What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-06 compared with 2020-05-07 · 132 added, 77 removed, 248 unchanged (46% of the section changed)

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Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:

the anticipated timing of our submission of investigational new drug applications or equivalent regulatory filings and initiation of clinical studies for NTLA-2001, our program for the treatment of transthyretin amyloidosis;

the anticipated timing of the initiation of our clinical studies for NTLA-2001, our program for the treatment of transthyretin amyloidosis;

the anticipated timing of preclinical studies, manufacturing activities and our investigational new drug application or equivalent regulatory filing for NTLA-5001, our program for the treatment of acute myeloid leukemia;

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our ability to acquire and maintain relevant intellectual property licenses and rights, and the scope and terms of such rights;

our plans to negotiate, and ability to agree to terms with Caribou in accordance with the September 2019 interim award issued by the arbitration panel in our arbitration against Caribou Biosciences, Inc.

(the “Caribou Arbitration”), including the scope of such arrangement and the timing and amount of payment under any such arrangement as well as the potential to initiate additional arbitration or legal proceedings if negotiations are not successful;

our plans to negotiate, and ability to agree to terms with Caribou Biosciences, Inc.

(“Caribou”) in accordance with the September 2019 interim award issued by the arbitration panel in our arbitration against Caribou (the “Caribou Arbitration”), including the scope of such arrangement and the timing and amount of payment under any such arrangement as well as the potential to initiate additional arbitration or legal proceedings if negotiations are not successful;

t he potential implications and impact the interim award in the Caribou Arbitration may have on any other intellectual property rights, as well as Caribou’s potential to compete with us in the field of human therapeutics;

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All of our revenue to date has been collaboration revenue .

Since our inception and through March 3 1 , 20 20 , we have raised an aggregate of approximately $ 658.

7 million to fund our operations, of which $1 5 5.5 million was through our collaboration agreements, $170.5 million was from our initial public offering and concurrent private placements, $141.0 million was from a follow-on offering, $ 106.

Since our inception and through June 3 0 , 20 20 , we have raised an aggregate of approximately $ 889.

8 million to fund our operations, of which $ 268.8 million was through our collaboration agreements, $170.5 million was from our initial public offering and concurrent private placements, $ 2 4 9.

1 million was from follow-on offering s , $ 1 1 6.

4 million was from at-the-market offering s and $85.0 million was from the sale of convertible preferred stock .

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and for which effective treatments are absent, limited or unduly burdensome.

Our initial in vivo indications target genetic liver diseases, including ATTR and HAE.

Our initial in vivo indications target genetic liver diseases, including ATTR and HAE, using a knockout approach.

Our current efforts on in vivo delivery focus on the use of LNPs for delivery of the CRISPR/Cas9 complex to the liver.

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Our lead candidate, NTLA-2001, applies an in vivo liver knockout approach for the treatment of ATTR.

We have manufactured clinical-scale materials for a Phase 1 study of NTLA-2001 and remain on track to submit an investigational new drug application (“IND”) or IND-equivalent for this program in mid-2020.

Subject to the impact of COVID-19, we plan to dose the first patient in the second half of 2020.

NTLA-2001 is part of a Co-Development and Co-Promotion (“Co/Co”) agreement directed to the first collaboration target, ATTR, for which we are the clinical and commercial Lead Party and Regeneron is the Participating Party.

On December 13, 2019, Regeneron informed us that it would exercise its right under the ATTR Co/Co agreement to decrease its share of worldwide development costs and profits from 50% to 25%, effective six months after its notice.

We have manufactured clinical-scale materials for a Phase 1 study of NTLA-2001 and announced that we have submitted our first Clinical Trial Application (“CTA”) to the United Kingdom’s Medicines and Healthcare products Regulatory Agency (“MHRA”) and are executing on our clinical plans to initiate a global Phase 1 study of NTLA-2001.

Pending approval of our CTA and subject to the impact of COVID-19, we plan to dose the first patient by the end of 2020.

In addition, we are submitting additional regulatory applications to enable enrollment in other countries as part of our global clinical development plans.

NTLA-2001 is part of a co-development and co-promotion (“Co/Co”) agreement directed to our first collaboration target with Regeneron, ATTR (the “ATTR Co/Co”), for which we are the clinical and commercial Lead Party and Regeneron is the Participating Party (see Note 7 to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for further detail).

Pursuant to the ATTR Co/Co agreement, Regeneron funded approximately 50% of the program’s development costs through 2019.

Starting June 2020 and thereafter, Regeneron will share approximately 25% of worldwide development costs and commercial profits for the ATTR program.

On December 13, 2019, Regeneron informed us that it would exercise its right under the ATTR Co/Co agreement to modify its share of worldwide development costs and profits from 50% to 25%, effective in mid-June 2020.

Hereditary Angioedema – (“HAE”)

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Prophylactic treatments have proven to be effective in reducing the number of attacks for most patients, though some patients still experience breakthrough attacks and such treatment options require regular injections which can be associated with significant treatment burden and impact on quality of life.

Using our modular LNP delivery system, we aim to knock out the pre kallikrein B1 (“KLKB1” ) gene with a single course of treatment to reduce plasma kallikrein activity to prevent excess bradykinin production leading to HAE attacks.

Using our modular LNP delivery system, we aim to knock out the prekallikrein B1 (“KLKB1” ) gene with a single course of treatment to reduce plasma kallikrein activity to prevent excess bradykinin production leading to HAE attacks.

We believe KLKB1 knockout to be safe, as humans with prekallikrein deficiency appear to have no known health effects.

In addition, inhibition of kallikrein activity has proven to be a clinically effective approach as a prophylactic treatment for HAE.

On May 7, 2020, we announced a development candidate for the treatment of HAE, NTLA-2002.

As part of an ongoing durability study of our lead LNP formulation in support of NTLA-2002, we have now demonstrated six months of sustained therapeutically relevant reduction of serum kallikrein levels and activity following a single dose in NHP’s.

On May 7, 2020, we announced a development candidate for the treatment of HAE, NTLA-2002 , a wholly-owned program .

As part of an ongoing durability study of our lead LNP formulation in support of NTLA-2002, we ha ve now demonstrated ten months of sustained therapeutically relevant reduction of serum kallikrein levels and activity following a single dose in NHPs .

We expect to submit an IND or IND-equivalent for NTLA-2002 in the second half of 2021.

NTLA-2002 is subject to an option by Regeneron to enter into a Co/Co agreement, which must be exercised within a limited time period after development candidate selection.

We will be the lead party if the option is exercised.

Ex Vivo Programs

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We are also exploring methods to apply CRISPR/Cas9 editing to CD4 immune cells to induce a non-reverting regulatory T cell phenotype, to create therapies that address autoimmune diseases.

In addition, our partner Novartis is developing therapies using CAR-T cells for oncology indications, as well as HSC and OSC-based therapies.

In addition, based on our collaboration and technology, Novartis is developing therapies using CAR-T cells for oncology indications, as well as HSC and OSC-based therapies for a variety of diseases.

Acute Myeloid Leukemia – (“AML”)

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The cells engineered with our lead WT1 TCR also exhibited no detectable reactivity to bone marrow cells, which express WT1 at low levels.

In May 2020, we presented data on our proprietary T cell engineering process in support of NTLA-5001.

The data presented showed that our proprietary process enables multiple, highly efficient, sequential edits in T cells, whether knocking out or inserting genes.

This technology yields engineered cells with high anti-tumor activity and favorable attributes, including a desired memory phenotype, which is associated with longer lasting treatment effects.

Importantly, chromosomal translocations (i.e., undesired chromosomal rearrangements) were similar to background levels in untreated cells.

We continue to advance IND-enabling activities, including process development to support clinical T cell manufacturing.

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Further, we are eligible to earn up to $230.3 million in development, regulatory and sales-based milestone payments and mid-single-digit royalties, in each case, on a per-product basis for the products developed by Novartis, subject to certain target-based limitations.

During the three months ended March 31, 2020, the U.S.

During the first quarter of 2020, the U.S.

Food and Drug Administration (“FDA”) accepted the IND application submitted by Novartis, for a CRISPR/Cas9-based engineered cell therapy for the treatment of sickle cell disease.

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We are pursuing a number of in vivo and ex vivo genome editing programs.

Within our in vivo research efforts, we continue to work on programs such as primary hyperoxaluria Type 1, alpha-1 antitrypsin deficiency and, in collaboration with Regeneron, hemophilia B, which leverage our capabilities to knockout, insert and make consecutive edits to the genome.

Within our in vivo research efforts, we continue to work on programs such as primary hyperoxaluria Type 1, alpha-1 antitrypsin deficiency, hemophilia A and hemophilia B which leverage our capabilities to knockout, insert and make consecutive edits to the genome.

We are also investigating delivery strategies that target tissues outside of the liver.

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To accelerate the development and commercialization of CRISPR/Cas9-based products in multiple therapeutic areas, we have formed, and may seek other opportunities to form, strategic alliances with collaborators who can augment our leadership in CRISPR/Cas9 therapeutic development.

As described in Note 7, “Collaborations—Regeneron Pharmaceuticals, Inc.,” i n April 2016, we entered into a license and collaboration agreement with Regeneron (the “Regeneron Agreement”).

The Regeneron A greement has two principal components:

As described in Note 7, “Collaborations—Regeneron Pharmaceuticals, Inc.,” to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, in April 2016 we entered into a license and collaboration agreement with Regeneron (the “2016 Regeneron Agreement”).

The 2016 Regeneron Agreement has two principal components:

(i) a product development component under which the parties will research, develop and commercialize CRISPR/Cas-based therapeutic products primarily focused on genome editing in the liver;

and (ii) a technology collaboration component, pursuant to which the parties will engage in research and development activities aimed at discovering and developing novel technologies and improvements to CRISPR/Cas technology to enhance our genome editing platform.

Under the Regeneron A greement, we also may access the Regeneron Genetics Center and proprietary mouse models to be provided by Regeneron for a limited number of our liver programs.

Through March 3 1 , 20 20 , we have recorded a $75.0 million upfront payment under the Regeneron Agreement and $ 28.8 million for research and development services under the ATTR Co/Co agreement .

Through March 3 1 , 20 20 , we have recognized $ 78.2 million of collaboration revenue under both arrangements , including $ 7.9 million and $ 5.7 million during the three months ended March 3 1 , 20 20 and 201 9 , respectively.

This includes $ 4.8 million and $ 2.6 million during the three months ended March 3 1 , 20 20 and 201 9 , respectively, representing payments due from Regeneron pursuant to the ATTR Co / Co a greement , which is accounted for under Accounting Standards Codification 808 , Collaborative Arrangements .

As of March 3 1 , 20 20 and December 31, 201 9 , we had accounts receivable of $ 8.4 million and $ 3.6 million, respectively, and deferred revenue of $ 25.7 million and $ 28.8 million , respectively, related to th ese a r range ment s .

As described in Note 7, “Collaborations—Novartis Institutes for BioMedical Research, Inc.,” i n December 2014, we entered into a strategic collaboration agreement with Novartis (the “2014 Novartis Agreement”), primarily focused on the development of new ex vivo CRISPR/Cas9-edited therapies using CAR-T cells and HSCs.

Under the 2016 Regeneron Agreement, we also may access the Regeneron Genetics Center and proprietary mouse models to be provided by Regeneron for a limited number of our liver programs.

On May 30, 2020, we entered into amendment no.

1 (the “2020 Regeneron Amendment”) to the 2016 Regeneron Agreement, pursuant to which we expanded the existing collaboration to co-develop potential products for the treatment of hemophilia A and hemophilia B.

The collaboration expansion builds upon the jointly developed targeted transgene insertion capabilities designed to durably restore a missing therapeutic protein, and to overcome the limitations of traditional gene therapy.

The collaboration has been extended until April 2024, at which point Regeneron has an option to renew for an additional two years.

The 2020 Regeneron Amendment also grants Regeneron rights to develop products for five additional in vivo CRISPR/Cas-based therapeutic liver targets and non-exclusive rights to independently develop and commercialize up to 10 ex vivo gene edited products made using certain defined cell types.

Through June 3 0 , 20 20 , excluding amounts allocated to Regeneron’s purchase of our common stock, we have recorded $ 145.0 million in upfront payment s under the 2016 Regeneron Agreement and the 2020 Regeneron Amendment and $ 32.

6 million for research and development services primarily under the ATTR Co/Co agreement, a s described in Note 7 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q .

Through June 3 0 , 20 20 , we have recognized $ 9 4.4 million of collaboration revenue under all arrangements , including $ 16.3 million and $ 24.2 million during the three and six months ended June 30, 2020 and $6.3 million and $12.0 million during the three and six months ended June 30, 2019, respectively , in the condensed consolidated statements of operations and comprehensive loss .

This includes $3.

8 million and $ 8.6 million during the three and six months ended June 30, 2020, respectively, and $3.2 million and $5.8 million during the three and six months ended June 30, 2019 , respectively, primarily representing payments due from Regeneron pursuant to the ATTR Co / Co a greement , which is accounted for under Accounting Standards Codification 808 , Collaborative Arrangements .

As of June 3 0 , 20 20 and December 31, 201 9 , we had accounts receivable of $ 3.9 million and $ 3 .6 million, respectively, and deferred revenue of $ 1 0 0.7 million and $ 28.8 million , respectively, related to th ese a r range ment s .

As described in Note 7, “Collaborations—Novartis Institutes for BioMedical Research, Inc.,” to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, i n December 2014, we entered into a strategic collaboration agreement with Novartis (the “2014 Novartis Agreement”), primarily focused on the development of new ex vivo CRISPR/Cas9-edited therapies using CAR-T cells and HSCs.

The agreement was amended in December 2018 (the “Novartis Amendment”) to also include research on OSCs.

Through March 31, 2020, excluding amounts allocated to Novartis’ purchase of the Company’s Class A-1 and Class A-2 Preferred Units, we had recorded a total of $62.4 million in cash and accounts receivable under the 2014 Novartis Agreement and the Novartis Amendment.

Through March 31, 2020, we have recognized $62.4 million of collaboration revenue, including $5.0 million related to a development milestone that was previously constrained in the three months ended March 31, 2020 and $4.7 million in the three months ended March 31, 2019.

As of March 31, 2020 and December 31, 2019, we had accounts receivable of $5.0 million and $1.0 million, respectively, related to the 2014 Novartis Agreement and the Novartis Amendment.

As of March 31, 2020 and December 31, 2019, we had no deferred revenue related to the 2014 Novartis Agreement and the Novartis Amendment.

Through June 30, 2020, excluding amounts allocated to Novartis’ purchase of the Company’s Class A-1 and Class A-2 Preferred Units, we had recorded a total of $62.4 million in cash under the 2014 Novartis Agreement and the Novartis Amendment.

Through June 30, 2020, we have recognized $62.4 million of collaboration revenue, including $5.0 million related to a development milestone that was recognized in the first quarter of 2020 and $4.8 million and $9.5 million in the three and six months ended June 30, 2019, respectively.

No collaboration revenue was recorded during the three months ended June 30, 2020, related to the 2014 Novartis Agreement and the Novartis Amendment.

As of June 30, 2020, we had no accounts receivable related to the 2014 Novartis Agreement and the Novartis Amendment.

As of December 31, 2019, we had accounts receivable of $1.0 million related to the 2014 Novartis Agreement and the Novartis Amendment.

As of June 30, 2020 and December 31, 2019, we had no deferred revenue related to the 2014 Novartis Agreement and the Novartis Amendment.

Financial Overview

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The following discussion of the financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and the related footnotes thereto.

Comparison of Three Months Ended March 3 1 , 20 20 and 201 9

The following table summarizes our results of operations for the three months ended March 31, 2020 and 2019:

Three Months Ended March 31,

Comparison of Three Months Ended June 30 , 2020 and 2019

The following table summarizes our results of operations for the three months ended June 30, 2020 and 2019:

Three Months Ended June 30,

Period Change

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Collaboration Revenue

Collaboration revenue increased $2.5 million to $12.9 million during the three months ended March 31, 2020, as compared to $10.4 million during the three months ended March 31, 2019.

The increase in collaboration revenue during the three months ended March 31, 2020 is primarily caused by a $2.2 million increase in research and development services related to our ATTR program with Regeneron, increasing to $4.8 million during the three months ended March 31, 2020 as compared to $2.6 million during the three months ended March 31, 2019, as well as $5.0 million from a milestone triggered by the Novartis IND submission earned during the three months ended March 31, 2020 as compared to $4.7 million related to the research portion of the Novartis collaboration during the three months ended March 31, 2019.

During the three months ended March 31, 2020 and 2019, collaboration revenue consisted of amounts recognized from deferred revenue related to an upfront payment received and amounts for research and development services under the Regeneron Agreement as well as amounts recognized from deferred revenue related to upfront technology access payments for licenses, technology access fees, research funding and, in 2020, milestone payments under the 2014 Novartis Agreement and Novartis Amendment.

Collaboration revenue increased $5.1 million to $16.3 million during the three months ended June 30, 2020, as compared to $11.1 million during the three months ended June 30, 2019.

The increase in collaboration revenue during the three months ended June 30, 2020 is primarily caused by an $8.4 million one-time cumulative catch-up adjustment related to the modification of the 2016 Regeneron Agreement.

Refer to Note 7 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q f or further details.

Research and Development

Research and development expenses increased by approximately $10.9 million to $34.7 million during the three months ended March 31, 2020, as compared to $23.7 million during the three months ended March 31, 2019.

The following table summarizes our research and development expenses for the three months ended March 31, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Three Months Ended March 31,

Research and development expenses increased by $12.3 million to $37.8 million during the three months ended June 30, 2020, as compared to $25.5 million during the three months ended June 30, 2019.

The following table summarizes our research and development expenses for the three months ended June 30, 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Three Months Ended June 30,

Period Change

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Total research and development expenses

The increase in research and development expenses for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was primarily attributable to:

approximately $6.0 million in increased pipeline and platform development expenses driven by increased manufacturing and related costs for NTLA-2001 and NTLA-5001;

The increase in research and development expenses for the three months ended June 30, 2020 compared to the three months ended June 30, 2019 was primarily attributable to:

approximately $8.7 million in increased pipeline and platform development expenses driven by increased manufacturing and related costs as we prepared to file our CTA and began preparations to enter the clinic for NTLA-2001, increased pre-clinical studies for NTLA-2002 and NTLA-5001, and an upfront payment associated with a research collaboration and licensing agreement;

approximately $2.8 million in employee-related expenses driven by an increase in the size of our workforce due to the advancement of our programs;

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General and Administrative

General and administrative expenses increased by approximately $0.8 million to $11.3 million during the three months ended March 31, 2020, compared to $10.5 million during the three months ended March 31, 2019.

This increase was primarily related to a $0.4 million increase in legal fees associated with intellectual property related fees due to an increase in patent activity and a $0.2 million increase related to technology expenses allocated to general and administrative costs.

General and administrative expenses decreased by approximately $1.6 million to $11.5 million during the three months ended June 30, 2020, compared to $13.1 million during the three months ended June 30, 2019.

This decrease was primarily related to a $3.1 million decrease in legal expenditures, which were principally related to a decrease in certain activities related to IP matters.

The decrease was offset in part by an increase in employee related expenses, including stock-based compensation, of $1.3 million.

Interest Income

Interest income decreased by approximately $0.6 million to $1.2 million during the three months ended March 31, 2020 as compared to $1.9 million during the three months ended March 31, 2019.

This decrease was due to a decline in investment income due to a lower investment balance and a general decrease in interest rates.

Interest income decreased by approximately $1.1 million to $0.6 million during the three months ended June 30, 2020 as compared to $1.8 million during the three months ended June 30, 2019.

This decrease was due to a decline in investment income due to market performance.

Comparison of Six Months Ended June 30 , 2020 and 2019

The following table summarizes our results of operations for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

Period Change

Collaboration revenue

Operating expenses:

Research and development

General and administrative

Total operating expenses

Operating loss

Interest income

Collaboration Revenue

Collaboration revenue increased approximately $7.6 million to $29.2 million during the six months ended June 30, 2020, as compared to $21.6 million during the six months ended June 30, 2019.

The increase in collaboration revenue during the six months ended June 30, 2020 is primarily caused by an $8.4 million one-time cumulative catch-up adjustment related to the modification of the 2016 Regeneron Agreement.

Refer to Note 7 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for further details.

Research and Development

Research and development expenses increased by approximately $23.3 million to $72.4 million during the six months ended June 30, 2020, as compared to $49.2 million during the six months ended June 30, 2019.

The following table summarizes our research and development expenses for the six months ended June 3 0 , 2020 and 2019, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Six Months Ended June 30,

Period Change

Pipeline and platform development

Employee-related expenses

Allocated facility-related expenses

Stock-based compensation expense

Other expenses

Total research and development expenses

The increase in research and development expenses for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 was primarily attributable to:

approximately $14.8 million in increased pipeline and platform development expenses driven by increased manufacturing and related costs as we prepared to file our CTA and began preparations to enter the clinic for NTLA-2001, increased pre-clinical studies for NTLA-2002 and NTLA-5001, and an upfront payment associated with a research collaboration and licensing agreement;

approximately $5.9 million in employee-related expenses driven by an increase in the size of our workforce due to the advancement of our programs;

approximately $1.9 million in increased facility-related expenses primarily related to rent, depreciation and technology expense allocated to research and development;

approximately $0.7 million in increased stock-based compensation driven by our larger workforce.

Through 2020, we expect research and development expenses to increase as we continue to grow our development team and advance our ATTR, AML and HAE programs towards clinical development.

General and Administrative

General and administrative expenses decreased by approximately $0.8 million to $22.8 million during the six months ended June 30, 2020, compared to $23.7 million during the six months ended June 30, 2019.

This decrease was primarily related to a $2.7 million decrease in legal expenditures, which were principally related to a decrease in certain activities related to IP matters.

The decrease was offset in part by an increase in employee related expenses, including stock-based compensation, of $1.2 million.

Interest Income

Interest income decreased by approximately $1.8 million to $1.9 million during the six months ended June 30, 2020 as compared to $3.6 million during the six months ended June 30, 2019.

This decrease was due to a decline in investment income due to market performance.

Liquidity and Capital Resources

Since our inception through March 31, 2020, we have raised an aggregate of $658.7 million to fund our operations, of which $155.5 million was through our collaboration agreements, $170.5 million was from our initial public offering and concurrent private placements, $141.0 million was from a follow-on public offering, $106.7 million was from at-the-market offerings and $85.0 million was from the sale of convertible preferred stock.

As of March 31, 2020, we had $250.3 million in cash, cash equivalents and marketable securities.

Since our inception through June 30, 2020, we have raised an aggregate of $889.8 million to fund our operations, of which $268.8 million was through our collaboration agreements, $170.5 million was from our initial public offering and concurrent private placements, $249.1 million was from follow-on public offerings, $116.4 million was from at-the-market offerings and $85.0 million was from the sale of convertible preferred stock.

As of June 3 0 , 20 20 , we had $ 4 36.8 million in cash, cash equivalents and marketable securities.

We are entitled to receive research payments under our collaboration with Novartis and are also eligible to earn a significant amount of milestone payments and royalties, in each case, on a per-product basis under our collaboration with Novartis and on a per-target basis under our collaboration with Regeneron.

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Our rights to payments under our collaboration agreements are our only committed external source of funds.

Follow-on Offering

On June 1, 2020, we entered into an underwriting agreement related to a public offering of 6,301,370 shares of our common stock, par value $0.0001 per share, including the exercise in full by the underwriters of their option to purchase an additional 821,917 shares, at the public offering price of $18.25 per share.

The offering closed on June 5, 2020 and we received net proceeds of $107.7 million, after deducting the underwriting discount, commissions and approximately $0.4 million in offering expenses.

Shares Issued In Private Placement to Regeneron

As described in Note 7 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, in May 2020 we entered into the 2020 Regeneron Amendment.

Simultaneously with the 2020 Regeneron Amendment, we and Regeneron entered into the 2020 Stock Purchase Agreement , under which we sold to Regeneron 925,218 shares of our common stock, par value $0.0001 per share, for aggregate cash consideration of $30.0 million, or $32.42 per share, representing a 100% premium over the volume-weighted average trading price of our common stock during the 30-day period prior to the closing.

Under the 2020 Stock Purchase Agreement, Regeneron will not dispose of any shares of common stock it beneficially owns in Intellia until the termination of the Technology Collaboration Term (see Note 7).

After applying equity accounting guidance to measure the issuance of the shares, $12.6 million was recorded as fair value in the condensed consolidated statement of stockholders’ equity for the shares.

At-the-Market Offering Programs

On October 12, 2018, we filed a Shelf Registration Statement on Form S-3 (the “2018 Shelf”) with the SEC in relation to the registration of common stock, preferred stock, warrants and units of any combination thereof for the purposes of selling, from time to time, our common stock, convertible securities or other equity securities in one or more offerings.

We also simultaneously entered into an Open Market Sale Agreement (the “2018 Sales Agreement”) with Jefferies LLC (the “Sales Agent”), to provide for the offering, issuance and sale of up to an aggregate amount of $100.0 million of our common stock from time to time in “at-the-market” offerings under the 2018 Shelf and subject to the limitations thereof.

We have paid the Sales Agent cash commissions of 3.0% of the gross proceeds of sales of common stock under the 2018 Sales Agreement.

In November 2018, we issued 1,659,300 shares of our common stock at $18.00 per share in accordance with the 2018 Sales Agreement for aggregate net proceeds of $28.5 million, after payment of cash commissions to the Sales Agent and approximately $0.4 million related to legal, accounting and other fees in connection with the sale.

During the twelve months ended Dec ember 31, 2019, we issued an additional 4,231,348 shares of our common stock, in a series of sales, at an average price of $ 16.57 per share, in accordance with the 2018 Sales Agreement, for aggregate net proceeds of $67.8 million, after payment of cash commissions to the Sales Agent and approximately $0.2 million related to legal, accounting and other fees in connection with the sales.

In October 2018, we entered into an Open Market Sale Agreement (the “2018 Sales Agreement”) with Jefferies LLC (“Jefferies”), under which Jefferies was able to offer and sell, from time to time in “at-the-market” offerings, shares of our common stock having aggregate gross proceeds of up to $100.0 million.

We paid to Jefferies cash commissions of 3.0% of the gross proceeds of sales of common stock under the 2018 Sales Agreement.

We issued 5,890,648 shares of our common stock at an average price of $16.98 per share in accordance with the 2018 Sales Agreement for aggregate net proceeds of $96.4 million, after payment of cash commissions to Jefferies and approximately $0.6 million related to legal, accounting and other fees in connection with the sales.

All shares related to the 2018 Sales Agreement had been sold as of December 31, 2019 .

On August 23 , 201 9 , we filed a Registration Statement on Form S-3 , as amended (the “ 2019 Shelf”) with the SEC in relation to the registration of common stock, preferred stock, warrants and units of any combination thereof.

We also simultaneously entered into an Open Market Sale Agreement (the “2019 Sales Agreement”) with the Sales Agent, to provide for the offering, issuance and sale by us of up to an aggregate amount of $ 150.0 million of our common stock from time to time in “at-the-market” offerings under the 2019 Shelf and subject to the limitations thereof .

W e agreed to pay to the Sales Agent cash commissions of 3.0 % of the gross proceeds of sales of common stock under the 2019 Sales Agreement.

During the year ended Dec ember 31, 2019, we issued 287,231 shares of our common stock, in a series of sales, at an average price of $ 16.48 per share, in accordance with the 2019 Sales Agreement, for aggregate net proceeds of $4.4 million, after payment of cash commissions to the Sales Agent and approximately $0.

2 million related to legal, accounting and other fees in connection with the sales.

During the three months ended March 31, 20 20 , we issued 351,252 shares of our common stock in a series of sales at an average price of $1 5.05 per share in accordance with the 2019 Sales Agreement, for aggregate net proceeds of $ 5.1 million, after payment of cash commissions to the Sales Agent and approximately $0.

1 million related to legal, accounting and other fees in connection with the sales .

As of March 3 1 , 20 20 , $ 0.5 million of these proceeds were recorded as a current asset on our condensed consolidated balance sheet, representing offerings with trade dates in March 20 20 that were settled in April 20 20 .

As of March 31, 2020, $140.0 million in shares of common stock remain eligible for sale under the 2019 Sales Agreement.

In August 2019, we entered into an Open Market Sale Agreement (the “2019 Sales Agreement”) with Jefferies, under which Jefferies is able to offer and sell, from time to time in “at-the-market” offerings, shares of our common stock having aggregate gross proceeds of up to $150.0 million.

We agreed to pay to Jefferies cash commissions of 3.0% of the gross proceeds of sales of common stock under the 2019 Sales Agreement.

During the year ended December 31, 2019, we issued 287,231 shares of our common stock, in a series of sales, at an average price of $ 16.48 per share, in accordance with the 2019 Sales Agreement for aggregate net proceeds of $ 4.4 million, after payment of cash commissions to Jefferies and approximately $0.2 million related to legal, accounting and other fees in connection with the sales .

During the six months ended June 30, 2020, we issued 1,107,100 shares of our common stock in a series of sales at an average price of $13.78 per share in accordance with the 2019 Sales Agreement, for aggregate net proceeds of $14.7 million after payment of cash commissions to Jefferies and approximately $0.1 million related to legal, accounting and other fees in connection with the sales.

As of June 30, 2020, $130.0 million in shares of common stock remain eligible for sale under the 2019 Sales Agreement.

Funding Requirements

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Until such time as we can generate substantial product revenues, if ever, we expect to finance our ongoing cash needs through equity financings and collaboration arrangements.

We receive cost reimbursements from Regeneron for the ATTR program.

We receive cost reimbursements from Regeneron for the ATTR and hemophilia programs.

Additionally, we are eligible to earn milestone payments and royalties, in each case, on a per-product basis under our collaboration with Novartis and on a per-target basis under our collaboration with Regeneron, subject to the provisions of our agreements with each of them.

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If we are unable to raise additional funds through equity financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Based on our research and development plans and our expectations related to the progress of our programs, we expect that our cash, cash equivalents and marketable securities as of March 31, 2020, as well as research and cost reimbursement funding from Regeneron, will enable us to fund our ongoing operating expenses and capital expenditure requirements at least to the end of 2021, excluding any potential milestone payments or extension fees that could be earned and distributed under the collaboration agreements with Regeneron and Novartis or any strategic use of capital not currently in the base case planning assumptions.

Based on our research and development plans and our expectations related to the progress of our programs, we expect that our cash, cash equivalents and marketable securities as of June 30, 2020, as well as research and cost reimbursement funding from Regeneron, will enable us to fund our ongoing operating expenses and capital expenditure requirements at least through the next twenty-four months, excluding any potential mile stone payments or extension fees that could be earned and distributed under the collaboration agreements with Regeneron and Novartis or any strategic use of capital not currently in the base case planning assumptions.

We have based this estimate on current assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect.

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and attracting, hiring, and retaining qualified personnel .

The following is a summary of cash flows for the three months ended March 31, 2020 and 2019:

Three Months Ended March 31,

The following is a summary of cash flows for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

(In thousands)

Net cash used in operating activities

Net cash provided by (used in) operating activities

Net cash provided by investing activities

Net cash provided by financing activities

Net cash used in operating activities

Net cash used in operating activities of $38.5 million and $21.5 million during the three months ended March 31, 2020 and 2019, respectively, primarily reflect increased spend in our research and development activities, offset in part by the receipt of $1.0 million and $7.5 million from our collaboration partners, respectively, during those periods.

Net cash provid ed by ( used in ) operating activities

Net cash provided by operating activities of $18.9 million during the six months ended June 30, 2020 primarily reflects the receipt of a $70.0 million up-front payment and $8.4 million in additional payments under our collaboration with Regeneron and $6.0 million in payments from Novartis, offset in part by increased spend in our research and development activities.

Net cash used in operating activities of $49.1 million during the six months ended June 30, 2019 primarily reflects increased spend in our research and development and general administrative activities, offset in part by the receipt of $7.0 million and $4.1 million in payments from our collaboration partners, Novartis and Regeneron, respectively, during those periods.

Net cash provided by investing activities

During the three months ended March 31, 2020 and 2019, our investing activities provided net cash of $57.4 million and $5.7 million, respectively.

The increase in the three months ended March 31, 2020 is primarily due to an increase of $58.3 million from marketable securities activity during the period, as $89.5 million in marketable securities matured and $31.2 million in marketable securities were purchased.

The increase in the three months ended March 31, 2019 is primarily due to an increase of $7.2 million from marketable securities activity during the period, as $26.5 million in marketable securities matured and $19.3 million in marketable securities were purchased.

These increases in cash provided by investing activity were offset in part by the use of $0.8 million and $1.5 million related to purchases of property and equipment in the three months ended March 31, 2020 and 2019, respectively.

During the six months ended June 30, 2020 and 2019, our investing activities provided net cash of $150.4 million and $28.9 million, respectively.

The increase in the six months ended June 30, 2020 is primarily due to an increase of $152.3 million from marketable securities activity during the period, as $183.5 million in marketable securities matured and $31.2 million in marketable securities were purchased.

The increase in the six months ended June 30, 2019 is primarily due to an increase of $31.4 million from marketable securities activity during the period, as $214.0 million in marketable securities matured and $182.6 million in marketable securities were purchased.

These increases in cash provided by investing activity were offset in part by the use of $1.9 million and $2.5 million related to purchases of property and equipment in the six months ended June 30, 2020 and 2019, respectively.

Net cash provided by financing activities

Net cash provided by financing activities of $4.9 million during the three months ended March 31, 2020 includes $4.5 million in net proceeds from at-the-market offerings and $0.3 million in cash received from the exercise of stock options.

Net cash provided by financing activities of $4.0 million during the three months ended March 31, 2019 includes $3.6 million in net proceeds from at-the-market offerings and $0.4 million in cash received from the exercise of stock options.

Net cash provided by financing activities of $137.1 million during the six months ended June 30, 2020 includes $107.7 million in net proceeds from a follow-on offering, $14.7 million in net proceeds from at-the-market offerings, $12.6 million in proceeds from the issuance of common stock to Regeneron in a private placement, $1.4 million in cash received from the exercise of stock options and $0.7 in cash received from the issuance of shares through our employee stock purchase plan.

Net cash provided by financing activities of $10.5 million during the six months ended June 30, 2019 includes $7.9 million in net proceeds from at-the-market offerings, $2.0 million in cash received from the exercise of stock options and $0.5 million in cash received from the issuance of shares through our employee stock purchase plan.

Critical Accounting Policies

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The Second Amendment extends the term of the 130 Brookline Lease by approximately six years through January 31, 2031.

This extended term is included as part of the lease liability and right-of-use asset at March 31, 2020.

This extended term is included as part of the lease liability and right-of-use asset at June 30, 2020.

The Second Amendment also provides an option to extend the lease for two consecutive five-year terms.

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We have the option to extend the 281 Albany Lease for two successive five-year terms.

There were no other material changes to our contractual obligations during the three months ended March 31, 2020.

T here were no other material changes to our contractual obligations during the six months ended June 3 0 , 20 20 .

For a complete discussion of our contractual obligations, please refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report for the year ended December 31, 201 9 .

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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-Q

Item 2. Management’s Discussion and Analysis