What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-02-28 compared with 2023-02-22 · 168 added, 151 removed, 696 unchanged (31% of the section changed)

3 unchanged sentences

government-backed securities, and marketable securities of $303.5 million, primarily consisting of U.S.

government-backed securities, commercial paper and corporate debt securities.

government-backed securities, U.S.

Treasuries and corporate debt securities.

Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S.

interest rates, particularly because our investments, including cash equivalents, are in the form, or may be in the form of, money market funds or marketable securities and are or may be

invested in U.S.

interest rates, particularly because our investments, including cash equivalents, are in the form, or may be in the form of, money market funds or marketable securities and are or may be invested in U.S.

Treasury and U.S.

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The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accrued Research and Development Expense

Description of the

The Company’s accrual for research and development expenses totaled $15.3 million at December 31, 2022.

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated

financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Research and Development Accruals

Description of the Matter The Company’s accrual for research and development expenses totaled $16.2 million at December 31, 2023.

As discussed in Note 2 to the consolidated financial statements, the Company expenses research and development costs as incurred.

The Company’s determination of costs incurred to conduct research and development on the Company’s product candidates, as well as the related accrued expenses at each reporting period incorporates judgment and utilizes various assumptions, including an evaluation of the information provided to the Company by third parties on actual costs incurred but not yet

billed, estimated project timelines and patient enrollment.

Payments for these activities are based on the terms of the individual arrangements, which often differ from the pattern of costs incurred.

How We Addressed the Matter in Our Audit

Auditing the Company’s research and development accruals is especially complex due to the judgments and estimations of the research and development expenses.

The Company uses judgment and estimation to estimate costs incurred and not yet billed at each reporting period as a result of the volume of pre-clinical and clinical trials and the related manufacturing activities, as well as the extent of third-party vendors utilized.

The Company uses judgment and estimation to estimate costs incurred and not yet billed at each reporting period as a result of the volume of R&D contracts, as well as the extent of third-party vendors utilized.

Additionally, due to the timing of invoices received from third parties, actual amounts incurred are not always known as of the audit report date.

We obtained an understanding of the Company’s process, evaluated and tested the design and operating effectiveness of internal controls that address the risks related to the completeness and valuation of accrued research and development expenses.

How We Addressed the Matter in Our Audit We obtained an understanding of the Company’s process, evaluated and tested the design and operating effectiveness of internal controls that address the risks related to the completeness and valuation of accrued research and development expenses.

To test the research and development accrual, our audit procedures included, among others, testing the accuracy and completeness of the underlying data used in the estimates and evaluating and testing the significant assumptions that are used by management to estimate the accruals.

To test the significant assumptions, we inspected the contracts and any amendments to the contracts with third-party service providers, corroborated the progress of pre-clinical and clinical trials and other research and development projects with the Company’s research and development personnel that oversee the clinical trials and the related manufacturing activities, and obtained information received from third parties, which included the third parties’ estimate of costs incurred to date.

To test the significant assumptions, we inspected the contracts and any amendments to the contracts with third-party service providers, corroborated the progress of research and development projects with the Company’s research and development personnel that oversee the clinical trials and the related manufacturing activities, and reviewed information received from third party vendors, which included the third parties’ estimate of costs incurred to date.

We also tested subsequent invoicing received from third parties.

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Editas Medicine, Inc.

Consolidated Balance Sheet s

Consolidated Balance Sheets

(amounts in thousands, except share and per share data)

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Restricted cash and other non-current assets 8,588 5,253

Total assets $ 499,153 $ 514,321

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Deferred revenue, net of current portion 60,667 60,667

Other non-current liabilities 1,800 —

Total liabilities 150,056 153,641

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Additional paid-in capital 1,580,241 1,442,405

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss) 198 ( 3,601 )

Accumulated deficit ( 1,231,350 ) ( 1,078,131 )

( 1,078,131 )

Total stockholders’ equity 349,097 360,680

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(amounts in thousands, except per share and share data)

2023 2022 2021

Collaboration and other research and development revenues $ 78,123 $ 19,712 $ 25,544

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Other income, net:

Other income (expense), net

Other income, net ( 1,604 ) — 37

Interest income, net 17,566 5,518 607

Total other income, net 15,962 5,518 644

Reconciliation of net loss to net loss attributable to common stockholders:

Net loss $ ( 153,219 ) $ ( 220,432 ) $ ( 192,502 )

Net loss per share, basic and diluted $ ( 2.02 ) $ ( 3.21 ) $ ( 2.85 )

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(amounts in thousands)

Other comprehensive loss:

Unrealized loss on marketable debt securities

2023 2022 2021

Net loss $ ( 153,219 ) $ ( 220,432 ) $ ( 192,502 )

Other comprehensive income (loss):

Unrealized gain (loss) on marketable debt securities 3,799 ( 3,108 ) ( 447 )

Comprehensive loss $ ( 149,420 ) $ ( 223,540 ) $ ( 192,949 )

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(amounts in thousands except share data)

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Income (Loss) Total

Stockholders’

Income (Loss)

Shares Amount

Balance at December 31, 2020 62,563,457 $ 6 $ 1,058,823 $ ( 665,197 ) $ ( 46 ) $ 393,586

Issuance of common stock from public offering, net of issuance costs of $0.3 million 4,025,000 1 249,458 — — 249,459

Issuance of common stock for repayment of notes payable 303,599 — 27,500 — — 27,500

Exercise of stock options 1,233,958 — 31,495 — — 31,495

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Unrealized loss on marketable debt securities — — — — ( 447 ) ( 447 )

Net loss — — — ( 192,502 ) — ( 192,502 )

Balance at December 31, 2021 68,435,257 $ 7 $ 1,411,827 $ ( 857,699 ) $ ( 493 ) $ 553,642

Issuance of common stock from public offering, net of issuance costs of $ 0.3 million

Issuance of common stock for repayment of notes payable

Exercise of stock options 19,769 — 305 — — 305

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Unrealized loss on marketable debt securities — — — — ( 3,108 ) ( 3,108 )

Net loss — — — ( 220,432 ) — ( 220,432 )

Balance at December 31, 2022 68,847,382 $ 7 $ 1,442,405 $ ( 1,078,131 ) $ ( 3,601 ) $ 360,680

Issuance of common stock from public offering, net commissions, underwriting discounts and offering costs 12,500,000 1 117,078 — — 117,079

Exercise of stock options 6,587 — 41 — — 41

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Purchase of common stock under benefit plans 115,360 — 919 — — 919

Unrealized loss on marketable debt securities

Unrealized gain on marketable debt securities — — — — 3,799 3,799

Net loss — — — ( 153,219 ) — ( 153,219 )

Balance at December 31, 2023 81,767,263 $ 8 $ 1,580,241 $ ( 1,231,350 ) $ 198 $ 349,097

( 1,078,131 )

The accompanying notes are an integral part of the consolidated financial statements.

Editas Medicine, Inc.

Consolidated Statements of Cash Flow s

Consolidated Statements of Cash Flows

(amounts in thousands)

2023 2022 2021

Cash flow from operating activities

Net loss $ ( 153,219 ) $ ( 220,432 ) $ ( 192,502 )

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation expense 19,798 29,294 43,399

Realized gain on corporate equity securities

Non-cash research and development expenses

Depreciation 6,064 6,337 5,053

Net amortization of premiums and discounts on marketable securities ( 4,823 ) ( 724 ) 1,657

Other non-cash items, net 1,596 — —

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Proceeds from maturities of marketable securities 259,505 433,354 362,402

Proceeds from sale of corporate equity securities

Net cash provided by (used in) investing activities ( 3,731 ) 114,068 ( 54,466 )

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Right-of-use assets obtained in exchange of operating lease obligations 2,752 29,861 10,736

Issuance of common stock for settlement of success payments (see Note 8)

The accompanying notes are an integral part of the consolidated financial statements.

Editas Medicine, Inc.

Notes to Consolidated Financial Statement s

Notes to Consolidated Financial Statements

Nature of Business

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Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and raising capital.

The Company has primarily financed its operations through various equity financings, payments received under a research collaboration with Juno Therapeutics, a wholly-owned subsidiary of the Bristol-Myers Squibb Company (“BMS”), and payments received under a strategic alliance and option agreement with Allergan Pharmaceuticals International Limited (together with its affiliates, “Allergan”).

The Company has primarily financed its operations through various equity financings, payments received under a research collaboration with Juno Therapeutics, a wholly-owned subsidiary of the Bristol-Myers Squibb Company (“BMS”), payments received under a strategic alliance and option agreement with Allergan Pharmaceuticals International Limited (together with its affiliates, “Allergan”) and payments received in conjunction with the Company’s license agreement with Vertex Pharmaceuticals, Inc (“Vertex”).

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations and ability to transition from pilot-scale manufacturing to large-scale production of products.

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, 2022, we had cash, cash equivalents and marketable securities of $ 437.4 million.

As of December 31, 2023, the Company has raised an aggregate of $ 1.0 billion in net proceeds through the sale of shares of its common stock in public offerings and at-the-market offerings.

The Company also has funded its business from payments received under its license agreement with Vertex, its research collaboration with BMS and its former strategic alliance with Allergan.

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

In May 2021, the Company entered into a common stock sales agreement with Cowen and Company, LLC (“Cowen”), under which the Company from time to time can issue and sell shares of its common stock through Cowen in at-the-market offerings for aggregate gross sale proceeds of up to $ 300.0 million (the “ATM Facility”).

As of December 31, 2022 the Company has no t sold any shares of its common stock under the ATM Facility.

As of December 31, 2023 the Company has not sold any shares of its common stock under the ATM Facility.

The Company has incurred annual net operating losses in every year since its inception.

The Company has an accumulated deficit of $ 1.2 billion at December 31, 2023.

The Company expects that its existing cash, cash equivalents and marketable securities on December 31, 2022 fund its operating expenses and capital expenditure requirements into 2025.The Company will require substantial additional capital to fund its operations.

As of February 28, 2024, the issuance date of the consolidated financial statements, the Company expects that its existing cash, cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the issuance date of the consolidate financial statements.

The Company has never generated any product revenue.

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The accompanying consolidated financial statements include the accounts of Editas Medicine, Inc.

and its wholly owned subsidiary, Editas Securities Corporation, which is a Delaware subsidiary created to buy, sell and hold securities.

and its wholly owned subsidiaries, Editas Securities Corporation, which is a Delaware subsidiary created to buy, sell and hold securities, and Editas Medicine, LLC, a Delaware limited liability company.

All intercompany transactions and balances have been eliminated.

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Cash and cash equivalents $ 123,652 $ 141,522

Restricted cash included in "Restricted cash and other non-current assets"

Total cash, cash equivalents, and restricted cash $ 127,529 $ 145,399

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Marketable securities are classified as long-term assets on the consolidated balance sheets if the contractual maturity exceeds one year and the Company does not intend to utilize the marketable securities to fund current operations.

For the years ended December 31, 2022 and 2021, the Company’s marketable securities consisted of investments in available-for-sale debt securities.

Available-for-sale debt securities are carried at fair value with the unrealized gains and losses included in other comprehensive loss as a component of stockholders’ equity until realized.

For the years ended December 31, 2023 and 2022, the Company’s marketable securities consisted of investments in available-for-sale debt securities and corporate equity securities.

Available-for-sale debt securities are carried at fair value with the unrealized gains and losses included in accumulated other comprehensive income (loss) as a component of stockholders’ equity until realized.

Any premium or discount arising at purchase is amortized and/or accreted to interest income and/or expense over the life of the of the underlying security.

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To date, the Company has not had any credit losses, and the Company did not have an allowance for credit losses as of December 31, 2023 and 2022.

During 2021, the Company’s marketable securities also included corporate equity securities.

The Company classified investments in equity securities that had a readily determinable fair value as marketable securities in the Company’s consolidated balance sheets.

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The Company believes that credit risk associated with its collaborations partners is not significant.

To date, the Company has no t had any write-offs of bad debt, and the Company did no t have an allowance for doubtful accounts as of December 31, 2022 and 2021.

To date, the Company has not had any write-offs of bad debt, and the Company did not have an allowance for doubtful accounts as of December 31, 2023 and 2022.

Concentrations of Credit Risk and Off-Balance Sheet Risk

The Company has no financial instruments with off-balance sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements.

Financial instruments that potentially subject the Company to a concentration of credit risk are cash, cash equivalents, marketable securities and receivables owed to the Company from collaboration partners.

Financial instruments that potentially subject the Company to a concentration of credit risk are cash, cash equivalents, marketable securities and receivables owed to the Company from

collaboration partners.

The Company’s cash, cash equivalents and marketable securities are held in accounts at a financial institution that may exceed federally insured limits.

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Estimated Useful life

Lab equipment

Computer equipment and software

Furniture and equipment

Leasehold improvements

Shorter of useful life or remaining lease term

Labratory and manufacturing equipment 5 years

Computer equipment and software 3 years

Furniture and equipment 5 years

Leasehold improvements Shorter of useful life or remaining lease term

Impairment of Long-lived Assets

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If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the assets exceed their fair value.

The Company has no t recognized any impairment losses from inception through December 31, 2022.

Profit-Sharing Arrangements

The Company considers the nature and contractual terms of the arrangements and assesses whether such arrangements involve a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards with respect to such arrangement.

If the Company is an active participant and is exposed to significant risks and rewards with respect to such arrangement, the Company accounts for such arrangement as a collaboration under ASC Topic 808, Collaborative Arrangements (“ASC 808”).

ASC 808 describes arrangements within its scope and considerations surrounding presentation and disclosure, with recognition matters subjected to other authoritative guidance, in certain cases by analogy.

Payments received from a collaboration partner to which this policy applies are recorded as contra-expense in the applicable period and may include development costs or patent expense reimbursements.

The Company classifies payments made under the cost sharing provisions of such arrangements as a component of research and development expenses to reflect the joint risk sharing nature of such profit-sharing arrangements.

The Company classifies payments owed or receivables recorded as other current liabilities or prepaid expenses and other current assets, respectively, in the Company’s consolidated balance sheets.

The Company had one agreement that was accounted for in accordance with ASC 808 prior to the termination of the arrangement during the year ended 2020.

The arrangements and payments are described more fully in Note 9.

The Company has not recognized any impairment losses from inception through December 31, 2023.

Revenue Recognition

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Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer and are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service is separately identifiable from other promises in the contract.

In assessing whether promised good or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on its own or whether the required expertise is readily available and whether the goods or services are integral or dependent to other goods or services in the contract.

In assessing whether promised good or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual

property, the capabilities of the customer to develop the intellectual property on its own or whether the required expertise is readily available and whether the goods or services are integral or dependent to other goods or services in the contract.

The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract.

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Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration and other research and development revenues in the period of adjustment.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty

has been allocated has been satisfied (or partially satisfied).

To date, the Company has not recognized any royalty revenue resulting from any of the Company’s collaboration or strategic alliance arrangements.

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In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period.

If the actual timing of the performance of services or the level of effort varies from the Company’s estimate, the accrual or prepaid is adjusted accordingly.

If the actual timing of the performance of services or the level of effort varies from the Company’s estimate, the accrual or prepaid is

adjusted accordingly.

The Company defers and capitalizes non-refundable advance payments made by the Company for research and development activities until the related goods are received or the related services are performed.

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The Company estimates the grant date fair value of each option award using the Black-Scholes option-pricing model.

The Black-Scholes option pricing model requires the input of certain subjective assumptions, including (1) the expected stock price volatility, (2) the calculation of expected term of the award, (3) the risk-free interest rate, and (4) the expected dividend yield.

Because there had been no public market for the Company’s common stock prior to its initial public offering, there was a lack of company-specific historical and implied volatility data.

Accordingly, the Company based its estimates of expected volatility on the historical volatility of a group of similar companies that are publicly traded.

The Company calculates historical volatility based on a period of time commensurate with the expected term.

The Company computes expected volatility based on the historical volatility of a representative group of companies with similar characteristics to the Company, including their stages of product development and focus on the life science

The Black-Scholes option pricing model requires the input of certain assumptions, including (1) the expected stock price volatility, (2) the calculation of expected term of the award, (3) the risk-free interest rate, and (4) the expected dividend yield.

The Company used its own historical volatility data for its estimates of expected volatility.

calculates historical volatility based on a period of time commensurate with the expected term.

The Company uses the simplified method as prescribed by the Securities and Exchange Commission’s Staff Accounting Bulletin No.

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The Company and the Company’s chief operating decision maker, the Company’s Chief Executive Officer, view the Company’s operations and manage the Company’s business as a single operating segment, which is the business of developing and commercializing genome editing technology.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2023-09 "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures." This guidance is intended to enhance the transparency and decision-usefulness of income tax disclosures.

The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in the United States and in foreign jurisdictions.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively.

Early adoption is permitted.

The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statement disclosures.

In October 2023, the FASB issued ASU 2023-06 "Disclosure Improvements:

Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative." which incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification ("Codification").

The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety Codification topics, allow investors to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC's regulations.

The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The amendments in this ASU should be applied prospectively.

The Company doe not expect ASU 2023-06 will have a material impact to its consolidated financial statements.

Cash Equivalents and Marketable Securities

Cash equivalents and marketable securities consisted of the following at December 31, 2023 (in thousands):

December 31, 2022

December 31, 2023 Amortized

Cost Allowance

Cash equivalents and marketable securities:

Government agency securities

Money market funds $ 123,652 $ — $ — $ — $ 123,652

Treasuries 168,858 — 611 169,469

Government agency securities 103,507 — — ( 327 ) 103,180

Corporate notes/bonds 30,920 — — ( 86 ) 30,834

Commercial paper

Total $ 426,937 $ — $ 611 $ ( 413 ) $ 427,135

Cash equivalents and marketable securities consisted of the following at December 31, 2022 (in thousands):

December 31, 2021

December 31, 2022 Amortized

Cost Allowance

Cash equivalents and marketable securities:

Money market funds $ 141,522 $ — $ — $ — $ 141,522

Treasuries 50,019 — 3 ( 229 ) 49,793

Government agency securities 161,902 — 11 ( 2,556 ) 159,357

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Corporate notes/bonds 57,575 — 2 ( 694 ) 56,883

As of December 31, 2022, the Company did no t hold any marketable securities that had been in an unrealized loss position for more than twelve months.

Furthermore, the Company has determined that there were no material changes in the credit risk of the debt securities.

As of December 31, 2022, the Company holds 32 securities with an aggregate fair value of $ 93.1 million that had remaining maturities between one and two years .

Total $ 440,972 $ — $ 19 $ ( 3,620 ) $ 437,371

The Company's available-for-sale securities are subject to a periodic impairment review.

A debt security is considered to be impaired when its fair value is less than its carrying cost, in which case the Company would further review the investment to determine whether it is other-than-temporarily impaired.

When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, intent to sell, and whether it is more likely than not we will be required to sell the investment before the recovery of its cost basis.

If an investment is other-than-temporarily impaired or subject to credit losses, the Company writes it down through the statement of operations and comprehensive loss to its fair value and establishes that value as a new cost basis for the investment.

We determined that none of our available-for-sale securities were other-than-temporarily impaired as of December 31, 2023 and 2022, and we did not hold any marketable securities that had been in an unrealized loss position for more than twelve months.

As such, the Company believes that it is more likely than not that the investments will be held until maturity or a forecasted recovery of fair value.

Based on our procedures under the expected credit loss model, including an assessment of unrealized losses in our portfolio, the Company concluded that any unrealized losses on marketable securities were not attributable to credit and, therefore, did not record an allowance for credit losses for these securities as of December 31, 2023 and 2022." As of December 31, 2023, the Company holds 23 securities with an aggregate fair value of $ 104.0 million that had remaining maturities between one and two years .

All other securities had a contractual maturity of less than a year.

Fair Value Measurements

Assets measured at fair value on a recurring basis as of December 31, 2023 were as follows (in thousands):

Financial Assets December 31,

2023 Quoted Prices

Identical Assets

Financial Assets

(Level 1) Significant

(Level 2) Significant

Cash equivalents:

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Corporate bonds 30,834 — 30,834 —

Commercial paper

Treasuries 169,469 169,469 — —

Restricted cash and other non-current assets:

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Assets measured at fair value on a recurring basis as of December 31, 2022 were as follows (in thousands):

Financial Assets December 31,

2022 Quoted Prices

Identical Assets

Financial Assets

(Level 1) Significant

(Level 2) Significant

Cash equivalents:

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Government agency securities 159,357 — 159,357 —

Commercial paper

Corporate bonds 56,883 — 56,883 —

Treasuries 49,793 49,793 — —

Commercial paper 29,816 — 29,816 —

Restricted cash and other non-current assets:

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Total financial assets $ 441,248 $ 195,192 $ 246,056 $ —

During the year ended December 31, 2020, the Company held an investment in Beam Therapeutics Inc.

(“Beam Therapeutics”) consisting of shares of Beam Therapeutics’ common stock.

Prior to Beam Therapeutics’ initial public offering in February 2020, the Company valued such investment based on the cost of the equity securities adjusted for any observable market transactions.

Following the initial public offering, the equity securities had a readily determinable fair value, and were included in marketable securities on the consolidated balance sheet.

The Company sold this investment in October 2020, resulting in a realized gain of $ 16.4 million recorded in other income (expense), net on the consolidated statements of operations.

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

Laboratory equipment

2023 December 31,

Laboratory and manufacturing equipment $ 25,043 $ 24,407

Leasehold improvements 9,648 9,761

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Furniture and office equipment 264 264

Software 215 215

Total property and equipment 38,292 37,095

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Employee related expenses 11,280 10,140

Sublicense and license fees 5,063 559

Intellectual property and patent related fees 983 1,809

Other expenses

Professional service expenses 750 1,260

Other expenses 283 1,076

Total accrued expenses $ 34,563 $ 31,296

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The Company’s leases are included on its consolidated balance sheet as follows (in thousands):

2023 December 31,

Right-of-use assets $ 33,680 $ 43,648

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December 31, 2023

2024 $ 14,847

Thereafter $ —

Total minimum lease payments $ 43,448

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The weighted-average remaining lease term is 3.8 years and the weighted-average discount rate is 8.9 %.

In the second quarter of 2023, the Company entered into a license and service agreement pursuant to which it will lease manufacturing space for our continued research and development activities.

As of December 31, 2023, the lease has 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.

The Company may terminate the license and service agreement in the Company's discretion upon twelve months' prior written notice.

Hurley Street

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The Company has the option to extend the lease for an additional five-year term at market-based rates.

rent payments commenced in January 2020 and continue through the term of the lease and are subject to increases over the term of the lease.

The base rent payments commenced in January 2020 and continue through the term of the lease and are subject to increases over the term of the lease.

Commitments and Contingencies

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The Company has the right to terminate each of the License Agreements at will with four months written notice to Broad.

Unless terminated earlier, the term of each of the License Agreements will expire on a country-by-country basis, upon the expiration of the last to expire valid claim of the licensed patent rights in such country.

Unless terminated earlier, the term of each of the License

Agreements will expire on a country-by-country basis, upon the expiration of the last to expire valid claim of the licensed patent rights in such country.

In aggregate, the Company may pay up to $ 14.8 million, $ 20.0 million, and $ 3.7 million in clinical and regulatory milestones under the Cas9-I License Agreement, Cpf1 License Agreement, and Cas9-II License Agreement, respectively.

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Collaboration Revenue

As of December 31, 2022, the Company’s contract liabilities were primarily related to the Company’s collaboration with BMS.

As of December 31, 2023, the Company’s contract liabilities were primarily related to the Company’s collaboration with BMS and the Company's license agreement with Vertex.

The following table presents changes in the Company’s accounts receivable and contract liabilities for the year ended December 31, 2023 (in thousands):

For the year ended December 31, 2022

Balance at December 31, 2021

Balance at December 31, 2022

For the year ended December 31, 2023 Balance at December 31, 2022 Additions Deductions Balance at December 31, 2023

Accounts receivable $ 5,145 $ 14,864 $ ( 9,822 ) $ 10,187

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Deferred revenue $ 68,888 $ — $ — $ 68,888

During the three and twelve months ended December 31, 2022, the Company recognized the following collaboration revenue (in thousands):

Three Months Ended

Revenue recognized in the period from:

December 31, 2022

Amounts included in deferred revenue at the beginning of the period

Performance obligations satisfied in previous periods

BMS Collaboration Agreemen t

BMS Collaboration Agreement

In 2019, the Company entered into an amended and restated collaboration agreement (“BMS Collaboration Agreement”) and license agreement (“BMS License Agreement”) with BMS to focus on the research, development, and commercialization of autologous and allogenic alpha-beta T cell medicines for the treatment of all diseases, subject to certain exceptions.

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During the years ended December 31, 2023, 2022 and 2021, the Company recognized $ 4.5 million, $ 18.8 million and $ 24.7 million of revenue related to BMS.

As of December 31, 2022, the Company recorded $ 56.7 million of deferred revenue, of which $ 56.7 million is classified as long-term on our consolidated balance sheet.

As of December 31, 2021, the $ 56.7 million was classified as long-term in the accompanying consolidated balance sheets.

As of December 31, 2023, the Company recorded $ 56.7 million of deferred revenue, of which $ 56.7 million is classified as long-term on the Company's consolidated balance sheets.

There were no material sublicense fees paid to licensors in connection with the consideration received pursuant to the BMS Collaboration Agreement for the years ended December 31, 2023 and 2022.

Allergan Pharmaceuticals Strategic Alliance and Profit-Sharing Agreement

In March 2017, the Company entered into a Strategic Alliance and Option Agreement with Allergan to discover, develop, and commercialize new gene editing medicines for a range of ocular disorders (the “Allergan Agreement”).

Under the terms of the Allergan Agreement, the Company received a $ 90.0 million up-front, non-refundable, non-creditable cash payment to primarily fund the Company’s ocular research and development efforts to provide Allergan with the option to exclusively exercise the worldwide development and commercialization rights to five ocular development programs meeting certain criteria.

Subsequently Allergan and the Company entered into an agreement (the “Profit-Sharing Agreement”) to equally split U.S.

profit and losses of EDIT-101, an experimental medicine or leber congenital amaurosis 10 or LCA10 that was the only program licensed to Allergan under the Allergan Agreement.

In August 2020, the Company and Allergan agreed to terminate the Allergan Agreement and the Profit-Sharing Agreement (together with the Allergan Agreement, the “Initial Agreements”).

In connection with the termination, the Company entered into a transition services agreement with Allergan (together with the termination agreement, the ‘Termination Agreements”), primarily to facilitate the transfer of EDIT-101 back to the Company.

Pursuant to the Termination Agreements, the Company regained full global rights to research, develop, manufacture, and commercialize its ocular medicines, including EDIT-101.

Allergan has no further obligations pursuant to the Initial Agreements, all unexercised options and contingent payments contemplated under the Initial Agreements have terminated, which includes Allergan’s worldwide developmental and commercialization rights to EDIT-101.

Under the Termination Agreements, Allergan granted the Company a non-exclusive license to certain know-how that is necessary to develop, manufacture and commercialize EDIT-101 and transferred to the Company certain materials produced under the Initial Agreements.

The Company is obligated to use commercially reasonable efforts to develop and commercialize products directed at four collaboration targets, one of which is LCA10.

In connection with the Termination Agreements, the Company agreed to make a $ 20.0 million payment to Allergan, which was fully paid as of December 31, 2021.

In addition, the Company will make certain payments on achievements of clinical and regulatory milestones up to $ 20.0 million for each target program and aggregated sales milestones for all products covered by the Termination Agreement up to $ 90.0 million.

Allergan is also entitled to royalties in a low-single digit percentage, subject to reduction under specified circumstances, on net sales of specified products.

The Company’s obligation to pay royalties will expire on a country-by-country and product-by-product basis upon the later of the expiration of regulatory-based exclusivity with respect to such product in such country and the tenth anniversary of the first commercial sale of such product.

Accounting Assessment

The Company evaluated the Termination Agreements in accordance with the provisions ASC 606 and concluded that they resulted in a modification followed by a termination of the Initial Agreements.

Upon execution of the Termination Agreements, the Company is no longer obligated to transfer control of any goods or services to Allergan, and therefore there are no remaining performance obligations.

As part of this assessment, the Company considered that Allergan relinquished its right to the remaining exclusive license options under the Allergan Agreement and the Company reacquired the development and commercialization rights to EDIT-101.

Allergan no longer has any involvement in the development activities of the collaboration targets.

Since there are no remaining performance obligations, the Company accounted for the modification as part of the existing contract with a cumulative catch-up adjustment.

The Company concluded that $ 5.0 million of the $ 20.0 million payment that was paid to Allergan was for re-acquired rights to EDIT-101 that had no alternative future use, and as such the Company recorded it as in-process research and development expenses as of December 31, 2020.

The remainder of the $ 20.0 million payment was recorded as a reduction to the contract liability and partially offset the recognition of $ 77.1 million in previously deferred revenue that was received under the Initial Agreements that was recognized on the termination date.

The contingent payments associated with the collaboration targets not previously licensed by Allergan under the Allergan Agreement did not impact the amount of deferred revenue recognized upon termination because it is not

probable that a significant reversal of revenue will occur.

The contingent milestone and royalty payments associated with EDIT-101 qualify for scope exceptions from derivative accounting, and therefore there is no accounting for the contingent payments upon termination.

During the year ended December 31, 2020, the Company recognized revenue related to Allergan of approximately $ 70.6 million.

There was no revenue recognized related to Allergan for the years ended December 31, 2021 and 2022.

Beam Therapeutics License Agreement

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Since both of the performance obligations were delivered at the inception of the arrangement and the licenses were made available for Beam’s use and benefit, the Company recognized the total transaction price at the inception of the agreement.

During the years ended December 31, 2022 and 2021, the Company recognized revenue under the Beam License Agreement of approximately $ 0.3 million and $ 0.3 million, respectively.

During the years ended December 31, 2023, 2022 and 2021, the Company recognized revenue under the Beam License Agreement of approximately $ 0.2 million, $ 0.3 million and $ 0.3 million, respectively.

Vertex Pharmaceuticals License Agreement

On December 12, 2023, the Company and Vertex Pharmaceuticals entered into a license agreement.

Under terms of the agreement, Vertex obtained a non-exclusive license for Editas Medicine’s Cas9 gene editing technology for ex vivo gene editing medicines targeting the BC11A gene in the fields of sickle cell disease and beta thalassemia, including exagamglogene autotemcel (exa-cel).

In connection with the License Agreement, the Company received an upfront payment of $ 50.0 million.

The Company is 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 and other contingent fees of $ 50.0 million.

Accounting Assessment

The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty, Vertex Pharmaceuticals, is a customer.

The Company identified a single performance obligation, which is the non-exclusive license to certain Cas9-I patents.

The total transaction price at the inception of the arrangement was determined to be $ 60.0 million, consisting of an upfront cash payment and the first annual license fee installment.

The remaining annual license fees and contingent fees represent variable consideration that was evaluated under the most likely amount method, and excluded from the initial transaction price because the amounts were fully constrained.

As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of the annual license fees and contingent fees are outside the control of the Company.

They will be recognized when each payment is determined to be probable.

The Company will re-evaluate the transaction price in each reporting period, as uncertain events are resolved, or as other changes in circumstances occur.

Since the single performance obligation was delivered at the inception of the arrangement and the license was made available for Vertex’s use and benefit, the Company recognized the total transaction price at the inception of the agreement.

During the year ended December 31, 2023, the Company recognized revenue under the Vertex License Agreement of $ 60.0 million.

Preferred Stock

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The holders of shares of common stock are entitled to receive dividends, if and when declared by the Company’s board of directors.

Cash dividends may not be declared or paid to holders of shares of common stock until all unpaid dividends on the redeemable convertible preferred stock have been paid in accordance with their terms.

Cash dividends may not be declared or paid to holders of shares of common stock until all unpaid dividends on any outstanding redeemable convertible preferred stock have been paid in accordance with their terms.

No dividends have been declared or paid by the Company since its inception.

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Certain options provide for accelerated vesting in the event of a change in control, as defined in the applicable options.

Awards granted to non-employee consultants generally vest monthly over a period

of one to four years .

Awards granted to non-employee consultants generally vest monthly over a period of one

to four years .

In connection with the Company’s initial public offering (“IPO”), the Company’s board of directors determined to grant no further awards under the 2013 Plan.

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Inducement awards are typically a service-based option and a restricted stock unit and are subject to the Company’s typical vesting terms and the employee’s continued service relationship with the Company through the applicable vesting dates.

In June 2022 and July 2022, the Company’s board of directors approved two inducement grants to the Company’s recently hired Chief Executive Officer and Chief Medical Officer, respectively.

In May 2023, July 2023 and September 2023, the Company’s board of directors approved three inducement grants to the Company’s recently hired Chief Financial Officer, Chief Scientific and Chief Commercial and Strategy Officer, respectively.

Shares Reserved for Future Issuance

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Remaining shares reserved, but unissued, for future awards under the 2015 Employee Stock Purchase Plan 3,185,493 3,300,853

20,542,532 17,888,611

Stock-Based Compensation

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The following table summarizes restricted stock and restricted stock unit awards activity for the instruments discussed above as of December 31, 2023 and 2022 is as follows:

Shares Weighted

Unvested restricted stock and restricted stock unit awards as of December 31, 2022 1,499,070 $ 18.70

Issued 1,375,602 $ 8.70

Vested ( 297,934 ) $ 20.08

Forfeited ( 469,591 ) $ 18.77

Unvested restricted stock and restricted stock unit awards as of December 31, 2023 2,107,147 $ 11.96

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The restricted stock and restricted stock units granted in the year ended December 31, 2023 include 437,842 units granted to certain employees that contain performance-based vesting provisions.

The expense related to the performance-based vesting restricted stock units was $ 4.4 million as of December 31, 2022.

The expense related to the performance-based vesting of restricted stock units was $ 0.5 million and $ 4.4 million for the years ended December 31, 2023 and December 31, 2022, respectively.

As of December 31, 2023, total unrecognized compensation expense related to unvested restricted stock and restricted stock unit awards was $ 13.8 million, which the Company expects to recognize over a remaining weighted-average period of 2.3 years.

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The following is a summary of stock option activity for the year ended December 31, 2023:

Weighted Average

Aggregate Intrinsic

Exercise Price

Contractual Life (years)

Shares Weighted Average

Exercise Price Remaining

Contractual Life (years) Aggregate Intrinsic

Value (in thousands)

Outstanding at December 31, 2022 5,276,148 $ 23.99 8.00 $ 402

Granted 2,393,380 $ 8.70

Exercised ( 6,587 ) $ 6.14

Cancelled ( 1,513,296 ) $ 30.45

Outstanding at December 31, 2023 6,149,645 $ 16.47 6.89 $ 3,195

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The fair value of each service-based vesting option issued was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

2023 2022 2021

Expected volatility 75.2 % 64.2 % 61.2 %

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The Company had no income tax expense due to operating losses incurred for the years ended December 31, 2023 and 2022.

A reconciliation of the income tax expense computed using the federal statutory income tax rate to the

Company’s effective income tax rate is as follows:

A reconciliation of the income tax expense computed using the federal statutory income tax rate to the Company’s effective income tax rate is as follows:

Income tax computed at federal statutory tax rate 21.0 % 21.0 %

6 unchanged sentences

Change in valuation allowance ( 21.8 ) % ( 20.0 ) %

Other 1.3 % ( 0.2 ) %

The principal components of the Company’s deferred tax assets and liabilities consist of the following at December 31, 2023 and 2022 (in thousands):

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Depreciation and amortization 905 299

Other 7,323 10,119

Total deferred tax assets 337,817 308,637

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Net deferred taxes $ — $ —

For taxable years beginning after December 31, 2021, the Tax Cuts and Jobs Act (the "Tax Act”) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to capitalize such expenses pursuant to Internal Revenue Code ( "IRC"

) Section 174.

As a result of this provision of the Tax Act, deferred tax assets related to capitalized research expenses pursuant to IRC Section 174 increased to $ 60.9 million for the year ended December 31, 2023.

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At December 31, 2023 and 2022, the Company had federal net operating loss carryforwards of $ 546.7 million and $ 517.5 million, respectively.

Of the amount

as of December 31, 2022, $ 442.7 million will carryforward indefinitely while $ 74.8 million will expire beginning in 2035 and will continue to expire through 2037.

Of the amount as of December 31, 2023, $ 472.0 million will carryforward indefinitely while $ 74.8 million will expire beginning in 2035 and will continue to expire through 2037.

As of December 31, 2023, and 2022, the Company also had state net operating loss carryforwards of approximately $ 648.0 million and $ 609.5 million, respectively, which may be available to offset future income tax liabilities and will expire beginning in 2035 and will continue to expire through 2043.

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The Company’s management has determined that it is more likely than not that the Company will not recognize the benefits of its federal and state deferred tax assets, and as a result, a valuation allowance of $ 328.6 million and $ 296.1 million has been established at December 31, 2023 and 2022, respectively.

The increase in the valuation allowance of $ 45.0 million for the year ended December 31, 2022 was primarily due to current period pre-tax losses incurred and research tax credits generated.

The increase in the valuation

allowance of $ 32.5 million for the year ended December 31, 2023 was primarily due to current period pre-tax losses incurred and research tax credits generated.

The Company applies ASC 740 related to accounting for uncertainty in income taxes.

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The following table summarizes the activity related to the Company’s gross unrecognized tax benefits at the beginning and end of the years ended December 31, 2023 and 2022 (in thousands):

December 31, 2023

Balance as of December 31, 2022 $ 11,797

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Gross increases for tax positions related to prior year 478

Gross decreases for tax positions related to prior year

Balance as of December 31, 2023 $ 13,659

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however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position.

A full valuation allowance has been provided against the Company’s research and development credits, and if an adjustment is

required, this adjustment would be offset by an adjustment to the valuation allowance.

A full valuation allowance has been provided against the Company’s research and development credits, and if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance.

Thus, there would be no impact to the consolidated balance sheets or statements of operations if an adjustment were required.

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The Company did not have any international operations as of December 31, 2023.

An examination by the Internal Revenue Service ("IRS") for the period ended December 31, 2018 related to its R&D tax credits concluded in December 31, 2022 and resulted in a reduction to the Company’s deferred tax assets.

An examination by the Internal Revenue Service (“IRS”) for the period ended December 31, 2018 related to its R&D tax credits concluded in December 31, 2022 and resulted in a reduction to the Company’s deferred tax assets.

Net Loss per Share

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Outstanding stock options 6,149,645 5,276,148

Total 8,256,792 6,775,218

The table above reflects restricted stock issued upon exercise of unvested stock options as exercised on the dates that the shares are no longer subject to repurchase.

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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 7A. Quantitative and Qualitative Disclosures About Market Risk