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Item 7. Management’s Discussion and Analysis

2024-02-28 compared with 2023-02-22 · 109 added, 112 removed, 184 unchanged (55% of the section changed)

Management’s Discussion and Analysi s of Financial Condition and Results of Operations .

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 consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.

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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.

W e 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.

For additional information regarding these clinical data, please see “Business—Our Gene Editing Medicine Programs—Hemoglobinopathies.” After completing sequential dosing of the first two patients, we have commenced parallel patient dosing in this trial and are on track to dose 20 total patients by the end of 2023.

We expect to provide clinical updates from the RUBY trial in mid-2023 and end of 2023.

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 are on track to dose the first patient in this trial in the first quarter of 2023.

We expect to provide data on this patient by the end of 2023.

W e are focused on advancing gene editing medicines to treat hemoglobinopathies, beginning with the continued development of our current ex vivo renizgamglogene autogedtemcel ("reni-cel") (formerly known as 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”).

We are also 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 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, reni-cel, 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-de pendent beta thalassemia (“TDT”), the most severe form of beta-thalassemia, another inherited blood disorder characterized by severe anemia.

We are investigating reni-cel in a single Phase 1/2/3 clinical trial, referred to as the RUBY trial, for the treatment of severe SCD.

In 2022, we dosed the first patient in the RUBY trial, and after completing sequential dosing of the first two patients, we commenced concurrent patient dosing in the first quarter of 2023.

Through February 28, 2024, we have enrolled 40 patients and dosed 18 patients in the RUBY trial .

We continue to enroll and dose patients in the adult cohort of the RUBY trial, with multiple patients scheduled for dosing.

We have also initiated enrollment in the adolescent cohort.

In December 2021, the U.S.

Food and Drug Administration (the "FDA") cleared our Investigational New Drug (“IND”) application for a Phase 1/2 clinical trial of reni-cel for the treatment of TDT, which we refer to as our EdiTHAL.

We dosed the first patient in this trial in the first quarter of 2023 and commenced concurrent patient dosing in the second

quarter of 2023.

Through February 28, 2024, we have enrolled 9 patients and dosed 7 patients in the EdiTHAL trial, and continue to enroll and dose patients.

In December 2023, we presented new safety and efficacy data in 17 patients treated with reni-cel in both the RUBY and EdiTHAL trials.

This clinical data, which remained consistent with and further confirmed earlier clinical results shared in June 2023 and December 2022, supports our belief that reni-cel can be a clinically differentiated, one-time, durable medicine that can provide life-changing clinical benefits to patients with SCD and TDT, specifically driving early and robust correction of anemia and sustained increases in fetal hemoglobin.

For additional information regarding these clinical data, please see “Business—Our Gene Editing Medicine Programs—Hemoglobinopathies.” We expect to provide a clinical data updates for both the RUBY and EdiTHAL trials in mid-2024 and by year-end 2024.

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 their 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 previously achieved human proof of concept for our most advanced in vivo gene editing medicine for inherited retinal diseases, EDIT-101 to treat Leber congenital amaurosis.

In November 2022 we announced updated clinical data from our Phase 1/2 BRILLIANCE trial of EDIT-101.

This data demonstrated a favorable safety profile and provided proof of concept.

However, we were not able to identify any baseline characteristics of the treatment responder patients that could pre-select a responder patient population other than zygosity.

The identified responder patient population was determined to be too small to progress the program independently.

We have since paused patient enrollment in this program.

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.

In 2023, we strengthened and focused our discovery organization to build an in vivo gene editing pipeline, and are on track to establish in vivo preclinical proof-of-concept for an undisclosed indication by year-end 2024.

In December 2023, we and Vertex Pharmaceuticals Incorporated (“Vertex”) entered into a license agreement, under which Vertex obtained a non-exclusive license for our Cas9 gene editing technology for ex vivo gene editing medicines targeting the BCL11A gene in the fields of sickle cell disease and transfusion-dependent beta thalassemia, including Vertex’s CASGEVY TM (exagamglogene autotemcel).

We received a $50.0 million upfront cash payment and are eligible to receive an additional $50.0 million contingent upfront payment.

We are also eligible to receive annual license fees, ranging from $10.0 million to $40.0 million annually, inclusive of certain sales-based annual license fee increases, through 2034.

We are required to pay The Broad Institute, Inc.

(“Broad”) and the President and Fellows of Harvard College (“Harvard”) a mid-double-digit percentage of amounts received from Vertex under the license agreement as it relates to Cas9 technology licensed by us from Broad and Harvard.

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 are eligible for future development, regulatory and commercial milestone payments, as well as royalties on medicines utilizing the related intellectual property.

In cellular therapy medicines, we are leveraging 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.

This collaboration, which leverages our Cas9 and AsCas12a platform technologies, has resulted in 13 total 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 January 2023, we announced the sale of our wholly owned oncology assets to Shoreline Biosciences, Inc.

(“Shoreline”).

Under the agreement, Shoreline acquired EDIT-202, our preclinical multiplexed edited induced human pluripotent stem cell (“iPSC”)-derived natural killer (“iNK”) cell medicine for the treatment of solid tumors, as well as an additional iNK program under development and certain related manufacturing technologies.

We also exclusively licensed to Shoreline our rights to a proprietary knock-in gene editing technology referred to as SLEEK (SeLection by Essential-gene Exon Knock-in) for use in Shoreline’s iNK platform and for oncology in Shoreline’s iPSC-derived macrophage platform, as well as a non-exclusively licensed our AsCas12a gene editing technology.

We believe that this transaction will enable this oncology program to more rapidly move towards clinical applications.

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.

Except for reni-cel, 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.

We have primarily financed our operations through various equity financings, payments received under our research collaboration with BMS, our former strategic alliance with Allergan Pharmaceuticals International Limited (together with its affiliates, “Allergan”), which was terminated in August 2020, and payments received in conjunction with our license agreement with Vertex .

Since inception, we have incurred significant operating losses.

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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 continue our current research programs and our preclinical development activities;

progress the clinical development of EDIT-301;

We anticipate

that our expenses will increase substantially as we continue our current research programs and our preclinical development activities;

progress the clinical development of reni-cel;

seek to identify additional research programs and additional product candidates;

initiate preclinical testing and clinical trials for other product candidates we

identify and develop;

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;

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We do not expect to be profitable for the year ending December 31, 2024 or the foreseeable future.

We did not experience any significant impact on our financial condition, results of operations or liquidity due to the COVID-19 pandemic during the year ended December 31, 2022.

At its height, the COVID-19 pandemic had a significant negative effect on the global economy, supply chains and labor force participation, and created significant volatility in financial markets.

The extent of the future impact of the COVID-19 pandemic on our operational and financial performance, including our ability to timely advance our clinical trials and preclinical actvtivies, will depend on future developments, including the duration, spread and severity of the pandemic, any evolution of the virus, government restrictions imposed in response, and the availability and effectiveness of vaccines and treatment options, all of which are uncertain and cannot be predicted.

We will continue to monitor and respond to the changing conditions created by the pandemic, with focus on prioritizing the health and safety of our employees and maintaining safe and reliable operations of our facilities.

Financial Operations Overview

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We no longer receive research funding support.

During the year ended December 31, 2022, we recognized $18.8 million of revenue related to our collaboration with BMS of which $11.3 million was previously deferred revenue.

During the year ended December 31, 2023, we recognized $4.5 million of revenue related to our collaboration with BMS of which none was previously deferred revenue.

As of December 31, 2023, we had $56.7 million of deferred revenue related to BMS, of which $56.7 million is classified as long-term on our consolidated balance sheet.

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As such, we expect that our revenue will fluctuate from quarter-to-quarter and year-to-year as a result of the timing of when these events occur.

In connection with our former strategic alliance with Allergan, we received an aggregate of $130.0 million in payments, which consisted of the initial upfront payment, an option exercise payment and a milestone payment.

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

During the third quarter of 2020, as a result of the termination of our agreements with Allergan, we recognized $63.2 million of revenue that consisted of previously deferred revenue net of a payment made to Allergan in connection with the termination.

For additional information about our revenue recognition policy related to the BMS collaboration or the Allergan strategic alliance, see “—Critical Accounting Policies and Estimates—Revenue Recognition” included in this Annual Report on Form 10-K.

For the foreseeable future we expect substantially all of our revenue will be generated from our collaboration with BMS, and any other collaborations or agreements we may enter into.

Upon execution of the license agreement with Vertex, we received a $50.0 million upfront cash payment and are eligible to receive an additional $50.0 million contingent upfront payment.

We are also eligible to receive annual license fees, ranging from $10.0 million to $40.0 million annually, inclusive of certain sales-based annual license fee increases, through 2034.

As of December 31, 2023, we have recorded $60.0 million of revenue related to the agreement.

For additional information about our revenue recognition policy related to the Vertex license agreement and BMS collaboration, see “—Critical Accounting Policies and Estimates—Revenue Recognition” included in this Annual Report on Form 10-K.

For the foreseeable future we expect substantially all of our revenue will be generated from our license agreement with Vertex, collaboration with BMS, and any other collaborations or license agreements we may enter into.

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

the performance of development activities under our collaboration agreements.

These costs are expensed as incurred and include:

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• costs incurred 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;

• costs associated with conducting our preclinical, process and scale-up development, manufacturing, quality, clinical and regulatory activities, including fees paid to third-party professional consultants, service providers and suppliers;

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

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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.

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

Other Income (Expense), Net

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The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of change in estimates.

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policy used in the preparation of our consolidated financial statements requires the most significant judgments and estimates.

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies used in the preparation of our consolidated financial statements requires the most significant judgments and estimates.

Revenue Recognition

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We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer.

At contract inception, once the contract is determined to be within the scope of ASC 606, we

assess the goods or services promised within each contract and determine those that are performance obligations, and whether each promised good or service is distinct.

At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are performance obligations, and whether each promised good or service is distinct.

We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

A significant portion of revenue recognized from our strategic alliance with Allergan, prior to termination, was related to research services performed for each clinical development program whereby revenue was recognized as the underlying services were performed using a proportional performance model.

Prior to the termination of the arrangement with Allergan, we measured proportional performance based on full time employee hours incurred relative to projected full time employee hours to complete the research services for each clinical development program.

We evaluated the measure of progress each reporting period and, if necessary, adjusted the measure of performance and related revenue recognition.

Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in our consolidated balance sheets.

As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract and use judgement in the determination of the transaction price and the application of the constraint.

The determination of standalone selling price has not had a significant impact on the accounting for our revenue arrangements given the nature of the performance obligations.

We have also not been required to apply significant judgement in determining the transaction price given the nature of the variable consideration and the application of the constraint.

Accrued research and development expenses

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The financial terms of these agreements are sometimes subject to negotiation, vary from contract to contract and may result in uneven payment flows.

There may be instances in which payments made to our service providers will exceed the level of services performed and result in a prepayment of the clinical expense.

There may be instances in which payments made to our service providers will exceed the level of services

performed and result in a prepayment of the clinical expense.

Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical milestones.

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The following table summarizes our results of operations for the years ended December 31, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Dollar Change

Percentage Change

Collaboration and other research and development revenues

December 31, Dollar Change Percentage Change

Collaboration and other research and development revenues $ 78,123 $ 19,712 $ 58,411 n/m

Operating expenses:

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Total operating expenses 247,304 245,662 1,642 1 %

Operating loss (169,181) (225,950) 56,769 (25) %

Other income, net:

Other income (expense), net

Interest income, net

Total other income, net

Other income, net (1,604) — (1,604) n/m

Interest income, net 17,566 5,518 12,048 n/m

Total other income, net 15,962 5,518 10,444 n/m

Net loss $ (153,219) $ (220,432) $ 67,213 (30) %

For our results of operations, we have included the respective percentage of changes, unless greater than 100% or less than (100)%, in which case we have denoted such changes as not meaningful (n/m).

Collaboration and Other Research and Development Revenues

Collaboration and other research and development revenues decreased by $5.8 million, to $19.7 million for the year ended December 31, 2022, from $25.5 million for the year ended December 31, 2021.

The decrease was primarily attributable to fewer programs licensed under our collaboration with BMS in 2022 than in 2021.

Collaboration and other research and development revenues increased by $58.4 million, to $78.1 million for the year ended December 31, 2023, from $19.7 million for the year ended December 31, 2022.

The increase was primarily attributable to revenue recognized under our license agreement with Vertex pursuant to the license agreement executed in December 2023.

Research and Development Expenses

Research and development expenses increased by $2.7 million, to $177.7 million for the year ended December 31, 2023 from $175.0 million for the year ended December 31, 2022.

The following table summarizes our research and development expenses for the years ended December 31, 2022 and December 31, 2021, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Dollar Change

Percentage Change

External research and development expenses

The following table summarizes our research and

development expenses for the years ended December 31, 2023 and December 31, 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

December 31, Dollar Change Percentage Change

Employee related expenses $ 47,363 $ 47,320 $ 43 — %

External research and development expenses 53,321 79,822 (26,501) (33) %

Facility expenses 21,447 21,032 415 2 %

Stock-based compensation expenses 9,842 12,425 (2,583) (21) %

Sublicense and license fees 35,011 5,334 29,677 n/m

Other expenses 10,667 9,025 1,642 18 %

Sublicense and license fees

Total research and development expenses $ 177,651 $ 174,958 $ 2,693 2 %

The increase in research and development expenses for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily attributable to:

● approximately $25.9 million in increased external research and development expenses primarily attributable to the clinical and manufacturing development of EDIT-301 as well as expenses related to the pause in internal investments in EDIT-101;

● approximately $6.8 million in increased employee related expenses primarily due to an increase in the size of our workforce, including a new Chief Medical Officer, to support clinical programs;

● approximately $5.6 million in increased other expenses related primarily to a COVID-19 employee retention tax credit recognized in the third quarter of 2021, which reduced research and development expenses and did not repeat in 2022, and increased consulting expenses in 2022;

● approximately $4.6 million in increased facility related expenses primarily related to increased lab and manufacturing space.

• approximately $29.7 million in increased sublicense and license fees primarily attributable to payments made related to our license agreement with Vertex;

• approximately $1.6 million in increased other expenses attributable to consulting and external fees to support clinical and quality initiatives;

• approximately $0.4 million in increased facility expenses.

These increases were partially offset by the following decreases in research and development expenses:

● approximately $6.3 million in decreased sublicense and license fees primarily related to the triggering of success payments under certain of our license agreements upon the achievement of market capitalization-based milestones in the first quarter of 2021 for which there were no similar fees in 2022, partially offset by license fees owed to certain of our licensors in 2022 in connection with receiving milestone and other payments from our licensees;

● approximately $4.1 million in decreased stock-based compensation expenses primarily due to equity awards granted in 2021, for which there were no similar awards in 2022, as well as decreased stock-based compensation expense recognized related to the performance-based awards that were granted to certain employees in 2021.

• approximately $26.5 million in decreased external research and development expenses primarily related to our strategic reprioritization and targeted focus on our reni-cel program;

• 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.

General and Administrative Expenses

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The following table summarizes our general and administrative expenses for the years ended December 31, 2023 and December 31, 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Dollar Change

Percentage Change

December 31, Dollar Change Percentage Change

Employee related expenses $ 16,969 $ 17,321 $ (352) (2) %

Stock-based compensation expenses

Intellectual property and patent related fees

Professional service expenses 19,575 11,496 8,079 70 %

Intellectual property and patent related fees 13,268 14,784 (1,516) (10) %

Stock-based compensation expenses 9,956 16,869 (6,913) (41) %

Facility and other expenses 9,885 10,234 (349) (3) %

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The decrease in general and administrative expenses for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily attributable to:

● approximately $10.0 million in decreased stock-based compensation expenses related to the acceleration of vesting of certain equity awards held by our former Chief Executive Officer in connection with her separation from our company in February 2021, as well as stock-based compensation expense recognized related to the performance-based awards that were granted to our succeeding Chief Executive Officer and

other employees in 2021, under which a single performance obligation was achieved in 2021, for which there were no similar expenses recognized in 2022;

● approximately $1.8 million in decreased intellectual property and patent related fees.

These decreases were partially offset by the following increases in general and administrative expenses:

● approximately $3.9 million in increased professional service expenses to support infrastructure and expanding operations;

● approximately $1.9 million in increased facility and other expenses.

• approximately $6.9 million in decreased stock-based compensation expense related to performance awards granted to our former Chief Executive Officer that were achieved or deemed probable in 2022, for which there was no similar expense in 2023, as well as a reduction in the market price of our common stock, resulting in a lower valuation of equity and awards granted;

• approximately $1.5 million in decreased intellectual property and patent related fees due to reduced legal activity;

• approximately $0.4 million in decreased employee related expenses;

• approximately $0.3 million in decreased facility and other expenses.

These decreases were partially offset by approximately $8.1 million in increased professional services to support strategic initiatives and business development activities.

Total Other Income, Net

For the years ended December 31, 2023, and 2022, total other income, net was $16.0 million and $5.5 million, respectively, which was primarily attributable to interest income and accretion of discounts associated with marketable securities.

The increase was attributable to increased invested balances as well as favorable market rates.

Comparison of Years Ended December 31, 2022 and 2021

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Sources of Liquidity

As of December 31, 2022, we have raised an aggregate of $898.0 million in net proceeds through the sale of shares of our common stock in public offerings and at-the-market offerings.

We also have funded our business from payments received under our research collaboration with BMS and our former strategic alliance with Allergan.

As of December 31, 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, including a public offering of our common stock in June 2023, pursuant to 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.

We also have funded our business from our research collaboration with BMS, our former strategic alliance with Allergan, and payments received under the license agreement with Vertex.

As of December 31, 2023, we had cash, cash equivalents and marketable securities of $427.1 million.

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We have not sold any shares of our common stock under this ATM Facility as of the date of this Annual Report on Form 10-K.

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.

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 the milestone payments and the timing of earning these amounts are dependent upon the timing and outcome of our development, regulatory and commercial activities and, as such, are uncertain at this time.

As of December 31, 2022, our right to contingent payments under our collaboration agreement with BMS is our only significant committed potential external source of funds.

As of December 31, 2023 , our right to contingent payments under our collaboration agreements with BMS and Vor Bio as well as our contingent upfront payment and annual license fees with Vertex are our only significant committed potential external source of funds.

The following table provides information regarding our cash flows for the years ended December 31, 2023 and 2022, respectively (in thousands):

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Financing activities 118,039 1,284

Net (decrease) increase in cash, cash equivalents, and restricted cash

Net decrease in cash, cash equivalents, and restricted cash $ (17,870) $ (61,997)

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 $177.3 million for the year ended December 31, 2022, which primarily consisted of operating expenses that relate to our on-going preclinical and clinical activities, sublicense and license fees, and increased personnel costs to support our expanding operations.

Net cash used in operating activities was approximately $163.8 million for the year ended December 31, 2021, which primarily consisted of operating expenses that relate to our on-going preclinical and clinical activities, a success payment that was settled in cash during the year, patent costs and license fees, rent expenses and increased costs as a result of staffing needs due to our expanding operations.

These expenses were partially offset by cash inflows from license fees received in the period.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities was approximately $114.1 million for the year ended December 31, 2022, primarily related to proceeds from maturities of marketable securities of $433.4 million, partially offset by costs used to acquire marketable securities of $315.2 million and purchases of property and equipment of $4.1 million.

Net cash used in investing activities was approximately $54.5 million for the year ended December 31, 2021, primarily related to costs to acquire marketable securities of $409.0 million and purchases of property and equipment of $8.0 million, partially offset by proceeds from maturities of marketable securities of $362.4 million.

Net cash used in operating activities was approximately $132.2 million for the year ended December 31, 2023, which primarily consisted of operating expenses related to the focused progression of clinical and manufacturing activities in support of the reni-cel program, sublicense and license fees, and supporting business operations.

Net cash used in operating activities was approximately $177.3 million for the year ended December 31, 2022, which primarily consisted of operating expenses related to our on-going preclinical and clinical activities, sublicense and license fees, and increased personnel costs to support our expanding operations.

Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities was approximately $3.7 million for the year ended December 31, 2023, primarily related to the purchase of property and equipment of $4.7 million.

The remaining offset relates to maturities of marketable securities of $259.5 million and purchases of marketable securities of $258.5 million.

Net cash provided by investing activities was approximately $114.1 million for the year ended December 31, 2022, primarily related to proceeds from maturities of marketable securities of $433.4 million, partially offset by the cost of acquiring marketable securities of $315.2 million and purchases of property and equipment of $4.1 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was approximately $118.0 million for the year ended December 31, 2023 primarily related to proceeds received from the public offering of common stock, net of issuance costs, of $117.1 million in June 2023 and proceeds received from issuance of common stock under our employee stock purchase plan of $0.9 million.

Net cash provided by financing activities was approximately $1.3 million for the year ended December 31, 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.

Net cash provided by financing activities was approximately $282.1 million for the year ended December 31, 2021 and consisted of $249.5 million in net proceeds received from the offering of our common stock in the first quarter 2021 and $31.5 million in proceeds received from exercises of options for our common stock.

For a discussion of our cash flows for the year ended December 31, 2021, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 22, 2023.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we progress the clinical development of EDIT-301;

We expect our expenses to increase in connection with our ongoing activities, particularly as we progress the clinical development of reni-cel;

further advance our research programs and our preclinical development activities;

seek to identify product candidates and additional research programs;

initiate preclinical testing and clinical trials for other product candidates we identify and develop;

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;

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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 December 31, 2022 will fund our operating expenses and capital expenditure requirements into 2025.

We expect that our existing cash, cash equivalents and marketable securities on December 31, 2023, together with the near-term annual license fees and the contingent upfront payment payable under our license agreement with Vertex, will fund our operating expenses and capital expenditure requirements into 2026.

Our forecast of the period of time through which our existing cash and cash equivalents and investments will be adequate to support our operations is a forward-looking statement and involves significant risks and uncertainties.

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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 sickle cell disease and to treat transfusion-dependent beta-thalassemia;

• the costs of progressing the clinical development of reni-cel to treat SCD and TDT;

• the scope, progress, results, and costs of clinical trials, drug discovery, preclinical development, laboratory testing, and clinical or natural history study trials for other product candidates we develop;

• 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 establishing and maintaining a supply chain for the development and manufacture of our product candidates;

• 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;

● whether BMS exercises any of its options to extend the research program term and/or to additional research programs under our collaboration;

• the success of our collaboration with BMS, including 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;

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• the costs of reimbursing our licensors for the prosecution and maintenance of the patent rights in-licensed by us;

● the costs of operating as a public company.

• our ability to establish and maintain healthcare coverage and adequate reimbursement for any product candidates for which we receive regulatory approval.

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.

In addition, even if we successfully identify and develop product candidates and those are approved, we will require significant additional amounts in order to launch and commercialize our product candidates and 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 years, if at all.

Accordingly, we will need to continue to rely on additional financing to achieve our business objectives.

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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.

Debt financing, if available, would result in increased fixed payment obligations and 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.

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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 December 31, 2023, the lease had not commenced for accounting purposes and it is not expected to commence until the first half of 2024.

The license and service agreement provides for total remaining lease payments of up to $85.4 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 and success fees, sublicense fees, royalty fees, licensing maintenance fees, and reimbursement of patent maintenance costs that we may be required to pay.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis