Editas Medicine, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission (“SEC”) on February 22, 2023 (the “Annual Report”). This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. All statements addressing our future operating performance and clinical development and regulatory timelines that we expect or anticipate will occur in the future, as well as expectations for cash runway, are forward-looking statements. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements, including uncertainties inherent in the initiation and completion of pre-clinical studies and clinical trials and clinical development of our product candidates; availability and timing of results from pre-clinical studies and clinical trials; whether interim results from a clinical trial will be predictive of the final results of the trial or the results of future trials; expectations for regulatory approvals to conduct trials or to market products and availability of funding sufficient for our foreseeable and unforeseeable operating expenses and capital expenditure requirements. These and other risks are described in greater detail in the Annual Report under the captions “Risk Factor Summary” and Part I, “Item 1A. Risk Factors,” as updated by our subsequent filings with the SEC. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make. You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Overview We are a clinical stage genome editing company dedicated to developing potentially transformative genomic medicines to treat a broad range of serious diseases. We have developed a proprietary gene editing platform based on CRISPR technology and we continue to expand its capabilities. Our product development strategy is to target diseases where gene editing can be used to enable or enhance therapeutic outcomes for patients, while maximizing probability of technical, regulatory and commercial success. We are focused on advancing gene editing medicines to treat hemoglobinopathies, beginning with the continued development of our current ex vivo EDIT-301 program and leveraging the insights gained from this program to pursue next generation in vivo gene editing medicines targeting hematopoietic stem cells (“HSCs”). In parallel, we are pursuing the development of in vivo gene editing medicines for other organs and tissues that we believe will significantly differentiate our genome editing approach from the current standards of care for serious diseases. As part of these efforts, we are using existing strategic partnerships and collaborations and pursuing further opportunities to extend the reach of our intellectual property portfolio and access complementary technologies to expedite our drug discovery and clinical execution objectives. Our lead program, EDIT-301, is an experimental ex vivo gene-edited medicine to treat sickle cell disease (“SCD”), a severe inherited blood disease that causes premature death, and transfusion-dependent beta thalassemia (“TDT”), the most severe form of beta-thalassemia, another inherited blood disorder characterized by severe anemia. In the second quarter of 2022, we dosed the first patient in our Phase 1/2 clinical trial of EDIT-301, which we refer to as our RUBY trial, for the treatment of severe SCD, and in December 2022, announced initial clinical data from the first two patients treated in the RUBY trial. This clinical data supports human proof of concept by showing that EDIT-301 could safely increase expression of fetal hemoglobin to clinically meaningful levels and correct anemia in SCD patients. After completing sequential dosing of the first two patients, we commenced parallel patient dosing in the first quarter of 2023. Through November 3, 2023, we have enrolled 27 patients in the RUBY trial. We expect to dose the 20th patient in the trial in the January 2024 timeframe. We provided an update on the initial clinical data from the RUBY trial in June 2023 and expect to provide additional clinical updates in December 2023 and in the middle of 2024. 14 Table of Contents In October 2023, the U.S. Food and Drug Administration (“FDA”) granted Regenerative Medicine Advanced Therapy designation to EDIT-301 for the treatment of SCD. A product is eligible for this designation if it is a regenerative medicine therapy that is intended to treat, modify, reverse or cure a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product candidate has the potential to address unmet medical needs for such disease or condition. The benefits of the designation include early interactions with the FDA to expedite development and review, benefits available to breakthrough therapies, potential eligibility for priority review and accelerated approval based on surrogate or intermediate endpoints. In December 2021, the FDA cleared our Investigational New Drug (“IND”) application for a Phase 1/2 clinical trial of EDIT-301 for the treatment of TDT. This trial, referred to as our EdiTHAL trial, is designed to assess the safety, tolerability, and preliminary efficacy of EDIT-301 for the treatment of TDT. We dosed the first patient in this trial in the first quarter of 2023 and commenced parallel patient dosing in the second quarter of 2023. Through November 3, 2023, we have enrolled eight patients in the EdiTHAL trial. We provided an initial clinical data update on the first patient in the EdiTHAL trial in June 2023 and expect to provide an additional clinical update in December 2023. In June 2023, we announced initial safety and efficacy data from the first four patients with SCD treated with EDIT-301 in the RUBY trial and from the first TDT patient treated in the EdiTHAL trial. In the RUBY trial, Patients 1 (male) and 2 (female) reached normal hemoglobin levels five months post-treatment with EDIT-301 and maintained a normal hemoglobin level at the 10- and six-month follow-ups, respectively. Each of these patients had fetal hemoglobin levels of greater than 40% persist during the same time frame. Patient 1’s total hemoglobin returned to a normal physiological level of 16.4g/dL (male normal range: 13.6–18.0 g/dL) at five months after infusion of EDIT-301 and was maintained at this level at the 10-month follow-up. In addition, Patient 1’s fetal hemoglobin fraction increased from 5% at baseline to 45.4% five months after treatment with EDIT-301 and 43.4% at the 10-month follow-up. Patient 2’s total hemoglobin reached a normal physiological level of 12.7 g/dL (female normal range: 12.0–16.0 g/dL) at five months after infusion of EDIT-301 and fetal hemoglobin increased from 10.8% at baseline to 51.3% at the six-month follow-up. Patients 3 (female) and 4 (male) in the RUBY trial saw increases in total hemoglobin and fetal hemoglobin fractions at three and two months of follow up, respectively, that followed similar trajectories as those seen in the first two patients at the same timepoints. All four treated RUBY patients were free of vaso-occlusive events following infusion with EDIT-301. In the EdiTHAL trial, the first patient (male) had successful neutrophil and platelet engraftment within 30 days of infusion, and, at one and a half months post-infusion, the patient’s response resembled that of the first four RUBY patients, achieving a fetal hemoglobin fraction of 34.9% representing 4 g/dL of total hemoglobin. EDIT-301 was well-tolerated and demonstrated a safety profile consistent with myeloablative conditioning with busulfan, the regimen that is necessary for current gene editing therapies for SCD and TDT, and autologous hematopoietic stem cell transplant by the four patients in the RUBY trial and the first patient in the EdiTHAL trial. After EDIT-301 infusion, no serious adverse events occurred, and no adverse events reported were related to treatment with EDIT-301. We are also pursuing the development of next generation in vivo administered gene editing medicines, in which the medicine is injected or infused into the patient to edit the cells inside the body. We are initially focused on editing HSCs through targeted delivery of our AsCas12a enzyme to our clinically validated HBG1 and HBG2 promotor site. We are also in the discovery stage in developing in vivo gene editing medicines for other organs and tissues. We are pursuing the right combination of gene editing and targeted delivery tools through internal development and the in-licensing of complementary technologies, while also leveraging our intellectual property portfolio to drive potential out-licensing and partnership discussions that can accelerate the achievement of our goal of delivering lifesaving medicines to patients with previously untreatable or under-treated diseases. In cellular therapy medicines, we are leveraging new and existing partnerships to progress engineered cell medicines to treat various cancers. We are advancing alpha-beta T-cell experimental medicines for the treatment of solid and liquid tumors in collaboration with Bristol Myers Squibb Company (“BMS”) through its wholly owned subsidiary, Juno Therapeutics, Inc. (“Juno Therapeutics”). This collaboration, which leverages our Cas9 and AsCas12a platform technologies, has resulted in 11 programs. We have also entered into a non-exclusive collaboration and licensing agreement with Immatics N.V. to combine gamma-delta T cell adoptive cell therapies and gene editing to develop medicines for the treatment of cancer. In August 2023, we entered into a license agreement with Vor Biopharma Inc. (“Vor Bio”), providing Vor Bio a non-exclusive license for the development of ex vivo Cas9 gene edited HSC therapies for the treatment and/or prevention of hematological malignancies. Under this agreement, we received an upfront payment and will be eligible for future development, regulatory and commercial milestone payments, as well as royalties on medicines utilizing the related intellectual property. 15 Table of Contents Since our inception in September 2013, our operations have focused on organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio, assembling our core capabilities in gene editing, seeking to identify potential product candidates, and undertaking preclinical studies. Except for EDIT-301, all of our ongoing research programs are still in the preclinical or research stage of development and the risk of failure of all of our research programs is high. We have not generated any revenue from product sales. We have primarily financed our operations through various equity financings and payments received under our research collaboration with BMS and our former strategic alliance with Allergan Pharmaceuticals International Limited (together with its affiliates, “Allergan”), which was terminated in August 2020. Since inception, we have incurred significant operating losses. Our net losses were $134.3 million and $159.7 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, we had an accumulated deficit of $1.2 billion. We expect to continue to incur significant expenses and operating losses for the foreseeable future. Our net losses may fluctuate significantly from quarter to quarter and from year to year. We anticipate that our expenses will increase substantially as we progress the clinical development of EDIT-301; scale our manufacturing capabilities and expand capacity, including capacity at third-party manufacturers, for EDIT-301; further advance our current research programs and our preclinical development activities; seek to identify additional product candidates and additional research programs; initiate preclinical testing and clinical trials for other product candidates we identify and develop; maintain, expand, and protect our intellectual property portfolio, including reimbursing our licensors for such expenses related to the intellectual property that we in-license from such licensors; hire additional clinical, quality control, and scientific personnel; and incur additional costs associated with operating as a public company. We do not expect to be profitable for the year ending December 31, 2023 or the foreseeable future. Financial Operations Overview Revenue To date, we have not generated any revenue from product sales, and we do not expect to generate any revenue from product sales for the foreseeable future. In connection with our collaboration with BMS, we have received an aggregate of $135.5 million in payments, which have primarily consisted of the initial upfront and amendment payments, development milestone payments, research funding support and certain opt-in fees. We no longer receive research funding support from BMS. As of September 30, 2023, we recorded $56.7 million of deferred revenue in relation to our collaboration with BMS, all of which is classified as long-term on our condensed consolidated balance sheet. Under this collaboration, we will recognize revenue upon delivery of option packages to BMS or upon receipt of development milestone payments. We expect that our revenue will fluctuate from quarter-to-quarter and year-to-year as a result of the timing of when we deliver such option packages or receive such milestone payments. For additional information about our revenue recognition policy related to the BMS collaboration, see Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Revenue Recognition” included in the Annual Report. For the foreseeable future we expect substantially all of our revenue will be generated from our collaboration with BMS, and other collaborations or license agreements we enter into. Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred for our research, preclinical development, process and scale-up development, manufacture and clinical development of our product candidates, and development activities under our collaboration agreements. These costs are expensed as incurred and include: • employee related expenses including salaries, benefits, and stock-based compensation expense; • costs under clinical trial agreements with investigative sites; • costs associated with conducting our preclinical, process and scale-up development, manufacturing, clinical and regulatory activities, including fees paid to third-party professional consultants, service providers and suppliers; 16 Table of Contents • costs of purchasing lab supplies and non-capital equipment used in our preclinical activities and in manufacturing preclinical and clinical study materials; • costs for research and development activities under our collaboration agreements ; • facility costs, including rent, depreciation, and maintenance expenses; and • fees for acquiring and maintaining licenses under our third-party licensing agreements, including any sublicensing or success payments made to our licensors. At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of any product candidates we may identify and develop. This is due to the numerous risks and uncertainties associated with developing such product candidates, including the uncertainty of: • successful completion of preclinical studies, IND-enabling studies and natural history studies; • successful enrollment in, and completion of, clinical trials; • receipt of marketing approvals from applicable regulatory authorities; • establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; • obtaining and maintaining patent and trade secret protection and non-patent exclusivity; • launching commercial sales of a product, if and when approved, whether alone or in collaboration with others; • acceptance of a product, if and when approved, by patients, the medical community, and third-party payors; • effectively competing with other therapies and treatment options; • a continued acceptable safety profile following approval; • enforcing and defending intellectual property and proprietary rights and claims; and • achieving desirable medicinal properties for the intended indications. A change in the outcome of any of these variables with respect to the development of any product candidates we develop would significantly change the costs, timing, and viability associated with the development of that product candidate. Research and development activities are central to our business model. We expect research and development costs to increase significantly for the foreseeable future as our development programs progress, including as we continue to progress our clinical trials as well as support preclinical studies for our other research programs. General and Administrative Expenses General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation for personnel in executive, finance, investor relations, business development, legal, corporate affairs, information technology, facilities and human resource functions. Other significant costs include corporate facility costs not otherwise included in research and development expenses, legal fees related to intellectual property and corporate matters, and fees for accounting and consulting services. We anticipate that our general and administrative expenses will increase in the future to support continued research and development activities and potential commercialization of any product candidates we identify and develop. These increases will include increased costs related to the hiring of additional personnel and fees to outside consultants. 17 Table of Contents We also anticipate increased expenses related to reimbursement of third-party patent-related expenses and expenses associated with operating as a public company, including costs for audit, legal, regulatory, and tax-related services, director and officer insurance premiums, and investor relations costs. With respect to reimbursement of third-party intellectual property-related expenses specifically, given the ongoing nature of the opposition and interference proceedings involving the patents licensed to us under our license agreement with The Broad Institute, Inc. and the President and Fellows of Harvard College, we anticipate general and administrative expenses will continue to be significant . Other Income, Net For the nine months ended September 30, 2023 and 2022, other income, net consisted primarily of interest income, partially offset by accretion of discounts associated with other marketable securities. Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of our condensed consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates, if any, will be reflected in the condensed consolidated financial statements prospectively from the date of change in estimates. There have been no material changes to our critical accounting policies from those described in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Annual Report. Results of Operations Comparison of the Three Months ended September 30, 2023 and 2022 The following table summarizes our results of operations for the three months ended September 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change: Three Months Ended September 30, Dollar Change Percentage Change 2023 2022 Collaboration and other research and development revenues $ 5,336 $ 42 $ 5,294 n/m Operating expenses: Research and development 40,512 41,326 (814) (2) % General and administrative 14,987 16,236 (1,249) (8) % Total operating expenses 55,499 57,562 (2,063) (4) % Other income, net Other income, net — 1 (1) (100) % Interest income, net 5,144 1,793 3,351 n/m Total other income, net 5,144 1,794 3,350 n/m Net loss $ (45,019) $ (55,726) $ 10,707 (19) % For our results of operations, we have included the respective percentage of changes, unless greater than 100% or less than (100)%, in which case we have denoted such changes as not meaningful (n/m). 18 Table of Contents Collaboration and other research and development revenues Collaboration and other research and development revenues were $5.3 million for the three months ended September 30, 2023 compared to $42.0 thousand for the same period in 2022. The increase from the three months ended September 30, 2022 is primarily attributable to an upfront payment for the non-exclusive license to Vor Bio in the third quarter of 2023. Research and development expenses Research and development expenses decreased by $0.8 million to $40.5 million for the three months ended September 30, 2023 compared to $41.3 million for the same period in 2022. The following table summarizes our research and development expenses for the three months ended September 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change: Three Months Ended September 30, Dollar Change Percentage Change 2023 2022 Employee related expenses $ 11,198 $ 11,768 $ (570) (5) % External research and development 17,593 17,449 144 1 % Facility expenses 5,073 5,414 (341) (6) % Stock-based compensation expense 2,571 3,045 (474) (16) % Sublicense and license fees 2,388 1,038 1,350 n/m Other expenses 1,689 2,612 (923) (35) % Total research and development expenses $ 40,512 $ 41,326 $ (814) (2) % The decrease in research and development expenses for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 was primarily attributable to: • approximately $0.9 million in decreased other expenses related to cost savings with external manufacturing support services; • approximately $0.6 million in decreased employee-related expenses related to reduced headcount as a result of our strategic reprioritization; • approximately $0.5 million in decreased stock-based compensation expenses; and • approximately $0.3 million in decreased facility expenses. These decreases were partially offset by: • approximately $1.4 million in increased sublicense and license fees paid in connection with licensing activity; and • approximately $0.1 million increase in external research and development expenses. General and administrative expenses General and administrative expenses decreased by $1.2 million to $15.0 million for the three months ended September 30, 2023 compared to $16.2 million for the three months ended September 30, 2022. The following table 19 Table of Contents summarizes our general and administrative expenses for the three months ended September 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change: Three Months Ended September 30, Dollar Change Percentage Change 2023 2022 Employee related expenses $ 3,910 $ 4,709 $ (799) (17) % Professional service expenses 3,684 2,513 1,171 47 % Intellectual property and patent related fees 2,769 3,630 (861) (24) % Stock-based compensation expenses 2,160 2,836 (676) (24) % Facility and other expenses 2,464 2,548 (84) (3) % Total general and administrative expenses $ 14,987 $ 16,236 $ (1,249) (8) % The decrease in general and administrative expenses for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 was primarily attributable to: • approximately $0.9 million in decreased intellectual property and patent related fees due to reduced legal activity; • approximately $0.8 million in decreased employee related expenses related to reduced headcount as a result of our strategic reprioritization; • approximately $0.7 million in decreased stock-based compensation expenses due to a reduction in the market price of our common stock, resulting in a lower valuation of equity awards granted; and • approximately $0.1 million in decreased facility and other expenses. These decreases were partially offset by approximately $1.2 million in increased professional service expenses to support strategic initiatives and business development activities. Other income, net For the three months ended September 30, 2023 and September 30, 2022 other income, net was $5.1 million and $1.8 million, respectively, which was primarily attributable to interest income, partially offset by accretion of discounts associated with other marketable securities. The increase for three months ended September 30, 2023 was attributable to increased invested balances as well as favorable market rates. 20 Table of Contents Comparison of the Nine Months ended September 30, 2023 and 2022 The following table summarizes our results of operations for the nine months ended September 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change: Nine Months Ended September 30, Dollar Change Percentage Change 2023 2022 Collaboration and other research and development revenues $ 18,074 $ 13,176 $ 4,898 37 % Operating expenses: Research and development 108,095 122,960 (14,865) (12) % General and administrative 55,198 52,720 2,478 5 % Total operating expenses 163,293 175,680 (12,387) (7) % Other income, net Other (expense) income, net (1,590) 4 (1,594) n/m Interest income, net 12,464 2,806 9,658 n/m Total other income, net 10,874 2,810 8,064 n/m Net loss $ (134,345) $ (159,694) $ 25,349 (16) % Collaboration and other research and development revenues Collaboration and other research and development revenues increased by $4.9 million to $18.1 million for the nine months ended September 30, 2023 compared to $13.2 million for nine months ended September 30, 2022. The increase was primarily related to the sale of our wholly owned oncology assets and licenses in January 2023, as well as an upfront payment for a non-exclusive license to Vor Bio in the third quarter of 2023, partially offset by the exercises of a program opt-in under our collaboration with BMS in 2022 for which there was no similar activity in 2023. Research and development expenses Research and development expenses decreased by $14.9 million to $108.1 million for the nine months ended September 30, 2023 compared to $123.0 million for the nine months ended September 30, 2022. The following table summarizes our research and development expenses for the nine months ended September 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change: Nine Months Ended September 30, Dollar Change Percentage Change 2023 2022 Employee related expenses $ 34,970 $ 35,502 $ (532) (1) % External research and development expenses 37,110 52,073 (14,963) (29) % Facility expenses 16,053 14,476 1,577 11 % Stock-based compensation expenses 7,182 9,803 (2,621) (27) % Sublicense and license fees 4,700 4,526 174 4 % Other expenses 8,080 6,580 1,500 23 % Total research and development expenses $ 108,095 $ 122,960 $ (14,865) (12) % The decrease in research and development expenses for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was primarily attributable to: • approximately $15.0 million in decreased external research and development expenses related to our reprioritization and targeted focus on our EDIT-301 program; 21 Table of Contents • approximately $2.6 million in decreased stock-based compensation expense due primarily to a reduction in the market price of our common stock, resulting in a lower valuation of equity awards granted ; and • approximately $0.5 million in decreased employee related expenses. These decreases were partially offset by: • approximately $1.6 million in increased facility expenses primarily related to increased rent expense incurred in connection with a lease extension for office, manufacturing and lab space; • approximately $1.5 million in increased other expenses attributable to consulting and external fees to support patient advocacy and medical affairs initiatives; and • approximately $0.2 million in increased sublicense and license fees. General and administrative expenses General and administrative expenses increased by $2.5 million to $55.2 million for the nine months ended September 30, 2023 compared to $52.7 million for the nine months ended September 30, 2022. The following table summarizes our general and administrative expenses for the nine months ended September 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change: Nine Months Ended September 30, Dollar Change Percentage Change 2023 2022 Employee related expenses $ 12,663 $ 13,067 $ (404) (3) % Professional service expenses 17,190 7,075 10,115 n/m Intellectual property and patent related fees 10,687 10,535 152 1 % Stock-based compensation expenses 7,271 14,127 (6,856) (49) % Facility and other expenses 7,387 7,916 (529) (7) % Total general and administrative expenses $ 55,198 $ 52,720 $ 2,478 5 % The increase in general and administrative expenses for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was primarily attributable to: • approximately $10.1 million in increased professional service expenses to support strategic initiatives and business development activities; and • approximately $0.2 million in increased intellectual property and patent related fees. These increases were partially offset by: • approximately $6.9 million in decreased stock-based compensation expenses due primarily to a reduction in the market price of our common stock, resulting in a lower valuation of equity awards granted ; • approximately $0.5 million in decreased facility and other expenses; and • approximately $0.4 million in decreased employee related expenses. Other income, net For the nine months ended September 30, 2023 and September 30, 2022, other income, net was $10.9 million and $2.8 million, respectively, which was primarily attributable to interest income, partially offset by accretion of discounts associated with other marketable securities. The increase for the nine months ended September 30, 2023 is attributable to increased invested balances and favorable market rates. 22 Table of Contents Liquidity and Capital Resources Sources of Liquidity In June 2023, we completed a public offering in which we sold 12,500,000 shares of our common stock and received net proceeds of approximately $117.1 million after deducting underwriting discounts and commissions and other offering costs. As of September 30, 2023, we have raised an aggregate of $1.0 billion in net proceeds through the sale of shares of our common stock in public offerings and at-the-market offerings. We also have funded our business from payments received under our research collaboration with BMS and our strategic alliance with Allergan, which was terminated in August 2020. As of September 30, 2023, we had cash, cash equivalents and marketable securities of $446.4 million. In May 2021, we entered into a common stock sales agreement with Cowen and Company, LLC (“Cowen”), under which we from time to time can issue and sell shares of our 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, we have not sold any shares of our common stock under the ATM Facility. In addition to our existing cash, cash equivalents and marketable securities, we are eligible to earn milestone and other payments under our collaboration agreement with BMS and our other collaboration and license agreements. Our ability to earn applicable milestone and other payments and the timing of earning these amounts are dependent upon the timing and outcome of development, regulatory and commercial activities and, as such, are uncertain at this time. As of September 30, 2023, our right to contingent payments under our collaboration agreement with BMS is our only significant committed potential external source of funds. Cash Flows The following table provides information regarding our cash flows for the nine months ended September 30, 2023 and 2022 (in thousands): Nine Months Ended September 30, 2023 2022 Net cash (used in) provided by: Operating activities $ (109,938) $ (135,076) Investing activities (66,571) 141,596 Financing activities 117,525 665 Net (decrease) increase in cash, cash equivalents, and restricted cash $ (58,984) $ 7,185 Net Cash Used in Operating Activities The use of cash in all periods resulted primarily from our net losses adjusted for non-cash charges and changes in components of working capital. Net cash used in operating activities was approximately $109.9 million for the nine months ended September 30, 2023, which primarily consisted of operating expenses that related to increasing our research efforts, the focused progression of clinical and manufacturing activities in support of the EDIT-301 program, and supporting business operations. Net cash used in operating activities was approximately $135.1 million for the nine months ended September 30, 2022, which primarily consisted of operating expenses that related to our preclinical and clinical activities, sublicense and license fees, and increased staffing costs to support various business operations. Net Cash Used in Investing Activities Net cash used in investing activities was approximately $66.6 million for the nine months ended September 30, 2023, primarily related to purchases of marketable securities of $219.8 million, partially offset by the proceeds from the maturities of marketable securities of $156.6 million. 23 Table of Contents Net cash provided by investing activities was approximately $141.6 million for the nine months ended September 30, 2022, primarily related to proceeds from maturities of marketable securities of $354.8 million, partially offset by costs used to acquire marketable securities of $209.8 million and purchases of property and equipment of $3.5 million. Net Cash Provided by Financing Activities Net cash provided by financing activities was approximately $117.5 million for the nine months ended September 30, 2023, primarily related to proceeds from our June 2023 offering of common stock of $117.1 million after deducting underwriting discounts and commissions and other offering costs , and proceeds received from issuance of common stock under the employee stock purchase plan of $0.4 million. Net cash provided by financing activities was approximately $0.7 million for the nine months ended September 30, 2022 primarily related to proceeds received from issuance of common stock under our employee stock purchase plan and exercises of options for our common stock. Funding Requirements We expect our expenses to increase in connection with our ongoing activities, particularly as we progress the clinical development of EDIT-301; scale our manufacturing capabilities and expand capacity, including capacity at third-party manufacturers, for EDIT-301; further advance our research programs and our preclinical development activities; seek to identify additional research programs and additional product candidates; initiate preclinical testing and clinical trials for other product candidates we identify and develop; maintain, expand, and protect our intellectual property portfolio, including reimbursing our licensors for expenses related to the intellectual property that we in-license from such licensors; hire additional clinical, quality control, and scientific personnel; and incur costs associated with operating as a public company. In addition, if we obtain marketing approval for any product candidate that we identify and develop, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution to the extent that such sales, marketing, and distribution are not the responsibility of a collaborator. We do not expect to generate significant recurring revenue unless and until we obtain regulatory approval for and commercialize a product candidate. Furthermore, since 2016 we have incurred, and in future years we expect to continue to incur significant costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts. We expect that our existing cash, cash equivalents and marketable securities at September 30, 2023, will enable us to fund our operating expenses and capital expenditure requirements into third quarter of 2025 . Our forecast of the period of time through which our existing cash, cash equivalents and investments will be adequate to support our operations is a forward-looking statement and involves significant risks and uncertainties. We have based this forecast on assumptions that may prove to be wrong, and actual results could vary materially from our expectations, which may adversely affect our capital resources and liquidity. We could utilize our available capital resources sooner than we currently expect. The amount and timing of future funding requirements, both near- and long-term, will depend on many factors, including, but not limited to: • the scope, progress, results, and costs of drug discovery, preclinical development, laboratory testing, and clinical or natural history study trials for the product candidates we develop; • the costs of progressing the clinical development of EDIT-301 to treat SCD and TDT; • the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights, and defending intellectual property-related claims; • the costs, timing, and outcome of regulatory review of the product candidates we develop; • the costs of future activities, including product sales, medical affairs, marketing, manufacturing, and distribution, for any product candidates for which we receive regulatory approval; • the success of our collaboration with BMS; 24 Table of Contents • whether BMS exercises any of its options to extend the research program term and/or to additional research programs under our collaboration; • our ability to establish and maintain additional collaborations on favorable terms, if at all; • the extent to which we acquire or in-license other medicines and technologies; • the costs of reimbursing our licensors for the prosecution and maintenance of the patent rights in-licensed by us; and • the costs of operating as a public company. Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive, and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, any product candidate that we identify and develop, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of genomic medicines that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all . Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise funds through additional collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Contractual Obligations As of September 30, 2023, we had non-cancelable operating leases with future minimum lease payments for a total of $41.9 million, of which $3.7 million will be payable in 2023. These minimum lease payments exclude our share of the facility operating expenses, real-estate taxes and other costs that are reimbursable to the landlord under the leases. 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. We may terminate the license and service agreement in our discretion upon twelve months' prior written notice. Our agreements with certain institutions to license intellectual property include potential milestone payments and success fees, sublicense fees, royalty fees, licensing maintenance fees, and reimbursement of patent maintenance costs that we may be required to pay. Our agreements to license intellectual property include potential milestone payments that are dependent upon the development of products using the intellectual property licensed under the agreements and contingent upon the achievement of development or regulatory approval milestones, as well as commercial milestones. These potential obligations are contingent upon future events and the timing and likelihood of such potential obligations are not known with certainty. For further information regarding these agreements, please see Part I, “Item 1. Business—Our Collaborations and Licensing Strategy” in the Annual Report. We also enter into contracts in the normal course of business with contract research organizations, contract manufacturing organizations and other vendors to assist in the performance of our research and development activities and 25 Table of Contents other services and products for operating purposes. These contracts generally provide for termination at any time upon prior notice.