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, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 82,537 $ 141,522 Marketable securities 267,080 202,752 Accounts receivable 2,422 5,145 Prepaid expenses and other current assets 6,564 7,335 Total current assets 358,603 356,754 Marketable securities 96,797 93,097 Property and equipment, net 11,559 15,569 Right-of-use assets 31,936 43,648 Restricted cash and other non-current assets 5,755 5,253 Total assets $ 504,650 $ 514,321 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 10,411 $ 9,511 Accrued expenses 30,278 31,296 Deferred revenue, current 8,221 8,221 Operating lease liabilities 9,693 11,082 Total current liabilities 58,603 60,110 Operating lease liabilities, net of current portion 24,918 32,864 Deferred revenue, net of current portion 60,667 60,667 Total liabilities 144,188 153,641 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; 81,668,796 and 68,847,382 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively 8 7 Additional paid-in capital 1,574,382 1,442,405 Accumulated other comprehensive loss ( 1,452 ) ( 3,601 ) Accumulated deficit ( 1,212,476 ) ( 1,078,131 ) Total stockholders’ equity 360,462 360,680 Total liabilities and stockholders’ equity $ 504,650 $ 514,321 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 share and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Collaboration and other research and development revenues $ 5,336 $ 42 $ 18,074 $ 13,176 Operating expenses: Research and development 40,512 41,326 108,095 122,960 General and administrative 14,987 16,236 55,198 52,720 Total operating expenses 55,499 57,562 163,293 175,680 Operating loss ( 50,163 ) ( 57,520 ) ( 145,219 ) ( 162,504 ) Other income, net: Other income (expense), net — 1 ( 1,590 ) 4 Interest income, net 5,144 1,793 12,464 2,806 Total other income, net 5,144 1,794 10,874 2,810 Net loss $ ( 45,019 ) $ ( 55,726 ) $ ( 134,345 ) $ ( 159,694 ) Net loss per share, basic and diluted $ ( 0.55 ) $ ( 0.81 ) $ ( 1.81 ) $ ( 2.33 ) Weighted-average common shares outstanding, basic and diluted 81,648,250 68,736,125 74,029,645 68,621,574 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 Loss (unaudited) (amounts in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net loss $ ( 45,019 ) $ ( 55,726 ) $ ( 134,345 ) $ ( 159,694 ) Other comprehensive loss: Unrealized gain (loss) on marketable debt securities 833 ( 904 ) 2,149 ( 3,798 ) Comprehensive loss $ ( 44,186 ) $ ( 56,630 ) $ ( 132,196 ) $ ( 163,492 ) 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) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Gain Other Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance at December 31, 2022 68,847,382 $ 7 $ 1,442,405 $ ( 3,601 ) $ ( 1,078,131 ) $ 360,680 Vesting of restricted common stock awards 146,209 — — — — — Stock-based compensation expense — — 4,507 — — 4,507 Unrealized gain on marketable debt securities — — — 1,322 — 1,322 Net loss — — — — ( 49,036 ) ( 49,036 ) Balance at March 31, 2023 68,993,591 $ 7 $ 1,446,912 $ ( 2,279 ) $ ( 1,127,167 ) $ 317,473 Issuance of common stock from public offering, net commissions, underwriting discounts and offering costs 12,500,000 1 117,078 — — 117,079 Exercise of stock options 3,122 — 11 — — 11 Stock-based compensation expense — — 5,215 — — 5,215 Vesting of restricted common stock awards 64,492 — — — — — Issuance of common stock under employee stock purchase plan 55,704 — 435 — — 435 Unrealized loss on marketable debt securities — — — ( 6 ) — ( 6 ) Net loss — — — — ( 40,290 ) ( 40,290 ) Balance at June 30, 2023 81,616,909 $ 8 $ 1,569,651 $ ( 2,285 ) $ ( 1,167,457 ) $ 399,917 Stock-based compensation expense — — 4,731 — — 4,731 Vesting of restricted common stock awards 51,887 — — — — — Unrealized gain on marketable debt securities — — — 833 — 833 Net loss — — — — ( 45,019 ) ( 45,019 ) Balance at September 30, 2023 81,668,796 $ 8 $ 1,574,382 $ ( 1,452 ) $ ( 1,212,476 ) $ 360,462 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Other Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance at December 31, 2021 68,435,257 $ 7 $ 1,411,827 $ ( 493 ) $ ( 857,699 ) $ 553,642 Exercise of stock options 12,573 — 218 — — 218 Vesting of restricted common stock awards 154,834 — — — — — Stock-based compensation expense — — 11,431 — — 11,431 Unrealized loss on marketable debt securities — — — ( 2,016 ) — ( 2,016 ) Net loss — — — — ( 50,515 ) ( 50,515 ) Balance at March 31, 2022 68,602,664 $ 7 $ 1,423,476 $ ( 2,509 ) $ ( 908,214 ) $ 512,760 Exercise of stock options 20 — — — — — Vesting of restricted common stock awards 77,884 — — — — — Stock-based compensation expense — — 6,618 — — 6,618 Issuance of common stock under employee stock purchase plan 37,866 — 367 — — 367 Unrealized loss on marketable debt securities — — — ( 878 ) — ( 878 ) Net loss — — — — ( 53,453 ) ( 53,453 ) Balance at June 30, 2022 68,718,434 $ 7 $ 1,430,461 $ ( 3,387 ) $ ( 961,667 ) $ 465,414 Exercise of stock options 4,976 — 80 — — 80 Vesting of restricted common stock awards 38,319 — — — — — Stock-based compensation expense — — 5,881 — — 5,881 Unrealized loss on marketable debt securities — — — ( 904 ) — ( 904 ) Net loss — — — — ( 55,726 ) ( 55,726 ) Balance at September 30, 2022 68,761,729 $ 7 $ 1,436,422 $ ( 4,291 ) $ ( 1,017,393 ) $ 414,745 The accompanying notes are an integral part of the condensed consolidated financial statements. 6 Table of Contents Editas Medicine, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (amounts in thousands) Nine Months Ended September 30, 2023 2022 Cash flow from operating activities Net loss $ ( 134,345 ) $ ( 159,694 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 14,453 23,930 Depreciation 4,598 4,760 Loss on disposal of fixed assets 1,583 — Net amortization of premiums and discounts on marketable securities ( 2,720 ) ( 226 ) Changes in operating assets and liabilities: Accounts receivable 2,723 147 Prepaid expenses and other current assets 771 307 Right-of-use assets 11,712 3,641 Other non-current assets ( 502 ) ( 719 ) Accounts payable 1,102 1,674 Accrued expenses 22 ( 485 ) Deferred revenue — ( 3,333 ) Operating lease liabilities ( 9,335 ) ( 5,078 ) Net cash used in operating activities ( 109,938 ) ( 135,076 ) Cash flow from investing activities Purchases of property and equipment ( 3,412 ) ( 3,494 ) Proceeds from the sale of equipment — 18 Purchases of marketable securities ( 219,764 ) ( 209,782 ) Proceeds from maturities of marketable securities 156,605 354,854 Net cash (used in) provided by investing activities ( 66,571 ) 141,596 Cash flow from financing activities Proceeds from offering of common stock, net of issuance costs 117,079 — Proceeds from exercise of stock options 11 298 Proceeds from issuance of common stock under employee stock purchase plan 435 367 Net cash provided by financing activities 117,525 665 Net (decrease) increase in cash, cash equivalents, and restricted cash ( 58,984 ) 7,185 Cash, cash equivalents, and restricted cash, beginning of period 145,399 207,396 Cash, cash equivalents, and restricted cash, end of period $ 86,415 $ 214,581 Supplemental disclosure of cash and non-cash activities: Fixed asset additions included in accounts payable and accrued expenses $ 199 $ 413 Cash paid in connection with operating lease liabilities 9,103 11,894 Right-of-use assets obtained in exchange of operating lease obligations 1,069 4,708 The accompanying notes are an integral part of the condensed consolidated financial statements. 7 Table of Contents Editas Medicine, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 1. Nature of Business Editas Medicine, Inc. (the “Company”) is a 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 (“BMS”), and payments received under a strategic alliance and option agreement with Allergan Pharmaceuticals International Limited, which was terminated in August 2020. 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 June 2023, the Company completed a public offering in which it sold 12,500,000 shares of its common stock and received net proceeds of approximately $ 117.1 million after deducting underwriting discounts and commissions and other offering costs. In May 2021, the Company entered into a common stock 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 $ 300.0 million (the “ATM Facility”). As of September 30, 2023, the Company has not sold any shares of its common stock under the ATM Facility. 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, 2023 , will enable it to fund its operating expenses and capital expenditure requirements into the third quarter of 2025. The Company had an accumulated deficit of $ 1.2 billion at September 30, 2023, 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. 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, 2022 (the “Annual Report”). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Editas Securities Corporation and Editas Medicine, LLC. All intercompany transactions and balances of the subsidiaries 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 8 Table of Contents 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, 2023 and 2022 are referred to as the third quarter of 2023 and 2022, 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. 3. Cash Equivalents and Marketable Securities Cash equivalents and marketable securities consisted of the following at September 30, 2023 (in thousands): Amortized Cost Allowance for Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash equivalents and marketable securities: Government agency securities $ 171,404 $ — $ — $ ( 1,197 ) $ 170,207 U.S. Treasuries 143,261 — 22 ( 12 ) 143,271 Money market funds 82,537 — — — 82,537 Corporate notes/bonds 38,066 — — ( 254 ) 37,812 Commercial paper 12,598 — — ( 11 ) 12,587 Total $ 447,866 $ — $ 22 $ ( 1,474 ) $ 446,414 Cash equivalents and marketable securities consisted of the following at December 31, 2022 (in thousands): Amortized Cost Allowance for Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash equivalents and marketable securities: Government agency securities $ 161,902 $ — $ 11 $ ( 2,556 ) $ 159,357 Money market funds 141,522 — — — 141,522 Corporate notes/bonds 57,575 — 2 ( 694 ) 56,883 U.S. Treasuries 50,019 — 3 ( 229 ) 49,793 Commercial paper 29,954 — 3 ( 141 ) 29,816 Total $ 440,972 $ — $ 19 $ ( 3,620 ) $ 437,371 As of September 30, 2023, the Company did not 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 securities. As of September 30, 2023, the Company holds 29 securities with an aggregate fair value of $ 96.8 million that had remaining maturities greater than one year. There were no realized gains or losses on available-for-sale securities during the nine months ended September 30, 2023 or 2022. 9 Table of Contents 4. Fair Value Measurements Assets measured at fair value on a recurring basis as of September 30, 2023 were as follows (in thousands): September 30, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents: Money market funds $ 82,537 $ 82,537 $ — $ — Marketable securities: Government agency securities 170,207 — 170,207 — Corporate notes/bonds 37,812 — 37,812 — Commercial paper 12,587 — 12,587 — U.S. Treasuries 143,271 143,271 — — Restricted cash and other non-current assets: Money market funds 3,877 3,877 — — Total financial assets $ 450,291 $ 229,685 $ 220,606 $ — Assets measured at fair value on a recurring basis as of December 31, 2022 were as follows (in thousands): December 31, 2022 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents: Money market funds $ 141,522 $ 141,522 $ — $ — Marketable securities: Government agency securities 159,357 — 159,357 — Corporate bonds 56,883 — 56,883 — U.S. Treasuries 49,793 49,793 — — Commercial paper 29,816 — 29,816 — Restricted cash and other non-current assets: Money market funds 3,877 3,877 — — Total financial assets $ 441,248 $ 195,192 $ 246,056 $ — 5. Accrued Expenses Accrued expenses consisted of the following (in thousands): September 30, 2023 December 31, 2022 External research and development expenses $ 17,135 $ 16,452 Employee related expenses 9,536 10,140 Intellectual property and patent related fees 1,385 1,809 Professional service expenses 943 1,260 Other expenses 1,279 1,635 Total accrued expenses $ 30,278 $ 31,296 10 Table of Contents 6. Property and Equipment, net Property and equipment, net consisted of the following (in thousands): September 30, 2023 December 31, 2022 Laboratory equipment $ 24,940 $ 24,407 Leasehold improvements 9,648 9,761 Computer equipment 875 875 Construction-in-progress 623 1,573 Furniture and office equipment 264 264 Software 215 215 Total property and equipment 36,565 37,095 Less: accumulated depreciation ( 25,006 ) ( 21,526 ) Property and equipment, net $ 11,559 $ 15,569 7. Commitments and Contingencies In the second quarter of 2023 , we entered into a license and service agreement pursuant to which we will lease manufacturing space for our continued research and development activities. As of September 30, 2023, the lease has not commenced for accounting purposes and it is not expected to commence until the second quarter of 2024. The license and service agreement provides for total remaining lease payments of up to $ 87.8 million over a 10-year lease term. The Company may terminate the license and service agreement in its discretion upon twelve months' prior written notice. 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 $ 1.5 million and $ 6.1 million in expense during the three and nine months ended September 30, 2023, respectively, for such reimbursement. The Company incurred an aggregate of $ 2.2 million and $ 6.1 million in expense during the three and nine months ended September 30, 2022, 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. 11 Table of Contents Collaboration Revenue As of September 30, 2023, the Company’s contract liabilities were primarily related to the Company’s collaboration with BMS. The following table presents changes in the Company’s accounts receivable and contract liabilities for the nine months ended September 30, 2023 (in thousands): Balance at December 31, 2022 Additions Deductions Balance at September 30, 2023 Accounts receivable $ 5,145 $ 2,277 $ ( 5,000 ) $ 2,422 Contract liabilities: Deferred revenue $ 68,888 $ — $ — $ 68,888 During the three and nine months ended September 30, 2023, the Company did not recognize any collaboration revenue that had been allocated to deferred revenue from BMS. 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 September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Research and development $ 2,571 $ 3,045 $ 7,182 $ 9,803 General and administrative 2,160 2,836 7,271 14,127 Total stock-based compensation expense $ 4,731 $ 5,881 $ 14,453 $ 23,930 Restricted Stock Unit Awards The following is a summary of restricted stock unit awards activity for the nine months ended September 30, 2023: Shares Weighted Average Grant Date Fair Value Per Share Unvested restricted stock unit awards as of December 31, 2022 1,499,070 $ 18.70 Issued 1,331,578 $ 8.71 Vested ( 262,588 ) $ 19.87 Forfeited ( 462,777 ) $ 18.86 Unvested restricted stock unit awards as of September 30, 2023 2,105,283 $ 12.20 The restricted stock units issued in the nine months ended September 30, 2023 include 437,842 units granted to certain employees that contain performance-based vesting provisions. The Company recognizes the fair value of the performance-based units through the expected achievement date if the performance-based vesting provisions are deemed probable. As of September 30, 2023, total unrecognized compensation expense related to unvested restricted stock unit awards was $ 13.2 million, which the Company expects to recognize over a remaining weighted-average period of 2.54 years. 12 Table of Contents Stock Options The following is a summary of stock option activity for the nine months ended September 30, 2023: Shares Weighted Average Exercise Price Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding at December 31, 2022 5,276,148 $ 23.99 8.00 $ 402 Granted 2,195,300 $ 8.74 Exercised ( 3,122 ) $ 3.38 Cancelled ( 1,467,700 ) $ 30.95 Outstanding at September 30, 2023 6,000,626 $ 16.72 7.83 $ 342 Exercisable at September 30, 2023 2,449,032 $ 22.72 6.34 $ 279 As of September 30, 2023, total unrecognized compensation expense related to stock options was $ 28.1 million, which the Company expects to recognize over a remaining weighted-average period of 2.70 years. 10. Net Loss per Share Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period determined using the treasury stock and if converted methods. Contingently issuable shares are included in the calculation of basic loss per share as of the beginning of the period in which all the necessary conditions have been satisfied. Contingently issuable shares are included in diluted loss per share based on the number of shares, if any, that would be issuable under the terms of the arrangement if the end of the reporting period was the end of the contingency period, if the results are dilutive. For purposes of the diluted net loss per share calculation, unvested restricted stock unit awards and outstanding stock options are considered to be common stock equivalents, but they were excluded from the Company’s calculation of diluted net loss per share allocable to common stockholders because their inclusion would have been anti-dilutive. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The following common stock equivalents were excluded from the calculation of diluted net loss per share allocable to common stockholders because their inclusion would have been anti-dilutive: September 30, 2023 2022 Unvested restricted stock unit awards 2,105,283 1,503,682 Outstanding stock options 6,000,626 5,216,124 Total 8,105,909 6,719,806 13 Table of Contents