What changed in this filing

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Item 1. Financial Statements

2020-11-06 compared with 2020-08-07 · 140 added, 76 removed, 280 unchanged (44% of the section changed)

3 unchanged sentences

(amounts in thousands, except share and per share data)

September 30,

Current assets:

4 unchanged sentences

Total current assets

Marketable securities

Property and equipment, net

19 unchanged sentences

195,000,000 shares authorized;

62,265,649 and 54,533,798 shares issued, and 62,103,649 and 54,355,798 shares outstanding at June 30, 2020 and December 31, 2019, respectively

62,331,700 and 54,533,798 shares issued, and 62,187,700 and 54,355,798 shares outstanding at September 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Accumulated deficit

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Collaboration and other research and development revenues

3 unchanged sentences

Total operating expenses

Operating loss

Other income, net:

Other income (expense), net

Operating income (loss)

Other (expense) income, net:

Other (expense) income, net

Interest income, net

Total other income, net

Net loss per share basic and diluted

Weighted-average common shares outstanding, basic and diluted

Total other (expense) income, net

Net income (loss)

Net income (loss) per share, basic

Net income (loss) per share, diluted

Weighted-average common shares outstanding, basic

Weighted-average common shares outstanding, diluted

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

Editas Medicine, Inc.

Condensed Consolidated Statements of Comprehensive Loss

Condensed Consolidated Statements of Comprehensive Income (Loss )

(amounts in thousands)

Three Months Ended

Six Months Ended

Other comprehensive income:

Unrealized gain (loss) on marketable debt securities

Comprehensive loss

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive income (loss):

Unrealized (loss) gain on marketable debt securities

Comprehensive income (loss)

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

4 unchanged sentences

Stockholders’

Income (Loss)

Balance at December 31, 2019

11 unchanged sentences

Balance at June 30, 2020

Exercise of stock options

Stock-based compensation expense

Vesting of restricted common stock awards

Unrealized loss on marketable debt securities

Balance at September 30, 2020

Comprehensive

Stockholders’

(Loss) Income

Balance at December 31, 2018

11 unchanged sentences

Balance at June 30, 2019

Exercise of stock options

Vesting of restricted common stock awards

Stock-based compensation expense

Issuance of common stock from public offering,

net of issuance costs of $ 0.1 million

Unrealized loss on marketable debt securities

Balance at September 30, 2019

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

2 unchanged sentences

(amounts in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flow from operating activities

19 unchanged sentences

Proceeds from maturities of marketable securities

Net cash provided by investing activities

Net cash (used in) provided by investing activities

Cash flow from financing activities

3 unchanged sentences

Net cash provided by financing activities

Net increase in cash, cash equivalents, and restricted cash

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

Cash, cash equivalents, and restricted cash, beginning of period

2 unchanged sentences

Fixed asset additions included in accounts payable and accrued expenses

Receivable of proceeds from offering of common stock

Cash paid in connection with operating lease liabilities

13 unchanged sentences

In August 2020, the collaboration with Allergan was terminated.

See Note 11, “Subsequent Events”.

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations and ability to transition from pilot-scale manufacturing to large-scale production of products.

In May 2020, the Company entered into a sales agreement with Cowen and Company, LLC (“Cowen”), under which the Company from time to time can issue and sell shares of its common stock through Cowen in at-the-market offerings for aggregate gross sale proceeds of up to $ 150.0 million ( the “ATM Facility”).

As of June 30, 2020, the Company has not sold any shares of its common stock under the ATM Facility.

As of September 30, 2020, the Company has not sold any shares of its common stock under the ATM Facility.

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

As of June 30, 2020, the Company has 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.

As of September 30, 2020, the Company has 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.

The Company has incurred annual net operating losses in every year since its inception.

The Company expects that its existing cash, cash equivalents and marketable securities at June 30, 2020 and anticipated interest income will enable it to fund its operating expenses and capital expenditure requirements into 2023 .

The Company had an accumulated deficit of $ 610.5 million at June 30, 2020, and will require substantial additional capital to fund its operations.

The Company expects that its existing cash, cash equivalents and marketable securities at September 30, 2020 and anticipated interest income will enable it to fund its operating expenses and capital expenditure requirements into 2023 .

The Company had an accumulated deficit of $ 602.7 million at September 30, 2020, and will require substantial additional capital to fund its operations.

The Company has never generated any product revenue.

10 unchanged sentences

The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.

The three months ended June 30, 2020 and 2019 are referred to as the second quarter of 2020 and 2019, respectively.

The three months ended September 30, 2020 and 2019 are referred to as the third quarter of 2020 and 2019, respectively.

The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

22 unchanged sentences

The modified retrospective approach requires the Company to record a one-time adjustment to opening accumulated deficit as of the effective date.

The Company concluded that there are no indicators of credit loss with respect to its available-for-sale debt securities which consist of U.S Treasury securities and government-agency bonds.

At adoption, the Company concluded that there are no indicators of credit loss with respect to its available-for-sale debt securities which consist of U.S Treasury securities and government-agency bonds.

The Company therefore did not record an allowance for credit losses or doubtful accounts upon adoption or during the first quarter of 2020.

11 unchanged sentences

The adoption of ASU 2018-13 did not have a material impact on the Company’s financial statement footnote disclosures.

Cash Equivalents, Marketable Securities and Equity Securities

Cash equivalents and marketable securities consisted of the following at June 30, 2020 (in thousands):

June 30, 2020

Cash Equivalents and Marketable Securities

Cash equivalents and marketable securities consisted of the following at September 30, 2020 (in thousands):

September 30, 2020

Cash equivalents and marketable securities:

Money market funds

1 unchanged sentence

Corporate equity securities

Cash equivalents, marketable securities and equity securities consisted of the following at December 31, 2019 (in thousands):

Commercial paper

Corporate notes/bonds

Cash equivalents and marketable securities consisted of the following at December 31, 2019 (in thousands):

December 31, 2019

4 unchanged sentences

Corporate equity securities

As of June 30, 2020, the Company did not hold any marketable securities in an unrealized loss position.

As of September 30, 2020, the Company did no t hold any marketable securities that had been in an unrealized loss position for more than twelve months.

Furthermore, the Company has determined that there were no material changes in the credit risk of the debt securities.

There were no realized gains or losses on available-for-sale securities during the six months ended June 30, 2020 or 2019.

As of September 30, 2020, the Company holds 21 securities with an aggregate fair value of $ 46.0 million that had remaining maturities between one and two years.

There were no realized gains or losses on available-for-sale securities during the nine months ended September 30, 2020 or 2019.

Fair Value Measurements

Assets measured at fair value on a recurring basis as of June 30, 2020 were as follows (in thousands):

Assets measured at fair value on a recurring basis as of September 30, 2020 were as follows (in thousands):

Quoted Prices

September 30,

Identical Assets

4 unchanged sentences

Government agency securities

Commercial paper

Corporate equity securities

Corporate bonds

Restricted cash and other non-current assets:

13 unchanged sentences

Total financial assets

The Company holds an investment in Beam Therapeutics Inc.

At September 30, 2020, the Company held an investment in Beam Therapeutics Inc.

(“Beam Therapeutics”) consisting of shares of Beam Therapeutics’ common stock.

Prior to Beam Therapeutics’ initial public offering in February 2020, the Company valued such investment based on the cost of the equity securities adjusted for any observable market transactions.

Following the initial public offering, the equity securities have a readily determinable fair value, and are included in marketable securities on the condensed consolidated balance sheet with a fair value based on Level 2 inputs due to transfer restrictions associated with the securities.

Upon the expiration of the transfer restrictions the Company expects to transfer the value of these equity securities from Level 2 to Level 1.

During the three and six months ended June 30, 2020, the Company recorded unrealized gains of $ 7.2 million and $ 14.5 million, respectively in other income (expense), net on the consolidated statements of operations.

Following the initial public offering, the equity securities have a readily determinable fair value, and are included in marketable securities on the condensed consolidated balance sheet.

During the three and nine months ended September 30, 2020, the Company recorded unrealized losses of $ 1.4 million and unrealized gains of $ 16.8 million, respectively in other income (expense), net on the consolidated statements of operations.

The Company sold this investment in October 2020, resulting in a realized gain of $ 16.3 million.

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

September 30,

Employee related expenses

Professional service expenses

Process and platform development expenses

Intellectual property and patent related fees

Sublicensing expenses

Professional service expenses

Other expenses

Sublicensing expenses

Total accrued expenses

1 unchanged sentence

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

September 30,

Laboratory equipment

16 unchanged sentences

As such, the Company anticipates that it has a substantial commitment in connection with these proceedings until such time as these proceedings have been resolved, but the amount of such commitment is not determinable.

The Company incurred an aggregate of $ 2.8 million and $ 6.6 million in expense during the three and six months ended June 30, 2020, respectively, for such reimbursement.

The Company incurred an aggregate of $ 3.5 million and $ 6.9 million in expense during the three and six months ended June 30, 2019, respectively, for such reimbursement.

The Company incurred an aggregate of $ 2.6 million and $ 9.3 million in expense during the three and nine months ended September 30, 2020, respectively, for such reimbursement.

The Company incurred an aggregate of $ 3.1 million and $ 10.1 million in expense during the three and nine months ended September 30, 2019, respectively, for such reimbursement.

Collaboration and Profit-Sharing Agreements

1 unchanged sentence

The terms and conditions as well as the accounting analysis for the Company’s significant collaborations, out-licenses and strategic alliances are described in Note 9, “Collaboration and Profit-Sharing Agreements” to the consolidated financial statements included in the Annual Report.

There have been no material changes to the terms and conditions, or the accounting conclusions previously disclosed in the Annual Report.

There have been no material changes to the terms and conditions, or the accounting conclusions previously disclosed in the Annual Report, other than as noted below.

Allergan Pharmaceuticals Strategic Alliance and Profit-Sharing Agreement

Termination Agreements

On August 5, 2020, the Company and Allergan agreed to terminate the strategic alliance and option agreement (the “Collaboration Agreement”) that was entered into in May 2017 and the profit-sharing arrangement (together with the Collaboration Agreement, the “Initial Agreements”) to equally split U.S profit and losses of EDIT-101, an experimental medicine for Leber congenital amaurosis 10 (“LCA10”) that was originally licensed to Allergan under the Collaboration Agreement (the “Termination Agreement”).

In addition, in connection with the termination, the Company entered into a transition services agreement with Allergan (together with the Termination Agreement, the “Termination Agreements”), primarily to facilitate the transfer of EDIT-101 back to the Company.

Pursuant to the Termination Agreements, the Company has regained full global rights to research, develop, manufacture, and commercialize its ocular medicines, including EDIT-101.

Allergan has no further obligations pursuant to the initial agreements, all unexercised options and contingent payments contemplated under the initial agreements have terminated, which includes Allergan’s worldwide developmental and commercialization rights to EDIT-101.

Under the Termination Agreements, Allergan granted the Company a non-exclusive license to certain know-how that is necessary to develop, manufacture and commercialize EDIT-101 and will transfer to the Company certain materials produced under the Collaboration Agreement.

The Company will use commercially reasonable efforts to develop and commercialize products directed at four collaboration targets, one of which is LCA10.

In connection with the Termination Agreements, the Company agreed to make a $ 20.0 million payment to Allergan, $ 17.5 million of which was paid as of September 30, 2020.

In addition, the Company will make certain payments on achievements of clinical and regulatory milestones up to $ 20.0 million for each target program and aggregated sales milestones for all products covered by the Termination Agreement up to $ 90.0 million.

Allergan is also entitled to royalties in a low-single digit percentage, subject to reduction under specified circumstances, on net sales of specified products.

The Company’s obligation to pay royalties will expire on a country-by-country and product-by-product basis upon the later of the expiration of regulatory-based exclusivity with respect to such product in such country and the tenth anniversary of the first commercial sale of such product.

Lastly, the Company is obligated to pay for a portion of the transition services.

Accounting Assessment

The Company evaluated the Termination Agreements in accordance with the provisions of Accounting Standards Codification (“ASC”) 606 and concluded that they resulted in a modification followed by a termination of the Initial Agreements.

Upon execution of the Termination Agreements, the Company is no longer obligated to transfer control of any goods or services to Allergan, and therefore there are no remaining performance obligations.

As part of this assessment, the Company considered that Allergan relinquished its right to the remaining exclusive license options under the Collaboration Agreement and the Company reacquired the development and commercialization rights to EDIT-101.

Allergan no longer has any involvement in the development activities of the collaboration targets.

Since there are no remaining performance obligations, the Company accounted for the modification as part of the existing contract with a cumulative catch-up adjustment.

The Company applied the vendor consideration to a customer guidance pursuant to ASC 606 in accounting for the $ 20 million payment due to Allergan and concluded that the worldwide rights to EDIT-101 represent a distinct good or service.

The Company therefore recorded the fair value of the rights to EDIT-101 of $ 5 million as in-process Research and Development expense in the quarter ended September 30, 2020 as the rights had no alternative future use.

The remainder of the $ 20 million was recorded as a reduction to the contract liability that was recognized as revenue upon termination.

The contingent payments associated with the collaboration targets not previously licensed by Allergan under the Collaboration Agreement did not impact the amount of deferred revenue recognized upon termination because it is not probable that a significant reversal of revenue will occur.

The contingent milestone and royalty payments associated with EDIT-101 qualify for scope exceptions from derivative accounting, and therefore there is no accounting for the contingent payments upon termination.

On the termination date, the Company recognized $ 62.1 million of previously deferred revenue related to the Collaboration Agreement.

This amount consisted of $ 77.1 million of revenues that were previously deferred related to the collaboration agreement, partially offset by $ 15.0 million of the fee paid to Allergan that was determined to exceed the fair value of the re-acquired rights to EDIT-101.

During the three and nine months ended September 30, 2020, the Company recognized revenue of $ 63.2 million and $ 70.6 million, respectively, related to the Allergan arrangement, including the termination.

During the three and nine months ended September 30, 2019, the Company recognized revenue of $ 3.4 million and $ 7.7 million, respectively.

At September 30, 2020 there was no remaining revenue deferred related to Allergan.

Collaboration Revenue

As of June 30, 2020, the Company’s contract liabilities were primarily related to the Company’s collaboration with Juno Therapeutics and its strategic alliance with Allergan.

The following table presents changes in the Company’s accounts receivable and contract liabilities for the six months ended June 30, 2020 (in thousands):

For the six months ended June 30, 2020

As of September 30, 2020, the Company’s contract liabilities were primarily related to the Company’s collaboration with Juno Therapeutics.

The following table presents changes in the Company’s accounts receivable and contract liabilities for the nine months ended September 30, 2020 (in thousands):

For the nine months ended September 30, 2020

Balance at December 31, 2019

Balance at June 30, 2020

Balance at September 30, 2020

Accounts receivable

1 unchanged sentence

Deferred revenue

During the three and six months ended June 30, 2020, the Company recognized the following collaboration revenue (in thousands):

During the three and nine months ended September 30, 2020, the Company recognized the following collaboration revenue (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

Revenue recognized in the period from:

June 30, 2020

September 30, 2020

Amounts included in deferred revenue at the beginning of the period

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Research and development

2 unchanged sentences

Restricted Stock and Restricted Stock Unit Awards

The following is a summary of restricted stock and restricted stock unit awards activity for the six months ended June 30, 2020:

The following is a summary of restricted stock and restricted stock unit awards activity for the nine months ended September 30, 2020:

Unvested restricted stock and restricted stock unit awards as of December 31, 2019

Unvested restricted stock and restricted stock unit awards as of June, 30 2020

As of June 30, 2020, total unrecognized compensation expense related to unvested restricted stock and restricted stock unit awards was $ 12.0 million, which the Company expects to recognize over a remaining weighted-average period of 3.0 years.

Unvested restricted stock and restricted stock unit awards as of September, 30 2020

As of September 30, 2020, total unrecognized compensation expense related to unvested restricted stock and

restricted stock unit awards was $ 11.9 million, which the Company expects to recognize over a remaining weighted-average period of 2.8 years.

Stock Options

The following is a summary of stock option activity for the six months ended June 30, 2020:

The following is a summary of stock option activity for the nine months ended September 30, 2020:

Weighted Average

5 unchanged sentences

( 1,103,283 )

Outstanding at June 30, 2020

Exercisable at June 30, 2020

As of June 30, 2020, total unrecognized compensation expense related to stock options was $ 40.0 million, which the Company expects to recognize over a remaining weighted-average period of 2.8 years.

Net Loss per Share

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities.

Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period determined using the treasury stock and if converted methods.

Contingently issuable shares are included in the calculation of basic loss per share as of the beginning of the period in which all the necessary conditions have been satisfied.

Contingently issuable shares are included in diluted loss per share based on the number of shares, if any, that would be issuable under the terms of the arrangement if the end of the reporting period was the end of the contingency period, if the results are dilutive.

For purposes of the diluted net loss per share calculation, stock options are considered to be common stock equivalents, but they were excluded from the Company’s calculation of diluted net loss per share allocable to common stockholders because their inclusion would have been anti-dilutive.

Therefore, basic and diluted net loss per share applicable to common stockholders was the same for all periods presented.

The following common stock equivalents were excluded from the calculation of diluted net loss per share allocable to common stockholders because their inclusion would have been anti-dilutive:

As of June 30,

Outstanding at September 30, 2020

Exercisable at September 30, 2020

As of September 30, 2020, total unrecognized compensation expense related to stock options was $ 39.1 million, which the Company expects to recognize over a remaining weighted-average period of 2.7 years.

Net Income (Loss) per Share

Basic net income (loss) per common share is calculated by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities.

Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period determined using the treasury stock and if converted methods.

Contingently issuable shares are included in the calculation of basic income (loss) per share as of the beginning of the period in which all the necessary conditions have been satisfied.

Contingently issuable shares are included in diluted income (loss) per share based on the number of shares, if any, that would be issuable under the terms of the arrangement if the end of the reporting period was the end of the contingency period, if the results are dilutive.

Three Months Ended

Nine Months Ended

September 30,

Net income (loss)

Weighted average common shares outstanding, basic

Dilutive effect of outstanding stock options

Dilutive effect of unvested restricted stock and restricted stock unit awards

Weighted average common shares outstanding, diluted

Net income (loss) per share, basic

Net income (loss) per share, diluted

The following common stock equivalents were excluded from the calculation of diluted net income (loss) per share allocable to common stockholders because their inclusion would have been anti-dilutive:

Three Months Ended

Nine months Ended

September 30,

Unvested restricted stock and restricted stock unit awards

Outstanding stock options

Subsequent Events

On August 5, 2020, the Company and Allergan Pharmaceuticals International Limited (which was acquired by AbbVie, Inc.

in May 2020 and is referred to together with its affiliates as “Allergan”) agreed to terminate the strategic alliance and option agreement that was entered into in May 2017 and the profit-sharing arrangement to equally split U.S profit and losses of EDIT-101, an experimental medicine for Leber congenital amaurosis 10 (“LCA10”) that was originally licensed to Allergan under the strategic alliance and option agreement (the “Termination Agreement”).

Pursuant to the Termination Agreements, the Company has regained full global rights to research, develop, manufacture, and commercialize its ocular medicines, including EDIT-101.

Allergan has no further obligations pursuant to the initial agreements, all unexercised options and contingent payments contemplated under the initial agreements have terminated, which includes their worldwide developmental and commercialization rights of EDIT-101.

The Company expects the transition services to be completed within four months.

Pursuant to the Termination Agreements, the Company will continue to use commercially reasonable efforts to develop and commercialize a product directed at four collaboration targets, one of which is LCA10.

The Termination Agreements also obligate the Company to make a payment to Allergan, as well as certain payments based on the achievement of clinical and regulatory milestones for each target program, aggregated sales milestones for all products covered by the Termination Agreement, and pay royalties on net sales of specified products.

The Company is also obligated to pay for a portion of the transition services.

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

What changed 10-Q

Item 1. Financial Statements