What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 188 added, 110 removed, 450 unchanged (40% of the section changed)

28 unchanged sentences

LONG-TERM LIABILITIES

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

Deferred revenue, net of current portion ($ 4,973 and $ 0 from related party, respectively)

18,162 15,954

MSKCC success payments liability 1,117 1,651

4 unchanged sentences

STOCKHOLDERS’ EQUITY

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

Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized at June 30, 2023 and December 31, 2022;

no shares issued and outstanding as of June 30, 2023 and December 31, 2022

Common stock, par value $ 0.0001 per share, 300,000,000 shares authorized at June 30, 2023 and December 31, 2022, respectively;

66,100,039 and 61,029,184 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in-capital 525,366 499,598

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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 349,647 $ 373,765

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

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

CARIBOU BIOSCIENCES, INC.

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(in thousands, except share and per share amounts)

Three Months Ended March 31,

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

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Licensing and collaboration revenue (including $ 1,150 for three and six months ended June 2023 from related party, and none for all other periods)

$ 3,755 $ 4,192 $ 7,257 $ 6,856

Operating expenses:

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Weighted-average common shares outstanding, basic and diluted 61,417,934 60,757,689 61,302,863 60,652,532

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

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

CARIBOU BIOSCIENCES, INC.

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

Issuance of common stock on exercise of options 86,085 — 236 — — 236

Issuance of common stock pursuant to a private placement with Pfizer 4,690,431 — 17,290 — — 17,290

Stock-based compensation expense — — 3,585 — — 3,585

Net loss — — — — ( 29,519 ) ( 29,519 )

Other comprehensive loss — — — ( 406 ) — ( 406 )

BALANCE—June 30, 2023 66,100,039 $ 6 $ 525,366 $ ( 1,136 ) $ ( 254,778 ) $ 269,458

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

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

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

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

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

CARIBOU BIOSCIENCES, INC.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Change in fair value of MSKCC success payments liability ( 534 ) ( 2,648 )

Amortization of investment premiums ( 1,494 ) 327

Acquired in-process research and development — 300

(Accretion of discounts) and amortization of premiums on investments, net ( 3,598 ) 449

Non-cash lease expense 1,024 1,000

17 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock in a private placement with Pfizer 17,450 —

Proceeds from exercise of stock options and purchases of common stock under employee stock purchase plan 755 1,352

1 unchanged sentence

Net cash provided by financing activities 19,213 1,352

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

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 7,856 ( 128,274 )

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

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TOTAL CASH, CASH EQUIVALENTS, AND RESTRICTED CASH $ 66,240 $ 112,192

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for income taxes $ 170 $ —

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Purchases of property and equipment included in accounts payable and accrued expenses $ 2,562 $ 707

Acquired in-process research and development accrued $ — $ 300

Offering costs included in accrued expenses $ 160 $ —

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

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

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

CARIBOU BIOSCIENCES, INC.

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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 $ 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 have incurred net losses and negative cash flows from operations since our inception and we had an accumulated deficit of $ 254.8 million as of June 30, 2023.

During the six months ended June 30, 2023, we incurred a net loss of $ 57.6 million and used $ 43.1 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 $ 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.

Our management expects that existing cash, cash equivalents, and marketable securities of $ 292.5 million as of June 30, 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.

In July and August of 2023, we issued and sold a total of 22,115,384 shares of our common stock in an underwritten public offering for total net proceeds of approximately $ 134.6 million, which included the full exercise of the underwriters’ over-allotment option.

See Note 16 to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for additional information.

Summary of Significant Accounting Policies

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

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

Our management bases its estimates on historical experience and on various other assumptions that they believe to be reasonable under the circumstances, the results of which form the

basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ materially from those estimates.

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

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

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

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

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Three Months Ended

March 31, 2023 March 31, 2022

Six Months Ended As of

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Licensee A 17.1 % 13.8 % 19.5 % 16.1 % 28.4 % 23.8 %

4 unchanged sentences

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 credit losses or contract asset impairment was recorded as of March 31, 2023 or December 31, 2022.

No allowance for credit losses or contract asset impairment was recorded as of June 30, 2023, or December 31, 2022.

Recent Accounting Pronouncements

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

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments–Credit Losses:

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

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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 months ended March 31, 2023.

No such transfers occurred during the six months ended June 30, 2023, and 2022.

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 March 31, 2023

Fair Value Measurements as of June 30, 2023

Total Level 1 Level 2 Level 3

2 unchanged sentences

government agency bonds 57,010 — 57,010 —

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

43,886 — 43,886 —

Money market fund investments (included in cash and cash equivalents) 47,899 47,899 — —

Commercial paper 15,655 — 15,655 —

Corporate debt securities 12,169 — 12,169 —

14 unchanged sentences

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 March 31, 2023 and December 31, 2022 are presented in the following tables (in thousands):

As of March 31, 2023

The fair value and amortized cost of cash equivalents and available-for-sale marketable securities by major security type as of June 30, 2023, and December 31, 2022 are presented in the following tables (in thousands):

As of June 30, 2023

Treasury bills ($ 18,295 included in cash and cash equivalents)

1 unchanged sentence

government agency bonds 57,442 — ( 432 ) 57,010

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

43,950 4 ( 68 ) 43,886

Money market investments (included in cash equivalents) 47,899 — — 47,899

Commercial paper 15,674 — ( 19 ) 15,655

Corporate debt securities 12,187 4 ( 22 ) 12,169

23 unchanged sentences

Change in fair value ( 534 )

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 $ 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.

Balance at June 30, 2023 $ 1,117

We recorded a $ 0.3 million and $ 1.1 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 June 30, 2023, and 2022, respectively.

We recorded $ 0.5 million and $ 2.6 million change in 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 six months ended June 30, 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.

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

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

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

2 unchanged sentences

Expected volatility 79 %

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

Probability of achieving multiple of Initial Share Price (1)

3.0 % to 10.6 %

Expected term (years) 4.6 to 6.0

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.

(1) MSKCC is entitled to certain success payments if our common stock fair value increases by certain multiples of 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.

For further information regarding our agreement with MSKCC, see Note 4 to the consolidated financial statements included in our Form 10-K.

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.

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

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.

As of June 30, 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 $ 4.25 per share.

Significant Agreements

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.

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

(“Pfizer”) investment agreements.

See Note 15 to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for additional information on the Pfizer agreements.

For further information regarding our significant agreements, 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 $ 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 $ 10.0 million and long-term deferred revenue in the amount of $ 10.8 million related to this upfront cash payment in our condensed consolidated balance sheets as of June 30, 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 recognized $ 1.4 million and $ 2.9 million in revenue for the three months ended June 30, 2023, and 2022, respectively, relating to the AbbVie Agreement.

We recognized $ 3.0 million and $ 3.8 million in revenue for the six months ended June 30, 2023, and 2022, respectively, relating to the AbbVie Agreement.

As of June 30, 2023, we recorded $ 0.6 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 June 30, 2023, and December 31, 2022, we had $ 0.5 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.

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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.

For the three months ended June 30, 2023, and 2022, we recorded $ 0.4 million and $ 0.2 million, respectively, as research and development expense in our condensed consolidated statements of operations related to our license agreements.

For the six months ended June 30, 2023, and 2022, we recorded $ 0.8 million and $ 0.5 million, respectively, as research and development expense in our condensed consolidated statements of operations related to our license agreements.

For the three months ended June 30, 2023, and 2022, we recorded $ 1.0 million and $ 1.2 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 $ 0.7 million and $ 0.7 million, respectively, from CRISPR Therapeutics AG and Intellia Therapeutics, Inc.

For the six months ended June 30, 2023, and 2022, we recorded $ 1.8 million and $ 3.7 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 $ 1.1 million and $ 2.1 million, respectively, from CRISPR Therapeutics AG and Intellia Therapeutics, Inc.

As of June 30, 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 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,

The following table is a summary of revenue by geographic location for the three and six months ended June 30, 2023, and 2022 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

United States $ 3,746 $ 4,183 $ 7,131 $ 6,795

1 unchanged sentence

Total $ 3,755 $ 4,192 $ 7,257 $ 6,856

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.

During the three months ended June 30, 2023, we recognized $ 2.4 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 1.4 million of revenue related to performance obligations satisfied over time.

During the three months ended June 30, 2022, we recognized $ 1.3 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 2.9 million of revenue related to performance obligations satisfied over time.

During the six months ended June 30, 2023, we recognized $ 4.3 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 3.0 million of revenue related to performance obligations satisfied over time.

During the six months ended June 30, 2022, we recognized $ 3.1 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 3.8 million of revenue related to performance obligations satisfied over time.

Contract Balances

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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 three months ended March 31, 2023 (in thousands):

The following table presents changes in our contract assets and liabilities during the six months ended June 30, 2023 (in thousands):

Balance as of

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Deferred revenue, current and long-term $ 25,891 $ 10,326 $ ( 5,095 ) $ 31,122

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.

Unbilled accounts receivable decreased $ 0.8 million during the six months ended June 30, 2023, primarily due to the decrease in unbilled research costs under the AbbVie Agreement.

Deferred revenue increased during the six months ended June 30, 2023, primarily due to the $ 7.5 million allocated to the Pfizer information sharing committee during the six months ended June 30, 2023.

See Note 15 to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for additional information.

During the six months ended June 30, 2023, and 2022, we recognized $ 2.4 million and $ 2.5 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 March 31, 2023 was approximately $ 38.3 million.

The value of transaction prices allocated to remaining unsatisfied performance obligations as of June 30, 2023, was approximately $ 43.9 million.

We expect to recognize approximately $ 13.0 million of remaining performance obligations as revenue in the next 12 months and to recognize the remainder thereafter.

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Property and equipment, net $ 15,429 $ 10,678

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.

Depreciation and amortization expenses related to property and equipment were $ 0.6 million and $ 0.4 million, respectively, for the three months ended June 30, 2023, and 2022.

Depreciation and amortization expenses related to property and equipment were $ 1.2 million and $ 0.7 million, respectively, for the six months ended June 30, 2023, and 2022.

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

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Related Party Transactions

Private Company, Related Party

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

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

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 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.

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

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

As of each of 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.

Edge Animal Health

On May 15, 2020, we entered into an Exclusive License Agreement for Veterinary Therapeutics (as amended, the “Edge chRDNA License Agreement”) with Edge Animal Health (“Edge”), a private company, related party, under which we granted Edge an exclusive worldwide license to Cas9 and Cas12a chRDNA intellectual property rights and know-how in the defined field of veterinary therapeutics.

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

This represents a material voting interest in Edge and entitles us to hold one of the four board of directors seats and to jointly vote with another stockholder on a second board of directors seat.

As of June 30, 2023, we have appointed one of the four Edge directors.

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

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

Under the measurement alternative, our

investment in Edge’s convertible preferred stock was initially recorded at its estimated fair value, and 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 Edge.

As of each of June 30, 2023, and December 31, 2022, the carrying value of the Edge investment was $ 7.5 million.

There have been no changes to the carrying value of the investment during the three months ended June 30, 2023.

We did not recognize any revenue in connection with the Edge chRDNA License Agreement for each of the three and six months ended June 30, 2023, and 2022.

On May 16, 2023, we entered into an Exclusive License Agreement for Veterinary Therapeutics (CRISPR-Cas9) (the “Edge Cas9 License Agreement”), under which we granted Edge an exclusive worldwide license to certain CRISPR-Cas9 intellectual property rights in the field of veterinary therapeutics.

Previously, on May 15, 2020, we had entered into an Option for an Exclusive License under which Edge could exercise its option within three years upon payment of a total of $ 1.2 million, which Edge paid, and we entered into the Edge Cas9 License Agreement.

We recognized $ 1.2 million of revenues in connection with the Edge Cas9 License Agreement for each of the three and six months ended June 30, 2023.

We did no t recognize any revenues in connection with the Edge Cas9 License Agreement in 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.

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

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

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,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Operating lease cost (1)

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Total lease cost $ 1,990 $ 1,842 $ 3,937 $ 3,704

(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.

(1) Included $ 0.6 million and $ 0.5 million of variable lease cost related to operating expenses and taxes for the three months ended June 30, 2023, and 2022, respectively.

Included $ 1.2 million and $ 1.0 million of variable lease cost related to operating expenses and taxes for the six months ended June 30, 2023, and 2022, respectively.

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

Three Months Ended March 31,

Six Months Ended June 30,

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

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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):

The following table summarizes a maturity analysis of our operating lease liabilities showing the aggregate lease payments as of June 30, 2023 (in thousands):

Remainder of 2023 (1)

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

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

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

Guarantees and Indemnifications

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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 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.

As of June 30, 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.

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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.

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.

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

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, on July 11, 2023, our motion to stay was denied.

We believe these lawsuits are without merit.

Common stock reserved for future issuance consisted of the following:

March 31, 2023 As of

June 30, 2023 As of

December 31, 2022

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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).

During the six months ended June 30, 2023, we 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.

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:

As of June 30, 2023, we had 6,246,232 shares available for issuance under the 2021 Plan.

The following table summarizes stock option activity under our equity incentive plans during the six months ended June 30, 2023:

Stock Options Weighted-

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Options cancelled or forfeited ( 375,414 ) 6.59

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

Outstanding at June 30, 2023 9,253,848 $ 8.14 8.5 $ 1,796

Exercisable at June 30, 2023 3,438,788 $ 7.65 7.6 $ 1,572

Vested and expected to vest at June 30, 2023 9,253,848 $ 8.14 8.5 $ 1,796

*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 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.

During the three months ended June 30, 2023, and 2022, we granted 486,366 and 495,120 stock options to employees with a weighted average grant date fair value of $ 2.95 and $ 4.82 , respectively.

During the six months ended June 30, 2023, and 2022, we granted 3,022,706 and 834,150 stock options to employees with a weighted average grant date fair value of $ 3.94 and $ 5.58 , 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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Volatility 74.7 % to 74.8 %

71.9 % to 74.1 %

74.7 % to 75.0 %

71.7 % to 74.1 %

Expected term (in years) 6.0 6.0 5.0 to 6.0

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2.8 % to 3.4 %

3.5 % to 4.1 %

1.7 % to 3.4 %

Expected dividend yield 0.0 % 0.0 % 0.0 % 0.0 %

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.

As of June 30, 2023, there was $ 31.7 million of unrecognized stock-based compensation expense related to employee and non-employee stock options that is expected to be recognized over a weighted-average period of 2.8 years.

Restricted Stock Units

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:

During the six months ended June 30, 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 June 30, 2023 was as follows:

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

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Forfeited ( 8,111 ) 9.90

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.

Unvested, June 30, 2023 233,035 $ 10.04

As of June 30, 2023, the achievement of this milestone was not considered probable and, therefore, no stock-based compensation was recorded.

As of June 30, 2023, the total unrecognized stock-based compensation expense related to unvested RSUs was $ 1.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.5 years.

As of June 30, 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.

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.

We have issued 139,384 shares of common stock under the ESPP as of June 30, 2023.

We recorded $ 0.3 million in accrued liabilities related to contributions withheld as of June 30, 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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Research and development $ 1,551 $ 967 $ 2,860 $ 2,067

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Stock options $ 3,202 $ 2,781 $ 6,000 $ 5,711

ESPP 189 66 331 129

RSUs 194 71 385 102

Total $ 3,585 $ 2,918 $ 6,716 $ 5,942

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.

Stock-based compensation expense related to employees was $ 3.6 million and $ 2.9 million for the three months ended June 30, 2023, and 2022, respectively.

Stock-based compensation expense related to employees was $ 6.7 million and $ 5.9 million for the six months ended June 30, 2023, and 2022, respectively.

There was no stock-based compensation expense related to non-employees for the three months ended June 30, 2023, and was less than $ 0.1 million for the three

months ended June 30, 2022.

There was no stock-based compensation expense related to non-employees for the six months ended June 30, 2023, and $ 0.1 million for the six months ended June 30, 2022.

401(k) Savings Plan

In 2017, we established a defined-contribution savings plan under Section 401(k) of the Tax Code.

In 2017, we established a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Tax Code”).

Our 401(k) plan is available to all employees and allows participants to defer a portion of their annual compensation on a pretax basis subject to applicable laws.

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

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.

During the six months ended June 30, 2023, and 2022, we contributed $ 0.5 million and $ 0.4 million, respectively, to our 401(k) plan.

No income tax expense was recorded during each of the three- and six-month periods ended June 30, 2023, and 2022 due to our operating losses.

Net Loss Per Share

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net loss $ ( 29,519 ) $ ( 26,697 ) $ ( 57,563 ) $ ( 45,785 )

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9,636,233 6,704,297

Pfizer Investment

On June 29, 2023, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Pfizer, pursuant to which we, in a private placement transaction (the “Pfizer Investment”), agreed to issue and sell to Pfizer 4,690,431 shares of our common stock, par value $ 0.0001 per share, at a purchase price of $ 5.33 per share, for aggregate gross proceeds of approximately $ 25.0 million.

The issuance and sale of the shares to Pfizer closed on June 30, 2023.

We granted certain registration rights to Pfizer under the Securities Purchase Agreement with regard to the resale of the shares.

Unless otherwise agreed by Pfizer, we have agreed to use the proceeds from the Pfizer Investment solely in connection with (i) the development program for our allogeneic anti-BCMA CAR-T cell therapy known as CB-011 that is being evaluated in the CaMMouflage clinical trial and/or (ii) any other single-targeted anti-BCMA CAR-T cell therapy using an anti-BCMA single-chain variable fragment owned or controlled by us (collectively, cell therapies described in clauses (i) and (ii) are referred to as a “BCMA Product Candidate”), for 36 months beginning on June 29, 2023.

On June 29, 2023, in connection with the Pfizer Investment, we and Pfizer also entered into an Information Rights Agreement (the “Information Rights Agreement”), having a thirty-six ( 36 )-month term.

Under the Information Rights Agreement, we granted Pfizer a thirty ( 30 )-calendar day right of first negotiation (“ROFN”) if we commence or engage with any third party with respect to a potential grant of rights to develop and/or commercialize a BCMA Product Candidate, including, without limitation, a license agreement, a co-promotion/co-commercialization agreement, a profit share agreement, a joint venture agreement, or an asset sale agreement (a “Grant of Program Rights”).

If we and Pfizer do not reach an agreement with respect to a Grant of Program Rights within the 30-day period, then we may pursue negotiations and enter into an agreement with any third party.

In the event that we and such third party do not reach agreement on the Grant of Program Rights within a specified time period, Pfizer’s right of first negotiation would be reinstated.

Under the Information Rights Agreement, we also agreed to grant Pfizer the right to designate one representative to serve on our scientific advisory board.

Through an information sharing committee, we will provide calendar quarter updates to Pfizer regarding the development program for a BCMA Product Candidate.

Additionally, we agreed to provide Pfizer access to any preclinical or interim or final clinical data (including raw data) and results generated as part of the development program for a BCMA Product Candidate at the same time that we provide such data to a third party (other than to our service providers or the FDA or other regulatory authorities), subject to certain confidentiality exceptions.

On June 29, 2023, we and Pfizer also entered into a Voting Agreement, pursuant to which, for a period of 12 months, Pfizer agreed to cause our voting securities that Pfizer beneficially owns (within the meaning of Rules 13d-3 or 13d-5 under the Exchange Act) in excess of 4.99 % of our then issued and outstanding voting securities to be voted (i) with respect to any matter directly relating to remuneration of directors, directors’ insurance, or indemnification or release from liability of directors, in a manner proportionally consistent with the votes properly cast for and against by holders of voting securities not beneficially owned by Pfizer, and (ii) with respect to any other matter in which Pfizer shall have the right to vote such voting securities, in accordance with the recommendation of our board of directors or any applicable committee thereof.

We recorded the issuance of our common stock at its estimated fair value of $ 17.5 million , which reflects a discount for the lack of marketability of the shares.

The remaining $ 7.5 million of the aggregate purchase price was allocated to the Information Rights Agreement, which represented a contract with a customer.

We concluded that the information sharing committee represents the only performance obligation under the Information Rights Agreement.

The ROFN does not provide Pfizer with a material right and is therefore not a performance obligation.

We recognize revenue over time as the measure of progress which we believe best depicts the obligations to Pfizer.

The information sharing committee will meet quarterly over the 36-month term of the Information Rights Agreement, which results in recognition of the transaction price over the 36-month term.

No revenue from Pfizer was recognized during each of the three- or six-month periods ended June 30, 2023, or 2022.

As of June 30, 2023, there was approximately $ 7.5 million of related party deferred revenue ($ 2.5 million included in current liabilities and $ 5.0 million included in long-term liabilities) related to our performance obligations to Pfizer.

Subsequent Events

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

In July and August 2023, we issued and sold a total of 22,115,384 shares of our common stock in an underwritten public offering at a price to the public of $ 6.50 per share, which included the full exercise of the underwriters’ over-allotment option.

The total net proceeds from the offering were approximately $ 134.6 million, after deducting underwriting discounts and commissions and estimated offering expenses.

The shares were issued pursuant to the Shelf Registration Statement.

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