What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-07 compared with 2020-05-08 · 147 added, 74 removed, 167 unchanged (57% of the section changed)

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In ocular diseases, our most advanced program is designed to address a specific genetic form of retinal degeneration called Leber congenital amaurosis 10 (“LCA10”), a disease for which we are not aware of any available therapies and only one other potential treatment in clinical trials in the United States and Europe.

In mid-2019, we initiated a Phase 1/2 clinical trial for EDIT-101 (also known as AGN-151587), an experimental medicine to treat LCA10, pursuant to an investigational new drug application (“IND”) that we filed in October 2018 and which was accepted by the United States Food and Drug Administration (“FDA”) in November 2018.

We and our partner Allergan Pharmaceuticals International Limited (together with its affiliates, “Allergan”) announced the first patient dosing during the first quarter of 2020.

We plan to enroll approximately 18 patients in the United States and Europe in up to five cohorts.

In mid-2019, we initiated a Phase 1/2 clinical trial for EDIT-101, an experimental medicine to treat LCA10.

The first patient was dosed in the first quarter of 2020 and we plan to enroll approximately 18 patients in the United States and Europe in up to five cohorts.

This trial remains active and open for enrollment.

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For our engineered cell medicines, our lead program is EDIT-301, an experimental medicine to treat sickle cell disease and beta-thalassemia.

We have initiated IND-enabling studies for EDIT-301 and aim to file an IND for EDIT-301 for sickle cell disease by the end of 2020.

We have initiated IND-enabling studies for EDIT-301 and aim to submit to the U.S.

Food and Drug Administration (“FDA”) an investigational new drug application (“IND”) for EDIT-301 for the treatment of sickle cell disease by the end of 2020.

In addition, EDIT-201 is our experimental allogeneic healthy-donor NK cell medicine for the treatment of solid tumors.

We aim to submit to the FDA an IND for EDIT-201 for the treatment of certain solid tumors in the second half of 2021.

In May 2015, we entered into a collaboration with Juno Therapeutics, Inc., a wholly-owned subsidiary of Bristol-Myers Squibb Company (“Juno Therapeutics”), a leader in the emerging field of immuno-oncology, to develop novel engineered alpha-beta T cell therapies for cancer and autoimmune diseases, which was amended and restated in each of May 2018 and November 2019, at which time we also entered into a related license agreement with Juno Therapeutics, which we collectively refer to as our collaboration with them.

In March 2017, we entered into a strategic alliance and option agreement with Allergan a leading global pharmaceutical company, to discover, develop, and commercialize new gene editing medicines for a range of ocular disorders.

In March 2017, we entered into a strategic alliance and option agreement with Allergan Pharmaceuticals International Limited (which is referred to together with its affiliates as “Allergan”), a leading global pharmaceutical company, to discover, develop, and commercialize new gene editing medicines for a range of ocular disorders.

In July 2018, Allergan exercised its option to develop and commercialize EDIT-101 and we subsequently entered into a co-development and commercialization agreement with Allergan under which we will co-develop and equally split profits and losses for EDIT-101 in the United States.

Allergan was acquired by AbbVie, Inc.

On August 5, 2020, we entered into a termination agreement with Allergan pursuant to which, among other things, we and Allergan terminated the strategic alliance and option agreement and the co-development and commercialization agreement.

As a result of the termination of our collaboration with Allergan, we have regained full global rights to research, develop, manufacture, and commercialize our ocular product candidates, including EDIT-101 for the treatment of LCA10.

Under the termination agreement, Allergan granted us a non-exclusive, royalty-bearing right and license, including the right to grant sublicenses (through multiple tiers), to certain Allergan know-how that is necessary to develop, manufacture and commercialize EDIT-101.

In addition, we are obligated to use commercially reasonable efforts to develop and commercialize a product directed to each of four collaboration targets, one of which is LCA10.

Under the termination agreement, we are obligated to make a payment to Allergan, as well as certain payments based on the achievement of clinical and regulatory milestones for the target programs and aggregate sales milestones for all target programs, and pay royalties on net sales of specified products.

We and Allergan also entered into a transition services agreement to facilitate the transfer of the LCA10 program from Allergan to us.

As a result of the termination of the agreements with Allergan, we will have full responsibility for the Phase 1/2 clinical trial for EDIT-101 and we expect that our research and development expenses will increase significantly for the foreseeable future as our development programs progress.

Since our inception in September 2013, our operations have focused on organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio, assembling our core capabilities in genome editing, seeking to identify potential product candidates, and undertaking preclinical and clinical studies.

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Since inception, we have incurred significant operating losses.

Our net losses were $37.7 million and $29.2 million for the three months ended March 31, 2020 and 2019, respectively.

As of March 31, 2020, we had an accumulated deficit of $586.9 million.

Our net losses were $61.3 million and $63.0 million for the six months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020, we had an accumulated deficit of $610.5 million.

We expect to continue to incur significant expenses and operating losses for the foreseeable future.

Our net losses may fluctuate significantly from quarter to quarter and from year to year.

We anticipate that our expenses will increase substantially as we continue our current research programs and our preclinical development activities, including those related to EDIT-301;

progress the clinical development of EDIT-101 with Allergan;

We anticipate that our expenses will increase substantially as we continue our current research programs and our preclinical development activities, including those related to EDIT-301 and EDIT-201;

progress the clinical development of EDIT-101;

seek to identify additional research programs and additional product candidates;

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We do not expect to be profitable for the year ending December 31, 2020 or the foreseeable future.

Although we did not experience any significant impact on our financial condition, results of operations or liquidity due to the ongoing coronavirus disease of 2019 (“COVID-19”) pandemic during the three months ended March 31, 2020, the ultimate impact of the COVID-19 pandemic is highly uncertain and we do not yet know the full extent of potential delays or impacts on our business, raising capital, the EDIT-101 clinical trial, ongoing preclinical activities, including those related to EDIT-301, or the global economy as a whole.

Additionally, we have implemented a work from home policy, and restricted on-site activities at our facilities in Massachusetts and Colorado to certain manufacturing, laboratory and related support activities in light of the COVID-19 pandemic.

Although we did not experience any significant impact on our financial condition, results of operations or liquidity due to the ongoing coronavirus disease of 2019 (“COVID-19”) pandemic during the six months ended June 30, 2020, the ultimate impact of the COVID-19 pandemic is highly uncertain and we do not yet know the full extent of potential delays or impacts on our business, our ability to continue to raise additional capital, the EDIT-101 clinical trial,

ongoing preclinical activities, including those related to EDIT-301 and EDIT-201, or the global economy as a whole.

In March, we implemented a work from home policy, and restricted on-site activities at our facilities in Massachusetts and Colorado to certain manufacturing, laboratory and related support activities in light of the COVID-19 pandemic.

Under our return to onsite work plans, we have resumed manufacturing, laboratory and related support activities at our facilities in Massachusetts and Colorado using shifts to comply with social distancing guidelines.

As such, it is uncertain as to the full magnitude that the pandemic will have directly or indirectly on our financial condition, liquidity and future results of operations.

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To date, we have not generated any revenue from product sales and we do not expect to generate any revenue from product sales for the foreseeable future.

In connection with our collaboration with Juno Therapeutics, we have received an aggregate of $120.0 million in payments, which have primarily consisted of the initial upfront and amendment payments, development milestone payments and research funding support, which we no longer receive.

As of March 31, 2020, we recorded $96.3 million of deferred revenue, of which $79.3 million is classified as long-term on our condensed consolidated balance sheet.

There was no revenue recognized during the three months ended March 31, 2020.

We no longer receive research funding support.

As of June 30, 2020, we recorded $96.3 million of deferred revenue, of which $79.3 million is classified as long-term on our condensed consolidated balance sheet.

There was no revenue recognized under the collaboration with Juno Therapeutics during the six months ended June 30, 2020.

Under this collaboration, we will recognize revenue upon delivery of option packages to Juno Therapeutics.

expect that our revenue will fluctuate from quarter-to-quarter and year-to-year as a result of the timing of when we deliver such option packages.

In connection with our strategic alliance with Allergan, we have received an aggregate of $130.0 million in payments, which have primarily consisted of the initial upfront payment, an option exercise payment and a milestone payment.

Certain of these payments were deferred and are being recognized over the remaining contract term based on a proportional performance metric.

As of March 31, 2020, we recorded $81.3 million of deferred revenue, of which $60.6 million is classified as long-term on our condensed consolidated balance sheet.

During the first quarter of 2020, we recognized $4.4 million in collaboration revenue under our strategic alliance with Allergan.

We expect that our revenue will fluctuate from quarter-to-quarter and year-to-year as a result of the timing of when we deliver such option packages.

In connection with our strategic alliance with Allergan, we received an aggregate of $130.0 million in payments, which consisted of the initial upfront payment, an option exercise payment and a milestone payment.

Prior to the termination of our agreements with Allergan, certain of these payments were deferred and were being recognized over the remaining contract term based on a proportional performance metric.

As of June 30, 2020, we recorded $78.2 million of deferred revenue, of which $57.2 million is classified as long-term on our condensed consolidated balance sheet.

During the second quarter of 2020, we recognized $3.1 million in collaboration revenue under our strategic alliance with Allergan.

For additional information about our revenue recognition policy related to the Juno Therapeutics collaboration or the Allergan strategic alliance, see “—Critical Accounting Policies and Estimates—Revenue Recognition” included in our Annual Report.

For the foreseeable future, we expect substantially all of our revenue will be generated from our collaboration with Juno Therapeutics, our strategic alliance with Allergan, any other collaborations or agreements we may enter into and anticipated interest income.

For the foreseeable future we expect substantially all of our revenue will be generated from our collaboration with Juno Therapeutics, and any other collaborations or agreements we may enter into.

Research and Development Expenses

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● receipt of marketing approvals from applicable regulatory authorities;

● establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;

● establishing clinical, commercial manufacturing capabilities or making arrangements with third-party manufacturers;

● obtaining and maintaining patent and trade secret protection and non-patent exclusivity;

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A change in the outcome of any of these variables with respect to the development of any product candidates we develop would significantly change the costs, timing, and viability associated with the development of that product candidate.

As a result of our a profit-sharing arrangement with Allergan in the United States for EDIT-101, our obligations to fund such program in the United States will represent 50% of the total costs related to developing and commercializing the program in the United States.

As a result of the termination of our profit-sharing arrangement with Allergan in the United States for EDIT-101, we will be obligated to fund all of the total costs related to developing and commercializing the LCA10 program in the United States.

We do not track research and development costs on a program-by-program basis except for reimbursable amounts that relate to third-party arrangements.

Research and development activities are central to our business model.

We expect research and development costs to increase significantly for the foreseeable future as our development programs progress, including as we continue to progress the clinical development of EDIT-101 with Allergan as well as supporting preclinical studies for our other research programs, including EDIT-301.

We expect research and development costs to increase significantly for the foreseeable future as our development programs progress, including as we continue to progress the clinical development of EDIT-101 as well as supporting preclinical studies for our other research programs, including EDIT-301.

General and Administrative Expenses

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Other Income, Net

For the three months ended March 31, 2020, other income, net consisted primarily of changes in the fair value of equity securities, interest income and accretion of discounts associated with other marketable securities.

For the three months ended March 31, 2019, other income, net consisted primarily of interest income and accretion of discounts associated with marketable securities, partially offset by loss on disposal of property and equipment.

For the six months ended June 30, 2020, other income, net consisted primarily of changes in the fair value of equity securities, interest income and accretion of discounts associated with other marketable securities.

For the six months ended June 30, 2019, other income, net consisted primarily of interest income and accretion of discounts associated with marketable securities, partially offset by loss on disposal of property and equipment.

Critical Accounting Policies and Estimates

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Results of Operations

Comparison of the Three Months ended March 31, 2020 and 2019

The following table summarizes our results of operations for the three months ended March 31, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Comparison of the Three Months ended June 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended June 30, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Three Months Ended

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Collaboration and other research and development revenues

Collaboration and other research and development revenues increased by $3.7 million, to $5.7 million for the three months ended March 31, 2020 from $2.1 million for three months ended March 1, 2019.

This increase was

primarily attributable to a $2.4 million increase in revenue recognized related to our strategic alliance with Allergan and a $1.3 million increase in revenue recognized pursuant to other license and collaboration arrangements.

Collaboration and other research and development revenues increased by $8.4 million, to $10.7 million for the three months ended June 30, 2020 from $2.3 million for three months ended June 30, 2019.

This increase was primarily attributable to $7.6 million in revenue recognized pursuant to an out-license agreement we entered into during the second quarter of 2020 and a $0.8 million increase in revenue recognized related to our strategic alliance with Allergan.

Research and development expenses

Research and development expenses increased by $18.7 million, to $34.6 million for the three months ended March 31, 2020 from $15.8 million for the three months ended March 31, 2019.

The following table summarizes our research and development expenses for the three months ended March 31, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Research and development expenses increased by $4.4 million, to $28.0 million for the three months ended June 30, 2020 from $23.6 million for the three months ended June 30, 2019.

The following table summarizes our research and development expenses for the three months ended June 30, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Three Months Ended

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Employee related expenses

Sublicense and license fees

Facility expenses

Stock-based compensation expenses

Other expenses

Total research and development expenses

The increase in research and development expenses for the three months ended June 30, 2020 compared to the three months ended June 30, 2019 was primarily attributable to:

● approximately $3.1 million in increased sublicense fees that were owed to our licensors in connection with an out-license agreement that we entered into during the second quarter of 2020 and additional license fees that we incurred during the quarter;

● approximately $2.4 million in increased employee related expenses primarily due to an increase in the size of our workforce including the expansion of our development organization;

● approximately $1.2 million in increased facility related expenses.

These increases were partially offset by approximately $1.6 million in decreased process and platform development expenses and $1.2 million in decreased stock-based compensation expenses.

As a result of the termination of our agreements with Allergan, we expect that our research and development costs will increase as we will be obligated to fund all of the total costs related to developing and commercializing the LCA10 program in the United States.

In addition, we anticipate that we will increase headcount in our clinical and development organization as a result of the transfer from Allergan to us of the Phase 1/2 clinical trial of EDIT 101 for the treatment of LCA10.

General and administrative expenses

General and administrative expenses decreased by $0.3 million, to $14.1 million for the three months ended June 30, 2020 from $14.4 million for the three months ended June 30, 2019.The following table summarizes our general and administrative expenses for the three months ended June 30, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Three Months Ended

Dollar Change

Percentage Change

Employee related expenses

Intellectual property and patent related fees

Stock-based compensation expenses

Professional service expenses

Other expenses

Total general and administrative expenses

The decrease in general and administrative expenses for the three months ended June 30, 2020 compared to the three months ended June 30, 2019 was primarily attributable to:

● approximately $1.4 million in decreased professional service expenses due to a decrease in our use of consulting services;

● approximately $0.7 million in decreased intellectual property and patent related fees.

These decreases were partially offset by approximately $1.0 million in increased employee related expenses due to an increase in the size of our workforce including the hiring of key executives, approximately $0.7 million in increased other expenses which includes facility costs, and $0.1 million in increased stock-based compensation expenses.

Other income, net

For the three months ended June 30, 2020, other income, net was $7.8 million, which was primarily attributable to the unrealized gains related to corporate equity securities, interest income and accretion of discounts associated with marketable securities.

For the three months ended June 30, 2019, other income, net was $1.9 million, which was primarily attributable to interest income and accretion of discounts associated with marketable securities, partially offset by a loss on disposal of property and equipment

Comparison of the Six Months ended June 30, 2020 and 2019

The following table summarizes our results of operations for the six months ended June 30, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Six Months Ended

Dollar Change

Percentage Change

Collaboration and other research and development revenues

Operating expenses:

Research and development

General and administrative

Total operating expenses

Other income, net:

Other (expense) income, net

Interest income, net

Total other income, net

For our results of operations, we have included the respective percentage of changes, unless greater than 100% or less than (100)%, in which case we have denoted such changes as not meaningful (n/m).

Collaboration and other research and development revenues

Collaboration and other research and development revenues increased by $12.1 million, to $16.4 million for the six months ended June 30, 2020 from $4.3 million for six months ended June 30, 2019.

This increase was primarily attributable to $7.6 million in revenue recognized pursuant to an out-license agreement we entered into during the second quarter of 2020, an increase of $3.1 million in revenue recognized related to our strategic alliance with Allergan and a $1.3 million increase in revenue recognized pursuant to other license and collaboration arrangements during the six months ended June 30, 2020.

Research and development expenses

Research and development expenses increased by $23.2 million, to $62.6 million for the six months ended June 30, 2020 from $39.4 million for the six months ended June 30, 2019.

The following table summarizes our research and development expenses for the six months ended June 30, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Six Months Ended

Dollar Change

Percentage Change

Process and platform development expenses

Employee related expenses

Facility expenses

Stock-based compensation expenses

Sublicense and license fees

Other expenses

Total research and development expenses

The increase in research and development expenses for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was primarily attributable to:

● approximately $14.5 million in increased process and platform development expenses due to increased manufacturing and clinical related costs, including under our profit-sharing arrangement with Allergan, and expenses incurred related to an in-license arrangement entered into during the first quarter of 2020;

● approximately $3.4 million in increased employee related expenses primarily due to an increase in the size of our workforce;

The increase in research and development expenses for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 was primarily attributable to:

● approximately $12.9 million in increased process and platform development expenses due to increased manufacturing and clinical related costs, including under our profit-sharing arrangement with Allergan,

● approximately $5.8 million in increased employee related expenses primarily due to an increase in the size of our workforce including the expansion of our development organization;

● approximately $3.1 million in increased sublicense and license fees that were owed to our licensors in connection with an out-license agreement that we entered into during the second quarter of 2020 and additional license fees that we incurred during the quarter;

● approximately $2.4 million in increased facility related expenses;

● approximately $0.4 million in increased other expenses.

These increases were partially offset by approximately $1.5 million in decreased stock-based compensation expenses.

General and administrative expenses

General and administrative expenses increased by $0.3 million, to $17.8 million for the three months ended March 31, 2020 from $17.5 million for the three months ended March 31, 2019.

The following table summarizes our general and administrative expenses for the three months ended March 31, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Three Months Ended

General and administrative expenses decreased by $0.05 million, to $31.9 million for the six months ended June 30, 2020 from $31.9 million for the six months ended June 30, 2019.

The following table summarizes our general and administrative expenses for the six months ended June 30, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Six Months Ended

Dollar Change

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Total general and administrative expenses

The increase in general and administrative expenses for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was primarily attributable to:

● approximately $1.2 million in increased employee related expenses due to an increase in the size of our workforce;

● approximately $0.9 million in increased other expenses including facility-related expenses;

● approximately $0.4 million in increased intellectual property and patent related fees.

These increases were partially offset by approximately $1.3 million in decreased stock-based compensation expenses and approximately $0.9 million in decreased professional service expenses due to a decrease in our use of consulting services.

The decrease in general and administrative expenses for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 was primarily attributable to:

● approximately $2.3 million in decreased professional service expenses due to a decrease in our use of consulting services;

● approximately $1.2 million in decreased stock-based compensation expenses;

● approximately $0.3 million in decreased intellectual property and patent related fees.

These decreased were partially offset by approximately $2.2 million in increased employee related expenses and $1.6 million in increased other expenses.

Other income, net

For the three months ended March 31, 2020, other income, net was $8.9 million, which was primarily attributable to the unrealized gains related to corporate equity securities, interest income and accretion of discounts associated with marketable securities.

For the three months ended March 31, 2019, other income, net was $2.0 million, which was primarily attributable to interest income and accretion of discounts associated with marketable securities, partially offset by a loss on disposal of property and equipment.

For the six months ended June 30, 2020, other income, net was $16.7 million, which was primarily attributable to the unrealized gains related to corporate equity securities, interest income and accretion of discounts associated with marketable securities.

For the six months ended June 30, 2019, other income, net was $3.9 million, which was primarily attributable to interest income and accretion of discounts associated with marketable securities, partially offset by a loss on disposal of property and equipment.

Liquidity and Capital Resources

Sources of Liquidity

As of March 31, 2020, the Company has raised an aggregate of $444.8 million in net proceeds through the sale of shares of its common stock in public offerings and at-the-market offerings.

We also have funded our business from payments received under our research collaboration with Juno Therapeutics and our strategic alliance with Allergan.

As of March 31, 2020, we had cash, cash equivalents and marketable securities of $415.0 million.

In addition to our existing cash, cash equivalents and marketable securities we are eligible to earn milestone and other payments under our collaboration agreement with Juno Therapeutics and our strategic alliance with Allergan.

We are also eligible to receive certain reimbursement for EDIT-101 costs in the United States under our profit-sharing arrangement with Allergan.

In May 2020, we entered into a sales agreement with Cowen and Company, LLC (“Cowen”) under which we are able from time to time to issue and sell shares of our common stock through Cowen for aggregate gross sales proceeds of up to $150.0 million (the “ATM Facility”).

We have not sold any shares of our common stock under this ATM Facility as of the date of this Quarterly Report on Form 10-Q.

In June 2020, we completed a public offering whereby we sold 6,900,000 shares of our common stock, inclusive of 900,000 shares of common stock sold by us pursuant to the full exercise of an option granted to the underwriters in connection with the offering and received net process of approximately $203.7 million.

As of June 30, 2020, we have raised an aggregate of $648.7 million in net proceeds through the sale of shares of its common stock in public offerings and at-the-market offerings.

We also have funded our business from payments received under our research collaboration with Juno Therapeutics and our strategic alliance with Allergan, which was terminated in August 2020.

As of June 30, 2020, we had cash, cash equivalents and marketable securities of $598.7 million.

In addition to our existing cash, cash equivalents and marketable securities we are eligible to earn milestone and other payments under our collaboration agreement with Juno Therapeutics.

Our ability to earn the milestone payments and the timing of earning these amounts are dependent upon the timing and outcome of our development, regulatory and commercial activities and, as such, are uncertain at this time.

As of March 31, 2020, our right to contingent payments under our collaboration agreement with Juno Therapeutics and our strategic alliance with Allergan are our only significant committed potential external sources of funds.

The following table provides information regarding our cash flows for the three months ended March 31, 2020 and 2019 (in thousands):

Three Months Ended

As of June 30, 2020, our right to contingent payments under our collaboration agreement with Juno Therapeutics is our only significant committed potential external source of funds.

The following table provides information regarding our cash flows for the six months ended June 30, 2020 and 2019 (in thousands):

Six Months Ended

Net cash (used in) provided by:

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Financing activities

Net (decrease) increase in cash, cash equivalents, and restricted cash

Net increase in cash, cash equivalents, and restricted cash

Net Cash (Used in) Operating Activities

The use of cash in all periods resulted primarily from our net losses adjusted for non-cash charges and changes in components of working capital.

Net cash used in operating activities was approximately $54.1 for the three months ended March 31, 2020, which primarily consisted of operating expenses that relate to our on-going preclinical and clinical activities, patent costs and license fees, and increased costs as a result of staffing needs due to our expanding operations.

These expenses were partially offset by unrealized gains associated with our corporate equity securities.

Net cash used in operating activities was approximately $29.0 million for the three months ended March 31, 2019, which primarily consisted of operating expenses that relate to our on-going preclinical activities, patent costs, and increased costs as a result of staffing needs due to our expanding operations.

Net cash used in operating activities was approximately $84.9 million for the six months ended June 30, 2020, which primarily consisted of operating expenses that relate to our on-going preclinical and clinical activities, patent costs and license fees, and increased costs as a result of staffing needs due to our expanding operations.

These expenses were partially offset by cash inflows from license fees received in the period.

Net cash used in operating activities was approximately $54.8 million for the six months ended June 30, 2019 which primarily consisted of an upfront payment related to an out-license arrangement which increased deferred revenue.

This amount was offset by operating expenses that relate to our on-going preclinical and clinical activities, patent costs and license fees, costs related to obtaining additional research facilities and increased costs as a result of staffing needs due to our expanding operations.

Net Cash Provided by Investing Activities

Net cash provided by investing activities was approximately $46.5 million for the three months ended March 31, 2020, primarily related to proceeds from maturities of marketable securities of $115.0 million, partially offset by costs to acquire marketable securities of $66.4 million and costs to acquire property and equipment of $2.2 million.

Net cash provided by investing activities was approximately $50.6 million for the three months ended March 31, 2019, primarily related to proceeds from maturities of marketable securities of $126.0 million, partially offset by costs to acquire marketable securities of $74.7 million and costs to acquire property and equipment of $0.7 million.

Net cash provided by investing activities was approximately $120.6 million for the six months ended June 30, 2020, primarily related to proceeds from maturities of marketable securities of $191.0 million, partially offset by costs to acquire marketable securities of $66.4 million and costs to acquire property and equipment of $4.0 million.

Net cash provided by investing activities was approximately $126.7 million for the six months ended June 30, 2019, primarily related to proceeds from maturities of marketable securities of $235.5 million, partially offset by costs to acquire marketable securities of $106.6 million and costs to acquire property and equipment of $2.2 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was approximately $3.0 million for the three months ended March 31, 2020 and consisted of $3.0 million in proceeds received from exercises of options for our common stock.

Net cash provided by financing activities was approximately $1.5 million for the three months ended March 31, 2019 and consisted of $1.5 million in proceeds received from exercises of options for our common stock.

Net cash provided by financing activities was approximately $214.2 million for the six months ended June 30, 2020 and consisted of $203.7 million in net proceeds received from offering of common stock, of which $0.3 million was unpaid at quarter-end, and $9.9 million in proceeds received from exercises of options for our common stock.

Net cash provided by financing activities was approximately $3.9 million for the six months ended June 30, 2019, primarily related to $3.6 million in proceeds for exercises of options for our common stock and $0.3 million from the issuance of our common stock under our equity plans.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we further advance our current research programs and our preclinical development activities, including those related to EDIT-301;

progress the clinical development of EDIT-101 with Allergan;

We expect our expenses to increase in connection with our ongoing activities, particularly as we progress the clinical development of EDIT-101;

further advance our current research programs and our preclinical development activities, including those related to EDIT-301 and EDIT-201;

seek to identify product candidates and additional research programs;

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If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts.

We expect that our existing cash, cash equivalents and marketable securities at March 31, 2020 and anticipated interest income will enable us to fund our operating expenses and capital expenditure requirements for at least 24 months following the date of this Quarterly Report on Form 10-Q.

We have based our estimates on assumptions that may prove

to be wrong, and we may use our available capital resources sooner than we currently expect.

We expect that our existing cash, cash equivalents and marketable securities at June 30, 2020 and anticipated interest income will enable us to fund our operating expenses and capital expenditure requirements into 2023.

We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect.

Our future capital requirements will depend on many factors, including:

● the scope, progress, results, and costs of drug discovery, preclinical development, laboratory testing, and clinical or natural history study trials for the product candidates we develop;

● the costs of progressing the clinical development with Allergan of EDIT-101 to treat LCA10;

● the costs of progressing the clinical development of EDIT-101 to treat LCA10;

● the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights, and defending intellectual property-related claims;

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● the costs of future activities, including product sales, medical affairs, marketing, manufacturing, and distribution, for any product candidates for which we receive regulatory approval;

● the success of our collaboration with Juno Therapeutics and our strategic alliance with Allergan;

● the success of our collaboration with Juno Therapeutics;

● whether Juno Therapeutics exercises any of its options to extend the research program term and/or to certain of the research programs under our collaboration;

● whether Allergan exercises any additional options under our strategic alliance;

● our ability to establish and maintain additional collaborations on favorable terms, if at all;

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Adequate additional financing may not be available to us on acceptable terms, or at all.

Further, our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic.

Further, our ability to continue to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements.

1 unchanged sentence

Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

If we raise funds through additional collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or

product candidates or to grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations

During the three months ended March 31, 2020, there were no material changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report.

During the six months ended June 30, 2020, there were no material changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report.

Off-Balance Sheet Arrangements

2 unchanged sentences

Inflation would generally affect our business by increasing our cost of labor and clinical trial costs.

We do not believe that inflation had a material effect on our business, financial condition or results of operations during the three months ended March 31, 2020 or 2019.

We do not believe that inflation had a material effect on our business, financial condition or results of operations during the six months ended June 30, 2020 or 2019.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis