Caribou Biosciences, Inc. 10-Q

Item 1. Financial Statements. CARIBOU BIOSCIENCES, INC. AND ITS SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share and per share amounts) June 30, 2023 December 31, 2022 ASSETS CURRENT ASSETS Cash and cash equivalents $ 66,194 $ 58,338 Marketable securities, short-term 193,038 189,325 Accounts receivable 766 202 Contract assets 1,481 2,247 Other receivables 1,495 2,215 Prepaid expenses and other current assets 5,564 7,921 Total current assets 268,538 260,248 NON-CURRENT ASSETS Investments in equity securities 7,766 7,698 Marketable securities, long-term 33,289 69,373 Property and equipment, net 15,429 10,678 Operating lease, right of use assets 23,206 24,230 Other assets 1,419 1,538 TOTAL ASSETS $ 349,647 $ 373,765 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 4,433 $ 1,146 Accrued expenses and other current liabilities 15,901 16,079 Lease liabilities, current 1,079 966 Deferred revenue ($ 2,487 and $ 150 from related party, respectively) 12,962 9,937 Total current liabilities 34,375 28,128 LONG-TERM LIABILITIES 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 Lease liabilities, non-current 26,155 26,780 Deferred tax liabilities 380 381 Total liabilities 80,189 72,894 COMMITMENTS AND CONTINGENCIES (Note 9) STOCKHOLDERS’ EQUITY 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 6 6 Additional paid-in-capital 525,366 499,598 Accumulated other comprehensive loss ( 1,136 ) ( 1,518 ) Accumulated deficit ( 254,778 ) ( 197,215 ) Total stockholders’ equity 269,458 300,871 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 349,647 $ 373,765 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents CARIBOU BIOSCIENCES, INC. AND ITS SUBSIDIARIES Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (in thousands, except share and per share amounts) 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: Research and development 26,503 22,579 52,212 36,503 General and administrative 10,120 10,044 19,029 19,637 Total operating expenses 36,623 32,623 71,241 56,140 Loss from operations ( 32,868 ) ( 28,431 ) ( 63,984 ) ( 49,284 ) Other income (expense): Change in fair value of equity securities 22 ( 16 ) 7 ( 104 ) Change in fair value of the MSKCC success payments liability 279 1,052 534 2,648 Other income, net 3,048 698 5,880 955 Total other income 3,349 1,734 6,421 3,499 Net loss ( 29,519 ) ( 26,697 ) ( 57,563 ) ( 45,785 ) Other comprehensive income (loss): Net unrealized gain (loss) on available-for-sale marketable securities, net of tax ( 406 ) ( 492 ) 382 ( 1,446 ) Net comprehensive loss $ ( 29,925 ) $ ( 27,189 ) $ ( 57,181 ) $ ( 47,231 ) Net loss per share, basic and diluted $ ( 0.48 ) $ ( 0.44 ) $ ( 0.94 ) $ ( 0.75 ) 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 unaudited condensed consolidated financial statements. 2 Table of Contents CARIBOU BIOSCIENCES, INC. AND ITS SUBSIDIARIES Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) (in thousands, except share amounts) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity Shares Amount BALANCE—December 31, 2022 61,029,184 $ 6 $ 499,598 $ ( 1,518 ) $ ( 197,215 ) $ 300,871 Issuance of common stock under employee stock plans 70,271 — 404 — — 404 Issuance of common stock on exercise of options 55,433 — 115 — — 115 Issuance of common stock in connection with at-the-market offering, net of offering expenses 168,635 — 1,007 — — 1,007 Stock-based compensation expense — — 3,131 — — 3,131 Net loss — — — — ( 28,044 ) ( 28,044 ) Other comprehensive income — — — 788 — 788 BALANCE—March 31, 2023 61,323,523 $ 6 $ 504,255 $ ( 730 ) $ ( 225,259 ) $ 278,272 Issuance of common stock on exercise of options 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 Issuance of common stock under employee stock plans 36,596 — 361 — — 361 Issuance of common stock on exercise of options 389,855 — 629 — — 629 Stock-based compensation expense — — 3,024 — — 3,024 Net loss — — — — ( 19,088 ) ( 19,088 ) Other comprehensive loss — — — ( 954 ) — ( 954 ) BALANCE—March 31, 2022 60,689,609 $ 6 $ 489,762 $ ( 1,089 ) $ ( 116,882 ) $ 371,797 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. 3 Table of Contents CARIBOU BIOSCIENCES, INC. AND ITS SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Six Months Ended June 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 57,563 ) $ ( 45,785 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,206 666 Gain on disposal of fixed assets ( 34 ) — Non-cash consideration for licensing and collaboration revenue ( 61 ) ( 205 ) Change in fair value of equity securities ( 7 ) 104 Stock-based compensation expense 6,716 5,942 Change in fair value of MSKCC success payments liability ( 534 ) ( 2,648 ) 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 Changes in operating assets and liabilities: Accounts receivable ( 564 ) 629 Contract assets 765 ( 606 ) Other receivables 720 2,388 Prepaid expenses and other current assets 2,356 ( 347 ) Other assets 119 ( 326 ) Accounts payable 2,042 ( 3,557 ) Accrued expenses and other current liabilities ( 431 ) 1,117 Deferred revenue, current and long-term 5,231 ( 2,470 ) Operating lease liabilities ( 511 ) ( 182 ) Other liabilities — ( 15 ) Net cash used in operating activities ( 43,124 ) ( 43,546 ) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales and maturities of marketable securities 171,025 99,009 Purchases of marketable securities ( 134,674 ) ( 181,746 ) Purchases of property and equipment ( 4,584 ) ( 3,343 ) Net cash provided by (used in) investing activities 31,767 ( 86,080 ) 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 Proceeds from issuance of common stock related to at-the-market offering, net of offering expenses 1,008 — Net cash provided by financing activities 19,213 1,352 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 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — END OF PERIOD $ 66,240 $ 112,192 RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH Cash and cash equivalents $ 66,194 $ 112,146 Restricted cash 46 46 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 unaudited condensed consolidated financial statements. 4 Table of Contents CARIBOU BIOSCIENCES, INC. AND ITS SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Description of the Business, Organization, and Liquidity Business and Organization Caribou Biosciences, Inc. (the “Company” or “we”) is a clinical-stage C lustered R egularly I nterspaced S hort P alindromic R epeats (“CRISPR”) genome-editing biopharmaceutical company dedicated to developing transformative therapies for patients with devastating diseases. Our genome-editing platform, including our novel chRDNA ( C RISPR h ybrid R NA- DNA , or “chRDNA,” pronounced “chardonnay”) technologies, enables superior editing precision to develop cell therapies that are armored to improve antitumor activity. We are advancing a pipeline of allogeneic, or off-the-shelf, cell therapies from our chimeric antigen receptor (“CAR”) T (“CAR-T”) cell and CAR-natural killer (“CAR-NK”) cell platforms as readily available therapeutic treatments for patients. We incorporated in October 2011 as a Delaware corporation and are headquartered in Berkeley, California. We have four wholly owned subsidiaries: Antler Holdco, LLC, incorporated in Delaware in April 2019; Microbe Holdco, LLC, incorporated in Delaware in June 2020; Arboreal Holdco, LLC, incorporated in Delaware in November 2020; and Biloba Holdco, LLC, incorporated in Delaware in April 2021. Our wholly owned subsidiaries hold interests in our equity investments and do not have operating activities. Liquidity 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 $ 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. 2. Summary of Significant Accounting Policies There have been no changes to the significant accounting policies disclosed in Note 2 to the annual consolidated financial statements for the year ended December 31, 2022, included in our Annual Report on Form 10-K (“Form 10-K”). Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of Caribou Biosciences, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities; the disclosure of contingent assets and liabilities at the date of our condensed consolidated financial statements; and the reported amounts of revenue, income, and expenses during the applicable reporting period. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, common stock valuation, stock-based compensation expense, accrued expenses related to research and development activities, valuation of the 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 5 Table of Contents 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. Segments We operate and manage our business as one reportable operating segment, which is the business of developing a pipeline of allogeneic CAR-T and CAR-NK cell therapies. Our president and chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating resources and evaluating financial performance. All long-lived assets are maintained in the United States. Concentrations of Credit Risk and Other Uncertainties Financial instruments that potentially subject us to concentration of credit risk consist of cash and cash equivalents, accounts receivable, contract assets, other receivables, and investments in marketable securities and equity securities. 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. Licensees that represent 10% or more of our revenue and accounts receivable and contract assets were as follows: Revenue Revenue Accounts Receivable and Contract Assets Three Months Ended Six Months Ended As of June 30, 2023 As of December 31, 2022 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 % Licensee B 36.6 % 68.3 % 41.1 % 55.4 % 45.6 % 36.6 % Licensee C 30.6 % * 15.8 % * * * Total 84.3 % 82.1 % 76.4 % 71.5 % 74.0 % 60.4 % *Less than 10% We monitor economic conditions to identify facts or circumstances that may indicate if any of our accounts receivable are not collectible or if the contract assets should be impaired. No allowance for credit losses or contract asset impairment was recorded as of June 30, 2023, or December 31, 2022. Recent Accounting Pronouncements 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). This ASU provides guidance on the measurement of credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the current incurred loss impairment approach with a methodology to reflect expected credit losses and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. This ASU is to be applied on a modified retrospective approach and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, and interim reporting periods within fiscal years beginning after December 15, 2023. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, and interim periods therein. We adopted ASU 2016-13 on January 1, 2023. The impact on our financial statements and related disclosures was not material. 3. Fair Value Measurements and Fair Value of Financial Instruments The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1 —Quoted prices in active markets for identical assets or liabilities. Level 2 —Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. 6 Table of Contents Level 3 —Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities measured at fair value are classified in their entireties based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires our management to make judgments and consider factors specific to the asset or liability. Our financial instruments consist of Level 1, Level 2, and Level 3 financial instruments. We generally classify our marketable securities as Level 2. Instruments are classified as Level 2 when observable market prices for identical securities that are traded in less active markets are used. When observable market prices for identical securities are not available, such instruments are priced using benchmark curves, benchmarking of like securities, sector groupings, matrix pricing, and valuation models. These valuation models are proprietary to the pricing providers or brokers and incorporate a number of inputs including, in approximate order of priority: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. For certain security types, additional inputs may be used, or some of the standard inputs may not be applicable. Evaluators may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs listed are available for use in the evaluation process for each security evaluation on any given day. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. 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 six months ended June 30, 2023, and 2022. Level 1 financial instruments are comprised of money market fund investments and U.S. Treasury bills. Level 2 financial instruments are comprised of commercial paper, corporate debt securities, and U.S. government agency bonds. Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. Level 3 financial instruments consist of the MSKCC success payments liability. The following table sets forth our financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): Fair Value Measurements as of June 30, 2023 Total Level 1 Level 2 Level 3 Assets: U.S. Treasury bills ($ 18,295 included in cash and cash equivalents) $ 159,788 $ 159,788 $ — $ — U.S. government agency bonds 57,010 — 57,010 — 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 — Total fair value of assets $ 292,521 $ 207,687 $ 84,834 $ — Liabilities: MSKCC success payments liability $ 1,117 $ — $ — $ 1,117 Total fair value of liabilities $ 1,117 $ — $ — $ 1,117 7 Table of Contents Fair Value Measurements as of December 31, 2022 Total Level 1 Level 2 Level 3 Assets: Commercial paper ($ 26,669 included in cash and cash equivalents) $ 96,899 $ — $ 96,899 $ — U.S. Treasury bills 91,966 91,966 — — U.S. government agency bonds ($ 3,976 included in cash and cash equivalents) 63,659 — 63,659 — Corporate debt securities 36,819 — 36,819 — Money market fund investments (included in cash and cash equivalents) 27,693 27,693 — — Total fair value of assets $ 317,036 $ 119,659 $ 197,377 $ — Liabilities: MSKCC success payments liability $ 1,651 $ — $ — $ 1,651 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 June 30, 2023, and December 31, 2022 are presented in the following tables (in thousands): As of June 30, 2023 Amortized Cost Basis Unrealized Gains Unrealized Losses Estimated Fair Value U.S. Treasury bills ($ 18,295 included in cash and cash equivalents) $ 160,455 $ 16 $ ( 683 ) $ 159,788 U.S. government agency bonds 57,442 — ( 432 ) 57,010 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 Total cash equivalents and marketable securities $ 293,657 $ 20 $ ( 1,156 ) $ 292,521 Classified as: Cash and cash equivalents $ 66,194 Marketable securities, short-term 193,038 Marketable securities, long-term 33,289 Total cash equivalents and marketable securities $ 292,521 8 Table of Contents As of December 31, 2022 Amortized Cost Basis Unrealized Gains Unrealized Losses Estimated Fair Value Commercial paper ($ 26,669 included in cash equivalents) $ 97,024 $ 6 $ ( 131 ) $ 96,899 U.S. Treasury bills 92,910 1 ( 945 ) 91,966 U.S. government agency bonds ($ 3,976 included in cash and cash equivalents) 63,926 25 ( 292 ) 63,659 Corporate debt securities 37,002 — ( 183 ) 36,819 Money market investments (included in cash equivalents) 27,693 — — 27,693 Total cash equivalents and marketable securities $ 318,555 $ 32 $ ( 1,551 ) $ 317,036 Classified as: Cash and cash equivalents $ 58,338 Marketable securities, short-term 189,325 Marketable securities, long-term 69,373 Total cash equivalents and marketable securities $ 317,036 The following table sets forth a summary of the changes in the fair value of our Level 3 financial liability (in thousands): MSKCC Success Payments Liability Balance at December 31, 2022 $ 1,651 Change in fair value ( 534 ) Balance at June 30, 2023 $ 1,117 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. 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 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: As of December 31, 2022 Fair value of common stock $ 6.28 Risk-free interest rate 3.88 % Expected volatility 79 % Probability of achieving multiple of Initial Share Price (1) 3.0 % to 10.6 % Expected term (years) 4.6 to 6.0 9 Table of Contents (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 computation of expected volatility was estimated using a combination of available information about the historical volatility of stocks of similar publicly traded companies for a period matching the expected term assumption and the historical and implied volatility of our stock. The risk-free interest rate, expected volatility, and expected term assumptions depend on the estimated timing of our phase 1 clinical trial for our CB-012 product candidate utilizing the know-how, biological materials, and intellectual property licensed under the Exclusive License Agreement, dated November 13, 2020, with MSKCC (the “MSKCC Agreement”) and the estimated timing of marketing approval for this product candidate from the U.S. Food and Drug Administration (“FDA”). In addition, we incorporated the estimated number and timing of valuation measurement dates in the calculation of the MSKCC success payments liability. 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. 4. Significant Agreements 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 $ 10.0 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 $ 1.4 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. These agreements may include non-refundable, upfront payments; annual license maintenance fees; sublicensing fees; obligations to reimburse for patent prosecution and maintenance fees; success payments; regulatory clinical and commercial milestones; and royalty payments. Our obligation to make such payments is contingent upon milestones being achieved, licensed products being commercialized, and the agreements remaining in effect. For the three months ended 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 10 Table of Contents 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. 5. Revenue 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 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 Rest of world 9 9 126 61 Total $ 3,755 $ 4,192 $ 7,257 $ 6,856 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 Accounts receivable relate to our right to consideration for performance obligations completed (or partially completed) for which we have an unconditional right to consideration. Our accounts receivable balances represent amounts that we billed to our licensees with invoices outstanding as of the end of a reporting period. Contract assets are rights to consideration in exchange for a license that we have granted to a licensee when the right is conditional on something other than the passage of time. Our contract asset balances represent research costs related to the AbbVie Agreement, as well as royalties and milestone payments from our other license agreements that are unbilled as of the end of a reporting period. Contract liabilities consist of deferred revenue and relate to amounts invoiced to, or advance consideration received from, licensees that precede our satisfaction of the associated performance obligations. Our deferred revenue primarily results from the upfront payment received relating to the performance obligation that is satisfied over time under the AbbVie Agreement. The remaining deferred revenue relates to upfront payments received under license agreements that also include non-refundable annual license fees, which are accounted for as material rights for license renewals and are recognized at the point in time annual license fees are paid by the licensees and the renewal periods begin. 11 Table of Contents The following table presents changes in our contract assets and liabilities during the six months ended June 30, 2023 (in thousands): Balance as of December 31, 2022 Additions Deductions Balance as of June 30, 2023 Accounts receivable $ 202 $ 5,704 $ ( 5,140 ) $ 766 Contract assets: Unbilled accounts receivable $ 2,247 $ 3,023 $ ( 3,789 ) $ 1,481 Contract liabilities: Deferred revenue, current and long-term $ 25,891 $ 10,326 $ ( 5,095 ) $ 31,122 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 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. Capitalized Contract Acquisition Costs and Fulfillment Costs We did not incur any expenses to obtain license and collaboration agreements, and costs to fulfill those contracts do not generate or enhance our resources. As such, no costs to obtain or fulfill a contract have been capitalized in any period. 6. Balance Sheet Items Other receivables consisted of the following (in thousands): June 30, 2023 December 31, 2022 Patent cost reimbursements $ 1,194 $ 1,638 Accrued interest on marketable securities 275 570 Other 26 7 Total $ 1,495 $ 2,215 12 Table of Contents Prepaid expenses and other current assets consisted of the following (in thousands): June 30, 2023 December 31, 2022 Prepaid contract manufacturing and clinical costs $ 3,228 $ 4,803 Prepaid insurance 248 1,568 Prepaid income taxes 603 431 Other 1,485 1,119 Total $ 5,564 $ 7,921 Property and equipment, net, consisted of the following (in thousands): June 30, 2023 December 31, 2022 Lab equipment $ 14,177 $ 12,588 Leasehold improvements 1,993 1,876 Computer equipment 809 709 Furniture and equipment 161 161 Construction in progress 5,115 993 Total property and equipment, gross 22,255 16,327 Less: accumulated depreciation and amortization ( 6,826 ) ( 5,649 ) Property and equipment, net $ 15,429 $ 10,678 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): June 30, 2023 December 31, 2022 Accrued employee compensation and related expenses $ 5,031 $ 5,752 Accrued research and development expenses 7,451 6,731 Accrued patent expenses 703 1,331 Accrued expenses related to sublicensing revenues 795 596 Other 1,921 1,669 Total $ 15,901 $ 16,079 7. Related Party Transactions 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 13 Table of Contents 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. 8. Leases 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 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Operating lease cost (1) $ 1,928 $ 1,822 $ 3,812 $ 3,621 Short-term lease cost 62 20 125 83 Total lease cost $ 1,990 $ 1,842 $ 3,937 $ 3,704 (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): Six Months Ended June 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 2,058 $ 1,743 The weighted-average remaining lease term and the weighted-average discount rate for our laboratory and office leases were as follows: June 30, 2023 December 31, 2022 Weighted-average remaining lease term (years) 7.8 8.3 Weighted-average discount rate 11.3 % 11.3 % 14 Table of Contents 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) $ 1,364 2024 (2) 3,794 2025 4,475 2026 5,720 2027 5,922 Thereafter 22,116 Total undiscounted lease payments 43,391 Less: imputed interest ( 16,157 ) Total discounted lease payments 27,234 Less: current portion of lease liability ( 1,079 ) Noncurrent portion of lease liability $ 26,155 (1) Reflects an offset of $ 0.8 million related to incentives expected to be received in 2023. (2) Reflects an offset of $ 0.7 million related to incentives expected to be received in 2024. 9. Commitments and Contingencies Research and Development Agreements 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 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 In the normal course of business, we enter into agreements that contain a variety of representations and warranties and provide for certain indemnifications by us. Our exposure under these agreements is unknown because claims may be made against us in the future. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. 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. Litigation From time to time, we may become involved in litigation arising in the ordinary course of business. We record a liability for such litigation when it is probable that future losses will be incurred and if such losses can be reasonably estimated. Significant judgment by us is required to determine both probability and the estimated amount. On February 10, 2023, a putative class action lawsuit was filed in the U.S. District Court for the Northern District of California against our company and certain of our officers and current and former members of our board of directors, Greenhalgh v. Caribou Biosciences, Inc., et al., Case Number 3:23-cv-00609-VC (the “Greenhalgh Case”). The Greenhalgh Case was voluntarily dismissed on March 16, 2023. On April 11, 2023, a putative class action lawsuit was filed in the U.S. District Court for the Northern District of California against our company and certain of our officers and current and former members of our board of directors, Bergman v. Caribou Biosciences, Inc., et al., Case Number 4:23-cv-01742-YGR (the “Bergman Case”). The Bergman complaint challenges disclosures regarding our company’s business, operations, and prospects, specifically with respect to the alleged durability of CB-010’s therapeutic effect and the product candidate’s clinical and commercial prospects, in alleged violation of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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 15 Table of Contents 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 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. 10. Common Stock Common stock reserved for future issuance consisted of the following: As of June 30, 2023 As of December 31, 2022 Stock options, issued and outstanding 9,253,848 6,733,074 Stock options, authorized for future issuance 6,246,232 5,833,979 Stock available under our employee stock purchase plan 1,584,538 1,044,518 Unvested restricted stock units and performance-based restricted stock units 233,035 256,146 17,317,653 13,867,717 Shelf Registration Statement On August 9, 2022, we filed a shelf registration statement on Form S-3 (“Shelf Registration Statement”) with the U.S. Securities and Exchange Commission (“SEC”). The Shelf Registration Statement allows us to sell from time to time up to $ 400.0 million of common stock, preferred stock, debt securities, warrants, rights, or units comprised of any combination of these securities, for our own account in one or more offerings (including the $ 100.0 million of common stock reserved for our at-the-market equity offering program described below). The SEC declared the Shelf Registration Statement effective on August 16, 2022. 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. At-the-market Equity Offering Program 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. 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). 11. Stock-Based Compensation Equity Incentive Plans In July 2021, our board of directors adopted and our stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”) that became effective on July 22, 2021. As of June 30, 2023, we had 6,246,232 shares available for issuance under the 2021 Plan. 16 Table of Contents The following table summarizes stock option activity under our equity incentive plans during the six months ended June 30, 2023: Stock Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands)* Outstanding at December 31, 2022 6,733,074 $ 9.01 8.2 $ 8,203 Options granted 3,022,706 5.79 Options exercised ( 126,518 ) 2.77 Options cancelled or forfeited ( 375,414 ) 6.59 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 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 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 5.5 to 6.0 Risk-free interest rate 3.6 % to 3.9 % 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 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. 17 Table of Contents Restricted Stock Units 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 Unvested, January 1, 2023 256,146 $ 10.07 Vested ( 15,000 ) 10.64 Forfeited ( 8,111 ) 9.90 Unvested, June 30, 2023 233,035 $ 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 an executive officer’s continued employment during the performance period. 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 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Research and development $ 1,551 $ 967 $ 2,860 $ 2,067 General and administrative 2,034 1,951 3,856 3,875 Total $ 3,585 $ 2,918 $ 6,716 $ 5,942 The above stock-based compensation expense related to the following equity-based awards (in thousands): 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 $ 3.6 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 18 Table of Contents 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. 12. 401(k) Savings Plan 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 six months ended June 30, 2023, and 2022, we contributed $ 0.5 million and $ 0.4 million, respectively, to our 401(k) plan. 13. Income Taxes 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. 14. Net Loss Per Share The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Numerator: Net loss $ ( 29,519 ) $ ( 26,697 ) $ ( 57,563 ) $ ( 45,785 ) Denominator: Weighted-average common shares outstanding used to compute net loss per share, basic and diluted 61,417,934 60,757,689 61,302,863 60,652,532 Net loss per share, basic and diluted $ ( 0.48 ) $ ( 0.44 ) $ ( 0.94 ) $ ( 0.75 ) Because we were in a net loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods, as the inclusion of all common stock equivalents outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows: As of June 30, 2023 As of June 30, 2022 Stock options outstanding 9,253,848 6,610,958 RSUs and PSUs issued and outstanding 233,035 60,000 Shares committed under ESPP 149,350 33,339 9,636,233 6,704,297 15. 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. 19 Table of Contents 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. 16. Subsequent Events 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. 20 Table of Contents