What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-09 compared with 2022-11-08 · 161 added, 403 removed, 399 unchanged (59% of the section changed)

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(in thousands, except share and per share amounts)

September 30,

2023 December 31,

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LONG-TERM LIABILITIES

Deferred revenue, net of current portion ($ 0 and $ 100 from related party, respectively)

15,423 22,032

Deferred rent and lease incentive liability — 2,097

Deferred revenue, net of current portion 13,911 15,954

MSKCC success payments liability 1,396 1,651

Lease liabilities, non-current 26,401 26,780

Other liabilities — 17

Deferred tax liabilities 382 381

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STOCKHOLDERS’ EQUITY

Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized at September 30, 2022 and December 31, 2021;

no shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Common stock, par value $ 0.0001 per share, 300,000,000 shares authorized at September 30, 2022 and December 31, 2021, respectively;

60,986,936 and 60,263,158 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized at March 31, 2023 and December 31, 2022;

no shares issued and outstanding as of March 31, 2023 and December 31, 2022

Common stock, par value $ 0.0001 per share, 300,000,000 shares authorized at March 31, 2023 and December 31, 2022, respectively;

61,323,523 and 61,029,184 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in-capital 504,255 499,598

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(in thousands, except share and per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Licensing and collaboration revenue $ 3,502 $ 2,664

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Change in fair value of the MSKCC success payments liability 255 1,596

Gain on extinguishment of PPP Loan — — — 1,584

Other income, net 2,832 257

Total other income (expense) ( 110 ) ( 2,358 ) 3,389 ( 1,870 )

Total other income 3,072 1,765

Net loss ( 28,044 ) ( 19,088 )

Other comprehensive loss:

Net unrealized loss on available-for-sale marketable securities, net of tax ( 454 ) — ( 1,900 ) —

Other comprehensive income (loss):

Net unrealized gain (loss) on available-for-sale marketable securities, net of tax 788 ( 954 )

Net comprehensive loss $ ( 27,256 ) $ ( 20,042 )

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AND ITS SUBSIDIARIES

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

Convertible Preferred Stock Common Stock Additional Paid-In

Capital Other Comprehensive

Common Stock Additional Paid-In

Capital Accumulated Other Comprehensive

Loss Accumulated

Deficit Total Stockholders’ Equity

Shares Amount Shares Amount

Shares Amount

BALANCE—December 31, 2022 61,029,184 $ 6 $ 499,598 $ ( 1,518 ) $ ( 197,215 ) $ 300,871

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Issuance of common stock on exercise of options 55,433 — 115 — — 115

Issuance of common stock in connection with at-the-market offering, net of offering expenses 168,635 — 1,007 — — 1,007

Stock-based compensation expense — — 3,131 — — 3,131

Net loss — — — — ( 28,044 ) ( 28,044 )

Other comprehensive loss — — — — — ( 954 ) — ( 954 )

Other comprehensive income — — — 788 — 788

BALANCE—March 31, 2023 61,323,523 $ 6 $ 504,255 $ ( 730 ) $ ( 225,259 ) $ 278,272

Issuance of common stock on exercise of options — — 148,761 — 363 — — 363

Stock-based compensation expense — — — — 2,918 — — 2,918

Net loss — — — — — — ( 26,697 ) ( 26,697 )

Other comprehensive loss — — — — — ( 492 ) — ( 492 )

BALANCE—June 30, 2022 — $ — 60,838,370 $ 6 $ 493,043 $ ( 1,581 ) $ ( 143,579 ) $ 347,889

Issuance of common stock on exercise of options — — 148,566 — 654 — — 654

Stock-based compensation expense — — — — 2,672 — — 2,672

Net loss — — — — — — ( 26,647 ) ( 26,647 )

Other comprehensive loss — — — — — ( 454 ) — ( 454 )

BALANCE—September 30, 2022 — $ — 60,986,936 $ 6 $ 496,369 $ ( 2,035 ) $ ( 170,226 ) $ 324,114

BALANCE—December 31, 2021 60,263,158 $ 6 $ 485,748 $ ( 135 ) $ ( 97,794 ) $ 387,825

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

6,663,940 108,827 — — — — — —

Issuance of common stock under employee stock plans 36,596 — 361 — — 361

Issuance of common stock on exercise of options 389,855 — 629 — — 629

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Net loss — — — — ( 19,088 ) ( 19,088 )

Other comprehensive loss — — — ( 954 ) — ( 954 )

BALANCE—March 31, 2022 60,689,609 $ 6 $ 489,762 $ ( 1,089 ) $ ( 116,882 ) $ 371,797

Repayment of promissory note — — — — 1,150 — — 1,150

Issuance of common stock on exercise of options — — 1,037,979 — 566 — — 566

Stock-based compensation expense — — — — 593 — — 593

Net loss — — — — — — ( 14,311 ) ( 14,311 )

BALANCE—June 30, 2021 14,430,522 $ 150,150 11,333,423 $ 1 $ 10,649 $ — $ ( 58,341 ) $ ( 47,691 )

Conversion of convertible preferred stock into common stock - 14,430,522 ( 150,150 ) 26,234,654 3 150,147 — — 150,150

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

— — 21,850,000 2 321,018 — — 321,020

Issuance of common stock on exercise of options — — 603,246 — 961 — — 961

Stock-based compensation expense — — — — 935 — — 935

Net loss — — — — — — ( 20,974 ) ( 20,974 )

BALANCE—September 30, 2021 — $ — 60,021,323 $ 6 $ 483,710 $ — $ ( 79,315 ) $ 404,401

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:

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Depreciation and amortization 589 308

Loss on disposal of fixed assets — 3

Gain on disposal of fixed assets ( 34 ) —

Non-cash consideration for licensing and collaboration revenue — ( 128 )

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Change in fair value of MSKCC success payments liability ( 255 ) ( 1,596 )

Acquired in-process research and development 300 1,000

Extinguishment of PPP Loan — ( 1,578 )

Amortization of investment premiums ( 1,494 ) 327

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Deferred revenue, current and long-term ( 1,097 ) ( 572 )

Deferred rent and lease incentive liability — 909

Operating lease liabilities ( 323 ) ( 85 )

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CASH FLOWS FROM INVESTING ACTIVITIES:

Maturities of marketable securities 163,130 —

Proceeds from sales and maturities of marketable securities 98,665 39,300

Purchases of marketable securities ( 75,931 ) ( 110,684 )

Purchases of property and equipment ( 2,031 ) ( 723 )

Payments to acquire in-process research and development ( 300 ) ( 1,000 )

Net cash used in investing activities ( 94,419 ) ( 2,436 )

Net cash provided by (used in) investing activities 20,703 ( 72,107 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from initial public offering of common stock, net of offering costs — 321,020

Proceeds from issuance of Series C convertible preferred stock, net of issuance costs — 108,827

Proceeds from exercise of stock options and purchases of common stock under employee stock purchase plan 519 990

Repayment of promissory note — 1,150

Payments on capital lease — ( 119 )

Proceeds from issuance of common stock related to at-the-market offering, net of offering expenses 1,123 —

Net cash provided by financing activities 1,642 990

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 158,335 ) 419,403

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 5,594 ) ( 92,790 )

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — BEGINNING OF PERIOD 58,384 240,466

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TOTAL CASH, CASH EQUIVALENTS, AND RESTRICTED CASH $ 52,790 $ 147,676

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for income taxes $ — $ 11

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Acquisition of property and equipment included in accrued expenses and other current liabilities $ 757 $ 268

Acquired in-process research and development accrued $ — $ —

Extinguishment of PPP Loan $ — $ 1,578

Conversion of convertible preferred stock to common stock at closing of initial public offering $ — $ 150,150

Purchases of property and equipment included in accounts payable and accrued expenses $ 1,714 $ 981

Offering costs included in accrued expenses $ 116 $ —

Right-of-use-assets obtained in exchange for new operating lease liabilities $ — $ 26,249

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Caribou Biosciences, Inc.

(the “Company” 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.

(the “Company” or “we”) is a clinical-stage C lustered R egularly I nterspaced S hort P alindromic R epeats (“CRISPR”) genome-editing biopharmaceutical company dedicated to developing transformative therapies for patients with devastating diseases.

Our genome-editing platform, including our novel chRDNA ( C RISPR h ybrid R NA- DNA , or “chRDNA,” pronounced “chardonnay”) technologies, enables superior editing precision to develop cell therapies that are armored to improve antitumor activity.

We are advancing a pipeline of allogeneic, or off-the-shelf, cell therapies from our chimeric antigen receptor (“CAR”) T (“CAR-T”) cell and CAR-natural killer (“CAR-NK”) cell platforms as readily available therapeutic treatments for patients.

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

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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 $ 170.2 million as of September 30, 2022.

During the nine months ended September 30, 2022, we incurred a net loss of $ 72.4 million and used $ 65.9 million of cash in operating activities.

We have incurred net losses and negative cash flows from operations since our inception and we had an accumulated deficit of $ 225.3 million as of March 31, 2023.

During the three months ended March 31, 2023, we incurred a net loss of $ 28.0 million and used $ 27.9 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, cash equivalents, and marketable securities of $ 342.6 million as of September 30, 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.

Our management expects that existing cash, cash equivalents, and marketable securities of $ 291.0 million as of March 31, 2023, 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 year ended December 31, 2021 included in our Annual Report on 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.

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, 2022 included in our Annual Report on Form 10-K (“Form 10-K”).

Basis of Presentation and Principles of Consolidation

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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 were as follows:

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Three Months Ended

Nine Months Ended

September 30, 2022 As of

December 31, 2021

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

March 31, 2023 March 31, 2022

Licensee A 17.6 % 23.1 % 17.4 % *

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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 or contract asset impairment was recorded as of September 30, 2022 or December 31, 2021.

Property and Equipment, Net

Property and equipment are recorded at cost, net of accumulated depreciation and amortization.

Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets.

The useful lives of property and equipment are as follows:

Computers 3 years

Furniture and fixtures 5 years

Laboratory equipment 5 years

Leasehold improvements Shorter of remaining lease term or estimated useful life

Upon retirement or sale of the assets, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is recorded in the statements of operations.

Repairs and maintenance are expensed as incurred.

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 assets may be required for items such as initial direct costs paid or incentives received and impairment charges if we determine the right-of-use assets are 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 September 30, 2022 and December 31, 2021, we had no finance leases.

See Note 9 to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional information about the impact of adoption and disclosures on our leases.

No allowance for credit losses or contract asset impairment was recorded as of March 31, 2023 or December 31, 2022.

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 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-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 allows 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 $ — $ 22,818 $ 22,818

Prepaid rent $ 291 $ ( 291 ) $ —

Accrued expenses and other current liabilities* $ 13,136 $ 683 $ 13,819

Long-term operating lease liabilities $ — $ 23,941 $ 23,941

Deferred rent and lease incentive liability $ 2,097 $ ( 2,097 ) $ —

*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:

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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 ASU 2016-13 on our condensed consolidated financial statements and related disclosures.

We adopted ASU 2016-13 on January 1, 2023.

The impact on our financial statements and related disclosures was not material.

Fair Value Measurements and Fair Value of Financial Instruments

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We recognize transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs.

No such transfers occurred during the three and nine months ended September 30, 2022.

No such transfers occurred during the three months ended March 31, 2023.

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

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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, 2022

Fair Value Measurements as of March 31, 2023

Total Level 1 Level 2 Level 3

Treasury bills ($ 18,946 included in cash and cash equivalents)

$ 139,072 $ 139,072 $ — $ —

government agency bonds 57,330 — 57,330 —

Commercial paper ($ 1,811 included in cash and cash equivalents)

43,886 — 43,886 —

Treasury bills 87,863 87,863 — —

Corporate debt securities 46,635 — 46,635 —

Money market fund investments (included in cash and cash equivalents) 31,987 31,987 — —

government agency bonds 28,858 — 28,858 —

Corporate debt securities 18,715 — 18,715 —

Total fair value of assets $ 290,990 $ 171,059 $ 119,931 $ —

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Total Level 1 Level 2 Level 3

Money market fund investments (included in cash and cash equivalents) $ 181,528 $ 181,528 $ — $ —

Commercial paper ($ 26,669 included in cash and cash equivalents)

$ 96,899 $ — $ 96,899 $ —

Corporate debt securities 38,649 — 38,649 —

Treasury bills 91,966 91,966 — —

government agency bonds 25,065 — 25,065 —

government agency bonds ($ 3,976 included in cash and cash equivalents)

63,659 — 63,659 —

Corporate debt securities 36,819 — 36,819 —

Money market fund investments (included in cash and cash equivalents) 27,693 27,693 — —

Total fair value of assets $ 317,036 $ 119,659 $ 197,377 $ —

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Total fair value of liabilities $ 1,651 $ — $ — $ 1,651

The fair value and amortized cost of cash equivalents and available-for-sale marketable securities by major security type as of September 30, 2022 and December 31, 2021 are presented in the following tables (in thousands):

As of September 30, 2022

The fair value and amortized cost of cash equivalents and available-for-sale marketable securities by major security type as of March 31, 2023 and December 31, 2022 are presented in the following tables (in thousands):

As of March 31, 2023

Treasury bills ($ 18,946 included in cash and cash equivalents)

$ 139,537 $ 65 $ ( 530 ) $ 139,072

government agency bonds 57,475 53 ( 198 ) 57,330

Commercial paper ($ 1,811 included in cash and cash equivalents)

43,950 4 ( 68 ) 43,886

Treasury bills 89,027 — ( 1,164 ) 87,863

Corporate debt securities 47,022 — ( 387 ) 46,635

Money market investments (included in cash equivalents) 31,987 — — 31,987

government agency bonds 29,178 1 ( 321 ) 28,858

Corporate debt securities 18,772 4 ( 61 ) 18,715

Total cash equivalents and marketable securities $ 291,721 $ 126 $ ( 857 ) $ 290,990

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As of December 31, 2022

Money market investments (included in cash equivalents) $ 181,528 $ — $ — $ 181,528

Commercial paper ($ 26,669 included in cash equivalents)

$ 97,024 $ 6 $ ( 131 ) $ 96,899

government agency bonds 25,102 — ( 37 ) 25,065

Corporate debt securities 38,661 4 ( 16 ) 38,649

Treasury bills 92,910 1 ( 945 ) 91,966

government agency bonds ($ 3,976 included in cash and cash equivalents)

63,926 25 ( 292 ) 63,659

Corporate debt securities 37,002 — ( 183 ) 36,819

Money market investments (included in cash equivalents) 27,693 — — 27,693

Total cash equivalents and marketable securities $ 318,555 $ 32 $ ( 1,551 ) $ 317,036

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Change in fair value ( 255 )

Balance at September 30, 2022 $ 3,039

Balance at March 31, 2023 $ 1,396

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 a

$ 1.6 million and $ 2.4 million change in fair value of the MSKCC success payments liability as a loss in other income (expense) in our condensed consolidated statements of operations and comprehensive loss for the three months ended September 30, 2022 and 2021, respectively.

We recorded a $ 1.0 million and $ 3.6 million change in fair value of the MSKCC success payments liability as a gain and a loss, respectively, in other income (expense) and research and development expense in our condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2022 and 2021, respectively.

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

We recorded a $ 0.3 million and $ 1.6 million change in the fair value of the MSKCC success payments liability as a gain in other income (expense) in our condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022, respectively.

As of December 31, 2022, we utilized 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 fair value of the MSKCC success payments liability at each balance sheet date.

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

September 30,

Fair value of common stock $ 6.28

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Probability of achieving multiple of Initial Share Price 3.0 % to 10.6 %

7.0 % to 20.9 %

Expected term (years) 4.6 to 6.0

The computation of expected volatility is 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 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.

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 for our CB-012 product candidate utilizing the know-how, biological materials, and intellectual property licensed under the Exclusive License Agreement, dated November 13, 2020, with MSKCC (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.

As of March 31, 2023 we did not note any significant changes to the inputs used in the MSKCC success payments liability fair value calculation, other than a change in the fair value of our common stock to $ 5.31 per share.

Significant Agreements

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.

Emmanuelle Charpentier (the “CVC IP”).

Charpentier has not granted us any rights, either directly or indirectly.

The UC/Vienna Agreement continues until the last-to-expire patent or last-to-be-abandoned patent application within the CVC IP;

provided, however, that UC/Vienna may terminate the UC/Vienna Agreement upon the occurrence of certain events and we may terminate the UC/Vienna Agreement at our sole discretion upon written notice.

Without patent term adjustment or patent term extension, the CVC IP will expire in 2033.

The UC/Vienna Agreement includes certain diligence milestones that we must meet.

For products and services sold by us that are covered by the CVC IP, we will owe low- to mid-single-digit percent royalties on net sales, subject to a minimum annual royalty.

Prior to the time that we are selling products, we owe UC/Vienna an annual license maintenance fee.

We may owe UC/Vienna up to $ 3.4 million in certain regulatory and clinical milestone payments in the field of human therapeutics and diagnostics for products that are covered by the CVC IP and developed by us, an affiliate, or a sublicensee.

Additionally, we pay UC/Vienna a specified percentage of sublicensing revenue, including cash and equity, we receive from sublicensing the CVC IP, subject to certain exceptions.

If we include intellectual property owned or controlled by us in a sublicense to the CVC IP, we pay UC/Vienna a low double-digit percentage of sublicensing revenues received under the sublicense.

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 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 each of the three-month periods ended September 30, 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 nine months ended September 30, 2022 and 2021, we incurred $ 0.8 million and $ 1.3 million, respectively, 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 September 30, 2022 and 2021, we reimbursed UC $ 1.4 million and $ 2.4 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, 2022 and 2021, we reimbursed UC $ 4.7 million and $ 8.9 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, 2022 and 2021, CRISPR reimbursed us $ 0.7 million and $ 1.2 million, respectively, which we 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, 2022 and 2021, CRISPR reimbursed us $ 2.4 million and $ 4.4 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

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 C-type lectin-like molecule-1 (CLL-1;

also known as CD371) for use in T cells, NK cells, and genome-edited induced pluripotent stem cells (“iPSCs”) for allogeneic CLL-1-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.

For each licensed CLL-1 product, we may owe potential clinical, regulatory, and commercial milestone payments totaling $ 112.0 million.

In addition, in the event we, our affiliates, or sublicensees, receive regulatory approval for a licensed CLL-1 product, we will owe low- to mid-single-digit percent royalties on net sales by us, our affiliates, and our sublicensees.

Our license from MSKCC includes the right to sublicense through multiple tiers and we will owe MSKCC a percentage of upfront cash or equity received from our sublicensees.

The percentage owed decreases as our licensed CLL-1 product candidate moves through development, starting at a low-double-digit percentage if clinical trials have not yet begun and decreasing to a mid-single-digit percentage if our licensed CLL-1 product candidate is in later clinical trial stages.

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 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 period commences when the first patient is dosed with a licensed CLL-1 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 CLL-1 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 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.

The following table summarizes the amounts of the MSKCC success payments:

Multiple of Initial Share Price giving rise to a success payment 5x 10x 15x

MSKCC success payments (in millions) $ 10.0 $ 10.0 $ 15.0

We may terminate the MSKCC Agreement upon 90 calendar days’ prior written notice to MSKCC.

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 September 30, 2022, the estimated fair value of the total success payments obligation to MSKCC was $ 3.0 million, which was included in long-term liabilities in our condensed consolidated balance sheets.

For the three months ended September 30, 2022 and 2021, we recognized a $ 1.6 million and $ 2.4 million, respectively, change in fair value of the MSKCC success payments liability, which was recorded as a loss in other income (expense) in our condensed consolidated statements of operations and comprehensive loss.

For the nine months ended September 30, 2022 and 2021, we recognized a $ 1.0 million and $ 3.6 million, respectively, change in fair value of the MSKCC success payments liability, which was recorded as a gain and a loss, respectively, in other income (expense) and research and development 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”) 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.

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.

During each of the three- and nine-month periods ended September 30, 2022 and 2021, we recognized less than $ 0.1 million of expenses in reimbursable patent prosecution and maintenance costs, which were recorded as general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

During the three months ended September 30, 2022 and 2021, Intellia reimbursed us $ 0.2 million and $ 0.4 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.

During the nine months ended September 30, 2022 and 2021, Intellia reimbursed us $ 0.7 million and $ 1.7 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 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.

(now Corteva Agriscience)

On July 13, 2015, we and Pioneer Hi-Bred International, Inc.

(“Pioneer”) (now Corteva Agriscience), then a DuPont company (“DuPont”), entered into an Amended and Restated Collaboration and License Agreement, as amended (the “Pioneer Agreement”).

Under the terms of the Pioneer Agreement, we and Pioneer cross licensed CRISPR intellectual property portfolios.

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 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 if the non-breaching party is materially adversely affected by the 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 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.

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.

In December 2020, we and Pioneer entered into an amendment to the Pioneer Agreement under which Pioneer assigned to us the chRDNA patent family developed under the research collaboration, and we paid Pioneer an upfront payment of $ 0.5 million.

We considered the payment to Pioneer in accordance with revenue recognition guidance and accounted for it as a reduction of the licensing and collaboration revenue in our condensed consolidated statements of operations and comprehensive loss.

In addition to the upfront payment, we are now obligated to pay all patent prosecution and maintenance costs for the chRDNA patent family;

up to $ 2.8 million in regulatory milestone payments for therapeutic products developed by us, our affiliates, or licensees that are covered by the chRDNA patent family;

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 revenue we receive for licensing the chRDNA patent family after December 2020.

For the three and nine months ended September 30, 2022, and for the three months ended September 30, 2021, we did not incur any expenses for payments we owe to Pioneer related to licensing revenues.

For the nine months ended September 30, 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 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 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 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 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;

and (c) the expiration date of regulatory exclusivity for such licensed product in such country.

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 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 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, 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.

Since December 31, 2022, there have been no material changes to the key terms of our significant agreements.

For further information regarding our significant agreements, please see Note 4 to the consolidated financial statements included in our Form 10-K.

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

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 $ 11.5 million and long-term deferred revenue in the amount of $ 12.7 million related to this upfront cash payment in our condensed consolidated balance sheets as of September 30, 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 $ 1.7 million and $ 2.3 million in revenue for the three months ended September 30, 2022 and 2021, respectively, relating to the AbbVie Agreement.

We recognized $ 5.5 million and $ 2.8 million in revenue for the nine months ended September 30, 2022 and 2021, respectively, relating to the AbbVie Agreement.

As of September 30, 2022, we did not record anything in accounts receivable and as of December 31, 2021, we recorded $ 1.0 million in accounts receivable, respectively, and $ 0.8 million and $ 0.2 million, respectively, in contract assets in our condensed consolidated balance sheets.

We recognized short-term deferred revenue in the amount of $ 10.4 million and long-term deferred revenue in the amount of $ 11.3 million related to this upfront cash payment in our condensed consolidated balance sheets as of March 31, 2023.

We recognized short-term deferred revenue in the amount of $ 9.4 million and long-term deferred revenue in the amount of $ 13.3 million related to this upfront cash payment in our consolidated balance sheets as of December 31, 2022.

We recognized $ 1.6 million and $ 0.9 million in revenue for the three months ended March 31, 2023 and 2022, respectively, relating to the AbbVie Agreement.

As of March 31, 2023, we recorded $ 0.9 million in accounts receivable and as of December 31, 2022, we had recorded no amounts in accounts receivable in our condensed consolidated balance sheets.

As of March 31, 2023 and December 31, 2022 we had $ 0.6 million and $ 0.9 million, respectively, in contract assets in our condensed consolidated balance sheets.

We enter into agreements with third parties to in-license intellectual property and related materials and know-how.

These agreements may include non-refundable, upfront payments;

annual license maintenance fees;

sublicensing fees;

obligations to reimburse for patent prosecution and maintenance fees;

success payments;

regulatory clinical and commercial milestones;

and royalty payments.

Our obligation to make such payments is contingent upon milestones being achieved, licensed products being commercialized, and the agreements remaining in effect.

For the three months ended March 31, 2023 and 2022, we recorded $ 0.4 million and $ 0.3 million, respectively, as research and development expense in our condensed consolidated statements of operations related to our license agreements.

For the three months ended March 31, 2023 and 2022, we recorded $ 0.8 million and $ 2.6 million, respectively, as general and administrative expense for patent prosecution and maintenance costs in our condensed consolidated statements of operations and comprehensive loss, which includes reimbursements of patent prosecution and maintenance costs of $ 0.4 million and $ 1.4 million, respectively, from CRISPR Therapeutics AG and Intellia Therapeutics, Inc.

As of March 31, 2023, certain license and assignment agreements included potential future payments from us for development, regulatory, and sales milestones totaling approximately $ 161.2 million.

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, 2022 and 2021 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The following table is a summary of revenue by geographic location for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

United States $ 3,385 $ 2,612

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Total $ 3,502 $ 2,664

During the three months ended September 30, 2022, we recognized $ 1.6 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 1.7 million of revenue related to performance obligations satisfied over time.

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 nine months ended September 30, 2022, we recognized $ 4.7 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 5.5 million of 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 three months ended March 31, 2023, we recognized $ 1.9 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 1.6 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.

Contract Balances

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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.

Our contract asset balances represent research costs related to the AbbVie Agreement, as well as royalties and milestone payments from our other license agreements 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.

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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 nine months ended September 30, 2022 (in thousands):

The following table presents changes in our contract assets and liabilities during the three months ended March 31, 2023 (in thousands):

Balance as of

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Balance as of

September 30,

Accounts receivable $ 202 $ 3,003 $ ( 1,672 ) $ 1,533

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Deferred revenue, current and long-term $ 25,891 $ 1,246 $ ( 2,343 ) $ 24,794

Unbilled accounts receivable increased $ 0.4 million during the nine months ended September 30, 2022, primarily due to the increase in unbilled research costs under the AbbVie Agreement.

Deferred revenue decreased during the nine months ended September 30, 2022, primarily due to a higher amount of revenue recognized compared to the amount of additional billings during the nine months ended September 30, 2022.

During the nine months ended September 30, 2022 and 2021, we recognized $ 3.4 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.

Unbilled accounts receivable decreased $ 0.6 million during the three months ended March 31, 2023, primarily due to the decrease in unbilled research costs under the AbbVie Agreement.

Deferred revenue decreased during the three months ended March 31, 2023, primarily due to a higher amount of revenue recognized compared to the amount of additional billings during the three months ended March 31, 2023.

During the three months ended March 31, 2023 and 2022, we recognized $ 1.1 million and $ 0.6 million of revenue, respectively, which were included in the opening contract liabilities balances at the beginning of the respective periods.

Transaction Prices Allocated to Remaining Performance Obligations

Remaining 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 September 30, 2022 was approximately $ 43.4 million.

The value of transaction prices allocated to remaining unsatisfied performance obligations as of March 31, 2023 was approximately $ 38.3 million.

We expect to recognize approximately $ 10.9 million of remaining performance obligations as revenue in the next 12 months and to recognize the remainder thereafter.

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Other receivables consisted of the following (in thousands):

September 30,

2023 December 31,

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Prepaid expenses and other current assets consisted of the following (in thousands):

September 30,

2023 December 31,

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Prepaid income taxes 431 431

Prepaid rent — 468

Other 1,234 1,119

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Property and equipment, net, consisted of the following (in thousands):

September 30,

2023 December 31,

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Property and equipment, net $ 12,646 $ 10,678

Depreciation and amortization expenses related to property and equipment were $ 0.4 million and $ 0.3 million, respectively, for the three months ended September 30, 2022 and 2021.

Depreciation and amortization expenses related to property and equipment were $ 1.1 million and $ 0.7 million for the nine months ended September 30, 2022 and 2021, respectively.

Depreciation and amortization expenses related to property and equipment were $ 0.6 million and $ 0.3 million, respectively, for the three months ended March 31, 2023 and 2022.

Accrued expenses and other current liabilities consisted of the following (in thousands):

September 30,

2023 December 31,

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Accrued expenses related to sublicensing revenues 656 596

Credit card liability — 259

Other 1,657 1,669

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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 seat.

As of September 30, 2022, we have appointed one of the four directors of the private company.

As of March 31, 2023, we have appointed one of the four directors of the private company.

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.

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

There have been no changes to the carrying value of the investment during the three months ended September 30, 2022.

We did not recognize any revenue in connection with the Private Company License Agreement for each of the three- and nine-month periods ended September 30, 2022 and 2021.

Scientific Advisory Board Payments

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- and nine-month periods ended September 30, 2022 and 2021, we paid Dr.

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

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 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.

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.

Paycheck Protection Program Loan

On May 6, 2020, we entered into a promissory note with WebBank (the “Lender”) pursuant to the Paycheck Protection Program for a total amount of $ 1.6 million (the “PPP Loan”).

Our PPP Loan had a two-year term and bore interest at a stated rate of 1.0 % per annum, accrued monthly, beginning on the date our PPP Loan was issued by the Lender.

No monthly principal and interest payments were required under our PPP Loan.

We did not provide any collateral or guarantees for our PPP Loan, nor did we pay any facility charge to obtain our PPP Loan.

Our PPP Loan provided for customary events of default, including those relating to failure to make payment, bankruptcy, breaches of representations,

and material adverse effects.

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

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.

Commitments and Contingencies

Facility Lease Agreements

We lease laboratory and office space under noncancellable operating agreements.

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 .

As of each of March 31, 2023 and December 31, 2022, the carrying value of the investment was $ 7.5 million.

There have been no changes to the carrying value of the investment during the three months ended March 31, 2023.

We did not recognize any revenue in connection with the Private Company License Agreement for the three months ended March 31, 2023 and 2022.

Operating Lease Obligations

As of March 31, 2023 we had operating leases for our laboratory and office space in Berkeley, California, consisting of approximately 75,000 square feet, with remaining lease terms up to 9.3 years.

Certain of our laboratory and office space lease agreements include options to extend the terms for a period of five years and contain provisions for future rent increases.

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

September 30, 2022 Nine Months Ended

September 30, 2022

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

Three Months Ended March 31,

Operating lease cost (1)

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Total lease cost $ 1,947 $ 1,862

(1) Includes $ 0.6 million and $ 1.6 million of variable lease cost related to operating expenses and taxes for the three and nine months ended September 30, 2022, respectively.

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

Nine Months Ended

September 30, 2022

(1) Includes $ 0.6 million and $ 0.5 million of variable lease cost related to operating expenses and taxes for the three months ended March 31, 2023 and 2022, respectively.

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

Three Months Ended March 31,

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

Operating cash flows from operating leases $ 1,093 $ 871

As of September 30, 2022, the weighted-average remaining lease term was 8.6 years for our corporate office and laboratory leases, and the weighted-average discount rate was 11.29 %.

The following table summarizes a maturity analysis of our operating lease liabilities showing the aggregate lease payments as of September 30, 2022 (in thousands):

The weighted-average remaining lease term and the weighted-average discount rate for our laboratory and office leases were as follows:

2023 December 31,

Weighted-average remaining lease term (years) 8.1 8.3

Weighted-average discount rate 11.3 % 11.3 %

The following table summarizes a maturity analysis of our operating lease liabilities showing the aggregate lease payments as of March 31, 2023 (in thousands):

Remainder of 2023 (1)

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(2) Reflects an offset of $ 0.6 million related to incentives expected to be received in 2024.

(3) Reflects an offset of $ 0.2 million related to incentives expected to be received in 2024.

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 December 31, 2021, the capital lease obligation was repaid in full and we do not have any remaining future minimum lease payments related to this capital lease.

Commitments and Contingencies

Research and Development Agreements

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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 September 30, 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.

As of March 31, 2023 and December 31, 2022, 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 litigation arising in the ordinary course of business.

We record a liability for such litigation 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 consists of the following:

September 30, 2022 As of

On February 10, 2023, a putative class action lawsuit was filed in the U.S.

District Court for the Northern District of California against our company and certain of our officers and current and former members of our board of directors, Greenhalgh v.

Caribou Biosciences, Inc., et al., Case Number 3:23-cv-00609-VC (the “Greenhalgh Case”).

The Greenhalgh Case was voluntarily dismissed on March 16, 2023.

On April 11, 2023, a putative class action lawsuit was filed in the U.S.

District Court for the Northern District of California against our company and certain of our officers and current and former members of our board of directors, Bergman v.

Caribou Biosciences, Inc., et al., Case Number 4:23-cv-01742-YGR (the “Bergman Case”).

The Bergman complaint challenges disclosures regarding our company’s business, operations, and prospects, specifically with respect to the alleged durability of CB-010’s therapeutic effect and the product candidate’s clinical and commercial prospects, in alleged violation of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended.

The allegations and claims asserted in the Bergman Case are the same allegations and claims asserted in the Greenhalgh Case.

Plaintiff in the Bergman Case has filed a motion to consolidate the Bergman Case with the Greenhalgh case, and that motion is pending.

Additionally, on March 22, 2023, a putative class action lawsuit was filed in Superior Court of the State of California for the County of Alameda against our company and certain of our officers and current and former members of our board of directors, Lowry v.

Caribou Biosciences, Inc., et al., Case Number T23-1084 (the “Lowry Case”).

The Lowry Case challenges disclosures regarding our company’s business, operations, and prospects, specifically with respect to the alleged durability of CB-010’s therapeutic effect and the product candidate’s clinical and commercial prospects, in alleged violation of Sections 11 and 15 of the Securities Act.

The allegations and claims in the Lowry Case are substantially similar to the Securities Act claims asserted in the Bergman and Greenhalgh Cases.

On April 26, 2023, we filed a motion to stay the Lowry Case during the pendency of the parallel federal court litigation in the Bergman Case and the Greenhalgh Case.

We believe all of these lawsuits are without merit.

Common stock reserved for future issuance consisted of the following:

March 31, 2023 As of

December 31, 2022

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At-the-market Equity Offering Program

On August 9, 2022, we also entered into an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC (“Jefferies”) with respect to an at-the-market (“ATM”) equity offering program, pursuant to which, through Jefferies as sales agent, we may from time to time, sell shares of our common stock having an aggregate offering price of up to $ 100.0 million in gross proceeds under the Shelf Registration Statement.

As of September 30, 2022, there have been no sales under the ATM equity offering program and, as of September 30, 2022, the full capacity remained available for issuance.

On August 9, 2022, we also entered into an Open Market Sale Agreement SM (the “ATM Sales Agreement”) with Jefferies LLC (“Jefferies”) with respect to an at-the-market (“ATM”) equity offering program, pursuant to which, through Jefferies as sales agent, we may from time to time, sell shares of our common stock having an aggregate offering price of up to $ 100.0 million in gross proceeds under the Shelf Registration Statement.

As of March 31, 2023, we have sold 168,635 shares of our common stock under the ATM Sales Agreement at an average price per share of $ 7.32 for aggregate gross proceeds of $ 1.2 million ($ 1.0 million net of offering expenses).

Stock-Based Compensation

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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.

In addition, 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, will be 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 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.

Options under the 2021 Plan may be granted for periods of up to 10 years at exercise prices no less than the fair market value of our common stock on the date of grant;

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 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 September 30, 2022, we had 5,955,761 shares available for issuance under the 2021 Plan.

The following table summarizes stock option activity under our equity incentive plans during the nine months ended September 30, 2022:

As of March 31, 2023, we had 6,495,096 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, 2023:

Stock Options Weighted-

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Options cancelled or forfeited ( 126,021 ) 10.12

Outstanding at September 30, 2022 6,649,892 $ 9.14 8.5 $ 24,431

Exercisable at September 30, 2022 2,207,115 $ 6.13 7.4 $ 12,416

Vested and expected to vest at September 30, 2022 6,649,892 $ 9.14 8.5 $ 24,431

Outstanding at March 31, 2023 9,102,960 $ 8.20 8.5 $ 4,824

Exercisable at March 31, 2023 3,019,066 $ 7.30 7.2 $ 3,551

Vested and expected to vest at March 31, 2023 9,102,960 $ 8.20 8.5 $ 4,824

*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, 2022, we granted 372,600 stock options to employees ( no stock options were granted to non-employees) with a weighted average grant date fair value of $ 6.43 .

During the nine months ended September 30, 2022, we granted 1,206,750 stock options to employees and non-employees with a weighted average grant date fair value of $ 5.84 .

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 March 31, 2023 and 2022, we granted 2,536,340 and 339,030 stock options to employees with a weighted average grant date fair value of $ 4.13 and $ 6.68 , respectively.

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:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Volatility 74.2 %

71.7 % to 74.2 %

Three Months Ended March 31,

Volatility 74.9 % to 75.0 %

71.7 % to 72.0 %

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1.7 % to 2.3 %

0.9 % to 1.2 %

Expected dividend yield 0.0 % 0.0 %

As of September 30, 2022, there was $ 29.2 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 2.8 years.

As of March 31, 2023, there was $ 34.2 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 2.9 years.

Restricted Stock Units

During the nine months ended September 30, 2022, we granted 200,058 restricted stock units (“RSUs”) and 59,781 performance-based RSUs (“PSUs”) under the 2021 Plan.

A summary of the status of and change in unvested RSUs and PSUs as of September 30, 2022 was as follows:

During the three months ended March 31, 2023, we did not grant any restricted stock units (“RSUs”) or performance-based RSUs (“PSUs”) under the 2021 Plan.

A summary of the status of and change in unvested RSUs and PSUs as of March 31, 2023 was as follows:

Number of Shares Underlying Outstanding RSUs and PSUs Weighted-Average Grant Date Fair Value per RSU and PSU

Unvested, January 1, 2023 256,146 $ 10.07

Granted 259,839 10.07

Vested ( 15,000 ) 10.64

Forfeited ( 4,977 ) 9.90

Unvested, September 30, 2022 259,769 $ 10.07

The PSUs were granted to our executive officers and will vest if and when a certain milestone is reached within a specific time period, contingent upon the executive officer remaining an employee at that time.

As of September 30, 2022, the achievement of this milestone was not considered probable and, therefore, no stock-based compensation was recorded.

As of September 30, 2022, the total unrecognized stock-based compensation expense related to unvested RSUs was $ 1.8 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.3 years.

As of September 30, 2022, there was approximately $ 0.6 million of unrecognized stock-based compensation expense related to unvested PSUs.

Unvested, March 31, 2023 236,169 $ 10.04

The PSUs were granted to our executive officers and will vest contingent upon the achievement of a clinical milestone for CB-010 during a performance period ending December 31, 2024 and the executive officer’s continued

employment during the performance period.

As of March 31, 2023, the achievement of this milestone was not considered probable and, therefore, no stock-based compensation was recorded.

As of March 31, 2023, the total unrecognized stock-based compensation expense related to unvested RSUs was $ 0.9 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.7 years.

As of March 31, 2023, there was approximately $ 0.6 million of unrecognized stock-based compensation expense related to unvested PSUs.

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 (the “Tax Code”).

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 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 September 30, 2022.

We recorded $ 0.1 million in accrued liabilities related to contributions withheld as of September 30, 2022.

We have issued 139,384 shares of common stock under the ESPP as of March 31, 2023.

We recorded $ 0.1 million in accrued liabilities related to contributions withheld as of March 31, 2023.

Stock-Based Compensation Expense

We recorded stock-based compensation expense related to employee and non-employee equity-based awards grants in our condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Research and development $ 1,310 $ 1,100

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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,

2022 2021 2022 2021

Three Months Ended March 31,

Stock options $ 2,798 $ 2,930

ESPP 80 41 209 41

RSUs 114 — 216 —

Total $ 3,131 $ 3,024

Stock-based compensation expense related to employees was $ 2.7 million and $ 0.9 million for the three months ended September 30, 2022 and 2021, respectively.

Stock-based compensation expense related to employees was $ 8.5 million and $ 1.9 million for the nine months ended September 30, 2022 and 2021, respectively.

Stock-based compensation expense related to non-employees was less than $ 0.1 million for the three months ended September 30, 2022 and 2021, respectively.

Stock-based compensation expense related to non-employees was $ 0.1 million and less than $ 0.1 million for the nine months ended September 30, 2022 and 2021, respectively.

Stock-based compensation expense related to employees was $ 3.1 million and $ 2.9 million for the three months ended March 31, 2023 and 2022, respectively.

There was no stock-based compensation expense related to non-employees for the three months ended March 31, 2023, and $ 0.1 million for the three months ended March 31, 2022.

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, 2022 and 2021, we contributed $ 0.6 million and $ 0.3 million, respectively, to our 401(k) plan.

No income tax expense was recorded during each of the three- and nine-month periods ended September 30, 2022 and 2021 due to our operating losses.

During the three months ended March 31, 2023 and 2022, we contributed $ 0.3 million and $ 0.2 million, respectively, to our 401(k) plan.

No income tax expense was recorded during each of the three-month periods ended March 31, 2023 and 2022 due to our operating losses.

Net Loss Per Share

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Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net loss $ ( 28,044 ) $ ( 19,088 )

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Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

September 30,

Convertible preferred stock — —

Stock options outstanding 9,102,960 6,286,542

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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