

The transaction price is reevaluated at the end of each reporting period and as changes in circumstances occur.

We determined that the licenses we granted to AbbVie and our participation in the joint governance committee are not capable of being distinct from the preclinical research, development, and manufacturing activities and therefore are combined into one performance obligation.

We recognize revenue based on the measure of progress using an estimated cost-based input method each reporting period.

We received an upfront cash payment of $ 30.0 million from AbbVie on March 11, 2021.

We recognized short-term deferred revenue in the amount of $ 8.3 million and long-term deferred revenue in the amount of $ 20.1 million related to this upfront cash payment in our condensed consolidated balance sheets as of September 30, 2021.

We recognized $ 2.3 million and $ 2.8 million in revenue for the three and nine months ended September 30, 2021, respectively, in relation to the AbbVie Agreement.

We received an upfront cash payment of $ 30.0 million from AbbVie during the year ended December 31, 2021.

We recognized short-term deferred revenue in the amount of $ 12.5 million and long-term deferred revenue in the amount of $ 14.5 million related to this upfront cash payment in our condensed consolidated balance sheets as of March 31, 2022.

We recognized short-term deferred revenue in the amount of $ 8.3 million and long-term deferred revenue in the amount of $ 19.1 million related to these payments in our consolidated balance sheets as of December 31, 2021.

We recognized $ 0.9 million in revenue for the three months ended March 31, 2022, relating to the AbbVie Agreement.

As of March 31, 2022, and December 31, 2021, we also recorded $ 0.2 and $ 1.0 million in accounts receivable, respectively, and $ 0.4 and $ 0.2 million, respectively, in contract assets in our condensed consolidated balance sheets.

Disaggregation of Revenue

We disaggregate revenue by geographical market based on the location of research and development activities of our licensees and collaborators.

The following is a summary of revenue by geographic location for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

The following is a summary of revenue by geographic location for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

United States

Rest of world

During the three months ended September 30, 2021, we recognized $ 1.7 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 2.3 million of revenue related to performance obligations satisfied over time.

During the three months ended September 30, 2020, we recognized $ 1.2 million of revenue related to performance obligations satisfied at a point in time, and we did no t recognize any revenue related to performance obligations satisfied over time.

During the nine months ended September 30, 2021, we recognized $ 4.2 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 2.8 million of revenue related to performance obligations satisfied over time.

During the nine months ended September 30, 2020, we recognized $ 10.5 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 0.9 million of revenue related to performance obligations satisfied over time.

During the three months ended March 31, 2022, we recognized $ 1.7 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 0.9 million of revenue related to performance obligations satisfied over time.

During the three months ended March 31, 2021, we recognized $ 1.6 million of revenue related to performance obligations satisfied at a point in time, and no revenue related to performance obligations satisfied over time.

Contract Balances

Accounts receivable relate to our right to consideration for performance obligations completed (or partially completed) for which we have an unconditional right to consideration.

Our accounts receivable balances represent amounts that we billed to licensees with invoices outstanding as of the period end.

Contract assets are rights to consideration in exchange for a license that we have granted to a licensee when such right is conditional on something other than the passage of time.

Our contract asset balances represent royalties, milestone payments, and research costs related to the AbbVie Agreement that are unbilled as of the period end.

Contract liabilities consist of deferred revenue and relate to amounts invoiced to, or advance consideration received from, licensees, which precede our satisfaction of the associated performance obligations.

Our deferred revenue primarily results from upfront payments received relating to performance obligations that are satisfied over time under the AbbVie Agreement.

The remaining deferred revenue relates to upfront payments received under license agreements that also include non-refundable annual license fees, which are accounted for as material rights for license renewals and are recognized at the point in time the annual license fee is paid by the licensee and the renewal period begins.

The following table presents changes in our contract assets and liabilities during the nine months ended September 30, 2021 (in thousands):

Our accounts receivable balances represent amounts that we billed to our licensees with invoices outstanding as of the end of a reporting period.

Contract assets are rights to consideration in exchange for a license that we have granted to a licensee when the right is conditional on something other than the passage of time.

Our contract asset balances represent royalties, milestone payments, and research costs related to the AbbVie Agreement that are unbilled as of the end of a reporting period.

Contract liabilities consist of deferred revenue and relate to amounts invoiced to, or advance consideration received from, licensees that, precede our satisfaction of the associated performance obligations.

Our deferred revenue primarily results from the upfront payment received relating to the performance obligation that is satisfied over time under the AbbVie Agreement.

The remaining deferred revenue relates to upfront payments received under license agreements that also include non-refundable annual license fees, which are accounted for as material rights for license renewals and are recognized at the point in time annual license fees are paid by the licensees and the renewal periods begin.

The following table presents changes in our contract assets and liabilities during the three months ended March 31, 2022 (in thousands):

Balance as of

September 30,

Accounts receivable

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Deferred revenue, current and long-term

Unbilled accounts receivable increased during the nine months ended September 30, 2021, primarily due to unbilled research costs under the AbbVie Agreement in the amount of $ 1.0 million.

Deferred revenue increased during the nine months ended September 30, 2021, primarily due to recognition of $ 30.0 million in deferred revenue related to the AbbVie Agreement (Note 4).

During the nine months ended September 30, 2021 and 2020, we recognized $ 0.1 million and $ 1.0 million of revenue, respectively, which were included in the opening contract liabilities balances as of December 31, 2020 and 2019, respectively.

Transaction Prices Allocated to the Remaining Performance Obligations

Remaining unsatisfied performance obligations represent in aggregate the amount of a transaction price that has been allocated to performance obligations not delivered, or only partially delivered, as of the end of a reporting period.

The value of transaction prices allocated to remaining unsatisfied performance obligations as of September 30, 2021 was approximately $ 54.0 million.

Unbilled accounts receivable did not change significantly during the three months ended March 31, 2022.

Deferred revenue decreased during the three months ended March 31, 2022, primarily due to offsetting of $ 0.5 million in deferred revenue recognized in connection with the AbbVie Agreement (Note 4).

During the three months ended March 31, 2022 and 2021, we recognized $ 0.6 million and $ 0.1 million of revenue, respectively, which were included in the opening contract liabilities balances as of December 31, 2021 and 2020, respectively.

Transaction Prices Allocated to Remaining Performance Obligations

Remaining unsatisfied performance obligations represent in aggregate the amount of a transaction price that has been allocated to performance obligations not delivered as of the end of a reporting period.

The value of transaction prices allocated to remaining unsatisfied performance obligations as of March 31, 2022 was approximately $ 46.4 million.

We expect to recognize approximately $ 12.8 million of remaining performance obligations as revenue in the next 12 months and the remainder thereafter.

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Balance Sheet Items

Other receivables consisted of the following as of September 30, 2021 and December 31, 2020, respectively (in thousands):

September 30,

Other receivables consisted of the following as of March 31, 2022 and December 31, 2021, respectively (in thousands):

Patent cost reimbursements

Prepaid expenses and other current assets consisted of the following as of September 30, 2021 and December 31, 2020, respectively (in thousands):

September 30,

Prepaid income taxes

Prepaid insurance

Accrued interest on marketable securities

Prepaid expenses and other current assets consisted of the following as of March 31, 2022 and December 31, 2021, respectively (in thousands):

Prepaid contract manufacturing and clinical costs

Property and equipment, net, consisted of the following as of September 30, 2021 and December 31, 2020, respectively (in thousands):

September 30,

Furniture and equipment

Computer equipment

Prepaid insurance

Prepaid income taxes

Property and equipment, net, consisted of the following as of March 31, 2022 and December 31, 2021, respectively (in thousands):

Lab equipment

Leasehold improvements

Computer equipment

Furniture and equipment

Construction in progress

Total property and equipment, gross

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Property and equipment, net

Depreciation and amortization expenses related to property and equipment were $ 0.3 million for each of the three months ended September 30, 2021 and 2020.

Depreciation and amortization expenses related to property and equipment were $ 0.7 million for each of the nine months ended September 30, 2021 and 2020.

Accrued expenses and other current liabilities consisted of the following as of September 30, 2021 and December 31, 2020, respectively (in thousands):

September 30,

Accrued patent expenses

Depreciation and amortization expenses related to property and equipment were $ 0.3 and $ 0.2 million, respectively, for each of the three months ended March 31, 2022 and 2021.

Accrued expenses and other current liabilities consisted of the following as of March 31, 2022 and December 31, 2021, respectively (in thousands):

Accrued employee compensation and related expenses

Accrued research and development expenses

Credit card liability

Accrued patent expenses

Accrued sublicensing fees

Accrued legal expenses

Credit card liability

Related Party Transactions

Related Party Private Company

On May 15, 2020, we received 7,500,000 shares of convertible preferred stock with an estimated fair value of $ 7.5 million as consideration for the Private Company License Agreement (Note 4).

This represents a material voting interest in the private company and entitles us to hold one of the four private company’s board of director seats and to jointly vote with another stockholder on a second board of director ’

To date, we have appointed one of the three directors on the private company board of directors.

Private Company, Related Party

On May 15, 2020, we entered into an Exclusive License Agreement, as amended, with a private company, related party (the “Private Company License Agreement”), under which we granted the private company an exclusive worldwide license to certain CRISPR intellectual property rights and know-how in a defined field.

As of March 31, 2022, we have appointed one of the four directors.

We concluded that the private company is a variable interest entity and that we are not its primary beneficiary based on our representation on its board of directors.

As the private company’s convertible preferred stock is not in substance common stock, we record this investment using the measurement alternative in accordance with ASC 321.

As the private company’s convertible preferred stock is not in substance common stock, we record this investment using the measurement alternative in accordance with ASC 321, Investments–Equity Securities.

Under the measurement alternative, our investment in the private company’s convertible preferred stock was initially recorded at its estimated fair value, but the carrying value may be adjusted through earnings upon an impairment or when there is an observable price change involving the same or a similar investment with the private company.

As of each of September 30, 2021 and December 31, 2020, the carrying value of investment was $ 7.5 million.

There have been no changes to the carrying value of the investment during the nine months ended September 30, 2021.

Amended and Restated Collaboration and License Agreement with Pioneer

As of September 30, 2020, DuPont held a greater than 10 % voting interest in the Company and Pioneer, then a DuPont company, was considered a related party (Note 4).

As of each of March 31, 2022 and December 31, 2021, the carrying value of investment was $ 7.5 million.

There have been no changes to the carrying value of the investment during the three months ended March 31, 2022.

We did not recognize any revenue in connection with the Private Company License Agreement for the three months ended March 31, 2022 and 2021.

As of March 31, 2022 and December 31, 2021, DuPont held a greater than 5 % of our voting interest and Pioneer, then a DuPont company, is considered a related party (Note 4).

Scientific Advisory Board Payments

Doudna, a co-founder and significant stockholder of the Company, receives compensation for participating on our scientific advisory board (the “SAB”) .

During each of the three and nine months ended September 30, 2021 and 2020, we paid Dr.

Doudna, a co-founder and stockholder of the Company, receives compensation for participating on our scientific advisory board (the “SAB”) .

During each of the three months ended March 31, 2022 and 2021, we paid Dr.

Doudna less than $ 0.1 million for her participation on our SAB.

Officer Promissory Note

Loan to our President and Chief Executive Officer

In November 2018, our president and chief executive officer entered into a promissory note with us for $ 1.1 million, as a means to provide liquidity without triggering a taxable event.

The note bore interest at a rate of 3.04 %, compounded annually, and was payable in five year s, together with principal and accrued interest.

The note bore interest at a rate of 3.04 %, compounded annually, and was payable in five years, together with principal and accrued interest.

The promissory note was secured by 409,795 shares of our common stock owned by our president and chief executive officer and was determined to be non-recourse for accounting purposes.

As such, the issuance of the promissory note was effectively the grant of a new share option.

A one-time stock compensation charge of $ 0.7 million was recorded as a general and administrative expenses during the year ended December 31, 2018.

The promissory note was repaid in full amount in June 2021 by our president and chief executive officer and recognized as an increase in additional paid in capital of $ 1.2 million.

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We could have prepaid the principal of our PPP Loan at any time without incurring any prepayment charges.

A PPP loan can be partially or fully forgiven if a borrower complies with the provisions of the CARES Act, including the use of PPP loan proceeds for payroll costs, rent, utilities, and certain other expenses, and at least 60 % of the PPP loan proceeds must be used for payroll costs as defined by the CARES Act.

Any forgiveness of a PPP loan is subject to approval by the SBA.

On May 22, 2021, our PPP Loan was forgiven in full by the SBA and, at that time, we recognized a PPP Loan extinguishment gain of $ 1.6 million in our condensed consolidated statements of operations and comprehensive loss.

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We lease laboratory and office space under non-cancellable operating agreements.

On March 31, 2021, we entered into a ten-year lease agreement, which superseded and replaced our prior lease, as amended, and the lease included additional office and laboratory space located within the same building in Berkeley, California.

Our lease agreement contains a renewal option for an additional term of five year s .

Monthly base rent under our lease agreement amounts to $ 0.3 million, subject to annual escalation from 3.1 % to 3.5 %.

We record rent expense on a straight-line basis over the term of our leases.

For tenant improvement allowances funded by landlord incentives, we record a deferred lease incentive liability in accrued expenses and other liabilities and amortize the deferred lease incentive liability as a reduction to rent expense on our condensed consolidated statements of operations and comprehensive loss over the term of the applicable lease.

As of September 30, 2021 and December 31, 2020, we recorded $ 0.8 million and $ 0.6 million, respectively, related to the required security deposits in other assets, long-term, in our condensed consolidated balance sheets.

As of September 30, 2021, future minimum lease payments under the leases were as follows (in thousands):

In March 2021, we entered into a ten-year lease agreement, which superseded and replaced our prior lease, as amended, for our corporate headquarters and the new lease included additional office and laboratory space located within the same building in Berkeley, California.

This lease agreement contains a renewal option for an additional term of five years .

In addition to base rent, we pay our share of operating expenses and taxes.

In January 2022, we entered into a ten-and-a-half-year lease agreement for approximately 10,000 square feet of office and laboratory space in Berkeley, California near our current corporate headquarters.

In connection with signing this lease, we paid a deposit in the amount of $ 0.4 million to the lessor.

This lease agreement contains an escalation clause for increased base rent over the term and a renewal option for an additional term of five years .

In addition to base rent, we pay our share of operating expenses and taxes.

To complete certain leasehold improvements, the lessor has agreed to provide us a tenant improvement allowance of $ 1.8 million.

The leasehold improvements constructed are presented under property and equipment on our condensed consolidated balance sheets and are depreciated on a straight-line basis over the remaining lease term.

The components of lease costs, which are included in our statements of operations and comprehensive loss, are as follows (in thousands):

Three Months Ended

March 31, 2022

Operating lease cost*

Short-term lease cost

Total lease cost

* Includes $ 0.5 million of variable lease cost related to operating expenses and taxes.

Supplemental information related to our leases is as follows (in thousands):

Three Months Ended March 31, 2022

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

As of March 31, 2022, the weighted-average remaining lease term was 9.0 years for our corporate office and laboratory leases, and the weighted-average discount rate was 11.3 %.

The following table summarizes a maturity analysis of our operating lease liabilities showing the aggregate lease payments as of March 31, 2022 (in thousands):

Remainder of 2022*

Rent expense was $ 2.9 million and $ 2.2 million for the nine months ended September 30, 2021 and 2020, respectively.

Total undiscounted lease payments

imputed interest

Total discounted lease payments

current portion of lease liability

Noncurrent portion of lease liability

*Reflects an offset of $ 1.6 million related to incentives expected to be received in 2022.

**Reflects an offset of $ 0.2 million related to incentives expected to be received in 2023.

Capital Lease

We accounted for certain leased equipment as a capital lease due to the ownership of such equipment transferring to us at the end of the lease term.

As of September 30, 2021, the capital lease obligation was repaid in full and we do no t have any remaining future minimum lease payments related to this capital lease.

As of December 31, 2020, the total capital lease obligation amounted to $ 0.1 million, which was included in the current portion of the capital lease obligation in the accrued expenses and other current liabilities and the non-current portion of the capital lease in other liabilities in our condensed consolidated balance sheets.

As of December 31, 2021, the capital lease obligation was repaid in full and we do no t have any remaining future minimum lease payments related to this capital lease.

Research and Development Agreements

We enter into various agreements in the ordinary course of business, such as those with suppliers, contract research organizations, contract manufacturing organizations, clinical trial sites, and the like.

We enter into various agreements in the ordinary course of business, such as those with suppliers, contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), clinical trial sites, and the like.

These agreements provide for termination at the request of either party, generally with less than one-year notice and are, therefore, cancellable contracts and, if cancelled, are not anticipated to have a material effect on our condensed consolidated financial condition, results of operations, or cash flows.

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To date, we have not paid any claims or been required to defend any action related to our indemnification obligations.

As of each of September 30, 2021 and December 31, 2020, we did not have any material indemnification claims that were probable or reasonably possible, and consequently, we have not recorded related liabilities.

Intellia Arbitration

On October 16, 2018, Intellia initiated an arbitration proceeding with JAMS, asserting that we had violated the terms and conditions of the Intellia License Agreement (the “Intellia Arbitration”).

The Intellia Arbitration involved whether two patent families controlled by us and respectively, to CRISPR-Cas9 chRDNAs and Cas9 scaffolds are included in the Intellia License Agreement.

On September 19, 2019, the parties received an interim award from the arbitration panel ruling that the two patent families are included in the Intellia License Agreement, but the arbitration panel granted us an exclusive leaseback to Cas9 chRDNAs under economic terms to be negotiated by the parties.

On February 6, 2020, the arbitration panel clarified that the leaseback relates solely to our CB-010 program and instructed the parties to negotiate economic terms based on a leaseback of that scope (Note 4).

On June 16, 2021, the parties entered into the Leaseback Agreement, which resolved the dispute and, on July 21, 2021, the arbitration panel dismissed the Intellia Arbitration with prejudice.

Convertible Preferred Stock

The authorized, issued, and outstanding shares of our convertible preferred stock and liquidation preferences as of December 31, 2020 were as follows (in thousands, except for share amounts):

Upon the closing of our IPO on July 27, 2021, all outstanding shares of convertible preferred stock, including the Series C preferred stock issued in March 2021, were converted into shares of common stock.

Our Amended and Restated Certificate of Incorporation, which was approved by our Board and stockholders in connection with the IPO, authorizes the issuance of 10,000,000 shares of preferred stock upon the closing of the IPO, no ne of which was issued and outstanding as of September 30, 2021.

As of March 31, 2022 and December 31, 2021, we did not have any material indemnification claims that were probable or reasonably possible, and consequently, we have not recorded related liabilities.

From time to time, we may become involved in legal proceedings arising in the ordinary course of business.

We record a liability for such matters when it is probable that future losses will be incurred and if such losses can be reasonably estimated.

Significant judgment by us is required to determine both probability and the estimated amount.

We are not currently subject to any material legal proceedings, and we are not aware of any unasserted claims pending that could, individually or in the aggregate, have a material adverse effect on our results of operations or financial condition.

Common stock reserved for future issuance, on an as converted basis, consists of the following:

September 30, 2021

March 31, 2022

December 31, 2021

Preferred stock, issued and outstanding

Stock options, issued and outstanding

Stock options, authorized for future issuance

Stock available under the Employee Stock Purchase Plan

Restricted stock awards

Stock Option Plans

In July 2021, our Board adopted and our stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan“) that became effective on July 22, 2021.

Stock available under our Employee Stock Purchase Plan

Unvested restricted stock units

Stock-Based Compensation

Equity Incentive Plans

In July 2021, our board of directors adopted and our stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan“) that became effective on July 22, 2021.

We reserved 5,200,000 shares of common stock for issuance under the 2021 Plan.

In addition, 934,562 shares available for issuance under the 2013 Equity Incentive Plan, adopted in 2013 and amended and restated in 2019, were transferred into the 2021 Plan.

Furthermore, any shares subject to awards under the 2013 Plan that terminate, expire, or lapse for any reason without the delivery of shares, or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price, are added to the 2021 Plan.

The 2021 Plan also provides that the number of shares initially reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022 and ending in January 1, 2031, by 5 % of the outstanding number of shares of our common stock as of the last day of the immediately preceding fiscal year, or such lesser number of shares as determined by our Board.

The 2021 Plan also provides that the number of shares initially reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022 and ending on January 1, 2031, by an amount equal to the lesser of (a) 5 % of the shares of common stock outstanding on the last day of the immediately preceding fiscal year and (b) such smaller number of shares of stock as determined by our Board.

No more than 56,000,000 shares of stock may be issued upon the exercise of incentive stock options under the 2021 Plan .

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provided, however, that the exercise price of an incentive stock option granted to a 10 % stockholder may not be less than 110 % of the fair market value of the shares on the date of grant and such option may not be exercisable after the expiration of five years from the date of grant.

The grant date fair market value of all awards made under our 2021 Plan and all cash compensation paid by us to any non-employee director for services as a director in any fiscal year may not exceed $ 750,000 , increased to $ 1,000,000 in the fiscal year of their initial service as a non-employee director.

As of September 30, 2021, we had 5,782,814 shares available for issuance under our 2021 Plan.

The following table summarizes stock option activity under our equity incentive plans during the nine months ended September 30, 2021:

The grant date fair market value of all awards made under the 2021 Plan and all cash compensation paid by us to any non-employee director for services as a director in any fiscal year may not exceed $ 750,000 , increased to $ 1,000,000 in the fiscal year of their initial service as a non-employee director.

As of March 31, 2022, we had 6,783,690 shares available for issuance under the 2021 Plan.

The following table summarizes stock option activity under our equity incentive plans during the three months ended March 31, 2022:

Shares Available

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Options cancelled or forfeited

Exercisable at September 30, 2021

Vested and expected to vest at September 30, 2021

(a) The aggregate intrinsic value is calculated as the difference between the stock option exercise price and the estimated fair value of the underlying common stock as of September 30, 2021.

Outstanding at March 31, 2022

Exercisable at March 31, 2022

Vested and expected to vest at March 31, 2022

* The aggregate intrinsic value is calculated as the difference between the stock option exercise price and the estimated fair value of the underlying common stock at the end of each reporting period referenced above.

Grant Date Fair Value

During the three months ended September 30, 2021, we granted 351,750 stock options to employees ( no stock options were granted to non-employees) with a weighted average grant date fair value of $ 16.64 .

During the nine months ended September 30, 2021, we granted 2,809,660 stock options to employees and non-employees with a weighted average grant date fair value of $ 4.70 .

During the three months ended September 30, 2020, no stock options were granted to employees or non-employees.

During the nine months ended September 30, 2020, we granted 379,761 stock options to employees and non-employees with a weighted average grant date fair value of $ 1.82 .

We estimated the fair value of each employee and non-employee stock option award on the grant date using the Black-Scholes option-pricing model based on the following assumptions for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30,

Nine Months Ended September 30,

74.8 % to 76.5 %

During the three months ended March 31, 2022 and 2021, we granted 339,030 and 1,561,079 stock options to employees and non-employees with a weighted-average grant date fair value of $ 6.68 and $ 2.73 per share, respectively.

Three Months Ended March 31,

71.7 % - 72.0 %

76.4 % to 76.5 %

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Expected dividend yield

As of September 30, 2021, there was $ 7.7 million of unrecognized stock-based compensation expense related to employee and non-employee stock options that is expected to be recognized over a weighted-average period of 9.3 years.

Employee Stock Purchase Plan

In July 2021, our Board adopted and our stockholders approved the 2021 Employee Stock Purchase Plan (“2021 ESPP”), which became effective on July 22, 2021.

As of March 31, 2022, there was $ 32.0 million of unrecognized stock-based compensation expense related to employee and non-employee stock options that is expected to be recognized over a weighted-average period of 3.0 years.

Restricted Stock Units (“RSUs”)

During the three months ended March 31, 2022, we granted 60,000 RSUs under the 2021 Plan.

A summary of the status of and change in unvested RSUs as of March 31, 2022 was as follows:

Number of Shares Underlying Outstanding Restricted Stock

Weighted-Average Grant Date Fair Value per RSU

Unvested, January 1, 2022

Unvested, March 31, 2022

As of March 31, 2022, the total unrecognized stock-based compensation expense related to unvested RSUs was $ 0.6 million, which is expected to be recognized over the remaining weighted-average vesting period of 3.8 years.

Employee Stock Purchase Plan (“ESPP”)

In July 2021, our board of directors adopted and our stockholders approved the ESPP, which became effective on July 22, 2021.

The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (“Tax Code”).

We reserved 511,000 shares of our common stock for employees’

purchases under the 2021 ESPP.

The number of shares of common stock reserved for issuance under the 2021 ESPP will be automatically increased each year for ten calendar years beginning in 2022 by the number of shares equal to 1 % of the total number of shares of common stock outstanding as of the last day of the immediately preceding fiscal year;

We reserved 511,000 shares of our common stock for employee purchases under the ESPP.

The number of shares of common stock reserved for issuance under the ESPP will be automatically increased each January 1, beginning on January 1, 2022 and ending on January 1, 2031 by an amount equal to the lesser of (a) 1 % of the shares of common stock outstanding on the last day of the immediately preceding fiscal year and (b) such smaller number of shares of stock as determined by our Board;

provided that the maximum number of shares that may be issued under the ESPP is 10,000,000 shares.

The ESPP allows an eligible employee to purchase shares of our common stock at a discount through payroll deductions of up to 15 % of the employee’s eligible compensation.

At the end of each offering period, employees are able to purchase shares at 85 % of the lower of the fair market value of our common stock at the beginning of the offering period or at the end of each applicable offering period.

The first offering period commenced on August 16, 2021 and will end on February 15, 2022.

We recorded $ 0.1 million in accrued liabilities related to the amounts withheld as of September 30, 2021.

At the end of each purchase period, employees are able to purchase shares at 85 % of the lower of the fair market value of our common stock at the beginning of the offering period or at the end of each applicable offering period.

The first offering period commenced on August 16, 2021 and ended on February 15, 2022.

We have issued 36,596 shares of common stock under the ESPP as of March 31, 2022.

We recorded $ 0.1 million in accrued liabilities related to contributions withheld as of March 31, 2022.

Stock-Based Compensation Expense

We recorded stock-based compensation expense related to employee and non-employee stock options grants in our condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2021 and 2020 as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

We recorded stock-based compensation expense related to employee and non-employee equity-based awards in our condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2022 and 2021 as follows (in thousands):

Three Months Ended March 31,

Research and development

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The above stock-based compensation expense related to the following equity-based awards (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Stock options

Stock-based compensation expense related to employees was $ 0.9 million and $ 0.2 million for the three months ended September 30, 2021 and 2020, respectively.

Stock-based compensation expense related to employees was $ 1.9 million and $ 0.8 million for the nine months ended September 30, 2021 and 2020, respectively.

Stock-based compensation expense related to non-employees was less than $ 0.1 million for each of the three and nine months ended September 30, 2021 and 2020.

Stock-based compensation expense related to employees was $ 2.9 million and $ 0.3 million for the three months ended March 31, 2022 and 2021, respectively.

Stock-based compensation expense related to non-employees was $ 0.1 million and less than $ 0.1 million for the three months ended March 31, 2022 and 2021, respectively.

401(k) Savings Plan

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We also provide a 4 % match for employee contributions up to a certain limit.

During the nine months ended September 30, 2021 and 2020, we contributed $ 0.3 million and $ 0.2 million, respectively, to our 401(k) plan.

No income tax benefit was recorded during the three and nine months ended September 30, 2021 due to our operating losses.

During the three and nine months ended September 30, 2020, we recorded income tax benefit of $ 0.2 million and $ 1.5 million, respectively.

The income tax benefit was primarily related to the recognition of net operating loss carrybacks under the CARES Act, which generated a refund of taxes paid for the year ended December 31, 2018.

During the three months ended March 31, 2022 and 2021, we contributed $ 0.2 million and $ 0.1 million, respectively, to our 401(k) plan.

No income tax expense was recorded during the three months ended March 31, 2022 and 2021 due to our operating losses.

Net Loss Per Share

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Weighted-average common shares outstanding used to compute net loss per share, basic and diluted

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Because we were in a net loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods, as the inclusion of all common stock equivalents outstanding would have been anti-dilutive.

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were, as of September 30, 2021 and September 30, 2020 , as follows:

September 30,

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were, as of March 31, 2022 and 2021 , as follows:

Convertible preferred stock

Stock options outstanding

RSUs issued and outstanding

Shares committed under ESPP

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Subsequent Events

The Company did not have any subsequent events as of the filing date of this Quarterly Report on Form 10-Q.

We did not have any subsequent events as of the filing date of this Quarterly Report on Form 10-Q (“Form 10-Q”).

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with the audited consolidated financial statements and the related notes for the fiscal year ended December 31, 2020 included in our final prospectus (the “Final Prospectus”) filed with the Securities and Exchange Commission (the “SEC”) on July 22, 2021 pursuant to Rule 424(b)(4)of the Securities Act of 1933, as amended (the “Securities Act”).

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1, of this Form 10-Q and with the audited consolidated financial statements and the related notes for the fiscal year ended December 31, 2021 included in our Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2022.

Special Note Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements.

All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, future revenue, business strategy, prospects, product candidates, planned and ongoing preclinical studies and clinical trials, results of preclinical studies and clinical trials, research and development costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements.

This Form 10-Q contains forward-looking statements.

All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding our business strategy, plans, and objectives;

expectations regarding our clinical and preclinical development programs, including our timing expectations with respect to such programs and the expected timing of disclosure of initial data from such programs;

future regulatory filings;

our results of operations and financial position;

plans and objectives of management for future operations;

and the like, are forward-looking statements .

In some cases, you can identify forward-looking statements by terms such as “may,”

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risks related to our reliance on third parties to conduct our clinical trials and manufacture our product candidates;

risks caused by the impact of COVID-19 on our business and operations;

and other risks described in greater detail in the section of the Final Prospectus titled “Risk Factors,”

risks caused by the impact of COVID-19 or geopolitical events on our business and operations;

and other risks described in greater detail in the section of our Form 10-K titled “Risk Factors,”

the events and circumstances reflected in our forward-looking statements may not be achieved or may not occur, and actual results could differ materially from those described in or implied by the forward-looking statements contained in the following discussion and analysis.

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We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

We are a clinical-stage biopharmaceutical company dedicated to transforming the lives of patients with devastating diseases by applying our novel CRISPR platform, C RISPR h ybrid R NA- DNA (“chRDNA,”

pronounced “chardonnay”), toward the development of next-generation, genome-edited cell therapies.

Our renowned founders, including a Nobel laureate, are pioneers in CRISPR genome editing.

Our chRDNA technology has demonstrated superior specificity and high efficiency in preclinical studies, which enables us to perform multiple, precise genome edits, while maintaining genomic integrity.

We believe that our technology has broad potential to generate gene and cell therapies in oncology and in therapeutic areas beyond oncology, including immune cell therapies, cell therapies derived from genome-edited induced pluripotent stem cells (“iPSCs”), and in vivo genome-editing therapies.

The genome-editing technologies currently used in the allogeneic cell therapy field generally have limited efficiency, specificity, and versatility for performing the multiple, precise genome edits necessary to address insufficient persistence.

Our chRDNA technology is designed to address these genome-editing limitations and improve cell therapy activity.

By applying this approach to allogeneic cell therapies, we believe we can unlock their full potential by improving upon their effectiveness and durability.

We are initially focused on advancing multiple proprietary allogeneic cell therapies for the treatment of both hematologic malignancies and solid tumors against cell surface targets for which autologous chimeric antigen receptor T cell (“CAR-T”) therapeutics have previously demonstrated clinical proof of concept, including both CD19 and B cell maturation antigen (“BCMA”), as well as new emerging targets.

We use our chRDNA technology to enhance, or armor, our cell therapies by creating additional genome edits to improve persistence of antitumor activity.

We are a clinical-stage CRISPR genome-editing bio pharmaceutical company dedicated to developing innovative, transformative therapies for patients with devastating diseases.

We are advancing a pipeline of allogeneic, or off-the-shelf, CAR-T and CAR-NK cell therapies for the treatment of patients with hematologic malignancies and solid tumors.

Our renowned founders, including a Nobel Prize laureate, are pioneers in the field of CRISPR genome editing.

Our chRDNA technology has demonstrated superior specificity and high efficiency in preclinical studies and enables us to perform multiple, precise genomic edits, while maintaining genomic integrity.

Our lead product candidate, CB-010, is, to our knowledge, the first clinical-stage allogeneic anti-CD19 CAR-T cell therapy with programmed cell death protein 1 (“PD-1”) removed from the CAR-T cell surface by a genome-edited knockout of the PDCD1 gene.

We have demonstrated in preclinical models that the PD-1 knockout improves the persistence of antitumor activity by disrupting a pathway that leads to rapid T cell exhaustion.

Our ANTLER phase 1 clinical trial for CB-010 is a study in patients with relapsed or refractory B cell non-Hodgkin lymphoma, with initial data expected to be disclosed in 2022.

We announced in July 2021 that we had dosed the first patient in this clinical trial, and we continue to enroll patients in our ANTLER phase 1 clinical trial for CB-010.

Our CB-011 product candidate is an allogeneic CAR-T cell therapy that is, to our knowledge, the first anti-BCMA CAR-T cell therapy incorporating an immune cloaking approach that includes both the removal of the endogenous beta-2-microglobulin protein and insertion of a beta-2-microglobulin–human-leukocyte-antigen-E–peptide transgene.

CB-010 is being evaluated in our ANTLER phase 1 clinical trial in patients with relapsed or refractory B cell non-Hodgkin lymphoma.

We have announced that the European Hematology Association (“EHA”) has accepted an abstract with initial clinical data from our ANTLER phase 1 trial for the EHA 2022 Hybrid Congress, to be held in Vienna, Austria, in June 2022.

Our CB-011 product candidate is an allogeneic CAR-T cell product candidate that is, to our knowledge, the first anti-BCMA CAR-T cell therapy incorporating an immune cloaking approach that includes both the removal of the endogenous beta-2 microglobulin (“B2M”) protein by a genome-edited knockout of the B2M gene and insertion of a beta-2-microglobulin–human-leukocyte-antigen-E–peptide transgene (“B2M–HLA-E”), enabling expression of HLA-E on the CAR-T cell surface.

This strategy is designed to blunt CAR-T cell rejection by both patient T cells and natural killer (“NK”) cells to enable more durable antitumor activity.

CB-011 is in preclinical development for relapsed or refractory multiple myeloma with an investigational new drug (“IND”) filing expected in 2022.

Our CB-012 program is an allogeneic armored CAR-T cell therapy targeting CD371, currently in preclinical development for the treatment of relapsed or refractory acute myeloid leukemia (“AML”), with an IND filing expected in 2023.

CD371 is an attractive target for AML due to its expression on myeloid cancer cells, its enrichment on leukemic stem cells, and its absence on hematopoietic stem cells.

CB-011 is in preclinical development for relapsed or refractory multiple myeloma.

We expect to submit an investigational new drug (“IND”) application for CB-011 in the second half of 2022.

CB-012 is our allogeneic armored CAR-T cell product candidate targeting CD371 (also known as CLL-1), currently in preclinical development for the treatment of relapsed or refractory acute myeloid leukemia (“AML”).

We expect to submit an IND application for CB-012 in 2023.

CD371 is an attractive target for AML due to its expression on myeloid cancer cells, its enrichment in leukemic stem cells, and its absence on hematopoietic stem cells.

We are also developing allogeneic CAR-NK cell therapies derived from genome-edited iPSCs for the treatment of solid tumors.

CB-020 is our first CAR-NK product candidate and it will contain genome edits designed to overcome the challenges of targeting solid tumors including trafficking, heterogeneity, and the immunosuppressive tumor microenvironment.

We control a robust patent portfolio protecting our chRDNA technology as well as certain of our allogeneic cell therapy binders.

In February 2021, we entered into a Collaboration and License Agreement (the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”) to develop two new CAR-T cell therapies for AbbVie.

We view this collaboration as an external recognition of the potential for our chRDNA genome-editing technology to significantly improve genome-editing specificity and efficiency.

On July 27, 2021, we successfully completed our initial public offering (“IPO”) of common stock.

On that date, we issued and sold an aggregate of 19,000,000 shares of our common stock at a price to the public of $16.00 per share for approximately $304.0 million in gross proceeds and approximately $282.7 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses.

On August 9, 2021, we issued and sold an additional 2,850,000 shares of our common stock pursuant to the IPO underwriters’

full exercise of their over-allotment option to purchase additional shares at the public offering price of $16.00 per share.

In total, we received an aggregate of approximately $349.6 million in gross proceeds from the IPO, including the exercise of the IPO underwriters’

over-allotment option, and approximately $321.0 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses.

In addition, in connection with the closing of our IPO, all outstanding shares of our convertible preferred stock automatically converted into 26,234,654 shares of our common stock.

Subsequent to the closing of our IPO, there are no shares of convertible preferred stock outstanding.

Since our founding in 2011, we have devoted substantially all of our resources to organizing and staffing, business planning, raising capital, developing our genome-editing platform technologies, developing our product candidates and building our pipeline, creating and maintaining our intellectual property portfolio, and establishing arrangements with third parties for the manufacture of our product candidates.

We do not have any products approved for commercial sale and have not generated any revenue from product sales and have incurred net losses since commencement of our operations.

CB-020 is our first CAR-NK product candidate and it will contain genome edits designed to overcome some of the challenges of targeting solid tumors, such as trafficking, tumor infiltration, heterogeneity, and the immunosuppressive tumor microenvironment.

We expect to select a tumor cell-surface target for our CB-020 product candidate in 2022.

Also in 2022, we expect to disclose armoring strategies we are developing for our CAR-NK platform.

We do not have any products approved for commercial sale and have not generated any revenue from product sales.

We have incurred net losses since commencement of our operations.

To date, we have primarily funded our operations through revenue from our license agreements, license and collaboration agreements, and a service agreement;

the sale of shares of Intellia Therapeutics, Inc.

(“Intellia”) common stock that we received as consideration for the License Agreement, dated July 16, 2014, as amended, between us and Intellia, LLC (now Intellia Therapeutics, Inc.) (the “Intellia License Agreement”);

the issuance and sale of our Series A, Series A-1, Series B, and Series C convertible preferred shares;

and the issuance and sale of common stock related to our IPO.

As of September 30, 2021, we had approximately $435.3 million in cash and cash equivalents.

Based on our current operating plan, we expect that our existing cash and cash equivalents, including net cash proceeds from the IPO of approximately $321.0 million received in July and August of 2021, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of this Quarterly Report.

See “Liquidity, Capital Resources, and Capital Requirements.”

Our net losses for the three months ended September 30, 2021 and 2020 were $21.0 million and $7.9 million, respectively.

Our net losses for the nine months ended September 30, 2021 and 2020 were $48.4 million and $19.6 million, respectively.

We had accumulated deficits of $79.3 million and $30.9 million as of September 30, 2021 and December 31, 2020, respectively.

the sale of shares of Intellia common stock that we received as consideration for the Intellia License Agreement;

the sale of our convertible preferred stock in private placements before our initial public offering (“IPO”);

and proceeds from our IPO.

In total, we received an aggregate of approximately $321.0 million in net proceeds from our IPO, after deducting underwriting discounts and commissions and offering expenses.

In connection with the closing of our IPO, all outstanding shares of our convertible preferred stock automatically converted into 26,234,654 shares of our common stock.

Our net losses for the three months ended March 31, 2022 and 2021 were $19.1 million and $13.2 million, respectively.

We had an accumulated deficit of $116.9 million as of March 31, 2022.

Our net losses and operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of our clinical trials and nonclinical studies and our other research and development expenses.

In addition, we will incur increased costs associated with operating as a public company, including legal, audit, and accounting fees;

regulatory costs related to maintaining compliance with the rules and regulations of the SEC and the Nasdaq Global Select Market;

In addition, we are incurring increased costs associated with operating as a public company, including legal, audit, and accounting fees;

maintaining compliance with the rules and regulations of the SEC and Nasdaq;

director and officer insurance premiums;

costs for investor and public relations activities;

and other accompanying compliance and governance costs.

investor and public relations activities;

and other accompanying compliance and governance requirements.

We anticipate that our expenses will increase substantially if and as we:

progress our ANTLER phase 1 clinical trial and advance further clinical development of our CB-010 product candidate;

continue our preclinical efforts and begin clinical development of our other product candidates, including CB-011, CB-012, and CB-020, and any other product candidates we identify and choose to develop;

progress our ANTLER phase 1 clinical trial for our CB-010 product candidate;

continue our current research programs and our preclinical and clinical development of our other current product candidates, including CB-011, CB-012, and CB-020, and any other product candidates we identify and choose to develop;

hire additional clinical, quality control, and scientific personnel;

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expand, maintain, enforce, and defend our intellectual property portfolio;

seek regulatory and marketing approvals for our product candidates that successfully complete clinical trials, if any;

seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical trials, if any;

establish and expand manufacturing capabilities and supply chain capacity for our product candidates;

add operational, legal, financial, and management information systems and personnel;

experience any delays, challenges, or other issues associated with any of the above, including the failure of clinical trials to meet endpoints, the generation of unanticipated preclinical study results or clinical trial data subject to differing interpretations, or the occurrence of potential safety issues or other development or regulatory challenges;

experience any delays, challenges, or other issues associated with any of the above, including the failure of clinical trials meeting endpoints, the generation of unanticipated preclinical results or clinical trial data subject to differing interpretations, or the occurrence of potential safety issues or other development or regulatory challenges;

make royalty, milestone, or other payments under current, and any future, in-license or assignment agreements;

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We do not own or operate any manufacturing facilities and we outsource a substantial portion of our clinical trial studies to third parties.

We use multiple contract manufacturing organizations (“CMOs”) to individually manufacture, under current good manufacturing processes (“cGMP”), the plasmids, chRDNA guides, Cas proteins, and AAV6 vectors used in the manufacture of our CAR-T cells as well as our CAR-T cell therapy product candidates.

We expect to rely on our CMOs in the future for the manufacturing of our product candidates to expedite readiness for future clinical trials and most of these CMOs have demonstrated capability in preparation of materials for commercialization.

We use multiple CMOs to individually manufacture, under cGMP, chRDNA guides, Cas proteins, plasmids, and AAV6 vectors used in the manufacture of our CAR-T cells as well as our CAR-NK cell therapy product candidates.

We expect to rely on our CMOs for the manufacturing of our product candidates to expedite readiness for future clinical trials, and most of these CMOs have capabilities for commercial manufacturing.

Additionally, we may decide to build our own manufacturing facility in the future to provide us greater flexibility and control over our clinical or commercial manufacturing needs.

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If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us.

If we are unable to raise capital as

and when needed or on attractive terms, we may have to significantly delay, reduce, or discontinue the development and commercialization of our product candidates or scale back or terminate our pursuit of new in-licenses and acquisitions.

Impact of the COVID-19 Pandemic

The COVID-19 pandemic has caused governments worldwide to implement measures to slow the spread of the outbreak through travel restrictions, business shutdowns, and other measures.

In response to the COVID-19 pandemic, starting on March 17, 2020, our entire workforce began working remotely pursuant to state, county, and city requirements.

Since May 2020, we have gradually brought back on site all of our research employees whose work must be performed in the lab and most of our non-research employees are currently working partially remotely and partially on site.

At this point in time, we do not know if or when we will bring our off-site functions back on site full-time.

We have experienced no significant workforce reduction as a result of the COVID-19 pandemic.

The COVID-19 pandemic did have an impact on our supply chain in the early months of the pandemic.

For example, we experienced delays in receiving healthy donor cells used in the manufacture of our CB-010 product candidate.

These issues have been largely alleviated in recent months and we are currently receiving adequate supplies of donor cells, however we could face similar obstacles in the future.

Although vaccines are now being distributed and administered across many parts of the world, new variants of the virus have emerged, and may continue to emerge, that are more contagious.

As a result of future developments in the COVID-19 pandemic, we and our CMOs, contract research organizations (“CROs”), clinical trial sites, and other third-party vendors may face disruptions that could delay or otherwise affect our ability to initiate and complete preclinical studies or clinical trials.

Since the start of the COVID-19 pandemic, we have been and will continue to be focused on the safety of our employees.

In response to the COVID-19 pandemic, we have instituted on-site protocols and procedures in accordance with guidance provided by the Centers for Disease Control and the State of California and regulations and guidelines promulgated by the County of Alameda and the City of Berkeley.

As of January 1, 2022, all of our employees will be required to be fully vaccinated against COVID-19 as a condition of employment with us.

Employees will be considered to be fully vaccinated two weeks after receiving both doses of a two-dose vaccine or one dose of a single-dose vaccine.

Individuals who are unable to be vaccinated, due to a religious belief, a medical condition, or disability that prevents them from being vaccinated, can request a reasonable accommodation.

In May 2020, we received a Paycheck Protection Plan (“PPP”) loan from the Small Business Administration (the “SBA”) in the amount of $1.6 million (the “PPP Loan”), which we used exclusively to pay employees’

In December 2020, we submitted an application to have our PPP Loan forgiven and, on May 22, 2021, our PPP Loan was forgiven in full by the SBA.

To the extent the COVID-19 pandemic adversely affects our business prospects, financial condition, and results of operation, it may also have the effect of exacerbating many of the other risks described or referenced in the section of the Final Prospectus titled “Risk Factors,”

such as those relating to the timing and results of our planned and future clinical trials and our financing needs.

See the section of the Final Prospectus titled “Risk Factors”

for more information regarding the potential adverse impact of the COVID-19 pandemic on our business, results of operations, and financial condition.

If we are unable to raise capital as and when needed or on attractive terms, we may have to significantly delay, reduce, or discontinue the development and commercialization of our product candidates or scale back or terminate our pursuit of new in-licenses and acquisitions.

Impact of the COVID-19 Pandemic and Geopolitical Events

We are unable to predict the effect that the COVID-19 pandemic or geopolitical events, including the conflict in Ukraine, may have on our operations.

To the extent the COVID-19 pandemic or geopolitical events adversely affect our business prospects, financial condition, and results of operation, they may also have the effect of exacerbating many of the other risks described or referenced in the section of our Form 10-K titled “Risk Factors,”

such as those relating to the supply of materials for our product candidates, and the timing and possible disruptions of our ongoing and future preclinical studies and clinical trials, and our access to the financial markets.

Components of Results of Operations

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If our development efforts for our product candidates are successful and result in regulatory approval and commercialization, we may generate revenue in the future from product sales.

We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our product candidates if we succeed in obtaining regulatory approval for such product candidates.

To date, all of our revenue consists of licensing and collaboration revenue earned from collaboration and/or licensing agreements entered into with third parties, including related parties.

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Each of these payments results in licensing and collaboration revenue.

Revenue under such licensing and collaboration agreements was $4.0 million and $1.2 million for the three months ended September 30, 2021 and 2020, respectively, and $7.0 million and $11.4 million for the nine months ended

September 30, 2021 and 2020, respectively.

See Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.

For additional information about our revenue recognition policy related to our licensing and collaboration agreements, see Note 2 to the annual consolidated financial statements for the years ended December 31, 2019 and 2020 included in our Final Prospectus.

Revenue under such licensing and collaboration agreements was $2.7 million and $1.6 million for the three months ended March 31, 2022 and 2021, respectively.

See Notes 4 and 5 to our condensed consolidated financial statements included elsewhere in this Form 10-Q.

For the foreseeable future we expect substantially all of our revenue will be generated from licensing and collaboration agreements.

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costs associated with acquiring technology and intellectual property licenses that have no alternative future uses;

costs incurred in connection with the preclinical and clinical development of our product candidates, including under agreements with CROs and other third parties that conduct clinical trials on our behalf;

costs incurred in connection with the preclinical and clinical development of our product candidates, including under agreements with CROs and clinical sites;

costs of supplying the components for, and the manufacturing of, our product candidates for use in our preclinical studies and clinical trials;

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Internal costs include:

employee-related costs, including salaries, benefits, and share-based compensation expense, for our research and development personnel;

personnel-related costs, including salaries, benefits, and share-based compensation expense, for our research and development personnel;

allocated facilities and other overhead expenses, including expenses for rent and facilities maintenance and depreciation.

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The successful development of our CB-010, CB-011, CB-012, and CB-020 product candidates, as well as other potential future product candidates, is highly uncertain.

Accordingly, at this time, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the development of such product candidates.

Accordingly, at this time, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the development of our product candidates.

We are also unable to predict when, if ever, we will generate revenue and material net cash inflows from the commercialization and sale of any of our product candidates for which we may obtain marketing approval.

We may never succeed in achieving regulatory approval for any of our

product candidates.

We may never succeed in achieving regulatory approval for any of our product candidates.

The duration, costs, and timing of preclinical studies, clinical trials, and development of our product candidates will depend on a variety of factors, including:

sufficiency of our financial and other resources;

acceptance of our chRDNA genome-editing technology;

acceptance of our CRISPR chRDNA genome-editing technology;

ability to develop differentiating features so that our products have a competitive edge;

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our ability to not infringe, misappropriate, or otherwise violate third-party intellectual property rights;

clearance of INDs to initiate clinical trials on product candidates;

clearance of IND applications to initiate clinical trials on product candidates;

successful enrollment in, and completion of, our clinical trials on our product candidates;

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grant of regulatory exclusivity for our product candidates;

establishment of sales, marketing, and distribution capabilities and commercial launch of our product candidates if and when approved, whether by us or in collaboration with third parties;

establishment of sales, marketing, and distribution capabilities necessary for commercialization of our product candidates if and when approved, whether by us or in collaboration with third parties;

maintenance of a continued acceptable safety profile of our products post-approval;

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expanded indications and patient populations for our products.

The following table summarizes our research and development expenses for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

The following table summarizes our research and development expenses for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

(in thousands)

External costs:

Acquisition of technology and intellectual property licenses

Services provided by third-party CROs, CMOs, and other third parties that conduct preclinical studies and clinical trials on our behalf

Expenses related to licensing, sublicensing revenue, and milestones

Services provided by CROs, CMOs, and other third parties that conduct preclinical studies and clinical trials on our behalf

Other research and development expenses

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Internal costs:

Payroll-related expenses

Personnel-related expenses

Facilities and other allocated expenses

Total external costs

Total internal costs

Total research and development expenses

General and Administrative Expenses

Our general and administrative expenses consist primarily of payroll-related costs, intellectual property costs, consulting costs, and allocated overhead, including rent, equipment depreciation, and utilities.

Payroll-related costs consist of salaries, benefits, and stock-based compensation for our general and administrative personnel.

Our general and administrative expenses consist primarily of personnel-related costs, intellectual property costs, consulting costs, and allocated overhead, including rent, equipment depreciation, and utilities.

Personnel-related costs consist of salaries, benefits, and stock-based compensation for our general and administrative personnel.

Intellectual property costs include expenses for filing, prosecuting, and maintaining patents and patent applications, including certain patents and patent applications that we license from third parties.

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We accrue for these reimbursements as the respective expenses are incurred and classify such reimbursements as a reduction of general and administrative expenses.

During the three months ended September 30, 2021 and 2020, we recorded $1.6 million and $1.5 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense.

During the nine months ended September 30, 2021 and 2020, we recorded $6.1 million and $3.7 million, respectively, of patent reimbursements as a reduction to general and administrative expense.

During the three months ended March 31, 2022 and 2021, we recorded $1.5 million and $2.1 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense.

We expect that our general and administrative expenses will increase substantially in the future as a result of expanding our operations, including hiring personnel, preparing for potential commercialization of our product candidates, and additional facility occupancy costs, as well as increased costs associated with operating as a public company (including legal, audit, and accounting fees;

regulatory costs related to maintaining compliance with the rules and regulations of the SEC and the Nasdaq Global Select Market;

maintaining compliance with the rules and regulations of the SEC and Nasdaq;

director and officer insurance premiums;

costs for investor and public relations activities;

and other accompanying compliance and governance costs).

investor and public relations activities;

and other accompanying compliance and governance requirements).

We also expect to increase the size of our administrative function to support the growth of our business.

Other Income (Expense)

Other income (expense) consists primarily of interest income earned on cash and money market funds, interest expense for our capital lease, and the promissory note related to our PPP Loan;

change in the fair value of Intellia common stock in 2020;

change in fair value of the MSKCC success payments liability under the Exclusive License Agreement (the “MSKCC Agreement”), dated November 13, 2020, by and between us and MSKCC;

and other income from the sale of certain intellectual property rights.

During the three and nine months ended September 30, 2021 and 2020, other income (expense) consisted primarily of interest income earned on cash and money market funds, interest expense on our capital lease, extinguishment of the promissory note related to our PPP Loan, and changes in the fair value of the MSKCC success payments liability.

Other income (expense) consists primarily of interest income earned on cash and marketable securities, change in the fair value of our equity investments, change in fair value of the MSKCC success payments liability under the MSKCC Agreement , and other income from the sale of certain intellectual property rights.

Results of Operations

Comparison of the Three Months Ended September 30, 2021 and 2020

The following table summarizes our results of operations for the three months ended September 30, 2021 and 2020:

Three Months Ended September 30,

(in thousands, except percentages)

Licensing and collaboration revenue

Operating expenses

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense)

Interest income

Interest expense

Change in fair value of the MSKCC success payments liability

Total other income (expense)

Net loss before provision for income taxes

Benefit from income taxes

Net loss and comprehensive loss

Licensing and Collaboration Revenue

Licensing and collaboration revenue increased $2.8 million, or 232%, to $4.0 million for the three months ended September 30, 2021 from $1.2 million for the three months ended September 30, 2020.

This increase was primarily related to increases of $2.3 million related to recognition of revenue under the AbbVie Agreement and $0.5 million related to other license agreements with various licensees.

The following table summarizes our revenue by licensee for the three months ended September 30, 2021 and 2020:

Three Months Ended September 30,

Comparison of the Three Months Ended March 31, 2022 and 2021

The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

(in thousands)

Other licensees

Total licensing revenue

Research and Development Expenses

Research and development expenses increased $9.7 million, or 156%, to $15.8 million for the three months ended September 30, 2021 from $6.2 million for the three months ended September 30, 2020.

This increase was primarily related to increases of $5.6 million in external clinical trial-related activities and contract manufacturing activities for our product candidates, $2.3 million in payroll-related expenses, $1.5 million related to our preclinical programs, and $0.4 million in facilities and other allocated expenses, partially offset by a $0.1 million decrease in costs associated with our intellectual property license agreements.

General and Administrative Expenses

General and administrative expenses increased $3.5 million, or 108%, to $6.8 million for the three months ended September 30, 2021 from $3.2 million for the three months ended September 30, 2020.

This increase was primarily related to increases of $2.1 million in payroll-related costs, $0.6 million in fees related to legal and accounting services, $0.5 million in insurance expenses, and

$0.4 million in facilities and maintenance expenses, partially offset by a $0.1 million decrease in costs of prosecuting and maintaining third-party patents.

Other Income (Expense)

We recognized expense related to the change in fair value of the MSKCC success payments liability in the amount of $2.4 million for the three months ended September 30, 2021.

The increase in the liability was primarily related to the increase in our common stock fair value after our IPO in July 2021.

The MSKCC Agreement was entered into on November 13, 2020, and no similar expense was recorded during the three months ended September 30, 2020.

No income tax benefit or expense was recognized for the three months ended September 30, 2021.

An income tax benefit of $0.2 million was recognized for the three months ended September 30, 2020, which was due primarily to the recognition of net operating loss carrybacks under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which generated a refund of taxes paid for the year ended December 31, 2018.

Comparison of the Nine Months Ended September 30, 2021 and 2020

The following table summarizes our results of operations for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

(in thousands, except percentages)

Licensing and collaboration revenue

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Change in fair value of the MSKCC success payments liability

Gain on extinguishment of PPP Loan

Total other income (expense)

Net loss before provision for income taxes

Benefit from income taxes

Net loss and comprehensive loss

Licensing and Collaboration Revenue

Licensing and collaboration revenue decreased $4.3 million, or 38%, to $7.0 million for the nine months ended September 30, 2021 from $11.4 million for the nine months ended September 30, 2020.

This decrease was primarily due to decreases of $7.5 million related to an Exclusive License Agreement, as amended, entered into with a related party private company on May 15, 2020 during the corresponding 2020 period, and $0.8 million related to completion of work under a Research Collaboration and License Agreement, as amended, with Genus plc on May 12, 2016, partially offset by increases of $2.8 million due to recognition of revenue under the AbbVie Agreement and $1.2 million related to other license agreements with various licensees.

The following table summarizes our revenue by licensee for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

Licensing and collaboration revenue increased by $1.1 million, or 68%, to $2.7 million for the three months ended March 31, 2022 from $1.6 million for the three months ended March 31, 2021.

We recognized $0.9 million related to the AbbVie Agreement for the three months ended March 31, 2022 and no revenue was recognized under this agreement for the three months ended March 31, 2021.

The remaining increase was primarily related to other license agreements with various other licensees.

The following table summarizes our revenue by licensee for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

(in thousands)

Related party private company

Other licensees

Other licensing agreements

Total licensing revenue

Research and Development Expenses

Research and development expenses increased $14.7 million, or 66%, to $37.1 million for the nine months ended September 30, 2021 from $22.4 million for the nine months ended September 30, 2020.

This increase was primarily related to increases of $5.2 million in external clinical trial-related activities and contract manufacturing activities for our product candidates, $3.3 million in payroll-related expenses, $3.1 million in expenses for our preclinical programs, $2.4 million in costs associated with our intellectual property license and assignment agreements, and $0.8 million in facilities and other allocated expenses.

Research and development expenses increased by $3.8 million, or 37%, to $13.9 million for the three months ended March 31, 2022 from $10.2 million for the three months ended March 31, 2021.

This increase was primarily related to increases of $3.2 million in personnel-related expenses (which includes an increase in stock-based compensation expense of $0.9 million), $1.1 million in external clinical trial-related activities and contract manufacturing for our product candidates, and $0.7 million in other facilities and allocated expenses, partially offset by decreases of $0.9 million in expenses related to licensing, sublicensing revenue, and milestones and $0.4 million in other research and development expenses.

General and Administrative Expenses

General and administrative expenses increased $6.6 million, or 67%, to $16.5 million for the nine months ended September 30, 2021 from $9.9 million for the nine months ended September 30, 2020.

This increase was primarily related to increases of $3.5 million in recruiting and payroll-related costs, $1.5 million in fees related to accounting, audit, and investor and public relations, $0.7 million in facilities and other allocated expenses, $0.6 million in insurance expenses, and $0.5 million in costs of prosecuting and maintaining third-party patents, partially offset by a decrease of $0.2 million in professional fees related to legal services.

Other Income (Expense)

We recognized a $0.7 million change in fair value of our equity investment in Intellia common stock during the nine months ended September 30, 2020.

We sold Intellia common shares during the three months ended March 31, 2020, and there were no changes in fair value of other equity securities during the nine months ended September 30, 2021.

We have not held any Intellia shares since March 31, 2020.

We recognized expense related to the change in the fair value of the success payments liability under the MSKCC Agreement in the amount of $3.6 million for the nine months ended September 30, 2021.

The MSKCC Agreement was entered into on November 13, 2020 and no similar expense was recorded during the nine months ended September 30, 2020.

Other income of $0.4 million for the nine months ended September 30, 2020 was related to earned sale and assignment of patents and patent applications, which was not an ordinary business activity.

Our PPP Loan was forgiven in May 2021, and we recognized a gain on the loan extinguishment of $1.6 million for the nine months ended September 30, 2021.

No such gain was recognized for the nine months ended September 30, 2020.

No income tax benefit or expense was recognized for the nine months ended September 30, 2021.

We recognized an income tax benefit of $1.5 million for the nine months ended September 30, 2020, which was due primarily to the recognition of net operating loss carrybacks under the CARES Act, which generated a tax refund of taxes paid for the year ended December 31, 2018.

General and administrative expenses increased by $5.0 million, or 109%, to $9.6 million for the three months ended March 31, 2022 from $4.6 million for the three months ended March 31, 2021.

This increase was primarily related to increases of $3.2 million in personnel-related expenses (which includes an increase in stock-based compensation expense of $1.8 million), $1.7 million in legal, accounting, insurance, and other expenses associated with being a public company, and $0.7 million in facilities and other allocated expenses, partially offset by a $0.6 million decrease in patent prosecution and maintenance costs.

Total Other Income (Expense)

We recognized other income related to the change in the fair value of the MSKCC success payments liability in the amount of $1.6 million for the three months ended March 31, 2022.

Interest income recognized during the three months ended March 31, 2022 increased to $0.3 million from less than $0.1 million during the three months ended March 31, 2021 due to the increase in holdings of marketable securities.

No income tax benefit or expense was recognized for the three months ended March 31, 2022 and 2021.

Liquidity, Capital Resources, and Capital Requirements

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Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations.

We have funded our operations through sales of Series A, A-1, B, and C convertible preferred stock that generated approximately $150.1 million in aggregate net proceeds and from our IPO that generated approximately $321.0 million in net proceeds.

We have also received approximately $88.4 million in net proceeds from the sale of Intellia common

stock received under the Intellia License Agreement.

Additionally, through September 30, 2021, we received approximately $77.7 million from licensing agreements, licensing and collaboration agreements, a service agreement, patent assignments, and government grants, including $30.0 million that was received from AbbVie under the AbbVie Agreement.

As of September 30, 2021, we had cash and cash equivalents of $435.3 million.

In March 2021, we received net proceeds of $108.8 million from our Series C convertible preferred stock financing and $30.0 million from AbbVie under the AbbVie Agreement.

We have funded our operations through sales of our convertible preferred stock, which generated approximately $150.1 million in aggregate net proceeds, and from our IPO, which generated approximately $321.0 million in net proceeds.

We have also received approximately $88.4 million in net proceeds from the sale of Intellia common stock that we received under the Intellia Agreement.

Additionally, through March 31, 2022, we received approximately $78.0 million from licensing agreements, licensing and collaboration agreements, a service agreement, patent assignments, and government grants, including $30.2 million that was received from AbbVie under the AbbVie Agreement.

As of March 31, 2022, we had cash, cash equivalents, and marketable securities of $390.8 million.

In March 2021, we received net proceeds of $108.8 million from our Series C convertible preferred stock financing and an upfront payment of $30.0 million from AbbVie under the AbbVie Agreement.

In July and August 2021, we received aggregate net proceeds of approximately $321.0 million from our IPO.

We will continue to be dependent upon equity financing, debt financing, and/or other forms of capital raises at least until we are able to generate significant positive cash flows from our operations.

We have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, except for our lease commitments as described in Note 9 to our condensed consolidated financial statements included elsewhere in this Quarterly Report .

Based on our current operating plan, we expect that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of this Quarterly Report.

We will continue to be dependent upon equity financing, debt financing, collaborations and licensing arrangements, and/or other forms of capital raises at least until we are able to generate significant positive cash flows from our operations.

We have based these estimates on our current assumptions, which may require future adjustments based on our ongoing business decisions.

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the increase in the number of our employees and expansion of our physical facilities to support growth initiatives;

the outcome, timing, and cost of meeting regulatory requirements established by the U.S.

Food and Drug Administration (“FDA”) and other comparable foreign regulatory authorities;

the outcome, timing, and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;

whether we enter into any additional collaboration agreements and the terms of any such agreements;

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the extent to which we acquire or in-license other product candidates and technologies;

the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against our products when we file for regulatory approval or thereafter;

the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against our products after we receive regulatory approval;

the effect of competing technological and market developments;

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our implementation of various computerized informational systems and efforts to enhance operational systems;

the impact of the COVID-19 pandemic on our clinical development or operations;

the impact of the COVID-19 pandemic or geopolitical events on our clinical development or operations;

the costs associated with being a public company.

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If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams, or research programs or grant licenses on terms that may not be favorable to us.

Comparison of the Nine Months Ended September 30, 2021 and 2020

Comparison of the Three Months Ended March 31, 2022 and 2021

The following summarizes our cash flows for the periods indicated:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Cash used in operating activities

Cash provided by (used in) investing activities

Cash provided by (used in) operating activities

Cash used in investing activities

Cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash Used in Operating Activities

Net cash used in operating activities was $11.1 million and $25.1 million for the nine months ended September 30, 2021 and 2020, respectively.

Cash used in operating activities in the nine months ended September 30, 2021 was primarily due to our net loss of $48.4 million, adjusted by non-cash charges of $5.6 million and net changes in our net operating assets and liabilities of $31.7 million.

Our non-cash charges consisted of a change in the fair value of the MSKCC success payments liability of $3.6 million, $1.9 million of stock-based compensation, $1.0 million of acquired in-process research development, which represents an investing activity, and $0.7 million of depreciation and amortization expense, which were offset by our PPP Loan extinguishment gain upon the loan forgiveness of $1.6 million.

The changes in our net operating assets and liabilities were due to increases of $30.7 million in deferred revenue, $4.9 million in accrued expenses and other current liabilities, $0.9 million in deferred rent and lease incentive liability, and $0.8 million in accounts payable, offset by increases of $2.8 million in prepaid expenses and other current assets, $1.7 million in other receivables, $0.5 million in contract assets, $0.4 million in accounts receivable, and $0.2 million in other assets.

Cash used in operating activities in the nine months ended September 30, 2020 was primarily due to our net loss for the nine months of $19.6 million, adjusted by non-cash charges of $4.9 million and net changes in our net operating assets and liabilities of $0.6 million.

Our non-cash charges consisted of $0.8 million of stock-based compensation, a change in the fair value of equity securities of $0.7 million, $0.7 million of depreciation and amortization expense, and $0.4 million of acquired in-process research and development, which represents an investing activity.

These were offset by receipt of non-cash consideration for licensing and collaboration revenue in the amount of $7.6 million.

The changes in our net operating assets and liabilities were primarily due to decreases of $1.5 million in prepaid expenses and other current assets, $0.2 million in contract assets, $0.1 million in other receivables, and an increase of $1.1 million in accrued expenses and other current liabilities, partially offset by a decrease of $1.9

million in accounts payable, $0.7 million in deferred revenue, $0.6 million in deferred tax liabilities, and $0.4 million in other liabilities.

Cash Provided by (Used in) Investing Activities

During the nine months ended September 30, 2021 cash used in investing activities was $2.4 million.

During the nine months ended September 30, 2020, cash provided by investing activities was $7.0 million.

Cash used in investing activities for the nine months ended September 30, 2021 was primarily due to purchases of property and equipment of $1.4 million and payments for the acquisition of in-process research and development of $1.0 million.

Cash provided by investing activities for the nine months ended September 30, 2020 was primarily due to the receipt of $7.7 million in proceeds from the sale of Intellia common stock.

This was partially offset by cash paid for the acquisition of in-process research and development of $0.4 million and purchases of property and equipment of $0.3 million.

Cash Provided by (Used in) Operating Activities

Net cash used in operating activities was $21.7 million for the three months ended March 31, 2022, and net cash provided by operating activities was $20.3 million for the three months ended March 31, 2021.

Cash used in operating activities for the three months ended March 31, 2022 was primarily due to our net loss of $19.1 million, adjusted by non-cash charges of $2.5 million and net changes in our operating assets and liabilities of $5.1 million.

Our non-cash charges were primarily comprised of $3.0 million of stock-based compensation, non-cash lease expense of $0.5 million, amortization of investment premiums of $0.3 million, and $0.3 million of depreciation and amortization expense, which were partially offset by the change in the fair value of the MSKCC success payments liability of $1.6 million.

The changes in our operating assets and liabilities were due to decreases of $0.8 million in accounts receivable and $1.3 million in other receivables, offset by increases in prepaid expenses and other current assets of $1.3 million, other assets of $0.5 million, and increases of $1.9 million in accounts payable, $2.8 million in accrued expenses and other current liabilities, $0.6 million in deferred revenue, and $0.1 million in operating lease liabilities.

Cash provided by operating activities in the three months ended March 31, 2021 was primarily due to a $30.0 million upfront payment received from AbbVie under the AbbVie Agreement and recorded as deferred revenues, partially offset by a net loss of $13.2 million for the three months ended March 31, 2021.

Our non-cash charges were comprised of a change in the fair value of the MSKCC success payments liability of $0.7 million, $0.3 million of stock-based compensation, and $0.2 million of depreciation and amortization expense.

The changes in our net operating assets and liabilities were primarily due to an increase of $3.9 million in accrued expenses and other current liabilities and a $0.4 million decrease in contract assets, partially offset by an increase of $1.1 million in other receivables, an increase of $0.6 million in prepaid expenses and other current assets, and an increase of $0.4 million in other assets.

Cash Used in Investing Activities

During the three months ended March 31, 2022, cash used in investing activities was $72.1 million.

During the three months ended March 31, 2021 cash used in investing activities was less than $0.1 million.

Cash used in investing activities for the three months ended March 31, 2022, was primarily due to purchases of marketable securities of $110.7 million and property and equipment of $0.7 million, partially offset by the proceeds from maturities of marketable securities of $39.3 million.

Cash used in investing activities for the three months ended March 31, 2021 was primarily due to purchases of property and equipment in the amount of less than $0.1 million.

Cash Provided by Financing Activities

During the nine months ended September 30, 2021 and 2020, cash provided by financing activities was $433.0 million and $1.7 million, respectively.

Cash provided by financing activities for the nine months ended September 30, 2021 was primarily due to the receipt of net proceeds from our IPO in the amount of $321.0 million, net proceeds from the issuance of Series C convertible preferred stock in the amount of $108.8 million, proceeds from the exercise of stock options of $2.1 million, and repayment of the promissory note issued to our president and chief executive officer in the amount of $1.2 million, partially offset by principal payments for a capital lease of $0.1 million.

Cash provided by financing activities for the nine months ended September 30, 2020 was primarily due to our receipt of proceeds from our PPP Loan in the amount of $1.6 million and receipt of proceeds from exercise of stock options of $0.2 million, offset by principal payments for a capital lease of $0.1 million.

Contractual Obligations and Commitments

The following summarizes our contractual obligations as of September 30, 2021:

Due by Period

(in thousands)

Operating leases (1)

Total obligations (2)

(1) The operating lease obligations are primarily related to the facility lease for our corporate headquarters and research and development facility in Berkeley, California, which was amended on March 31, 2021 to include additional office and laboratory space and to extend the lease term to March 31, 2031.

(2) Excludes payment obligations under our in-license and assignment agreements as of September 30, 2021, which are contingent upon our achievement of predefined clinical, regulatory, and commercial milestones;

in the case of the MSKCC Agreement, changes in the price of our common stock and any change in control;

and our royalty payment obligations on net product sales by our licensees.

See Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.

We enter into contracts in the normal course of business with suppliers, CMOs, CROs, clinical trial sites, and the like.

These agreements provide for termination at the request of either party generally with less than one-year notice a nd, therefore, we believe that our non-cancelable obligations under these agreements are not material and they are not included in the table above.

We have not included milestones, royalty, or other payments due under our existing license agreements in the table above due to the uncertainty of the occurrence of the events requiring payment under those agreements.

Under the MSKCC Agreement, we are obligated to make success payments to MSKCC of up to $35.0 million if our stock price increases by certain multiples of increasing value based on a comparison of the fair market value of our common stock with $5.1914 per share, which is the split adjusted initial price at which our Series B convertible preferred stock was sold, as adjusted for future stock splits, during a specified time interval.

The relevant time interval commences when the first patient is dosed with a licensed CD371 product candidate in the first phase 1 clinical trial and ends upon the earlier of the third anniversary of approval by the FDA of our, our affiliate’s, or licensee’s biologics license application for a licensed CD371 product or 10 years from the date the first patient was dosed with a licensed CD371 product in the first phase 1 clinical trial.

In no event will the combination of the MSKCC success payments and the change of control payment exceed $35.0 million.

The relevant time period during which MSKCC is eligible for success payments and a change of control payment has not yet commenced.

As of September 30, 2021 and December 31, 2020, the timing and likelihood of triggering the MSKCC success payments are uncertain and therefore any related payments are not included in the tables above.

See Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information about the MSKCC success payments liability.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under applicable SEC rules.

During the three months ended March 31, 2022 and 2021, cash provided by financing activities was $1.0 million and $109.7 million, respectively.

Cash provided by financing activities for the three months ended March 31, 2022 was primarily due to exercise of stock options and purchases of common stock under the 2021 ESPP plan of $1.0 million.

Cash provided by financing activities for the three months ended March 31, 2021 was primarily due to our receipt of net proceeds from the issuance of Series C preferred stock in the amount of $109.2 million and proceeds from common stock options exercised of $0.6 million, partially offset by the repayments of capital lease obligation in the amount of $0.1 million.

Critical Accounting Policies and Significant Judgments and Estimates

Our critical accounting policies are disclosed in our audited consolidated financial statements for the year ended December 31, 2020, and the related notes included in the Final Prospectus.

Since the date of such financial statements, there have been no material changes to our significant accounting policies other than those described in Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.

Our critical accounting policies are disclosed in our audited consolidated financial statements for the year ended December 31, 2021, and the related notes included in our Form 10-K.

Recently Issued Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information regarding recently issued accounting pronouncements.

See Note 2 to our condensed consolidated financial statements included elsewhere in this Form 10-Q for more information regarding recently issued accounting pronouncements.

Indemnification Agreements

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We believe the fair value of the indemnification rights and agreements is minimal.

Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of September 30, 2021.

Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of March 31, 2022.

Emerging Growth Company Status

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We expect to use the extended transition period for any other new or revised accounting standards during the period in which we remain an emerging growth company.

As described in “Recent Accounting Pronouncements”

in Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report, we have early adopted multiple accounting standards, because the JOBS Act does not preclude an emerging growth company from adopting a new or revised accounting standard earlier than the time that such standard applies to private companies, to the extent early adoption is allowed by the accounting standard.

As described in Note 2 to our condensed consolidated financial statements included elsewhere in this Form 10-Q, we have early adopted multiple accounting standards, because the JOBS Act does not preclude an emerging growth company from adopting a new or revised accounting standard earlier than the time that such standard applies to private companies, to the extent early adoption is allowed by the accounting standard.

Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes to the Company’s market risk during the three months ended March 31, 2022.

For a discussion of the Company’s exposure to market risk, refer to the section titled “Quantitative and Qualitative Disclosures About Market Risk”

in our Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements