What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-09 compared with 2022-11-08 · 111 added, 170 removed, 207 unchanged (58% of the section changed)

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 Part I, Item 1, of this Quarterly Report on Form 10-Q (“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 Annual Report on Form 10-K (“Form 10-K”) filed with the U.S.

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 the related notes included in Part I, Item 1, of this Quarterly Report on Form 10-Q (“Form 10-Q”) and with the audited consolidated financial statements and the related notes for the fiscal year ended December 31, 2022 included in our Annual Report on Form 10-K (“Form 10-K”) filed with the U.S.

Securities and Exchange Commission (“SEC”) on March 9, 2023.

11 unchanged sentences

the risk that initial or interim clinical trial data will not ultimately be predictive of the safety and efficacy of our product candidates or that clinical outcomes may differ as more clinical data becomes available;

the risk that preclinical study results will not be borne out in human patients;

risks related to our ability to obtain and maintain regulatory approval for our product candidates;

5 unchanged sentences

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 or geopolitical events on our business and operations;

risks caused by the impact of the COVID-19 pandemic and other public health crises 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,” and in other filings we make with the SEC, 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.

1 unchanged sentence

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 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.

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.

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

Our novel CRISPR platform, CRISPR hybrid RNA-DNA (“chRDNA,” pronounced “chardonnay”) genome-editing technology, has demonstrated superior specificity and high efficiency in preclinical studies and enables us to perform multiple, precise genomic edits, while maintaining genomic integrity.

We are 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 are initially focused on advancing multiple allogeneic cell therapies for the treatment of hematologic malignancies and solid tumors.

Our therapies are directed at established tumor cell surface targets for which autologous CAR-T cell therapeutics have already demonstrated clinical proof of concept, including CD19 and B cell maturation antigen (“BCMA”), as well as targets such as C-type lectin-like molecule-1 (“CLL-1,” also known as CD371).

We use our chRDNA technologies to armor our cell therapies by using multiple genome-editing strategies, such as checkpoint disruption, immune cloaking, or a combination of these two strategies to enhance their antitumor activity.

Our lead product candidate, CB-010, to our knowledge, is 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.

CB-010 is being evaluated in our ANTLER phase 1 clinical trial in patients with relapsed or refractory B cell non-Hodgkin lymphoma (“r/r B-NHL”).

We presented initial clinical data from cohort 1 at dose level 1 (40x10 6 CAR-T cells) from our ANTLER trial in June 2022 at the European Hematology Association 2022 Congress, and we expect to share additional clinical data from cohort 1 by the end of 2022.

The ANTLER trial is currently enrolling patients at dose level 2 (80x10 6 CAR-T cells).

Our CB-011 product candidate is an allogeneic CAR-T cell product candidate that targets B cell maturation antigen (“BCMA”).

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

CB-010 is being evaluated in our ongoing ANTLER phase 1 clinical trial in patients with relapsed or refractory B cell non-Hodgkin lymphoma (“r/r B-NHL”).

We completed the dose escalation portion of the ANTLER trial and advanced into the dose expansion portion, enrolling second-line large B cell lymphoma (“LBCL”) patients to determine the recommended phase 2 dose.

CB-010 has received Regenerative Medicine Advanced Therapy (“RMAT”) designation for r/r LBCL and fast track designation for r/r B-NHL from the U.S.

Food and Drug Administration (“FDA”).

We plan to provide a safety and efficacy update in the second half of 2023 from the ongoing ANTLER trial, including data from at least 15 patients from dose escalation with a minimum of six months of follow up.

Our second product candidate, CB-011, is an allogeneic CAR-T cell therapy that targets BCMA.

To our knowledge, it is 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 B2M–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 (“r/r MM”).

We submitted our investigational new drug (“IND”) application to the U.S.

Food and Drug Administration (“FDA”) for CB-011 in r/r MM in the fourth quarter of 2022.

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

CLL-1 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 expect to submit an IND application to the FDA for CB-012 in r/r AML in 2023.

We are also developing allogeneic CAR-NK cell therapies derived from genome-edited induced pluripotent stem cells (“iPSCs”) for the treatment of solid tumors.

CB-020 is our first CAR-NK product candidate from our CAR-NK platform 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 the fourth quarter of 2022.

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

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 and testing of our product candidates.

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

CB-011 is being evaluated in our ongoing CaMMouflage phase 1 clinical trial in patients with relapsed or refractory multiple myeloma (“r/r MM”).

CB-011 has received fast track designation for r/r MM from the FDA.

We plan to provide updates on dose escalation as the CaMMouflage Phase 1 trial advances.

Our third product candidate, CB-012, is an allogeneic CAR-T cell therapy targeting CLL-1, currently in preclinical development for the treatment of relapsed or refractory acute myeloid leukemia (“r/r AML”).

CB-012 is, to our knowledge, the first allogeneic CAR-T cell therapy with both checkpoint disruption and immune cloaking strategies.

We believe that CLL-1 is an attractive target for acute myeloid leukemia (“AML”) due to its expression on myeloid cancer cells, its enrichment in leukemic stem cells, and its absence on hematopoietic stem cells (“HSCs”).

CB-012 is being evaluated in investigational new drug (“IND”) application-enabling studies to support a planned IND application submission for r/r AML in the second half of 2023.

We are developing allogeneic CAR-NK cell therapies derived from genome-edited induced pluripotent stem cells (“iPSCs”) for the treatment of solid tumors.

CB-020 is our first CAR-NK product candidate from our CAR-NK platform and we have selected receptor tyrosine kinase like orphan receptor 1 (“ROR1”) as the tumor cell-surface target for CB-020.

CB-020 and potential future CAR-NK cell therapy product candidates 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.

Since our founding in 2011, we have devoted substantially all of our resources to organizing and staffing, business planning, raising capital, expanding 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, testing, and clinical trial evaluations of our product candidates.

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;

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

the sale of shares of Intellia Therapeutics, Inc.

(“Intellia”) common stock that we received as consideration for a License Agreement (as amended, the “Intellia License Agreement”) with Intellia, LLC, to which Intellia is a successor in interest;

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

(“Intellia”) common stock;

the sale of our convertible preferred stock in private placements before our initial public offering (“IPO”) in 2021;

and proceeds from our IPO.

Our net losses for the three months ended September 30, 2022 and 2021 were $26.6 million and $21.0 million, respectively.

Our net losses for the nine months ended September 30, 2022 and 2021 were $72.4 million and $48.4 million, respectively.

We had an accumulated deficit of $170.2 million as of September 30, 2022.

Our net losses for the three months ended March 31, 2023 and 2022 were $28.0 million and $19.1 million, respectively.

We had an accumulated deficit of $225.3 million as of March 31, 2023.

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

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;

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 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;

• progress our ANTLER phase 1 clinical trial for our CB-010 product candidate and our CaMMouflage phase 1 clinical trial for our CB-011 product candidate;

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

• hire additional clinical, quality control, regulatory, technical operations, and scientific personnel;

• seek to identify additional research programs and additional product candidates;

10 unchanged sentences

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, chRDNA guides, Cas proteins, plasmids, and adeno-associated virus serotype 6 vectors used in the manufacture of our CAR-T cells as well as our CAR-NK cell therapy product candidates.

We use multiple contract manufacturing organizations (“CMOs”) to individually manufacture, under current good manufacturing processes, chRDNA guides, Cas9 and Cas12a proteins, plasmids, and adeno-associated virus serotype 6 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.

1 unchanged sentence

Because of the numerous risks and uncertainties associated with therapeutic product development, we may never achieve profitability and, unless and until we are able to develop and commercialize our product candidates, we will need to continue to raise additional capital.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through public or private equity or debt financings, collaborations, strategic alliances, and licensing arrangements with third parties.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through equity offerings (including our at-the-market facility), debt financings, collaborations and strategic alliances, licensing arrangements, or other sources.

There are no assurances that we will be successful in obtaining an adequate level of financing to support our business plans as needed on acceptable terms, or at all.

1 unchanged sentence

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 currently unable to predict the effect that the ongoing COVID-19 pandemic may have on our Company in the future.

Furthermore, we cannot predict the impact that national or international geopolitical events, such as the ongoing war 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 to our ongoing and future preclinical studies and clinical trials, and our access to the financial markets.

Components of Results of Operations

13 unchanged sentences

Each of these payments results in licensing and collaboration revenue.

Revenue under such licensing and collaboration agreements was $3.3 million and $4.0 million for the three months ended September 30, 2022 and 2021, respectively, and $10.2 million and $7.0 million for the nine months ended September 30, 2022 and 2021, respectively.

Revenue under such licensing and collaboration agreements was $3.5 million and $2.7 million for the three months ended March 31, 2023 and 2022, respectively.

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

5 unchanged sentences

External costs include:

• costs associated with acquiring technology and intellectual property licenses that have no alternative future uses, sublicensing revenue, and milestones;

• costs associated with acquiring technology and intellectual property licenses that have no alternative future uses, sublicensing revenue, and milestones under our licensing agreements;

• costs incurred in connection with the preclinical and clinical development and manufacturing of our product candidates, including under agreements with contract research organizations (“CROs”), CMOs, and clinical sites;

7 unchanged sentences

The capitalized amounts are recognized as expense as the goods are delivered or as related services are performed.

Historically, we have not tracked external costs by clinical program.

We intend to separately track certain external costs for each clinical program.

However, we do not currently track, and do not intend to track, costs that are deployed across multiple programs.

We separately track certain external costs on a program-by-program basis;

however, we do not track costs that are deployed across multiple programs.

Research and development activities are central to our business model.

1 unchanged sentence

We expect that our research and development expenses will increase substantially for the foreseeable future as we continue to implement our business strategy;

advance our CB-010 product candidate through clinical trials and later stages of development;

advance our CB-010 and CB-011 product candidates through clinical trials and later stages of development;

conduct preclinical studies and clinical trials for our other product candidates;

5 unchanged sentences

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.

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:

20 unchanged sentences

The following table summarizes our research and development expenses for the periods indicated:

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

2022 2021 2022 2021

(in thousands) (in thousands)

Three Months Ended March 31,

(in thousands)

External costs:

12 unchanged sentences

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.

We are entitled to receive reimbursement from third parties for a portion of the costs for filing, prosecuting, and maintaining certain patents and patent applications.

We are entitled to receive reimbursement from third parties of a portion of the costs for filing, prosecuting, and maintaining certain patents and patent applications.

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, 2022 and 2021, we recorded $1.0 million and $1.6 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense.

During the nine months ended September 30, 2022 and 2021, we recorded $3.1 million and $6.1 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense.

During the three months ended March 31, 2023 and 2022, we recorded $0.4 million and $1.5 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense.

We expect that our general and administrative expenses may increase 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 other expenses necessary to support the growth and operations of a clinical-stage public company.

Other Income (Expense)

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 Memorial Sloan Kettering Cancer Center (“MSKCC”) success payments liability under the Exclusive License Agreement with MSKCC (the “MSKCC Agreement”).

Other income (expense) consists primarily of interest income earned on cash and marketable securities, change in the fair value of our equity investments, and change in the fair value of the Memorial Sloan Kettering Cancer Center (“MSKCC”) success payments liability under the Exclusive License Agreement, dated November 13, 2020, with MSKCC (the “MSKCC Agreement”).

Results of Operations

Comparison of the Three Months Ended September 30, 2022 and 2021

The following table summarizes our results of operations for the periods indicated:

Three Months Ended September 30,

2022 2021 Change

(in thousands)

Licensing and collaboration revenue $ 3,303 $ 3,977 $ (674)

Operating expenses

Research and development 19,991 15,833 4,158

General and administrative 9,849 6,760 3,089

Total operating expenses 29,840 22,593 7,247

Loss from operations (26,537) (18,616) (7,921)

Other income (expense)

Change in fair value of equity securities 31 — 31

Change in fair value of the MSKCC success payments liability (1,607) (2,403) 796

Gain on extinguishment of PPP Loan — — —

Other income, net 1,466 45 1,421

Total other income (expense) (110) (2,358) 2,248

Net loss $ (26,647) $ (20,974) $ (5,673)

Licensing and Collaboration Revenue

Licensing and collaboration revenue decreased by $0.7 million, or 17%, to $3.3 million for the three months ended September 30, 2022 from $4.0 million for the three months ended September 30, 2021.

This decrease was primarily related to a decrease of $0.6 million related to recognition of revenue under the Collaboration and License Agreement (the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”).

The following table summarizes our revenue by licensee for the periods indicated:

Three Months Ended September 30,

2022 2021 Change

(in thousands)

AbbVie $ 1,709 $ 2,274 $ (565)

Other licensees 1,594 1,703 (109)

Total licensing revenue $ 3,303 $ 3,977 $ (674)

Research and Development Expenses

Research and development expenses increased by $4.2 million, or 26%, to $20.0 million for the three months ended September 30, 2022 from $15.8 million for the three months ended September 30, 2021.

This increase was primarily related to increases of $2.2 million in other research and development expenses to advance IND-enabling studies for CB-011 and preclinical research for additional programs, as well as other consulting services related to research and development;

$2.2 million in personnel-related expenses (which include an increase in stock-based compensation expense of $0.7 million) due to incremental hiring;

and $0.5 million in other facilities and allocated expenses;

partially offset by a net decrease of $0.8M in external CMO and CRO activities, driven by a decrease of $2.2 million due to timing of CMO activities for our product candidates, partially offset by a $1.4 million increase in CRO activities primarily to advance our ANTLER phase 1 trial for CB-010.

General and Administrative Expenses

General and administrative expenses increased by $3.1 million, or 46%, to $9.8 million for the three months ended September 30, 2022 from $6.8 million for the three months ended September 30, 2021.

This increase was primarily related

to increases of $1.6 million in personnel-related expenses (which include an increase in stock-based compensation expense of $1.1 million) due to incremental hiring;

$0.7 million in facilities and other allocated expenses;

and $0.7 million in legal, accounting, insurance, and other expenses necessary to support the growth and operations of a clinical-stage public company.

Total Other Income (Expense)

We recognized a loss related to the change in the fair value of the MSKCC success payments liability in the amount of $1.6 million and $2.4 million for the three months ended September 30, 2022 and 2021, respectively.

Other income, net during the three months ended September 30, 2022 increased to $1.5 million from less than $0.1 million during the three months ended September 30, 2021 primarily due to an increase in interest income related to increased market rates and growth of our marketable securities portfolio.

Comparison of the Nine Months Ended September 30, 2022 and 2021

Comparison of the Three Months Ended March 31, 2023 and 2022

The following table summarizes our results of operations for the periods indicated:

Nine Months Ended September 30,

Three Months Ended March 31,

2023 2022 Change

9 unchanged sentences

Change in fair value of the MSKCC success payments liability 255 1,596 (1,341)

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

Other income, net 2,832 257 2,575

Total other income (expense) 3,389 (1,870) 5,259

Total other income 3,072 1,765 1,307

Net loss $ (28,044) $ (19,088) $ (8,956)

Licensing and Collaboration Revenue

Licensing and collaboration revenue increased by $3.1 million, or 44%, to $10.2 million for the nine months ended September 30, 2022 from $7.0 million for the nine months ended September 30, 2021.

This increase was primarily related to increases of $2.7 million related to recognition of revenue under the AbbVie Agreement and $0.4 million related to other license agreements with various licensees.

Licensing and collaboration revenue increased by $0.8 million to $3.5 million for the three months ended March 31, 2023 from $2.7 million for the three months ended March 31, 2022.

This increase was primarily related to increases of $0.7 million related to recognition of revenue under the Collaboration and License Agreement (as amended, the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”) and $0.2 million related to other license agreements with various licensees.

The following table summarizes our revenue by licensee for the periods indicated:

Nine Months Ended September 30,

Three Months Ended March 31,

2023 2022 Change

4 unchanged sentences

Research and Development Expenses

Research and development expenses increased by $19.4 million, or 52%, to $56.5 million for the nine months ended September 30, 2022 from $37.1 million for the nine months ended September 30, 2021.

This increase was primarily

related to increases of $7.8 million in personnel-related expenses (which include an increase in stock-based compensation expense of $2.3 million) due to incremental hiring;

$6.4 million in external CMO and CRO activities, driven by increases of $4.6 million due to the timing of CMO activities for our product candidates, and $1.8 million in CRO activities primarily to advance our ANTLER phase 1 trial for CB-010;

$5.7 million in other research and development expenses to advance IND-enabling studies for CB-011 and preclinical research for additional programs, as well as other consulting services related to research and development;

and $1.8 million in other facilities and allocated expenses;

partially offset by a decrease of $2.3 million in expenses related to licensing, sublicensing revenue, and milestones.

General and Administrative Expenses

General and administrative expenses increased by $13.0 million, or 79%, to $29.5 million for the nine months ended September 30, 2022 from $16.5 million for the nine months ended September 30, 2021.

This increase was primarily related to increases of $8.0 million in personnel-related expenses (which include an increase in stock-based compensation expense of $4.5 million) due to incremental hiring;

$4.0 million in legal, accounting, insurance, and other expenses associated with being a public company;

Research and development expenses increased by $11.8 million to $25.7 million for the three months ended March 31, 2023 from $13.9 million for the three months ended March 31, 2022.

This increase was primarily related to increases of $6.3 million in external CMO and CRO activities, driven by increases of $4.8 million due to timing of CMO activities for our product candidates, and $1.5 million in CRO activities primarily to advance our CB-010 ANTLER phase 1 trial;

$2.4 million in other research and development expenses to advance CB-012 investigational new drug (“IND”) application-enabling studies and other preclinical research, as well as other outside services related to research and development;

$2.3 million in personnel-related expenses, including stock-based compensation, due to headcount increases;

and $0.7 million in facilities and other allocated expenses.

partially offset by a $0.9 million decrease in patent cost reimbursements.

Total Other Income (Expense)

We recognized a gain and a loss related to the change in the fair value of the MSKCC success payments liability in the amount of $1.0 million and $3.6 million, respectively, for the nine months ended September 30, 2022 and 2021, respectively.

The PPP Loan was forgiven in May 2021, and we recognized gain on the PPP 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, 2022.

Other income, net during the nine months ended September 30, 2022 increased to $2.4 million from $0.1 million during the nine months ended September 30, 2021 primarily due to an increase in interest income related to increased market rates and growth of our marketable securities portfolio.

General and Administrative Expenses

General and administrative expenses decreased by $0.7 million to $8.9 million for the three months ended March 31, 2023 from $9.6 million for the three months ended March 31, 2022.

This decrease was primarily related to decreases of $0.8 million in director and officer insurance and legal expenses;

and $0.4 million in patent prosecution and maintenance costs;

partially offset by an increase of $0.5 million in personnel-related expenses, including stock-based compensation, due to headcount increases.

Total Other Income

Total other income increased by $1.3 million for three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

We recognized a gain related to the change in the fair value of the MSKCC success payments liability in the amount of $0.3 million and $1.6 million, respectively, for the three months ended March 31, 2023 and 2022, respectively.

Other income, net increased by $2.6 million during the three months ended March 31, 2023 compared to March 31, 2022.

The increase primarily relates to a $2.5 million increase in interest income earned from marketable securities.

Liquidity, Capital Resources, and Capital Requirements

2 unchanged sentences

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 September 30, 2022, we received approximately $82.3 million from licensing agreements, licensing and collaboration agreements, a service agreement, patent assignments, and government grants, including $33.0 million that was received from AbbVie under the AbbVie Agreement.

In order to assist in funding our future operations, including our planned clinical trials, on August 9, 2022, we filed a universal shelf registration statement on Form S-3 (the “Shelf Registration Statement”) with the SEC, which allows us to, from time to time, sell up to $400.0 million of common stock, preferred stock, debt securities, warrants, rights, or units comprised of any combination thereof (including the $100.0 million of common stock reserved for our at-the-market equity offering program described below).

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

Additionally, through March 31, 2023, we received approximately $85.9 million from licensing agreements, licensing and collaboration agreements, a service agreement, patent assignments, and government grants, including $33.8 million that was received from AbbVie under the AbbVie Agreement.

equity offering program described below).

The Shelf Registration Statement was declared effective by the SEC on August 16, 2022.

We believe that our Shelf Registration Statement will provide us with the flexibility to raise additional capital to finance our operations as needed.

From time to time, we may offer securities under our Shelf Registration Statement in response to market conditions or other circumstances if we believe such a plan of financing is in the best interests of our stockholders.

The terms of any offering under the Shelf Registration Statement will be established at the time of such offering and will be described in a prospectus supplement to the Shelf Registration Statement filed with the SEC prior to the completion of any such offering.

On August 9, 2022, we entered into an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC (“Jefferies”) pursuant to which we may, from time to time, in our sole discretion, issue and sell, through Jefferies, acting as sales agent, up to $100.0 million of our shares of common stock, by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended (the “Securities Act”).

Jefferies will use commercially reasonable efforts consistent with its normal sales and trading practices to sell shares from time to time, based upon our instructions (including any price or size limits or other customary parameters or conditions we may impose).

We will pay Jefferies a commission equal to 3.0% of the aggregate gross proceeds of any shares sold through Jefferies pursuant to the Sales Agreement.

We are not obligated to sell any shares under the Sales Agreement.

Unless otherwise terminated earlier, the Sales Agreement will continue until all shares available under the Sales Agreement have been sold.

As of September 30, 2022, there have been no sales under the Sales Agreement and, as of September 30, 2022, the full capacity remained available for issuance.

As of September 30, 2022, we had cash, cash equivalents, and marketable securities of $342.6 million.

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.

On August 9, 2022, we entered into an Open Market Sale Agreement SM (the “ ATM Sales Agreement”) with Jefferies LLC (“Jefferies”), pursuant to which, upon the terms and subject to the conditions and limitations set forth in the ATM Sales Agreement, we may, from time to time, in our sole discretion, issue and sell, through Jefferies, acting as sales agent, up to $100.0 million of our shares of common stock, by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended.

Jefferies uses commercially reasonable efforts consistent with its normal sales and trading practices to sell shares from time to time, based upon our instructions (including any price or size limits or other customary parameters or conditions we may impose).

We pay Jefferies a commission equal to 3.0% of the aggregate gross proceeds of any shares sold through Jefferies pursuant to the ATM Sales Agreement.

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).

As of March 31, 2023, we had cash, cash equivalents, and marketable securities of $291.0 million.

We will continue to be dependent upon equity financing, debt financing, collaboration 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 no current 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 8 to our condensed consolidated financial statements included elsewhere in this Form 10-Q, and payments under certain of our license agreements as described in Note 4 to our condensed consolidated financial statements included elsewhere in this Form 10-Q.

Based on our current operating plan, we expect that our existing cash and cash equivalents will enable us to fund our current operating plan for at least the next 12 months from the date of this Form 10-Q.

Based on our current operating plan, we expect that our existing cash, cash equivalents, and marketable securities will be sufficient to fund our current operating plan for at least the next 12 months from the date of this Form 10-Q.

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

18 unchanged sentences

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

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

• the impact of the COVID-19 pandemic or other public health crises or geopolitical events on our clinical development or operations;

• the impact of inflationary pressures on the cost of our operations;

3 unchanged sentences

If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or suspend one or more of our preclinical studies, clinical trials, research and development programs, and/or commercialization efforts.

We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations, and licensing arrangements.

We may seek to raise any necessary additional capital through a combination of equity offerings (including our at-the-market equity offering program), debt financings, collaborations and strategic alliances, licensing arrangements, or other sources.

If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in dilution to our stockholders.

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, 2022 and 2021

The following summarizes our cash flows for the periods indicated:

Nine Months Ended September 30,

If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties or other sources, 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 Three Months Ended March 31, 2023 and 2022

The following table summarizes our cash flows for the periods indicated:

Three Months Ended March 31,

2023 2022 Change

1 unchanged sentence

Cash used in operating activities $ (27,939) $ (21,673) $ (6,266)

Cash used in investing activities (94,419) (2,436) (91,983)

Cash provided by (used in) investing activities 20,703 (72,107) 92,810

Cash provided by financing activities 1,642 990 652

Net (decrease) increase in cash and cash equivalents $ (158,335) $ 419,403 $ (577,738)

Net decrease in cash and cash equivalents $ (5,594) $ (92,790) $ 87,196

Cash Used in Operating Activities

Net cash used in operating activities was $65.9 million and $11.1 million for the nine months ended September 30, 2022 and 2021, respectively.

Cash used in operating activities for the nine months ended September 30, 2022 was primarily due to our net loss of $72.4 million, adjusted by non-cash charges of $10.6 million and net changes in our operating assets and liabilities of $4.1 million.

Our non-cash charges were primarily comprised of $8.6 million of stock-based compensation, non-cash lease expense of $1.6 million, $1.1 million of depreciation and amortization expense, and acquired in-process research and development of $0.3 million, which were partially offset by the change in the fair value of the MSKCC success payments liability of $1.0 million.

The changes in our operating assets and liabilities were due to increases of $1.6 million in prepaid expenses and other current assets, $0.4 million in contract assets, $0.4 million in other assets, and decreases of $2.6 million in accounts payable, $3.3 million in deferred revenue, and $0.3 million in operating lease liabilities, partially offset by decreases of $0.8 million in accounts receivable and $2.8 million in other receivables, an increase of $0.9 million in accrued expenses and other current liabilities.

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, partially 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 Investing Activities

During the nine months ended September 30, 2022, and 2021 cash used in investing activities was $94.4 million and $2.4 million, respectively.

Cash used in investing activities for the nine months ended September 30, 2022, was primarily due to purchases of marketable securities of $252.6 million, property and equipment of $4.7 million, and in-process research and development of $0.3 million, partially offset by the proceeds from maturities of marketable securities of $163.1 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.

Net cash used in operating activities was $27.9 million and $21.7 million for the three months ended March 31, 2023 and 2022, respectively.

Cash used in operating activities for the three months ended March 31, 2023 was primarily due to our net loss of $28.0 million, adjusted by non-cash charges of $2.5 million and net changes in our operating assets and liabilities of $2.4 million.

Our non-cash charges were primarily comprised of $3.1 million of stock-based compensation, $0.6 million of depreciation and amortization expense, and non-cash lease expense of $0.5 million, which were partially offset by amortization of investment premiums of $1.5 million, and change in the fair value of the MSKCC success payments liability of $0.3 million.

The changes in our operating assets and liabilities were due to increases of $1.3 million in

accounts receivable, and decreases of $4.1 million in accrued expenses and other current liabilities, $1.1 million in deferred revenue, and $0.3 million in operating lease liabilities, partially offset by decreases in prepaid expenses and other current assets of $1.8 million, contract assets of $0.6 million, and other receivables of $0.5 million, and an increase of $1.5 million in accounts payable.

Cash used in operating activities in 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 (Used in) Investing Activities

During the three months ended March 31, 2023 cash provided by investing activities was $20.7 million, and during the three months ended March 31, 2022 cash used in investing activities was $72.1 million.

Cash provided by investing activities for the three months ended March 31, 2023, was primarily due to proceeds from the sales and maturities of marketable securities of $98.7 million, partially offset by purchases of marketable securities of $75.9 million and property and equipment of $2.0 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 Provided by Financing Activities

During the nine months ended September 30, 2022 and 2021, cash provided by financing activities was $2.0 million and $433.0 million, respectively.

Cash provided by financing activities for the nine months ended September 30, 2022 was due to the exercise of stock options and purchases of common stock under the 2021 Employee Stock Purchase Plan of $2.0 million.

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.

During the three months ended March 31, 2023 and 2022, cash provided by financing activities was $1.6 million and $1.0 million, respectively.

Cash provided by financing activities for the three months ended March 31, 2023 was due to net proceeds from our at-the-market equity offering program of $1.1 million and the exercise of stock options and purchases of common stock under the 2021 Employee Stock Purchase Plan of $0.5 million.

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.

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, 2022, and the related notes included in our Form 10-K.

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 Form 10-Q.

Since the date of such financial statements, there have been no material changes to our significant accounting policies.

There have been no material changes to our critical accounting estimates as compared to those disclosed in our Form 10-K.

5 unchanged sentences

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, 2022.

Emerging Growth Company Status

Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of March 31, 2023.

Emerging Growth Company and Smaller Reporting Company Status

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

1 unchanged sentence

We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (a) are no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

result, our condensed consolidated financial statements may not be comparable to those of companies that comply with the new or revised accounting pronouncements as of public company effective dates.

As a result, our condensed consolidated financial statements may not be comparable to those of companies that comply with the new or revised accounting pronouncements as of public company effective dates.

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 Note 2 to our condensed consolidated financial statements included elsewhere in this Form 10-Q, we have early adopted certain 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.

We are also a “smaller reporting company.” If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited consolidated financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes to the Company’s market risk during the nine months ended September 30, 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.

There have been no material changes to our market risk during the three months ended March 31, 2023.

For a discussion of our 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 2. Management’s Discussion and Analysis