What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-06 compared with 2020-08-07 · 108 added, 95 removed, 219 unchanged (48% of the section changed)

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The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

All statements addressing our future operating performance and clinical development and regulatory timelines that we expect or anticipate will occur in the future, are forward-looking statements.

There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements.

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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.

We have completed dosing of the adult low-dose cohort.

This trial remains active and open for enrollment.

We aim to complete the dosing of the adult low-dose cohort and to dose at least one patient of the adult mid-dose cohort by the end of 2020, with the potential for data also by the end of 2020.

We continue to enroll patients, but enrollment has been slowed due to the ongoing impact of the coronavirus disease of 2019 (“COVID-19”) pandemic.

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 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.

Food and Drug Administration 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.

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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.

As a result of the termination of our collaboration with Allergan, we 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.

Under the termination agreement, we agreed to make a one-time aggregate payment of $20.0 million to Allergan, of which $17.5 million had been paid as of September 30, 2020.

In addition, we 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.

We are also obligated to pay royalties in a low-single digit percentage, subject to reduction under specified circumstances, on net sales of specified products.

Our 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.

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.

As a result of the termination of the agreements with Allergan, we now have full responsibility for the Phase 1/2 clinical trial for EDIT-101 and 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 $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.

Our net losses were $53.5 million and $96.0 million for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, we had an accumulated deficit of $602.7 million.

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

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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 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.

Although we did not experience any significant impact on our financial condition, results of operations or liquidity due to the ongoing COVID-19 pandemic during the nine months ended September 30, 2020, we have recently experienced slowed enrollment in the EDIT-101 clinical trial as a result of the COVID-19 pandemic.

The ultimate impact of the COVID-19 pandemic, particularly in light of its current resurgence, 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.

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 and other capacity-limiting measures 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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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.

As of September 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 nine months ended September 30, 2020.

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

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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.

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

During the third quarter of 2020, as a result of the termination of our agreements with Allergan, we recognized $63.2 million of previously deferred revenue related to 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.

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● employee-related expenses including salaries, benefits, and stock-based compensation expense;

● costs of funding research performed by third parties that conduct research and development and preclinical and clinical activities on our behalf;

● costs of funding research performed by third parties that conduct research and development and preclinical

and clinical activities on our behalf;

● costs of purchasing lab supplies and non-capital equipment used in our preclinical activities and in manufacturing preclinical study materials;

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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 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.

As a result of the termination of our profit-sharing arrangement with Allergan in the United States for EDIT-101, we are now obligated to fund all of the 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.

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(“Broad”) and the President and Fellows of Harvard College (“Harvard”), we anticipate general and administrative expenses will continue to be significant.

Other Income, Net

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.

Other (Expense) Income, Net

For the nine months ended September 30, 2020, other (expense) 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 nine months ended September 30, 2019, other (expense) 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 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:

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

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

Three Months Ended

September 30,

Dollar Change

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Total operating expenses

Other income, net:

Other income (expense), net

Other (expense) income, net:

Other expense, net

Interest income, net

Total other income, net

Total other (expense) income, net

Net income (loss)

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 $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.

Collaboration and other research and development revenues increased by $59.0 million, to $62.8 million for the three months ended September 30, 2020 from $3.8 million for three months ended September 30, 2019.

This increase was primarily attributable to the recognition of $59.9 million of previously deferred revenue as a result of the termination of our strategic alliance with Allergan.

Research and development expenses

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:

Research and development expenses increased by $11.2 million, to $33.9 million for the three months ended September 30, 2020 from $22.7 million for the three months ended September 30, 2019.

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

Three Months Ended

September 30,

Dollar Change

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Employee related expenses

Sublicense and license fees

Facility expenses

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Other expenses

Sublicense and license fees

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;

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

● approximately $8.9 million in increased process and platform development expenses related primarily to the clinical and manufacturing development of EDIT-101 and our other programs, including a one-time in-process research and development expense of $5.0 million for re-acquiring the rights to EDIT-101 from Allergan;

● approximately $1.7 million in increased employee related expenses primarily due to an increase in the size of our workforce including the expansion of our research and development organization;

● approximately $1.1 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.

● approximately $0.2 million in increased other expenses.

These increases were partially offset by approximately $0.7 million in decreased stock-based compensation expenses resulting from forfeitures.

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

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:

General and administrative expenses increased by $4.2 million, to $19.9 million for the three months ended September 30, 2020 from $15.7 million for the three months ended September 30, 2019.The following table summarizes our general and administrative expenses for the three months ended September 30, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Three Months Ended

September 30,

Dollar Change

Percentage Change

Employee related expenses

Professional service expenses

Intellectual property and patent related fees

Employee related expenses

Stock-based compensation expenses

Professional service expenses

Other expenses

Facility and 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

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

● approximately $2.3 million in increased professional service expenses in connection with the termination of the Allergan agreement;

● approximately $0.9 million in increased employee related expenses primarily due to an increase in the size of our workforce and the timing of hiring key executives;

● approximately $0.8 million in increased facility and other expenses resulting from additional office space leased in 2020;

● approximately $0.2 million in increased intellectual property and patent related fees.

Other (expense) income, net

For the three months ended September 30, 2020, other (expense) income, net was an expense of $1.2 million, which was primarily attributable to the unrealized losses related to corporate equity securities, partially offset by interest income.

For the three months ended September 30, 2019, other (expense) income, net was income of $1.6 million, which was primarily attributable to interest income and accretion of discounts associated with marketable securities.

Comparison of the Nine Months ended September 30, 2020 and 2019

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

Nine Months Ended

September 30,

Dollar Change

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Other income, net

Other (expense) income, net

Other income (expense), net

Interest income, net

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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.

Collaboration and other research and development revenues increased by $71.1 million to $79.3 million for the nine months ended September 30, 2020 from $8.2 million for the nine months ended September 30, 2019.

This increase was primarily attributable to the recognition of $63.0 million of previously deferred revenue as a result of the termination of our strategic alliance with Allergan, as well as an increase of $7.7 million in revenue recognized pursuant to an out-license agreement we entered into during the second quarter of 2020, and a $0.4 million increase in revenue recognized pursuant to other license and collaboration arrangements during the nine months ended September 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

Research and development expenses increased by $34.4 million, to $96.5 million for the nine months ended September 30, 2020 from $62.1 million for the nine months ended September 30, 2019.

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

Nine Months Ended

September 30,

Dollar Change

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Total research and development expenses

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,

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

● approximately $21.8 million in increased process and platform development expenses related primarily to the clinical and manufacturing development of EDIT-101 and our other programs, including a one-time in-process research and development expense of $5.0 million for re-acquiring the rights to EDIT-101 from Allergan and expenses incurred under the profit-sharing arrangement with Allergan related to EDIT-101 prior to the termination of the agreement and expenses incurred related to an in-license arrangement entered into during the first quarter of 2020;

● approximately $7.5 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.

● approximately $3.6 million in increased facility expenses primarily due additional lab and manufacturing space leased in 2020;

● approximately $3.1 million in increased sublicense and license fees primarily related to 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 $0.6 million in increased other expenses primarily due to increase software license fees.

These increases were partially offset by approximately $2.2 million in decreased stock-based compensation expenses resulting primarily from forfeitures.

General and administrative expenses

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

General and administrative expenses increased by $4.2 million, to $51.8 million for the nine months ended September 30, 2020 from $47.6 million for the nine months ended September 30, 2019.

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

Nine Months Ended

September 30,

Dollar Change

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Employee related expenses

Stock-based compensation expenses

Professional service expenses

Other expenses

Stock-based compensation expenses

Facility and other expenses

Total general and administrative expenses

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 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.

The increase in general and administrative expenses for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was primarily attributable to:

● approximately $3.0 million in increased employee related expenses primarily due to an increase in the size of our workforce and the timing of hiring key executives;

● approximately $2.5 million in increased facility and other expenses resulting from additional office space leased in 2020.

These increases were partially offset by approximately $1.2 million in decreased stock-based compensation expenses resulting from a modification that occurred in 2019 with respect to which there was no similar activity for in 2020 and approximately $0.1 million in decreased intellectual property and patent related expenses.

Other (expense) income, net

For the nine months ended September 30, 2020, other (expense) income, net was income of $15.5 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 nine months ended September 30, 2019, other (expense) income, net was income of $5.5 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

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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.

As of September 30, 2020, we have raised an aggregate of $648.7 million in net proceeds through the sale of shares of our 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.

As of September 30, 2020, we had cash, cash equivalents and marketable securities of $541.3 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 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

As of September 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 nine months ended September 30, 2020 and 2019 (in thousands):

Nine Months Ended

September 30,

Net cash (used in) provided by:

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Financing activities

Net increase in cash, cash equivalents, and restricted cash

Net increase (decrease) 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 $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.

Net cash used in operating activities was approximately $139.7 million for the nine months ended September 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 $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 used in operating activities was approximately $81.7 million for the nine months ended September 30, 2019, which primarily consisted of operating expenses that related to our strategic alliance with Allergan which decreased deferred revenue, partially offset by an upfront payment received related to an out-license arrangement.

This amount was offset by operating expenses that related 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 Used in Investing Activities

Net cash used in investing activities was approximately $31.6 million for the nine months ended September 30, 2020, primarily related to costs used to acquire marketable securities of $300.4 million and costs to acquire property and equipment of $5.8 million, partially offset by proceeds from maturities of marketable securities of $274.5 million.

Net cash provided by investing activities was approximately $4.4 million for the nine months ended September 30, 2019, primarily related to higher proceeds from maturities of marketable securities than purchases of marketable securities that were partially offset by $4.5 million in equipment purchases.

Net Cash Provided by Financing Activities

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.

Net cash provided by financing activities was approximately $215.0 million for the nine months ended September 30, 2020, and consisted of $203.8 million in net proceeds received from offering of common stock, of which $0.2 million of expenses related to the offering were unpaid at quarter-end, and $10.8 million in proceeds received from exercises of options for our common stock.

Net cash provided by financing activities was approximately $47.2 million for the nine months ended September 30, 2019, and consisted of $41.2 million in proceeds received from at-the-market offerings of our common stock, $5.8 million in proceeds from exercises of options for our common stock and $0.3 million from the issuance of our common stock under our equity plans.

Funding Requirements

11 unchanged sentences

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 June 30, 2020 and anticipated interest income will enable us to fund our operating expenses and capital expenditure requirements into 2023.

We expect that our existing cash, cash equivalents and marketable securities at September 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.

23 unchanged sentences

Contractual Obligations

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.

During the nine months ended September 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 six months ended June 30, 2020 or 2019.

We do not believe that inflation had a material effect on our business, financial condition or results of operations during the nine months ended September 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