What changed in this filing

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Item 1. Financial Statements

2023-11-07 compared with 2023-08-08 · 177 added, 151 removed, 487 unchanged (40% of the section changed)

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(in thousands, except share and per share amounts)

September 30,

2023 December 31,

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Deferred revenue, net of current portion ($ 4,352 and $ 0 from related party, respectively)

18,162 15,954

MSKCC success payments liability 1,256 1,651

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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

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

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

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

88,430,609 and 61,029,184 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in-capital 664,021 499,598

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(in thousands, except share and per share amounts)

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

Three Months Ended September 30, Nine Months Ended September 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)

Licensing and collaboration revenue (including $ 622 and $ 1,772 for three and nine months ended September 2023, respectively, from related parties, and none for all other periods)

$ 23,662 $ 3,303 $ 30,919 $ 10,159

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Other income, net 4,774 1,466 10,654 2,421

Total other income 3,349 1,734 6,421 3,499

Total other income (expense)

4,631 ( 110 ) 11,052 3,389

Net loss ( 10,002 ) ( 26,647 ) ( 67,565 ) ( 72,432 )

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

Issuance of common stock under employee stock plans

68,183 — 382 — — 382

Issuance of common stock on exercise of options 83,407 — 372 — — 372

Issuance of common stock on RSU release

63,596 — — — — —

Issuance of common stock in connection with follow-on public offering, net of offering expenses

22,115,384 2 134,423 — — 134,425

Stock-based compensation expense — — 3,478 — — 3,478

Net loss — — — — ( 10,002 ) ( 10,002 )

Other comprehensive income — — — 155 — 155

BALANCE—September 30, 2023 88,430,609 $ 8 $ 664,021 $ ( 981 ) $ ( 264,780 ) $ 398,268

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

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

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

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

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

Other comprehensive loss

— — — ( 454 ) — ( 454 )

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

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

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(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Purchases of property and equipment ( 9,336 ) ( 4,697 )

Net cash provided by (used in) investing activities 31,767 ( 86,080 )

Payments to acquire in-process research and development — ( 300 )

Net cash used in investing activities ( 36,709 ) ( 94,419 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from follow-on public offering, net of offering expenses

Proceeds from issuance of common stock in a private placement with Pfizer 17,290 —

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Purchases of property and equipment included in accounts payable and accrued expenses $ 556 $ 757

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

Offering costs included in accrued expenses $ 113 $ —

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(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.

Our genome-editing platform, including our novel chRDNA ( C RISPR h ybrid R NA- DNA , or “chRDNA,” pronounced “chardonnay”) technology, 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.

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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 $ 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 have incurred net losses and negative cash flows from operations since our inception and we had an accumulated deficit of $ 264.8 million as of September 30, 2023.

During the nine months ended September 30, 2023, we incurred a net loss of $ 67.6 million and used $ 71.9 million of cash in operating activities.

We expect to continue to incur substantial losses, and our ability to achieve and sustain profitability will depend on the successful development, regulatory approval, and commercialization of our product candidates and on our generation 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.

Our management expects that existing cash, cash equivalents, and marketable securities of $ 396.7 million as of September 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 follow-on public offering for total net proceeds of approximately $ 134.4 million, which included the full exercise of the underwriters’ right to purchase 2,884,615 additional shares of our common stock.

Summary of Significant Accounting Policies

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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 exceed federally insured limits.

Substantially all of our cash and cash equivalents are deposited in accounts at two financial institutions, and our 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

Six Months Ended As of

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

Nine Months Ended As of

September 30,

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Licensee A * 17.2 % * 16.4 % 23.6 % 23.8 %

Licensee B 90.8 % 51.7 % 79.1 % 54.2 % 62.6 % 36.6 %

Licensee C 30.6 % * 15.8 % * * *

Total 90.8 % 68.9 % 79.1 % 70.6 % 86.2 % 60.4 %

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

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

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

Recent Accounting Pronouncements

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

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

The impact of ASU 2016-13 on our financial statements and related disclosures was not material.

Fair Value Measurements and Fair Value of Financial Instruments

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

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

No such transfers occurred during the nine months ended September 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 June 30, 2023

Fair Value Measurements as of September 30, 2023

Total Level 1 Level 2 Level 3

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

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

As of June 30, 2023

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

As of September 30, 2023

Treasury bills ($ 84,502 included in cash and cash equivalents)

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Change in fair value ( 395 )

Balance at June 30, 2023 $ 1,117

Balance at September 30, 2023 $ 1,256

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.

We recorded a $ 0.1 million and $ 1.6 million change in the fair value of the MSKCC success payments liability as a loss in other income (expense) in our condensed consolidated statements of operations for the three months ended September 30, 2023, and 2022, respectively.

We recorded $ 0.4 million and $ 1.0 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 for the nine months ended September 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.

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

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

The risk-free interest rate, expected volatility, and expected term assumptions depend on the estimated initiation of our AMpLify 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.

As of September 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 $ 4.78 per share.

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.

Since December 31, 2022, there have been no material changes to the key terms of our significant agreements other than the termination notice we received from AbbVie Manufacturing Management Unlimited Company (“AbbVie”) for the Collaboration and License Agreement (as amended, the “AbbVie Agreement”) under which we were developing two allogeneic CAR-T cell therapies for AbbVie.

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

See Note 7 to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for additional information on our agreements with Pfizer, Inc.

(“Pfizer”), which we entered into on June 29, 2023.

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

On September 26, 2023, we received notice from AbbVie that AbbVie elected to terminate the AbbVie Agreement.

By mutual agreement with AbbVie, termination of the AbbVie Agreement became effective on October 25, 2023.

Due to receipt of the termination notice, we stopped performing preclinical research and development services under the AbbVie Agreement and determined that our performance obligation to AbbVie was substantially completed as of September 30, 2023.

Consequently, the remaining $ 20.8 million of deferred revenue from the upfront cash payment was recognized during the three months ended September 30, 2023.

During the three months ended September 30, 2023, we recognized $ 21.5 million in licensing and collaboration revenue associated with the AbbVie Agreement, of which $ 20.8 million had been included in deferred revenue as of the beginning of the period.

During the nine months ended September 30, 2023, we recognized $ 24.5 million in licensing and collaboration revenue associated with the AbbVie Agreement.

For the three and nine months ended September 30, 2022, we recognized $ 1.7 million and $ 5.5 million in revenue associated with the AbbVie Agreement, respectively.

As of September 30, 2023, we had recorded $ 1.0 million in accounts receivable and, as of December 31, 2022, we had recorded no amounts in accounts receivable in our condensed consolidated balance sheets relating to the AbbVie Agreement.

As of September 30, 2023, and December 31, 2022, we had $ 0.7 million and $ 0.9 million, respectively, in contract assets in our condensed consolidated balance sheet and consolidated balance sheet, respectively, relating to the AbbVie Agreement.

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;

These agreements may include nonrefundable, upfront payments;

annual license maintenance fees;

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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 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.

For the three months ended September 30, 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 nine months ended September 30, 2023, and 2022, we recorded $ 1.2 million and $ 0.8 million, respectively, as research and development expense in our condensed consolidated statements of operations related to our license agreements.

For the three months ended September 30, 2023, and 2022, we recorded $ 0.4 million and $ 1.4 million, respectively, as general and administrative expense for patent prosecution and maintenance costs in our condensed consolidated statements of operations, which includes reimbursements of patent prosecution and maintenance costs of $ 0.1 million and $ 0.9 million, respectively.

For the nine months ended September 30, 2023, and 2022, we recorded $ 2.2 million and $ 4.7 million, respectively, as general and administrative expense for patent prosecution and maintenance costs in our

condensed consolidated statements of operations, which includes reimbursements of patent prosecution and maintenance costs of $ 1.3 million and $ 3.1 million, respectively.

As of September 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 and six months ended June 30, 2023, and 2022 (in thousands):

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

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

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

2023 2022 2023 2022

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Total $ 23,662 $ 3,303 $ 30,919 $ 10,159

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.

During the three months ended September 30, 2023, we recognized $ 1.6 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 22.1 million of revenue related to performance obligations satisfied over time that included $ 21.5 million in licensing and collaboration revenue associated with the AbbVie Agreement, of which $ 20.8 million had been included in deferred revenue as of the beginning of the period.

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

During the nine months ended September 30, 2023, we recognized $ 5.8 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 25.1 million of revenue related to performance obligations satisfied over time which included $ 24.5 million in licensing and collaboration revenue associated with the AbbVie Agreement.

During the nine months ended September 30, 2022, we recognized $ 4.7 million of revenue related to performance obligations satisfied at a point in time, and we recognized $ 5.5 million of revenue related to performance obligations satisfied over time.

Contract Balances

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

Our contract asset balances represent 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.

Our contract asset balances represent reimbursable 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.

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

Our deferred revenue primarily results from the upfront payment received relating to our performance obligation to Pfizer.

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

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

Balance as of

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Balance as of

September 30,

Accounts receivable $ 202 $ 7,631 $ ( 6,700 ) $ 1,133

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Deferred revenue, current and long-term $ 25,891 $ 11,537 $ ( 27,874 ) $ 9,554

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.

Unbilled accounts receivable decreased $ 0.6 million during the nine months ended September 30, 2023, primarily due to the decrease in unbilled research costs under the AbbVie Agreement.

Deferred revenue decreased during the nine months ended September 30, 2023, primarily due to the recognition of deferred revenues related to the completion of our performance obligation to AbbVie as a result of AbbVie’s termination of the AbbVie Agreement, offset by the $ 7.5 million allocated to the Pfizer information sharing committee, during the nine months ended September 30, 2023.

See Notes 4 and 7 to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for additional information.

During the nine months ended September 30, 2023, and 2022, we recognized $ 23.2 million and $ 3.4 million of revenue, respectively, which was 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.

The value of transaction prices allocated to remaining unsatisfied performance obligations as of September 30, 2023, was approximately $ 9.6 million.

We expect to recognize approximately $ 2.8 million of remaining performance obligations as revenue in the next 12 months and to recognize the remainder thereafter.

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Other receivables consisted of the following (in thousands):

September 30,

2023 December 31,

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

September 30,

2023 December 31,

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

September 30,

2023 December 31,

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Property and equipment, net $ 16,598 $ 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.

Depreciation and amortization expenses related to property and equipment were $ 1.6 million and $ 0.4 million, respectively, for the three months ended September 30, 2023, and 2022.

Depreciation and amortization expenses related to property and equipment were $ 2.8 million and $ 1.1 million, respectively, for the nine months ended September 30, 2023, and 2022.

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

September 30,

2023 December 31,

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Accrued expenses related to sublicensing revenues 688 596

Credit card liability

Other 1,646 1,370

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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.

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

As of September 30, 2023, we had 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.

As Edge’s convertible preferred stock is not in substance common stock, we recorded 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 September 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 September 30, 2023.

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.

We did not recognize any revenue in connection with the Edge Cas9 License Agreement during the three months ended September 30, 2023.

We recognized $ 1.2 million of revenue in connection with the Edge Cas9 License Agreement during the nine months ended September 30, 2023.

We did no t recognize any revenue in connection with the Edge Cas9 License Agreement in 2022.

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 covering 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.

If 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.

During each of the three- and nine-month periods ended September 30, 2023, we recognized $ 0.6 million of revenue from Pfizer.

As of September 30, 2023, there was approximately $ 6.9 million of related party deferred revenue ($ 2.5 million included in current liabilities and $ 4.4 million included in long-term liabilities) related to our performance obligation to Pfizer.

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.

As of September 30, 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 8.8 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,

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

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

2023 2022 2023 2022

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Total lease cost $ 2,000 $ 1,822 $ 5,937 $ 5,526

(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.

(1) Included $ 0.7 million and $ 0.6 million of variable lease cost related to operating expenses and taxes for the three months ended September 30, 2023, and 2022, respectively.

Included $ 1.9 million and $ 1.6 million of variable lease cost related to operating expenses and taxes for the nine months ended September 30, 2023, and 2022, respectively.

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

Six Months Ended June 30,

Nine Months Ended September 30,

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

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

September 30,

2023 December 31,

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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 June 30, 2023 (in thousands):

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

Remainder of 2023 (1)

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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 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.

As of September 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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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.

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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

our board of directors, Lowry v.

On September 18, 2023, plaintiffs filed an amended complaint adding the IPO underwriters as defendants and making substantially the same allegations as the original complaint.

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 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.

On September 11, 2023, plaintiff filed an amended complaint making substantially the same allegations as the original complaint.

We believe these lawsuits are without merit and intend to vigorously defend the claims asserted against us.

Common stock reserved for future issuance consisted of the following:

June 30, 2023 As of

September 30, 2023 As of

December 31, 2022

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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.

In July and August 2023, we issued and sold a total of 22,115,384 shares of our common stock in an underwritten follow-on public offering at a price to the public of $ 6.50 per share, which included the full exercise of the underwriters’ right to purchase 2,884,615 additional shares of our common stock.

The total gross proceeds from the offering were approximately $ 143.7 million ($ 134.4 million net of underwriting discounts and commissions and offering expenses).

The shares were issued pursuant to the Shelf Registration Statement.

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).

On August 9, 2022, we 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 nine months ended September 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 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:

As of September 30, 2023, we had 5,894,280 shares available for issuance under the 2021 Plan.

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

Stock Options Weighted-

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Options cancelled or forfeited ( 406,556 ) 6.69

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

Outstanding at September 30, 2023 9,523,394 $ 8.06 8.3 $ 3,139

Exercisable at September 30, 2023 3,906,573 $ 7.88 7.5 $ 2,527

Vested and expected to vest at September 30, 2023 9,523,394 $ 8.06 8.3 $ 3,139

*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.

During the three months ended September 30, 2023, and 2022, we granted 384,095 and 372,600 stock options to employees with a weighted average grant date fair value of $ 3.64 and $ 6.43 , respectively.

During the nine months ended September 30, 2023, and 2022, we granted 3,406,801 and 1,206,750 stock options to employees with a weighted average grant date fair value of $ 3.91 and $ 5.84 , 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,

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

2023 2022 2023 2022

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71.7 % to 74.2 %

71.7 % to 74.1 %

Expected term (in years) 6.0 6.0 5.0 to 6.0

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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.

As of September 30, 2023, there was $ 29.7 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 2.7 years.

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:

During the nine months ended September 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 September 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 ( 9,112 ) 9.90

Unvested, June 30, 2023 233,035 $ 10.04

Unvested, September 30, 2023 168,438 $ 10.10

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.

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

As of September 30, 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 1.5 years.

As of September 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.

We have issued 207,567 shares of common stock under the ESPP as of September 30, 2023.

We recorded $ 0.2 million in accrued liabilities related to contributions withheld as of September 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,

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

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

2023 2022 2023 2022

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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,

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

2023 2022 2023 2022

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Total $ 3,478 $ 2,673 $ 10,194 $ 8,615

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.

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

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

401(k) Savings Plan

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

During the 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.

During the three months ended September 30, 2023, and 2022, we contributed $ 0.3 million and $ 0.2 million, respectively, to our 401(k) plan.

During the nine months ended September 30, 2023, and 2022, we contributed $ 0.8 million and $ 0.6 million, respectively, to our 401(k) plan.

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

Net Loss Per Share

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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

September 30,

Stock options outstanding 9,523,394 6,649,892

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9,826,108 6,958,770

Pfizer Investment

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.

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.