What changed in this filing

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Item 1A. Risk Factors

2020-11-06 compared with 2020-08-07 · 108 added, 102 removed, 1306 unchanged (14% of the section changed)

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Our net losses were $133.7 million, $110.0 million, and $120.3 million for the years ended December 31, 2019, 2018 and 2017, respectively.

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

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

We have financed our operations primarily through public offerings of our common stock, private placements of our preferred stock, our collaboration with Juno Therapeutics, Inc., a wholly-owned subsidiary of Bristol-Myers Squibb Company (“Juno Therapeutics”), and payments under our strategic alliance with Allergan Pharmaceuticals International Limited (which was acquired by AbbVie Inc.

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We are in the early stages of the clinical development of EDIT-101 and expect that it will be many years, if ever, before we have a product candidate ready for commercialization.

As a result of the termination of our agreements with Allergan in August 2020, we will be obligated to fund all of the total costs related to developing and commercializing the LCA10 program in the United States, including the costs of the clinical development of EDIT-101.

As a result of the termination of our agreements with Allergan in August 2020, we are now obligated to fund all of the costs related to developing and commercializing the LCA10 program in the United States, including the costs of the clinical development of EDIT-101.

To become and remain profitable, we must develop and eventually commercialize a medicine or medicines with significant market potential.

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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 product 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 through 2023 following the date of this Quarterly Report on Form 10-Q.

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.

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

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Our ability to generate product revenues, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of EDIT-101 for the treatment of LCA10 and other product candidates that we may identify in the future.

As a result of the termination of our collaboration with Allergan in August 2020, we will be obligated to fund all of the total costs related to developing and commercializing the LCA10 program in the United States, including the costs of the clinical development of EDIT-101, and will need to expand our clinical development organization.

As a result of the termination of our collaboration with Allergan in August 2020, we are now obligated to fund all of the costs related to developing and commercializing the LCA10 program in the United States, including the costs of the clinical development of EDIT-101, and will need to expand our clinical development organization.

Previously, we relied on Allergan to conduct the Phase 1/2 clinical trial of EDIT-101 and we do not have experience conducting Phase 1/2 clinical trials.

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If serious adverse events, undesirable side effects, or unexpected characteristics are identified during the development of any product candidates we develop, we may need to abandon or limit our further clinical development of those product candidates.

Other than in connection with the EDIT-101 Phase 1/2 clinical trial, for which we have only recently begun dosing patients and is in the early stages of assessing safety, we have not evaluated any product candidates in human clinical trials, and our proposed delivery modes, combined with CRISPR technology, have a limited history, if any, of being tested clinically.

Other than in connection with the EDIT-101 Phase 1/2 clinical trial, for which we began dosing patients in 2020 and is in the early stages of assessing safety, we have not evaluated any product candidates in human clinical trials, and our proposed delivery modes, combined with CRISPR technology, have a limited history, if any, of being tested clinically.

It is impossible to predict when or if any product candidates we develop will ultimately prove safe in humans, including EDIT-101.

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Additionally, the process of finding and diagnosing patients may prove costly.

We have recently experienced slowed enrollment in the EDIT-101 clinical trial resulting from the impact of the COVID-19 pandemic, including international travel restrictions imposed in response to the pandemic.

The ultimate impact of the COVID-19 pandemic on enrollment of the EDIT-101 trial, particularly in light of the pandemic’s current resurgence, is highly uncertain and we do not yet know the full extent of potential delays or impacts on the EDIT-101 clinical trial.

Our ability to successfully initiate, enroll, and complete a clinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including:

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● potential burden of complying with a variety of foreign laws, medical standards, and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatment.

In connection with the termination of our collaboration with Allergan, we will need to transfer relationships with CROs or establish new relationships, which, if we are not successful, could delay enrollment of additional patients in our Phase 1/2 clinical trial of EDIT-101.

Enrollment delays in our clinical trials may result in increased development costs for any of our product

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Lot failures or product recalls could cause us to delay clinical trials, including the ongoing Phase 1/2 clinical trial for EDIT-101, or product launches, which could be costly to us and otherwise harm our business, financial condition, results of operations, and prospects.

In connection with the termination of our collaboration with Allergan, we will need to transfer the manufacturing relationships or establish new manufacturing relationships, which, if we are not successful, could cause delays in the manufacture of product for our Phase 1/2 clinical trial of EDIT-101.

We also may encounter problems hiring and retaining the experienced scientific, quality control, and manufacturing personnel needed to manage our manufacturing process, which could result in delays in our production or difficulties in maintaining compliance with applicable regulatory requirements.

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Any problems in our manufacturing process or the facilities with which we contract could make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions, which could limit our access to additional attractive development programs.

Problems in third-party manufacturing process or facilities also could restrict our ability to ensure sufficient clinical material for any clinical trials we may be conducting or are planning to conduct and meet market demand for any products we commercialize.

Problems in third-party manufacturing process or facilities also could restrict our ability to ensure sufficient clinical material for any clinical

trials we may be conducting or are planning to conduct and meet market demand for any products we commercialize.

Risks Related to Our Dependence on Third Parties

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For example, in March 2017, we entered into a strategic alliance with Allergan focused on discovering, developing, and commercializing new gene editing medicines for a range of ocular disorders, which collaboration was terminated in August 2020.

As a result of the termination of the collaboration and the related co-development and commercialization agreement, we will be obligated to fund all of the total costs related to developing and commercializing the LCA10 program in the United States, including the costs of the clinical development of EDIT-101, which will increase our expenses significantly.

As a result of the termination of the collaboration and the related co-development and commercialization agreement, we are now obligated to fund all of the costs related to developing and commercializing the LCA10 program in the United States, including the costs of the clinical development of EDIT-101, which will increase our expenses significantly.

If our collaborations do not result in the successful development and commercialization of products, or if one of our collaborators terminates its agreement with us, we may not receive any milestone or royalty payments under such collaborations.

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Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration, and the proposed collaborator’s evaluation of a number of factors.

Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge

to such ownership without regard to the merits of the challenge, and industry and market conditions generally.

The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us.

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Collaborations are also complex and time-consuming to negotiate and document.

In addition, there have been a significant number of recent business combinations among large pharmaceutical companies, including the acquisition of Juno Therapeutics’ parent entity, Celgene Corporation by Bristol-Myers Squibb Company, and the acquisition of Allergan by AbbVie Inc.

in May 2020, that have resulted in a reduced number of potential future collaborators.

In addition, there have been a significant number of recent business combinations among large pharmaceutical companies, including the impending acquisition of Asklepios BioPharmaceutical, Inc.

by Bayer AG, the acquisition of Allergan by AbbVie Inc.

in May 2020, and the acquisition of Juno Therapeutics’ parent entity, Celgene Corporation by Bristol-Myers Squibb Company, that have resulted in a reduced number of potential future collaborators.

We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all.

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We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials.

Any performance failure on the part of our distributors could delay clinical development or marketing approval of any

product candidates we develop or commercialization of our medicines, producing additional losses and depriving us of potential product revenue.

Any performance failure on the part of our distributors could delay clinical development or marketing approval of any product candidates we develop or commercialization of our medicines, producing additional losses and depriving us of potential product revenue.

We contract with third parties for the manufacture of materials for our research programs, preclinical studies and clinical trials and expect to continue to do so and for commercialization of any product candidates that we develop.

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We do not currently have arrangements in place for redundant supply for bulk drug substances.

If any one of our current contract manufacturer cannot perform as agreed, we may be required to replace that manufacturer.

If any one of our current contract manufacturers cannot perform as agreed, we may be required to replace that manufacturer.

Although we believe that there are several potential alternative manufacturers who could manufacture any of our product candidates, we may incur added costs and delays in identifying and qualifying any such replacement.

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If we are unable to obtain and maintain patent protection for any products we develop and for our technology, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize any of our product candidates, and our technology may be adversely affected.

Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our CRISPR platform technology and any proprietary product candidates and technology we develop.

Our success depends in large part on our ability to obtain and maintain patent protection in the United States

and other countries with respect to our CRISPR platform technology and any proprietary product candidates and technology we develop.

We seek to protect our proprietary position by in-licensing intellectual property relating to our platform technology and filing patent applications in the United States and abroad related to our technologies and product candidates that are important to our business.

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Our owned and in-licensed patents may not cover CRISPR technology in conjunction with a protein other than Cas9 or Cas12a.

If our competitors commercialize the CRISPR technology in conjunction with a protein other than Cas9 or Cas12a, our business, financial

condition, results of operations, and prospects could be materially adversely affected.

If our competitors commercialize the CRISPR technology in conjunction with a protein other than Cas9 or Cas12a, our business, financial condition, results of operations, and prospects could be materially adversely affected.

The issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad.

Our licensors are currently, and we or our licensors may in the future become, subject to a third party pre-issuance submission of prior art to the United States Patent and Trademark Office (the “USPTO”) or opposition, derivation, revocation, re-examination, post-grant and inter partes review, or interference proceedings and other similar proceedings challenging our patent rights or the patent rights of others.

An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.

An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or

invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.

Moreover, we, or one of our licensors, may have to participate in interference proceedings declared by the USPTO to determine priority of invention or in post-grant challenge proceedings, such as oppositions in a foreign patent office, that challenge priority of invention or other features of patentability.

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Our rights to develop and commercialize our technology and product candidates are subject, in part, to the terms and conditions of licenses granted to us by others.

We are heavily reliant upon licenses to certain patent rights and proprietary technology from third parties that

are important or necessary to the development of our genome editing technology, including our CRISPR technology, and product candidates.

We are heavily reliant upon licenses to certain patent rights and proprietary technology from third parties that are important or necessary to the development of our genome editing technology, including our CRISPR technology, and product candidates.

These and other licenses may not provide exclusive rights to use such intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our technology and products in the future.

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For example, pursuant to our license agreements with Broad, and Broad and the President and Fellows of Harvard College (“Harvard”), the licensors may, under certain circumstances, grant a license to the patents that are the subject of such license agreements to a third party.

Such third party would have full rights to the patent rights that are the subject of such licenses, which could impact our competitive position and enable a third party to commercialize products similar to our future product candidates and technology.

Such third party would have full rights to the patent rights that are the subject of such licenses, which could impact our

competitive position and enable a third party to commercialize products similar to our future product candidates and technology.

Furthermore, under these license agreements, Broad has the right, after specified periods of time and subject to certain limitations, to designate gene targets for which Broad, whether alone or together with an affiliate or third party, has an interest in researching and developing products that would otherwise be covered by rights licensed to us under the agreements.

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Additionally, given that we are required to reimburse our licensors for all of their expenses related to the prosecution, maintenance, enforcement and defense of patents and patent applications that we in-license from them, given the ongoing nature of the interference, opposition and re-examination proceedings involving the patents licensed to us under our license agreement with Harvard and Broad, and given that our obligation to make such reimbursements are not subject to any limitations, we anticipate that our obligation to reimburse our licensors for expenses related to these matters will continue to be substantial.

In connection with these reimbursement obligations, we incurred expenses in aggregate amounts of $14.0 million, $14.2 million, and $18.7 million during the years ended December 31, 2019, 2018 and 2017, respectively, and we incurred expenses in an aggregate amount of $6.6 million during the six months ended June 30, 2020.

In connection with these reimbursement obligations, we incurred expenses in aggregate amounts of $14.0 million, $14.2 million, and $18.7 million during the years ended December 31, 2019, 2018 and 2017, respectively, and we incurred expenses in an aggregate amount of $9.3 million during the nine months ended September 30, 2020.

Our licensors may have relied on third party consultants or collaborators or on funds from third parties such that our licensors are not the sole and exclusive owners of the patents and patent applications we in-license.

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If these in-licenses are terminated, or if the underlying patents fail to provide the intended exclusivity, competitors would have the freedom to seek regulatory approval of, and to market, products identical to ours.

In addition, we may seek to obtain additional licenses from our licensors and, in connection with obtaining such licenses, we may agree to amend our existing licenses in a manner that

may be more favorable to the licensors, including by agreeing to terms that could enable third parties (potentially including our competitors) to receive licenses to a portion of the intellectual property that is subject to our existing licenses.

In addition, we may seek to obtain additional licenses from our licensors and, in connection with obtaining such licenses, we may agree to amend our existing licenses in a manner that may be more favorable to the licensors, including by agreeing to terms that could enable third parties (potentially including our competitors) to receive licenses to a portion of the intellectual property that is subject to our existing licenses.

Any of these events could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.

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The declaration of interference described the interfering subject matter as related to a eukaryotic cell that comprises a target DNA and certain defined CRISPR/Cas9 components including a single-molecule guide RNA that are capable of cleaving or editing the target DNA molecule or modulating transcription of at least one gene encoded thereon.

Although we cannot predict with any certainty how long the second interference will actually take, each phase may take approximately a year or longer before a decision is made by the PTAB.

It is possible for motions filed in the

preliminary motions phase to be dispositive of the interference proceeding, such that the second priority phase is not reached.

It is also possible that other third parties may seek to become a party to this interference.

On September 10, 2020, the PTAB granted Broad’s motion for priority benefit while denying the University of California, the University of Vienna, and Emmanuelle Charpentier priority benefit to their two earliest provisional patent applications.

As a result, Broad will enter the priority phase of the interference as “Senior Party” while the University of California, the University of Vienna, and Emmanuelle Charpentier remain the “Junior Party” for purposes of determining which entity was the first to invent the inventions at issue.

Although we cannot predict with any certainty how long the second interference will actually take, it may take approximately a year or longer before the PTAB issues a decision at the conclusion of the priority phase.

It also remains possible that other third parties may seek to become a

party to this interference.

The University of California, the University of Vienna, and Emmanuelle Charpentier or other third parties may file a separate Suggestion of Interference against the Broad patents and patent application that are subject to the interference or other U.S.

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Any of the foregoing could have a material adverse effect on the conduct of our business, financial condition, results of operations, and prospects.

We or our licensors are subject to and may in the future become a party to similar proceedings or priority

disputes in Europe or other foreign jurisdictions.

For example, four European patents that we have in-licensed from Broad, acting on behalf of itself and MIT, or itself, MIT and Harvard (European Patent Nos.

We or our licensors are subject to and may in the future become a party to similar proceedings or priority disputes in Europe or other foreign jurisdictions.

For example, four European patents that we have in-licensed from

Broad, acting on behalf of itself and MIT, or itself, MIT and Harvard (European Patent Nos.

EP 2,764,103 B1, EP 2,771,468 B1, EP 2,784,162 B1, and EP 2,931,898 B1) have been revoked in their entirety by the European Patent Office Opposition Division (the “Opposition Division”).

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It is uncertain when or in what manner the Boards of Appeal will act on these appeals.

The Opposition Division has also initiated opposition proceedings against seven other European patents that we have in-licensed from Broad, acting on behalf of itself, MIT and Harvard, or itself, MIT, Harvard and The Rockefeller University (“Rockefeller”) (European Patent Nos.

EP 2,825,654 B1, EP 2,840,140 B1, EP 2,921,557 B1, EP 2,931,892 B1, EP 2,931,897 B1, EP 2,940,140 B1, and EP 3,494,997 B1), and one European patent that we co-own and in-license from Broad, acting on behalf of itself, MIT and The University of Iowa Research Foundation (European Patent No.

The Opposition Division has also initiated opposition proceedings against nine other European patents that we have in-licensed from Broad, acting on behalf of itself and MIT, or itself, MIT and Harvard, or itself, MIT, Harvard and The Rockefeller University (“Rockefeller”) (European Patent Nos.

EP 2,825,654 B1, EP 2,840,140 B1, EP 2,921,557 B1, EP 2,931,892 B1, EP 2,931,897 B1, EP 2,940,140 B1, EP 3,011,032 B1, EP 3,011,034 B1, and EP 3,494,997 B1), and one European patent that we co-own and in-license from Broad, acting on behalf of itself, MIT and The University of Iowa Research Foundation (European Patent No.

EP 3,066,201 B1).

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One or more of the third parties that have filed oppositions against these European patents or other third parties may file future oppositions against other European patents that we in-license or own.

For example, we are aware that oppositions have been filed against two European patents that we have in-licensed from Broad, acting on behalf of itself, MIT and Harvard (European Patent Nos.

EP 3,064,585 B1 and EP 3,144,390 B1) and one European patent that we have in-licensed from Broad, acting on behalf of itself and MIT (European Patent No.

3,011,032 B1).

The deadlines for filing oppositions against these European patents are November 5, 2020 and December 18, 2020, respectively.

For example, we are aware that oppositions have been filed against three European patents that we have in-licensed from Broad, acting on behalf of itself, MIT and Harvard (European Patent Nos.

EP 3,064,585 B1, EP 3,144,390 B1, and EP 3,310,917).

The deadlines for filing oppositions against these European patents are November 5, 2020, December 18, 2020 and November 12, 2020, respectively.

There may be other oppositions against these European patents that have not yet been filed or that have not yet been made available to the public.

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In addition, our intellectual property license agreements may not always include worldwide rights.

example, certain U.S.

patent applications licensed to us by Broad include The University of Tokyo (“Tokyo”) and NIH as joint applicants.

For example, certain U.S.

patent applications licensed to us by Broad include The University of Tokyo (“Tokyo”) and NIH

as joint applicants.

Broad has only granted a license to us with respect to its interests and to Tokyo’s interests in these U.S.

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It is possible that we may be unable to obtain any additional licenses at a reasonable cost or on reasonable terms, if at all.

that event, we may be required to expend significant time and resources to redesign our technology, product candidates, or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis.

In that event, we may be required to expend significant time and resources to redesign our technology, product candidates,

or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis.

If we are unable to do so, we may be unable to develop or commercialize the affected product candidates, which could harm our business, financial condition, results of operations, and prospects significantly.

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We may also require licenses from third parties for certain non-CRISPR technologies including certain delivery methods that we are evaluating for use with product candidates we develop.

In addition, with

respect to any patents we co-own with third parties, we may require licenses to such co-owners’ interest in such patents.

In addition, with respect to any patents we co-own with third parties, we may require licenses to such co-owners’ interest in such patents.

However, we may be unable to secure such licenses or otherwise acquire or in-license any compositions, methods of use, processes, or other intellectual property rights from third parties that we identify as necessary for our CRISPR technology and product candidates we develop.

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We also may be unable to license or acquire third party intellectual property rights on terms that would allow us to make an appropriate return on our investment or at all.

For example, certain methods for editing immune cells, guide RNA modifications and delivery modes, including certain adeno-associated virus vector technologies, that we are evaluating for use are covered by patents held by third parties.

For example, certain methods for editing cells, guide RNA modifications and delivery modes, including certain adeno-associated virus vector technologies, that we are evaluating for use are covered by patents held by third parties.

If we are unable to successfully obtain rights to required third party intellectual property rights or maintain the existing intellectual property rights we have, we may have to abandon development of the relevant program or product candidate, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

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Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution.

Third parties have raised challenges to the validity of certain of our in-licensed patent

claims and may in the future raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation.

Third parties have raised challenges to the validity of certain of our in-licensed patent claims and may in the future raise similar claims before administrative bodies in the United States or abroad, even

outside the context of litigation.

Such mechanisms include re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings).

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patent applications and foreign counterparts including European Patent Nos.

EP 2,800,811 B1, EP 3,241,902 B1, and EP 3,401,400 B1 which are being

opposed by several parties) filed by the University of California, the University of Vienna (both of which are reported to have exclusively licensed their rights to Caribou Biosciences, which is reported to have exclusively licensed certain rights to Intellia Therapeutics), and Emmanuelle Charpentier (who is reported to have exclusively licensed her rights to CRISPR Therapeutics, ERS Genomics and TRACR Hematology), WO 2014/065596 (and its related U.S.

EP 2,800,811 B1, EP 3,241,902 B1, and EP 3,401,400 B1 which are being opposed by several parties) filed by the University of California, the University of Vienna (both of which are reported to

have exclusively licensed their rights to Caribou Biosciences, which is reported to have exclusively licensed certain rights to Intellia Therapeutics), and Emmanuelle Charpentier (who is reported to have exclusively licensed her rights to CRISPR Therapeutics, ERS Genomics and TRACR Hematology), WO 2014/065596 (and its related U.S.

10,731,181 and 10,745,716, and other related U.S.

patent applications and foreign counterparts including European Patent No.

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Additionally, on June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the European Union, commonly referred to as Brexit.

Following protracted negotiations, the United Kingdom left the European Union on January 31, 2020.

Under the withdrawal agreement, there is a transitional period until December 31, 2020 (extendable up to two years).

Discussions between the United Kingdom and the European Union have so far mainly focused on finalizing withdrawal issues and transition agreements but have been extremely difficult to date.

To date, only an outline of a trade agreement has been reached.

Much remains open but the Prime Minister has indicated that the United Kingdom will not seek to extend the transitional period beyond the end of 2020.

Following protracted negotiations, the United Kingdom left the European Union on January 31, 2020, with a transitional period until December 31, 2020.

Discussions between the United Kingdom and the European Union are ongoing and are expected to continue in relation to the customs and trading relationship between the United Kingdom and the European Union following the transitional period.

If no trade agreement has been reached before the end of the transitional period, there may be significant market and economic disruption

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The FDA and other regulatory agencies closely regulate the post-approval marketing and promotion of medicines to ensure that they are marketed only for the approved indications and in accordance with the provisions of the approved labeling.

The FDA and other regulatory agencies impose stringent restrictions on manufacturers’ communications regarding off-label use, and if we do not market our medicines for their approved indications, we may be subject to enforcement action for off-label marketing by the FDA and other federal and state enforcement agencies,

including the Department of Justice.

Violation of the Federal Food, Product, and Cosmetic Act and other statutes, including the False Claims Act, relating to the promotion and advertising of prescription products may also lead to investigations or allegations of violations of federal and state health care fraud and abuse laws and state consumer protection laws.

Violation of the Federal Food, Product, and Cosmetic Act and other statutes, including the False Claims Act, relating to the promotion and advertising of prescription products may also lead to

investigations or allegations of violations of federal and state health care fraud and abuse laws and state consumer protection laws.

In addition, later discovery of previously unknown problems with our medicines, manufacturers, or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:

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Restrictions under applicable federal and state healthcare laws and regulations include the following:

● the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and

willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order, or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid;

● the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order, or recommendation of,

any good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid;

● the federal False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval from Medicare, Medicaid, or other government payors that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties;

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These requirements are provided in the national laws, industry codes, or professional codes of conduct applicable in the European Union Member States.

Failure to comply with these requirements could result in reputational risk, public

reprimands, administrative penalties, fines, or imprisonment.

Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines, or imprisonment.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.

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For fiscal years 2018 and beyond, the executive order requires agencies to identify regulations to offset any incremental cost of a new regulation.

In interim guidance issued by the Office of Information and Regulatory Affairs within the Office of Management and on February 2, 2017, the administration indicates that the “two-for-one” provisions may apply not only to agency regulations, but also to significant agency guidance documents.

The president has also issued another executive order meant to ensure that agency guidance documents do not establish legally binding requirements and it directs each agency to rescind guidance documents that it determines should no longer be in effect.

In interim guidance issued by the Office of Information and Regulatory Affairs within the Office of Management on February 2, 2017, the administration indicates that the “two-for-one” provisions may apply not only to agency regulations, but also to significant agency guidance documents.

The president has also issued an executive order meant to ensure that agency guidance documents do not establish legally binding requirements and it directs each agency to rescind guidance documents that it determines should no longer be in effect.

If these executive actions impose constraints on FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.

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Cost reduction initiatives and other provisions of this legislation could decrease the coverage and price that we receive for any approved products.

While the Medicare Modernization Act applies only to drug benefits for Medicare beneficiaries, private payors often

follow Medicare coverage policy and payment limitations in setting their own reimbursement rates.

Therefore, any reduction in reimbursement that results from the Medicare Modernization Act may result in a similar reduction in payments from private payors.

While the Medicare Modernization Act applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates.

Therefore, any reduction in reimbursement that results from the Medicare Modernization Act may result in a similar reduction in

payments from private payors.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (the “PPACA”), which became law in 2010, contains provisions of importance to our business, including, without limitation, our ability to commercialize and the prices we may obtain for any of our product candidates and that are approved for sale, the following:

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For example, with enactment of the Tax Cuts and Jobs Act of 2017 (the “TCJA”), Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019.

Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the PPACA-mandated “Cadillac” tax on high-cost

employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax.

Further, the Bipartisan Budget Act of 2018, among other things, amended the PPACA, effective January 1, 2019, to increase from 50 percent to 70 percent the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” Congress may consider other legislation to replace elements of the PPACA during the next Congressional session.

Further, each chamber of Congress has put forth multiple bills designed to repeal or repeal and replace portions of the PPACA.

Although none of these measures has been enacted by Congress to date, Congress may consider other legislation to repeal and replace elements of the PPACA.

Congress will likely consider other legislation to replace elements of the PPACA, during the next Congressional session.

It is possible that repeal and replacement initiatives, if enacted into law, could ultimately result in fewer individuals having health insurance coverage or in individuals having insurance coverage with less generous benefits.

While the timing and scope of any potential future legislation to repeal and replace PPACA provisions is highly uncertain in many respects, it is also possible that some of the PPACA provisions that generally are not favorable for the research-based pharmaceutical industry could also be repealed along with PPACA coverage expansion provision.

Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the PPACA-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax.

Further, the Bipartisan Budget Act of 2018, among other things, amended the PPACA, effective January 1,

2019, to increase from 50 percent to 70 percent the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” Congress may in the future consider other legislation to replace elements of the PPACA.

We expect that these healthcare reforms, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product and/or the level of reimbursement physicians receive for administering any approved product we might bring to market.

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On June 25, 2020, the Trump Administration and a coalition of 18 states asked the court to strike down the entirety of the PPACA.

The case is scheduled for oral argument before the court on November 10, 2020.

It is unclear how such litigation and other efforts to repeal and replace the PPACA will impact the PPACA and our business.

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The costs of prescription pharmaceuticals has also been the subject of considerable discussion in the United States, and members of Congress and the executive branch have stated that they will address such costs through new legislative and administrative measures.

To date, there have been several recent U.S.

congressional inquiries and proposed and enacted state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under

Medicare and reform government program reimbursement methodologies for drug products.

At the federal level, the current presidential administration has pressed for drug price control measures that could be enacted during the 2019 budget process or in other future legislation, including, for example, measures to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug prices under Medicaid, and to eliminate cost sharing for generic drugs for low-income patients.

To date, there have been several U.S.

At the federal level, the current presidential administration has pressed for enactment of a number of drug price control measures, including, for example, measures to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug prices under Medicaid, and to eliminate cost sharing for generic drugs for low-income patients.

While any proposed measures will require authorization through additional legislation to become effective, Congress and the current presidential administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.

In addition, on December 23, 2019, the Trump Administration published a proposed rulemaking that, if finalized, would allow states or certain other non-federal government entities to submit importation program proposals to the FDA for review and approval.

Applicants would be required to demonstrate their importation plans pose no additional risk to public health and safety and will result in significant cost savings for consumers.

At the same time, the FDA issued draft guidance that would allow manufacturers to import their own FDA-approved drugs that are authorized for sale in other countries (multi-market approved products).

Finally, the current presidential administration’s budget proposal for fiscal year 2021 includes a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs.

More recently, the president issued five executive orders that are intended to lower the costs of prescription drug products.

The first order would require all federally qualified health centers (“FQHCs”) to pass on to patients the

discounts the health centers receive on insulin and epinephrine through Medicare’s 340B Drug Discount Program.

The second order would establish an international pricing index that would set the price Medicare Part B pays for the costliest medications covered under the program to the lowest price in other economically advanced countries.

The third order is intended to reduce the costs of drugs by supporting the safe importation of prescription drugs.

Specifically, the order calls upon the Department of Health and Human Services (“HHS”) to facilitate grants to individuals of waivers of the prohibition of importation of prescription drugs that would allow patients to import FDA approved drug products from abroad, so long as doing so would result in lower costs.

In addition, the order would allow wholesalers and pharmacies to re-import both biological drugs and insulin that were originally manufactured in the United States and then exported for international sale.

This action preceded the finalization of a rulemaking on September 24, 2020 that allows states or certain other non-federal government entities to submit importation program proposals to the FDA for review and approval.

Applicants would be required to demonstrate that their importation plans pose no additional risk to public health and safety and will result in significant cost savings for consumers.

At the same time, the FDA issued draft guidance that would allow manufacturers to import their own FDA-approved drugs that are authorized for sale in other countries (multi-market approved products).

The fourth executive order would end drug rebates used by health plan sponsors, pharmacies or pharmacy benefit managers (“PBMs”) in operating the Medicare Part D program.

Specifically, the order directs HHS to exclude from safe harbor protections under the federal anti-kickback statute retroactive price reductions that are not applied at the point-of-sale.

Instead, the order requires HHS to establish new safe harbors that would allow health plan sponsors, pharmacies, and PBMs to pass on those discounts to consumers at point-of-sale in order to lower the patient’s out-of-pocket costs and permit the use of certain bona fide PBM service fees.

Each of these orders directs the federal government to implement the initiatives outlined in the orders, meaning they will not have immediate effects.

Finally, the fifth order instructs the federal government to develop a list of “essential” medicines and then buy them and other medical supplies from U.S.

manufacturers instead of from companies around the world, including especially China.

The order is meant reduce regulatory barriers to domestic pharmaceutical manufacturing and catalyze manufacturing technologies needed to keep drug prices low and the production of drug products in the United States.

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

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Our employees, principal investigators, consultants, and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.

We are exposed to the risk of fraud or other misconduct by our employees, consultants, and partners, and, if we commence clinical trials, our principal investigators.

We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants,

and partners.

Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in the European Union and other jurisdictions, provide accurate information to the FDA, the European Commission, and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately, or disclose unauthorized activities to us.

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Such misconduct also could involve the improper use of information obtained in the course of clinical trials or interactions with the FDA or other regulatory authorities, which could result in regulatory sanctions and cause serious harm to our reputation.

We have adopted a code of conduct applicable to all of our employees, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits

stemming from a failure to comply with these laws or regulations.

If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, results of operations, and prospects, including the imposition of significant fines or other sanctions.

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Additionally, we are actively trying to recruit a candidate for the role of Chief Medical Officer.

Any inability to fill this

position in an expedient manner may have a material adverse effect on our business.

Any inability to fill this position in an expedient manner may have a material adverse effect on our business.

Recruiting and retaining qualified scientific, clinical, manufacturing, and sales and marketing personnel will also be critical to our success.

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Significant outbreaks of contagious diseases, and other adverse public health developments, could have a material impact on our business operations and operating results.

For example, the spread of COVID-19 has affected segments of the global economy and could affect our operations We have taken steps in line with guidance from the U.S.

For example, the spread of COVID-19 has affected segments of the global economy and could affect our operations.

We have taken steps in line with guidance from the U.S.

Centers for Disease Control and Prevention, the Commonwealth of Massachusetts and the State of Colorado, the jurisdictions in which we primarily operate our business, to protect the health and safety of our employees and the community.

In particular, 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.

Under our return-to-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-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.

We continue to assess the impact of the COVID-19 pandemic to best mitigate risk and continue the operations of our business.

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● limitations imposed on our business operations by local, state, or federal authorities to address such pandemics or similar public health crises could impact our ability to conduct preclinical or clinical activities, including conducting IND- and CTA-enabling studies or our ability to select future development candidates;

● business disruptions caused by potential workplace, laboratory and office closures and an increased reliance on employees working from home, disruptions to or delays in ongoing laboratory experiments and operations, staffing shortages, travel limitations, cyber security and data accessibility, or communication or mass transit disruptions, any of which could adversely impact our business operations or delay necessary

interactions with local regulators, ethics committees, manufacturing sites, research or clinical trial sites and other important agencies and contractors.

For example and in light of the ongoing COVID-19 pandemic, we have decided to delay the development of our research program to treat autosomal dominant retinitis pigmentosa 4 and not to pursue declaring a development candidate for such program by the end of 2020.

We have also recently experienced slowed enrollment in the EDIT-101 clinical trial as a result of the COVID-19 pandemic and may experience a further enrollment slowdown in light of the pandemic’s current resurgence.

In addition, the trading prices for our common stock and other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic.

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We also rely to a large extent on information technology systems to operate our business, including our financial systems.

We have outsourced elements of our confidential information processing and information technology structure, and as a result, we are managing independent vendor relationships with third parties who may or could have access to our confidential information.

our confidential information.

Similarly, our business partners and other third-party providers possess certain of our sensitive data.

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In addition, certain of our employees, executive officers, directors, and affiliated stockholders have entered or may enter into Rule 10b5-1 plans providing for sales of shares of our common stock from time to time.

Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the participant establishing the plan when entering into the plan, without further direction from such participant.

Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the participant establishing the plan when entering into the plan, without further direction from such participant.

A Rule 10b5-1 plan may be amended or terminated in some circumstances.

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The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The Nasdaq Global Select Market, and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.

We have had to hire additional accounting, finance, and other personnel in connection with our becoming, and our efforts to comply with the requirements of being, a public company, and our management and other personnel devote a substantial amount of time

towards maintaining compliance with these requirements.

These requirements increase our legal and financial compliance costs and make some activities more time-consuming and costly.

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This exclusive forum provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act of 1934, which provides for exclusive jurisdiction of the federal courts.

It could apply, however, to a suit that falls within one or more of the categories enumerated in the exclusive forum provision and asserts claims under the Securities Act of 1933, as amended (the “Securities Act”) , inasmuch as Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder;

It could apply, however, to a suit that falls within one or more of the categories enumerated in the exclusive forum provision and asserts claims under the Securities Act of 1933, as amended (the

“Securities Act”) , inasmuch as Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder;

provided, that with respect to claims under the Securities Act, our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

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Description of Exhibit

Common Stock Sales Agreement, dated as of May 15, 2020, by and between the Company and Cowen and Company, LLC (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K (File No.

001-37687) filed with the Securities and Exchange Commission on May 15, 2020).

Separation Agreement, dated as of April 30, 2020, by and between the Company and Judith Abrams.

Advisory Services Agreement, Dated May 1, 2020, by and between the Company and Judith Abrams

Termination Agreement, dated August 5, 2020, by and between the Company and Allergan Sales, LLC.

Rule 13a-14(a) Certification of Principal Executive Officer

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Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C.

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language):

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Comprehensive Income (Loss) (unaudited), (iv) Consolidated Statement of Stockholders’ Equity (unaudited), (v) Consolidated Statements of Cash Flows (unaudited)and (vi) Notes to Condensed Consolidated Financial Statements (unaudited), tagged as blocks of text and including detailed tags.

The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL.

The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline XBRL.

*Filed herewith

† Confidential portions of this exhibit have been omitted.

+ The certifications furnished in Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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EDITAS MEDICINE, INC.

August 7, 2020

November 6, 2020

/s/ Michelle Robertson

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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 1A. Risk Factors