Editas Medicine, Inc. 10-Q

Item 1. Financial Statements. Editas Medicine, Inc. Condensed Consolidated Balance Sheets (unaudited) (amounts in thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ 2020 ​ 2019 ASSETS ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 279,576 ​ $ 238,183 Marketable securities ​ ​ 215,729 ​ ​ 218,957 Accounts receivable ​ 1,055 ​ 418 Prepaid expenses and other current assets ​ 10,467 ​ 6,286 Total current assets ​ 506,827 ​ 463,844 Marketable securities ​ ​ 45,986 ​ ​ — Property and equipment, net ​ 14,069 ​ 10,887 Right-of-use assets ​ ​ 26,398 ​ ​ 28,761 Restricted cash and other non-current assets ​ 3,877 ​ 5,393 Total assets ​ $ 597,157 ​ $ 508,885 LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 5,158 ​ $ 5,843 Accrued expenses ​ 20,307 ​ 22,120 Deferred revenue, current ​ ​ 19,874 ​ ​ 23,514 Operating lease liabilities ​ ​ 6,342 ​ ​ 5,804 Other current liabilities ​ 3,135 ​ 2,682 Total current liabilities ​ 54,816 ​ 59,963 Operating lease liabilities, net of current portion ​ ​ 20,368 ​ ​ 23,277 Deferred revenue, net of current portion ​ ​ 80,821 ​ ​ 163,207 Other non-current liabilities ​ — ​ 1 Total liabilities ​ ​ 156,005 ​ ​ 246,448 Stockholders’ equity ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.0001 par value per share: 5,000,000 shares authorized; no shares issued or outstanding ​ — ​ — Common stock, $ 0.0001 par value per share: 195,000,000 shares authorized; 62,331,700 and 54,533,798 shares issued, and 62,187,700 and 54,355,798 shares outstanding at September 30, 2020 and December 31, 2019, respectively ​ 6 ​ 5 Additional paid-in capital ​ 1,043,892 ​ 811,546 Accumulated other comprehensive (loss) income ​ ​ ( 48 ) ​ ​ 107 Accumulated deficit ​ ( 602,698 ) ​ ( 549,221 ) Total stockholders’ equity ​ ​ 441,152 ​ ​ 262,437 Total liabilities and stockholders’ equity ​ $ 597,157 ​ $ 508,885 ​ The accompanying notes are an integral part of the condensed consolidated financial statements. ​ ​ 3 Table of Contents ​ Editas Medicine, Inc. Condensed Consolidated Statements of Operations (unaudited) (amounts in thousands, except per share and share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ ​ ​ 2020 ​ 2019 ​ 2020 ​ 2019 ​ Collaboration and other research and development revenues ​ $ 62,841 ​ $ 3,848 ​ $ 79,313 ​ $ 8,247 ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ 33,916 ​ 22,702 ​ 96,492 ​ 62,109 ​ General and administrative ​ 19,936 ​ 15,734 ​ 51,789 ​ 47,638 ​ Total operating expenses ​ 53,852 ​ 38,436 ​ 148,281 ​ ​ 109,747 ​ Operating income (loss) ​ 8,989 ​ ( 34,588 ) ​ ( 68,968 ) ​ ( 101,500 ) ​ Other (expense) income, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (expense) income, net ​ ( 1,396 ) ​ ( 33 ) ​ 13,114 ​ ( 144 ) ​ Interest income, net ​ ​ 226 ​ ​ 1,680 ​ ​ 2,377 ​ ​ 5,668 ​ Total other (expense) income, net ​ ( 1,170 ) ​ 1,647 ​ 15,491 ​ 5,524 ​ Net income (loss) ​ $ 7,819 ​ $ ( 32,941 ) ​ $ ( 53,477 ) ​ $ ( 95,976 ) ​ Net income (loss) per share, basic ​ $ 0.13 ​ $ ( 0.66 ) ​ $ ( 0.93 ) ​ $ ( 1.95 ) ​ Net income (loss) per share, diluted ​ $ 0.12 ​ $ ( 0.66 ) ​ $ ( 0.93 ) ​ $ ( 1.95 ) ​ Weighted-average common shares outstanding, basic ​ 62,144,118 ​ 49,820,455 ​ 57,377,581 ​ 49,246,684 ​ Weighted-average common shares outstanding, diluted ​ ​ 62,697,173 ​ ​ 49,820,455 ​ 57,377,581 ​ 49,246,684 ​ ​ The accompanying notes are an integral part of the condensed consolidated financial statements. ​ 4 Table of Contents Editas Medicine, Inc. Condensed Consolidated Statements of Comprehensive Income (Loss ) (unaudited) (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2020 ​ 2019 ​ 2020 ​ 2019 Net income (loss) ​ $ 7,819 ​ $ ( 32,941 ) ​ $ ( 53,477 ) ​ $ ( 95,976 ) Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized (loss) gain on marketable debt securities ​ ( 231 ) ​ ( 6 ) ​ ( 155 ) ​ 68 Comprehensive income (loss) ​ $ 7,588 ​ $ ( 32,947 ) ​ $ ( 53,632 ) ​ $ ( 95,908 ) ​ The accompanying notes are an integral part of the condensed consolidated financial statements. ​ ​ ​ ​ ​ 5 Table of Contents Editas Medicine, Inc. Condensed Consolidated Statements of Stockholders’ Equity (unaudited) (amounts in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ Other ​ Total ​ ​ Common Stock ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ Shares Amount ​ Capital ​ Income (Loss) ​ Deficit ​ Equity Balance at December 31, 2019 ​ 54,355,798 ​ $ 5 ​ $ ​ 811,546 ​ $ 107 ​ $ ( 549,221 ) ​ $ 262,437 Exercise of stock options ​ 233,208 ​ ​ — ​ ​ ​ 3,047 ​ ​ — ​ ​ — ​ ​ 3,047 Vesting of restricted common stock awards ​ 213,393 ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation expense ​ — ​ ​ — ​ ​ ​ 6,220 ​ ​ — ​ ​ — ​ ​ 6,220 Unrealized gain on marketable debt securities ​ — ​ ​ — ​ ​ ​ — ​ ​ 587 ​ ​ — ​ ​ 587 Net loss ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ( 37,724 ) ​ ​ ( 37,724 ) Balance at March 31, 2020 ​ 54,802,399 ​ $ 5 ​ $ ​ 820,813 ​ $ 694 ​ $ ( 586,945 ) ​ $ 234,567 Exercise of stock options ​ 355,812 ​ ​ — ​ ​ ​ 6,839 ​ ​ — ​ ​ — ​ ​ 6,839 Issuance of common stock for public offering ​ 6,900,000 ​ ​ 1 ​ ​ ​ 203,681 ​ ​ — ​ ​ — ​ ​ 203,682 Stock-based compensation expense ​ — ​ ​ — ​ ​ ​ 5,417 ​ ​ — ​ ​ — ​ ​ 5,417 Vesting of restricted common stock awards ​ 30,194 ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ — ​ ​ — Purchase of common stock under benefit plans ​ 15,244 ​ ​ — ​ ​ ​ 350 ​ ​ — ​ ​ — ​ ​ 350 Unrealized loss on marketable debt securities ​ — ​ ​ — ​ ​ ​ — ​ ​ ( 511 ) ​ ​ — ​ ​ ( 511 ) Net loss ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ( 23,572 ) ​ ​ ( 23,572 ) Balance at June 30, 2020 ​ 62,103,649 ​ $ 6 ​ $ ​ 1,037,100 ​ $ 183 ​ $ ( 610,517 ) ​ $ 426,772 Exercise of stock options ​ 48,312 ​ ​ — ​ ​ ​ 947 ​ ​ — ​ ​ — ​ ​ 947 Stock-based compensation expense ​ — ​ ​ — ​ ​ ​ 5,845 ​ ​ — ​ ​ — ​ ​ 5,845 Vesting of restricted common stock awards ​ 35,739 ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ — ​ ​ — Unrealized loss on marketable debt securities ​ — ​ ​ — ​ ​ ​ — ​ ​ ( 231 ) ​ ​ — ​ ​ ( 231 ) Net income ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ 7,819 ​ ​ 7,819 Balance at September 30, 2020 ​ 62,187,700 ​ $ 6 ​ $ ​ 1,043,892 ​ $ ( 48 ) ​ $ ( 602,698 ) ​ $ 441,152 ​ ​ 6 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ Other ​ Total ​ ​ Common Stock ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ Shares Amount ​ Capital ​ Income ​ Deficit ​ Equity Balance at December 31, 2018 ​ 48,758,951 ​ $ 5 ​ $ ​ 652,464 ​ $ ( 29 ) ​ $ ( 416,278 ) ​ $ 236,162 Cumulative effect adjustment for adoption of new accounting guidance ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ 803 ​ ​ 803 Exercise of stock options ​ 146,171 ​ ​ — ​ ​ ​ 1,533 ​ ​ — ​ ​ — ​ ​ 1,533 Vesting of restricted common stock awards ​ 18,000 ​ ​ — ​ ​ ​ ​ ​ ​ — ​ ​ — ​ ​ — Stock-based compensation expense ​ — ​ ​ — ​ ​ ​ 7,855 ​ ​ — ​ ​ — ​ ​ 7,855 Unrealized gain on marketable debt securities ​ — ​ ​ — ​ ​ ​ — ​ ​ 58 ​ ​ — ​ ​ 58 Net loss ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ( 29,249 ) ​ ​ ( 29,249 ) Balance at March 31, 2019 ​ 48,923,122 ​ $ 5 ​ $ ​ 661,852 ​ $ 29 ​ $ ( 444,724 ) ​ $ 217,162 Exercise of stock options ​ 277,259 ​ ​ — ​ ​ ​ 2,894 ​ ​ — ​ ​ — ​ ​ 2,894 Vesting of restricted common stock awards ​ 24,486 ​ ​ — ​ ​ ​ 410 ​ ​ — ​ ​ — ​ ​ 410 Purchase of common stock under benefit plan ​ 16,226 ​ ​ — ​ ​ ​ 283 ​ ​ — ​ ​ — ​ ​ 283 Stock-based compensation expense ​ — ​ ​ — ​ ​ ​ 6,083 ​ ​ — ​ ​ — ​ ​ 6,083 Unrealized gain on marketable debt securities ​ — ​ ​ — ​ ​ ​ — ​ ​ 16 ​ ​ — ​ ​ 16 Net loss ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ( 33,786 ) ​ ​ ( 33,786 ) Balance at June 30, 2019 ​ 49,241,093 ​ $ 5 ​ $ ​ 671,522 ​ $ 45 ​ $ ( 478,510 ) ​ $ 193,062 Exercise of stock options ​ 78,804 ​ ​ — ​ ​ ​ 1,329 ​ ​ — ​ ​ — ​ ​ 1,329 Vesting of restricted common stock awards ​ 34,566 ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation expense ​ — ​ ​ — ​ ​ ​ 6,559 ​ ​ — ​ ​ — ​ ​ 6,559 Issuance of common stock from public offering, net of issuance costs of $ 0.1 million ​ 1,721,735 ​ ​ — ​ ​ ​ 41,987 ​ ​ — ​ ​ — ​ ​ 41,987 Unrealized loss on marketable debt securities ​ — ​ ​ — ​ ​ ​ — ​ ​ ( 6 ) ​ ​ — ​ ​ ( 6 ) Net loss ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ ( 32,941 ) ​ ​ ( 32,941 ) Balance at September 30, 2019 ​ 51,076,198 ​ $ 5 ​ $ ​ 721,397 ​ $ 39 ​ $ ( 511,451 ) ​ $ 209,990 ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of the condensed consolidated financial statements. 7 Table of Contents Editas Medicine, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2020 2019 Cash flow from operating activities ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 53,477 ) ​ $ ( 95,976 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Stock-based compensation expense ​ 17,483 ​ 20,907 Depreciation ​ 2,776 ​ 2,048 Unrealized gain on corporate equity securities ​ ​ ( 13,109 ) ​ ​ — Other non-cash items, net ​ ( 285 ) ​ ( 2,427 ) Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ ​ ( 637 ) ​ ​ ( 281 ) Prepaid expenses and other current assets ​ ​ ( 4,181 ) ​ ​ 263 Right-of-use assets ​ ​ 2,363 ​ ​ 1,780 Other non-current assets ​ ​ 106 ​ ​ ( 14 ) Accounts payable ​ ​ ( 447 ) ​ ​ 1,005 Accrued expenses ​ ​ ( 2,391 ) ​ ​ ( 4,491 ) Deferred revenue ​ ( 86,026 ) ​ ( 2,928 ) Operating lease liabilities ​ ( 2,371 ) ​ ( 2,107 ) Other current and non-current liabilities ​ ​ 453 ​ ​ 528 Net cash used in operating activities ​ ( 139,743 ) ​ ( 81,693 ) Cash flow from investing activities ​ ​ ​ ​ ​ ​ Purchases of property and equipment ​ ( 5,786 ) ​ ​ ( 4,476 ) Proceeds from the sale of equipment ​ ​ 21 ​ ​ 36 Purchases of marketable securities ​ ​ ( 300,363 ) ​ ​ ( 305,126 ) Proceeds from maturities of marketable securities ​ ​ 274,500 ​ ​ 314,000 Net cash (used in) provided by investing activities ​ ( 31,628 ) ​ 4,434 Cash flow from financing activities ​ ​ ​ ​ ​ ​ Proceeds from offering of common stock, net of issuance costs ​ ​ 203,839 ​ ​ 41,216 Proceeds from exercise of stock options ​ ​ 10,833 ​ ​ 5,756 Issuance of common stock under benefit plans ​ ​ 350 ​ ​ 283 Net cash provided by financing activities ​ 215,022 ​ 47,255 Net increase (decrease) in cash, cash equivalents, and restricted cash ​ 43,651 ​ ​ ( 30,004 ) Cash, cash equivalents, and restricted cash, beginning of period ​ 239,802 ​ ​ 136,395 Cash, cash equivalents, and restricted cash, end of period ​ $ 283,453 ​ $ 106,391 Supplemental disclosure of cash and non-cash activities: ​ ​ ​ ​ ​ ​ Fixed asset additions included in accounts payable and accrued expenses ​ $ 910 ​ $ 772 Receivable of proceeds from offering of common stock ​ ​ — ​ ​ 756 Cash paid in connection with operating lease liabilities ​ ​ 7,757 ​ ​ 4,604 Offering costs included in accounts payable and accrued expenses ​ ​ 158 ​ ​ 15 Right-of-use assets obtained in exchange of operating lease obligations ​ ​ — ​ ​ 19,461 ​ The accompanying notes are an integral part of the condensed consolidated financial statements. ​ 8 Table of Contents Editas Medicine, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) ​ 1. Nature of Business ​ Editas Medicine, Inc. (the “Company”) is a leading, clinical stage genome editing company dedicated to developing potentially transformative genomic medicines to treat a broad range of serious diseases. The Company was incorporated in the state of Delaware in September 2013. Its principal offices are in Cambridge, Massachusetts. Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and raising capital. The Company has primarily financed its operations through various equity financings, payments received under a research collaboration with Juno Therapeutics, Inc., a wholly-owned subsidiary of the Bristol-Myers Squibb Company (“Juno Therapeutics”), and payments received under a strategic alliance with Allergan Pharmaceuticals International Limited (which was acquired by AbbVie, Inc. in May 2020 and is referred to together with its affiliates as “Allergan”). In August 2020, the collaboration with Allergan was terminated. The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations and ability to transition from pilot-scale manufacturing to large-scale production of products. Liquidity ​ In May 2020, the Company entered into a sales agreement with Cowen and Company, LLC (“Cowen”), under which the Company from time to time can issue and sell shares of its common stock through Cowen in at-the-market offerings for aggregate gross sale proceeds of up to $ 150.0 million ( the “ATM Facility”). As of September 30, 2020, the Company has not sold any shares of its common stock under the ATM Facility. In June 2020, the Company completed a public offering whereby the Company sold 6,900,000 shares of its common stock, inclusive of 900,000 shares of common stock sold by the Company pursuant to the full exercise of an option granted to the underwriters in connection with the offering and received net proceeds of approximately $ 203.7 million. As of September 30, 2020, the Company has raised an aggregate of $ 648.7 million in net proceeds through the sale of shares of its common stock in public offerings and at-the-market offerings. ​ The Company has incurred annual net operating losses in every year since its inception. The Company expects that its existing cash, cash equivalents and marketable securities at September 30, 2020 and anticipated interest income will enable it to fund its operating expenses and capital expenditure requirements into 2023 . The Company had an accumulated deficit of $ 602.7 million at September 30, 2020, and will require substantial additional capital to fund its operations. The Company has never generated any product revenue. There can be no assurance that the Company will be able to obtain additional debt or equity financing or generate product revenue or revenues from collaborative partners, on terms acceptable to the Company, on a timely basis or at all. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations, and financial condition. ​ 9 Table of Contents 2. Summary of Significant Accounting Policies ​ Unaudited Interim Financial Information ​ The condensed consolidated financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “Annual Report”). ​ The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Editas Securities Corporation. All intercompany transactions and balances of the subsidiary have been eliminated in consolidation. In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The three months ended September 30, 2020 and 2019 are referred to as the third quarter of 2020 and 2019, respectively. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period. ​ Summary of Significant Accounting Policies ​ The Company’s significant accounting policies are described in Note 2, “Summary of significant accounting policies,” to the consolidated financial statements included in the Annual Report. There have been no material changes to the significant accounting policies previously disclosed in the Annual Report, other than as noted below. ​ Corporate Equity Securities ​ The Company classifies investments in equity securities that have a readily determinable fair value as marketable securities in the Company’s condensed consolidated balance sheets. The Company’s marketable securities are stated at fair value. Typically, the fair value of these securities is based on a quoted price for an identical equity security. If the equity security has a restriction that is determined to be an attribute of the security that would transfer to a market participant, the fair value of the security is measured based on the quoted price for an otherwise identical unrestricted equity security, adjusted for the effect of the restriction. The adjustment reflects the discount that a market participant would demand for the risk relating to the inability to dispose of the security for a specified period of time. That adjustment is based on the nature and duration of the restriction and the limitations imposed by the restriction to a buyer. The Company records changes in the fair value of its equity securities in “Other Income (Expense), net” in the Company’s condensed consolidated statement of operations. ​ Recent Accounting Pronouncements – Recently Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Statement Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (“ASU 2016-13”) which was clarified and amended by the issuances of ASUs 2018-19, 2019-04, 2019-05 and 2019-11 in November 2018, April 2019, May 2019 and November 2019, respectively. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis to be measured using an expected-loss model, replacing the current incurred-loss model, and recorded through an allowance for credit losses which is a valuation account that is deducted from the amortized cost basis of the financial asset. ASU 2016-13 requires evaluation of credit loss based on historical experience, current conditions and reasonable and supportable forecasts. The Company’s estimate of expected credit losses includes a measure of the expected risk of credit loss even if the risk is remote. When assessing financial assets for credit losses, the Company pools financial assets with similar risk characteristics and performs a collective evaluation. However, the Company is not required to measure expected credit losses in which historical credit loss information adjusted for 10 Table of Contents current conditions and reasonable and supportable forecasts results in an expectation that nonpayment of the amortized cost basis is zero. At each reporting date, the Company will record an allowance for credit losses and reports it as credit loss expense which is included in “Other income (expense), net” in the Company’s condensed consolidated statement of operations. However subsequent increases or decreases in the fair value of available-for-sale securities that do not result in recognition or reversal of an allowance for credit loss or write-down will continue to be recorded in other comprehensive loss. The Company adopted the new standard and the related amendments on January 1, 2020 using a modified retrospective approach. The modified retrospective approach requires the Company to record a one-time adjustment to opening accumulated deficit as of the effective date. At adoption, the Company concluded that there are no indicators of credit loss with respect to its available-for-sale debt securities which consist of U.S Treasury securities and government-agency bonds. The Company therefore did not record an allowance for credit losses or doubtful accounts upon adoption or during the first quarter of 2020. The adoption of ASU 2016-13 had no impact on the Company’s condensed consolidated financial statements. ​ In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”) . ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018 - 15 was effective on January 1, 2020. The Company adopted ASU 2018-15 using the prospective transition approach, which allows the Company to change the accounting method without restating prior periods or recording cumulative adjustments. The adoption of ASU 2018-15 did not have a material impact on the Company’s condensed consolidated financial statements. ​ In 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which eliminates, adds, and modifies the disclosure requirements for fair value measurements. ASU 2018-13 was effective on January 1, 2020. The adoption of ASU 2018-13 results in additional disclosures related to the Company’s assets and liabilities that are valued based on Level 3 inputs and transfers between Level 1 and Level 2 fair value measurements. The adoption of ASU 2018-13 did not have a material impact on the Company’s financial statement footnote disclosures. ​ ​ 3. Cash Equivalents and Marketable Securities ​ Cash equivalents and marketable securities consisted of the following at September 30, 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance ​ ​ Gross ​ Gross ​ ​ ​ ​ Amortized ​ for Credit ​ ​ Unrealized ​ Unrealized ​ Fair September 30, 2020 ​ Cost ​ Losses ​ ​ Gains ​ Losses ​ Value Cash equivalents and marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 259,081 ​ $ — ​ ​ $ — ​ $ — ​ $ 259,081 U.S. Treasuries ​ ​ 165,518 ​ ​ — ​ ​ ​ 20 ​ ​ ( 6 ) ​ ​ 165,532 Government agency securities ​ ​ 49,214 ​ ​ — ​ ​ ​ — ​ ​ ( 20 ) ​ ​ 49,194 Corporate equity securities ​ ​ 3,667 ​ ​ — ​ ​ ​ 13,109 ​ ​ — ​ ​ 16,776 Commercial paper ​ ​ 25,928 ​ ​ — ​ ​ ​ — ​ ​ ( 4 ) ​ ​ 25,924 Corporate notes/bonds ​ ​ 24,823 ​ ​ — ​ ​ ​ — ​ ​ ( 39 ) ​ ​ 24,784 Total ​ $ 528,231 ​ $ — ​ ​ $ 13,129 ​ $ ( 69 ) ​ $ 541,291 ​ 11 Table of Contents Cash equivalents and marketable securities consisted of the following at December 31, 2019 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair December 31, 2019 ​ Cost ​ Gains ​ Losses ​ Value Cash equivalents and marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 230,201 ​ $ — ​ $ — ​ $ 230,201 U.S. Treasuries ​ ​ 71,348 ​ ​ 20 ​ ​ — ​ ​ 71,368 Government agency securities ​ ​ 155,484 ​ ​ 87 ​ ​ — ​ ​ 155,571 Equity securities included in other non-current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate equity securities ​ ​ 3,667 ​ ​ — ​ ​ — ​ ​ 3,667 Total ​ $ 460,700 ​ $ 107 ​ $ — ​ $ 460,807 ​ As of September 30, 2020, the Company did no t hold any marketable securities that had been in an unrealized loss position for more than twelve months. Furthermore, the Company has determined that there were no material changes in the credit risk of the debt securities. As of September 30, 2020, the Company holds 21 securities with an aggregate fair value of $ 46.0 million that had remaining maturities between one and two years. ​ There were no realized gains or losses on available-for-sale securities during the nine months ended September 30, 2020 or 2019. ​ 4. Fair Value Measurements ​ Assets measured at fair value on a recurring basis as of September 30, 2020 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted Prices Significant ​ ​ ​ ​ ​ ​ ​ in Active ​ Other ​ Significant ​ ​ ​ ​ ​ Markets for ​ Observable ​ Unobservable ​ ​ September 30, ​ Identical Assets ​ Inputs ​ Inputs Financial Assets ​ 2020 ​ (Level 1) ​ (Level 2) ​ (Level 3) Cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 259,081 ​ $ 259,081 ​ $ — ​ $ — Marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasuries ​ ​ 165,532 ​ ​ 165,532 ​ ​ — ​ ​ — Government agency securities ​ ​ 49,194 ​ ​ — ​ ​ 49,194 ​ ​ — Commercial paper ​ ​ 25,924 ​ ​ — ​ ​ 25,924 ​ ​ — Corporate equity securities ​ ​ 16,776 ​ ​ 16,776 ​ ​ — ​ ​ — Corporate bonds ​ ​ 24,784 ​ ​ — ​ ​ 24,784 ​ ​ — Restricted cash and other non-current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ ​ 3,877 ​ ​ 3,877 ​ ​ — ​ ​ — Total financial assets ​ $ 545,168 ​ $ 445,266 ​ $ 99,902 ​ $ — ​ 12 Table of Contents Assets measured at fair value on a recurring basis as of December 31, 2019 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted Prices Significant ​ ​ ​ ​ ​ ​ ​ in Active ​ Other ​ Significant ​ ​ ​ ​ ​ Markets for ​ Observable ​ Unobservable ​ ​ December 31, ​ Identical Assets ​ Inputs ​ Inputs Financial Assets ​ 2019 ​ (Level 1) ​ (Level 2) ​ (Level 3) Cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 230,201 ​ $ 230,201 ​ $ — ​ $ — U.S. Treasuries ​ ​ 7,982 ​ ​ 7,982 ​ ​ — ​ ​ — Marketable securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasuries ​ ​ 63,386 ​ ​ 63,386 ​ ​ — ​ ​ — Government agency securities ​ ​ 155,571 ​ ​ 155,571 ​ ​ — ​ ​ — Restricted cash and other non-current assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate equity securities ​ ​ 3,667 ​ ​ — ​ ​ 3,667 ​ ​ — Money market funds ​ ​ 1,619 ​ ​ 1,619 ​ ​ — ​ ​ — Total financial assets ​ $ 462,426 ​ $ 458,759 ​ $ 3,667 ​ $ — ​ At September 30, 2020, the Company held an investment in Beam Therapeutics Inc. (“Beam Therapeutics”) consisting of shares of Beam Therapeutics’ common stock. Prior to Beam Therapeutics’ initial public offering in February 2020, the Company valued such investment based on the cost of the equity securities adjusted for any observable market transactions. Following the initial public offering, the equity securities have a readily determinable fair value, and are included in marketable securities on the condensed consolidated balance sheet. During the three and nine months ended September 30, 2020, the Company recorded unrealized losses of $ 1.4 million and unrealized gains of $ 16.8 million, respectively in other income (expense), net on the consolidated statements of operations. The Company sold this investment in October 2020, resulting in a realized gain of $ 16.3 million. ​ ​ 5. Accrued Expenses ​ Accrued expenses consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ September 30, ​ December 31, ​ 2020 2019 Employee related expenses ​ $ 6,634 ​ $ 4,971 Professional service expenses ​ ​ 5,037 ​ 674 Process and platform development expenses ​ ​ 5,019 ​ ​ 735 Intellectual property and patent related fees ​ ​ 2,653 ​ ​ 3,725 Other expenses ​ ​ 964 ​ ​ 599 Sublicensing expenses ​ ​ — ​ ​ 11,416 Total accrued expenses ​ $ 20,307 ​ $ 22,120 ​ ​ ​ ​ ​ ​ ​ ​ 13 Table of Contents 6. Property and Equipment, net ​ Property and equipment, net consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ September 30, ​ December 31, ​ 2020 2019 Laboratory equipment ​ $ 17,483 ​ $ 14,571 Leasehold improvements ​ ​ 4,990 ​ ​ 1,042 Computer equipment ​ 858 ​ 858 Construction-in-progress ​ ​ 300 ​ ​ 1,336 Furniture and office equipment ​ ​ 239 ​ ​ 166 Software ​ 118 ​ 118 Total property and equipment ​ 23,988 ​ 18,091 Less: accumulated depreciation ​ ( 9,919 ) ​ ( 7,204 ) Property and equipment, net ​ $ 14,069 ​ $ 10,887 ​ ​ 7. Commitments and Contingencies ​ The Company is a party to a number of license agreements under which the Company licenses patents, patent applications and other intellectual property from third parties. As such, the Company is obligated to pay licensors for various costs including upfront licenses fees, annual license fees, certain licensor expense reimbursements, success payments, research funding payments, and milestones triggerable upon certain development, regulatory, and commercial events as well as royalties on future products. These contracts are generally cancellable, with notice, at the Company’s option and do not have significant cancellation penalties. The terms and conditions as well as the accounting analysis for the Company’s significant commitments and contingencies are described in Note 8, “Commitments and Contingencies” to the consolidated financial statements included in the Annual Report. There have been no material changes to the terms and conditions, or the accounting conclusions previously disclosed in the Annual Report. ​ Licensor Expense Reimbursement ​ The Company is obligated to reimburse The Broad Institute, Inc. (“Broad”) and the President and Fellows of Harvard College (“Harvard”) for expenses incurred by each of them associated with the prosecution and maintenance of the patent rights that the Company licenses from them pursuant to the license agreement by and among the Company, Broad and Harvard, including the interference and opposition proceedings involving patents licensed to the Company under the license agreement, and other license agreements between the Company and Broad. As such, the Company anticipates that it has a substantial commitment in connection with these proceedings until such time as these proceedings have been resolved, but the amount of such commitment is not determinable. The Company incurred an aggregate of $ 2.6 million and $ 9.3 million in expense during the three and nine months ended September 30, 2020, respectively, for such reimbursement. The Company incurred an aggregate of $ 3.1 million and $ 10.1 million in expense during the three and nine months ended September 30, 2019, respectively, for such reimbursement. ​ 8 . Collaboration and Profit-Sharing Agreements ​ The Company has entered into multiple collaborations, out-licenses and strategic alliances with third parties that typically involve payments to or from the Company, including up-front payments, payments for research and development services, option payments, milestone payments and royalty payments to or from the Company. The terms and conditions as well as the accounting analysis for the Company’s significant collaborations, out-licenses and strategic alliances are described in Note 9, “Collaboration and Profit-Sharing Agreements” to the consolidated financial statements included in the Annual Report. There have been no material changes to the terms and conditions, or the accounting conclusions previously disclosed in the Annual Report, other than as noted below. ​ Allergan Pharmaceuticals Strategic Alliance and Profit-Sharing Agreement ​ 14 Table of Contents Termination Agreements ​ On August 5, 2020, the Company and Allergan agreed to terminate the strategic alliance and option agreement (the “Collaboration Agreement”) that was entered into in May 2017 and the profit-sharing arrangement (together with the Collaboration Agreement, the “Initial Agreements”) to equally split U.S profit and losses of EDIT-101, an experimental medicine for Leber congenital amaurosis 10 (“LCA10”) that was originally licensed to Allergan under the Collaboration Agreement (the “Termination Agreement”). In addition, in connection with the termination, the Company entered into a transition services agreement with Allergan (together with the Termination Agreement, the “Termination Agreements”), primarily to facilitate the transfer of EDIT-101 back to the Company. ​ Pursuant to the Termination Agreements, the Company has regained full global rights to research, develop, manufacture, and commercialize its ocular medicines, including EDIT-101. Allergan has no further obligations pursuant to the initial agreements, all unexercised options and contingent payments contemplated under the initial agreements have terminated, which includes Allergan’s worldwide developmental and commercialization rights to EDIT-101. Under the Termination Agreements, Allergan granted the Company a non-exclusive license to certain know-how that is necessary to develop, manufacture and commercialize EDIT-101 and will transfer to the Company certain materials produced under the Collaboration Agreement. The Company will use commercially reasonable efforts to develop and commercialize products directed at four collaboration targets, one of which is LCA10. ​ In connection with the Termination Agreements, the Company agreed to make a $ 20.0 million payment to Allergan, $ 17.5 million of which was paid as of September 30, 2020. In addition, the Company will make certain payments on achievements of clinical and regulatory milestones up to $ 20.0 million for each target program and aggregated sales milestones for all products covered by the Termination Agreement up to $ 90.0 million. Allergan is also entitled to royalties in a low-single digit percentage, subject to reduction under specified circumstances, on net sales of specified products. The Company’s obligation to pay royalties will expire on a country-by-country and product-by-product basis upon the later of the expiration of regulatory-based exclusivity with respect to such product in such country and the tenth anniversary of the first commercial sale of such product. Lastly, the Company is obligated to pay for a portion of the transition services. ​ Accounting Assessment ​ The Company evaluated the Termination Agreements in accordance with the provisions of Accounting Standards Codification (“ASC”) 606 and concluded that they resulted in a modification followed by a termination of the Initial Agreements. Upon execution of the Termination Agreements, the Company is no longer obligated to transfer control of any goods or services to Allergan, and therefore there are no remaining performance obligations. As part of this assessment, the Company considered that Allergan relinquished its right to the remaining exclusive license options under the Collaboration Agreement and the Company reacquired the development and commercialization rights to EDIT-101. Allergan no longer has any involvement in the development activities of the collaboration targets. Since there are no remaining performance obligations, the Company accounted for the modification as part of the existing contract with a cumulative catch-up adjustment. The Company applied the vendor consideration to a customer guidance pursuant to ASC 606 in accounting for the $ 20 million payment due to Allergan and concluded that the worldwide rights to EDIT-101 represent a distinct good or service. The Company therefore recorded the fair value of the rights to EDIT-101 of $ 5 million as in-process Research and Development expense in the quarter ended September 30, 2020 as the rights had no alternative future use. The remainder of the $ 20 million was recorded as a reduction to the contract liability that was recognized as revenue upon termination. The contingent payments associated with the collaboration targets not previously licensed by Allergan under the Collaboration Agreement did not impact the amount of deferred revenue recognized upon termination because it is not probable that a significant reversal of revenue will occur. The contingent milestone and royalty payments associated with EDIT-101 qualify for scope exceptions from derivative accounting, and therefore there is no accounting for the contingent payments upon termination. ​ On the termination date, the Company recognized $ 62.1 million of previously deferred revenue related to the Collaboration Agreement. This amount consisted of $ 77.1 million of revenues that were previously deferred related to the collaboration agreement, partially offset by $ 15.0 million of the fee paid to Allergan that was determined to exceed the fair value of the re-acquired rights to EDIT-101. 15 Table of Contents ​ During the three and nine months ended September 30, 2020, the Company recognized revenue of $ 63.2 million and $ 70.6 million, respectively, related to the Allergan arrangement, including the termination. During the three and nine months ended September 30, 2019, the Company recognized revenue of $ 3.4 million and $ 7.7 million, respectively. At September 30, 2020 there was no remaining revenue deferred related to Allergan. ​ ​ Collaboration Revenue ​ As of September 30, 2020, the Company’s contract liabilities were primarily related to the Company’s collaboration with Juno Therapeutics. The following table presents changes in the Company’s accounts receivable and contract liabilities for the nine months ended September 30, 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the nine months ended September 30, 2020 Balance at December 31, 2019 ​ Additions ​ Deductions ​ Balance at September 30, 2020 Accounts receivable $ 418 ​ $ 946 ​ $ ( 309 ) ​ $ 1,055 Contract liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred revenue $ 186,721 ​ $ 508 ​ $ ( 86,534 ) ​ $ 100,695 ​ During the three and nine months ended September 30, 2020, the Company recognized the following collaboration revenue (in thousands): ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended Revenue recognized in the period from: September 30, 2020 Amounts included in deferred revenue at the beginning of the period $ 78,651 ​ $ 86,534 Performance obligations satisfied in previous periods $ — ​ $ 60 ​ ​ 9 . Stock-based Compensation ​ Total compensation cost recognized for all stock-based compensation awards in the condensed consolidated statements of operations was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2020 ​ 2019 ​ 2020 ​ 2019 Research and development ​ $ 2,938 ​ $ 3,619 ​ $ 8,668 ​ $ 10,854 General and administrative ​ 2,908 ​ 2,940 ​ 8,815 ​ 10,053 Total stock-based compensation expense ​ $ 5,846 ​ $ 6,559 ​ $ 17,483 ​ $ 20,907 ​ Restricted Stock and Restricted Stock Unit Awards ​ The following is a summary of restricted stock and restricted stock unit awards activity for the nine months ended September 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ ​ ​ Grant Date ​ ​ ​ ​ Fair Value ​ ​ Shares ​ Per Share Unvested restricted stock and restricted stock unit awards as of December 31, 2019 581,408 ​ $ 24.03 Issued 318,714 ​ $ 28.44 Vested ( 279,326 ) ​ $ 23.05 Forfeited ​ ( 110,918 ) ​ $ 24.16 Unvested restricted stock and restricted stock unit awards as of September, 30 2020 509,878 ​ $ 27.38 ​ As of September 30, 2020, total unrecognized compensation expense related to unvested restricted stock and 16 Table of Contents restricted stock unit awards was $ 11.9 million, which the Company expects to recognize over a remaining weighted-average period of 2.8 years. ​ Stock Options ​ The following is a summary of stock option activity for the nine months ended September 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Remaining Aggregate Intrinsic ​ ​ Shares ​ Exercise Price ​ Contractual Life (years) ​ Value (in thousands) Outstanding at December 31, 2019 4,358,291 ​ $ 25.40 ​ 7.4 ​ $ 26,060 Granted ​ 1,423,115 ​ $ 28.54 ​ ​ ​ ​ ​ Exercised ​ ( 637,332 ) ​ $ 17.00 ​ ​ ​ ​ ​ Cancelled ​ ( 1,103,283 ) ​ $ 30.96 ​ ​ ​ ​ ​ Outstanding at September 30, 2020 4,040,791 ​ $ 26.31 ​ 7.9 ​ $ 12,549 Exercisable at September 30, 2020 1,545,508 ​ $ 24.04 ​ 7.0 ​ $ 8,973 ​ As of September 30, 2020, total unrecognized compensation expense related to stock options was $ 39.1 million, which the Company expects to recognize over a remaining weighted-average period of 2.7 years. ​ 10. Net Income (Loss) per Share ​ Basic net income (loss) per common share is calculated by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period determined using the treasury stock and if converted methods. Contingently issuable shares are included in the calculation of basic income (loss) per share as of the beginning of the period in which all the necessary conditions have been satisfied. Contingently issuable shares are included in diluted income (loss) per share based on the number of shares, if any, that would be issuable under the terms of the arrangement if the end of the reporting period was the end of the contingency period, if the results are dilutive. ​ 17 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2020 ​ 2019 ​ 2020 ​ 2019 Net income (loss) ​ $ 7,819 ​ $ ( 32,941 ) ​ $ ( 53,477 ) ​ $ ( 95,976 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding, basic ​ 62,144,118 ​ ​ 49,820,455 ​ ​ 57,377,581 ​ ​ 49,246,684 Dilutive effect of outstanding stock options ​ ​ 414,640 ​ ​ — ​ ​ — ​ ​ — Dilutive effect of unvested restricted stock and restricted stock unit awards ​ 138,415 ​ — ​ — ​ — Weighted average common shares outstanding, diluted ​ ​ 62,697,173 ​ ​ 49,820,455 ​ ​ 57,377,581 ​ ​ 49,246,684 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per share, basic ​ $ 0.13 ​ $ ( 0.66 ) ​ $ ( 0.93 ) ​ $ ( 1.95 ) Net income (loss) per share, diluted ​ $ 0.12 ​ $ ( 0.66 ) ​ $ ( 0.93 ) ​ $ ( 1.95 ) ​ The following common stock equivalents were excluded from the calculation of diluted net income (loss) per share allocable to common stockholders because their inclusion would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine months Ended ​ ​ September 30, ​ September 30, ​ 2020 ​ 2019 ​ 2020 2019 Unvested restricted stock and restricted stock unit awards 371,463 ​ 586,892 ​ 509,878 586,892 Outstanding stock options 3,626,151 ​ 5,139,652 ​ 4,040,791 5,141,255 Total 3,997,614 ​ 5,726,544 ​ 4,550,669 5,728,147 ​ ​ ​ 18 Table of Contents ​