What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-05 · 117 added, 314 removed, 270 unchanged (61% of the section changed)

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(Amounts in thousands except share and per share data)

September 30,

Current Assets:

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67,890,334 and 66,234,056 shares issued and outstanding at

September 30, 2020 and December 31, 2019, respectively

March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Accumulated deficit

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(Amounts in thousands except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Collaboration revenue

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(Amounts in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Equity-based compensation

Accretion of investment discounts

Amortization/accretion of investment premiums/discounts

Changes in operating assets and liabilities:

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Maturities of marketable securities

Net cash used in investing activities

Net cash (used in) provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock through follow-on offering,

net of issuance costs of $ 0.4 million

Proceeds from issuance of common stock through at-the-market offerings,

net of issuance costs of $ 0.1 million and $ 0.3 million, respectively

Proceeds from issuance of common stock to Regeneron

net of issuance costs

Proceeds from options exercised

Issuance of shares through employee stock purchase plan

Net cash provided by financing activities

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

Cash and cash equivalents and restricted cash equivalents, beginning of period

Cash and cash equivalents and restricted cash equivalents, end of period

Reconciliation of cash, cash equivalents and restricted cash

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

Cash and cash equivalents and restricted cash and cash equivalents, beginning of

Cash and cash equivalents and restricted cash and cash equivalents, end of period

Reconciliation of cash and cash equivalents and restricted cash and cash

equivalents to condensed consolidated balance sheet:

Cash and cash equivalents

Restricted cash equivalents, included in other assets

Total cash, cash equivalents and restricted cash equivalents

Restricted cash and cash equivalents, included in prepaids and other current assets

and other assets

Total cash and cash equivalents and restricted cash and cash equivalents

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

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Right-of-use assets acquired under operating leases

Proceeds from at-the-market offerings unpaid at period end

See notes to condensed consolidated financial statements.

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Intellia Therapeutics, Inc.

(“Intellia” or the “Company”) is a leading genome editing company, focused on the development of proprietary, potentially curative therapeutics using a biological tool known as CRISPR/Cas9, which stands for C lustered, R egularly I nterspaced S hort P alindromic R epeats (“CRISPR”)/CRISPR associated 9 (“Cas9”) .

This is a technology for genome editing, the process of altering selected sequences of genomic deoxyribonucleic acid (“DNA”).

The Company believes the CRISPR/Cas9 technology has the potential to transform medicine by both producing therapeutics that permanently edit and/or correct disease-associated genes in the human body with a single treatment course, and creating enhanced engineered cells that can treat oncological and immunological diseases.

The Company’s combination of deep scientific, technical and clinical development experience, along with its intellectual property (“IP”) portfolio, puts it in a position to unlock broad therapeutic applications of the CRISPR/Cas9 technology and create new classes of therapeutic products.

(“Intellia” or the “Company”) is a leading clinical-stage genome editing company, focused on developing proprietary, potentially curative CRISPR/Cas9-based therapeutics.

CRISPR/Cas9, an acronym for C lustered, R egularly I nterspaced S hort P alindromic R epeats (“CRISPR”)/CRISPR associated 9 (“Cas9”), is a technology for genome editing, the process of altering selected sequences of genomic deoxyribonucleic acid (“DNA”).

The Company believes the breakthrough CRISPR/Cas9 technology has the potential to transform medicine by both producing therapeutics that permanently edit and/or correct disease-associated genes in the human body with a single dose of treatment and creating enhanced engineered cell therapies.

The Company’s combination of deep scientific, technical and clinical development experience, and proprietary innovations in genome editing and delivery technologies, along with its intellectual property (“IP”) portfolio, puts it in a position to unlock broad therapeutic applications of the CRISPR/Cas9 technology and create new classes of therapeutic products.

The condensed consolidated financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations.

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All intercompany balances and transactions have been eliminated in consolidation.

Comprehensive loss is comprised of net loss and gain/loss on marketable securities.

Comprehensive loss is comprised of net loss and unrealized gain/loss on marketable securities.

The preparation of financial statements in conformity with U.S.

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The effects of material revisions in estimates are reflected in the condensed consolidated financial statements prospectively from the date of the change in estimate.

Certain prior year amounts have been reclassified in order to conform to the current year presentation.

In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods.

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The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

Since its inception through September 30, 2020, the Company has raised an aggregate of $ 893.6 million to fund its operations, of which $ 272.6 million was through its collaboration agreements, $ 170.5 million was from its initial public offering (“IPO”) 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.

The Company expects that its cash, cash equivalents and marketable securities as of September 30, 2020, as well as research and cost reimbursement funding from its collaboration agreement with Regeneron (see Note 7), will enable the Company to fund its ongoing operating expenses and capital expenditure requirements for at least the twelve-month period following the issuance of these condensed consolidated financial statements.

Since its inception through March 31, 2021, the Company has raised an aggregate of $ 1,165.3 million to fund its operations, of which $ 275.0 million was through its collaboration agreements, $ 170.5 million was from its initial public offering (“IPO”) and concurrent private placements, $ 438.3 million was from follow-on public offerings, $ 196.5 million was from at-the-market offerings and $ 85.0 million was from the sale of convertible preferred stock.

The Company expects that its cash, cash equivalents and marketable securities as of March 31, 2021, as well as research and cost reimbursement funding from its collaboration agreement with Regeneron Pharmaceuticals, Inc.

(“Regeneron”) (see Note 7), will enable the Company to fund its ongoing operating expenses and capital expenditure requirements for at least the twelve-month period following the issuance of these condensed consolidated financial statements.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies” to the consolidated financial statements included in the Annual Report for the year ended December 31, 2020.

There have been no material changes during the nine months ended September 30, 2020, other than as noted below .

Restricted Cash Equivalents

Restricted cash equivalents are money market funds held in collateral accounts that are restricted to secure a letter of credit in accordance with the lease for 281 Albany Street that the Company entered into in March of 2020 (see Note 8).

The letter of credit is required to be maintained throughout the term of the lease, which is ten years.

These restricted cash equivalents amount to $ 1.9 million and are included in “Other Assets” in the Company’s condensed consolidated balance sheet .

There have been no material changes during the three months ended March 31, 2021, other than as noted below .

Recent Accounting Pronouncements – Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”) .

The new standard modifies disclosure requirements related to fair value measurement.

The Company adopted ASU 2018-13 on January 1, 2020.

The adoption did not have a material impact on the Company’s condensed consolidated financial statements as of and for the three or nine months ended September 30, 2020.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

The standard changes how credit losses are measured for most financial assets and certain other instruments.

For trade and other receivables, the standard requires the use of a new forward-looking “expected credit loss” model that generally will result in the earlier recognition of allowances for losses.

For available-for-sale debt securities with unrealized losses, the standard now requires allowances to be recorded instead of reducing the amortized cost of the investment.

With certain exceptions, the guidance is applied using a modified retrospective approach by reflecting adjustments through a cumulative-effect impact to retained earnings as of the beginning of the fiscal year of adoption.

The Company adopted ASU 2016-13 on January 1, 2020.

The adoption did not have a material effect on the Company’s condensed consolidated financial statements as of and for the three or nine months ended September 30, 2020 .

Recent Accounting Pronouncements – Issued but not yet adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

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ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

The amendments in ASU 2019-12 are effective for fiscal years beginning after December 15, 2020, including interim periods therein.

Early adoption of the standard is permitted.

The Company does not anticipate that the adoption of ASU 2019-12 will have a material effect on the Company’s condensed consolidated financial statements.

The Company adopted ASU 2019-12 on January 1, 2021.

The adoption did not have a material effect on the Company’s condensed consolidated financial statements.

Marketable Securities

The following table summarizes the Company’s available-for-sale marketable securities as of September 30, 2020 and December 31, 2019 at net book value:

September 30, 2020

The following table summarizes the Company’s available-for-sale marketable securities as of March 31, 2021 and December 31, 2020 at net book value:

March 31, 2021

Gross Unrealized

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Marketable securities:

Treasury securities

Treasury and other government securities

Financial institution debt securities

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Marketable securities:

Treasury securities

Treasury and other government securities

Financial institution debt securities

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The amortized cost of available-for-sale securities is adjusted for amortization of premiums and accretion of discounts to maturity.

At September 30, 2020 and December 31, 2019, the balance in the Company’s accumulated other comprehensive income was composed of activity related to the Company’s available-for-sale marketable securities.

There were no material realized gains or losses in the nine months ended September 30, 2020 or for the year ended December 31, 2019.

The Company did not reclassify any amounts out of accumulated other comprehensive income during this period.

The Company did not have any securities in a material unrealized loss position at September 30, 2020.

At March 31, 2021 and December 31, 2020, the balance in the Company’s accumulated other comprehensive (loss) income was composed of activity related to the Company’s available-for-sale marketable securities.

There were no realized gains or losses in the three months ended March 31, 2021 or for the year ended December 31, 2020.

The Company did not reclassify any amounts out of accumulated other comprehensive (loss) income during this period.

The Company did not have any securities in a material unrealized loss position at March 31, 2021 or December 31, 2020.

The Company's available-for-sale securities that are classified as short-term marketable securities in the condensed consolidated balance sheet mature within one year or less as of the balance sheet date.

Available-for-sale securities that are classified as noncurrent in the condensed consolidated balance sheet are those that mature after one year but within five years from the balance sheet date and that the Company does not intend to dispose of within the next twelve months.

At September 30, 2020 and December 31, 2019, the Company did no t hold any investments that matured beyond five years of the balance sheet date.

At March 31, 2021 and December 31, 2020, the Company did no t hold any investments that matured beyond five years of the balance sheet date.

Fair Value Measurements

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and Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of September 30, 2020 and December 31, 2019, the Company’s financial assets recognized at fair value on a recurring basis consisted of the following:

Fair Value as of September 30, 2020

As of March 31, 2021 and December 31, 2020, the Company’s financial assets recognized at fair value on a recurring basis consisted of the following:

Fair Value as of March 31, 2021

(In thousands)

Cash equivalents

Cash equivalents and restricted cash equivalents

Marketable securities:

Treasury securities

Treasury and other government securities

Financial institution debt securities

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(In thousands)

Cash equivalents

Cash equivalents and restricted cash equivalents

Marketable securities:

Treasury securities

Treasury and other government securities

Financial institution debt securities

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Total marketable securities

The Company’s financial assets, which include cash equivalents and marketable securities, have been initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third-party pricing services or other observable market data.

Certain of the Company’s financial assets, including cash equivalents, restricted cash equivalents and marketable securities, have been initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third-party pricing services or other observable market data.

The pricing services utilize industry standard valuation models and observable market inputs to determine value .

After completing our validation procedures, the Company did not adjust or override any fair value measurements provided by the pricing services as of September 30, 2020 or December 31, 2019.

Other financial instruments, including accounts receivable, accounts payable and accrued expense, are carried at cost, which approximate fair value due to the short duration and term to maturity.

After completing its validation procedures, the Company did not adjust or override any fair value measurements provided by the pricing services as of March 31, 2021 or December 31, 2020.

Other financial instruments, including accounts receivable, accounts payable and accrued expense, are carried at cost, which approximates fair value due to the short duration and term to maturity.

Accrued Expenses

Accrued expenses consisted of the following:

September 30,

(In thousands)

Employee compensation and benefits

Accrued research and development

Employee compensation and benefits

Accrued legal and professional expenses

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Commitments and Contingencies

There have been no material changes to any of the outstanding litigation, nor is the Company a party to any new litigation, since December 31, 2019.

There have been no material changes to any of the outstanding litigation, nor is the Company a party to any new litigation, since December 31, 2020, except as described below.

For further information please see the notes to the consolidated financial statements included in the Company’s Annual Report for the year ended December 31, 2020.

Caribou Arbitration

On October 17, 2018, the Company initiated an arbitration proceeding against Caribou Biosciences, Inc.

(“Caribou”) asserting that Caribou violated the terms and conditions of a license agreement the Company entered into with them in July 2014 related to certain IP (the “Caribou License”), as well as other contractual and legal obligations to the Company, by using and seeking to license to third parties two patent families relating to specific structural or chemical modifications of guide RNAs (“gRNAs”), that were purportedly invented or controlled by Caribou, in the Company’s exclusive human therapeutic field, before an agreed-upon cutoff date of January 30, 2018.

On September 26, 2019, the Company announced that the arbitration panel issued an interim award concluding that both the structural and chemical gRNA modification technologies were exclusively licensed to the Company by Caribou pursuant to the Caribou License.

Nevertheless, the arbitration panel, solely with respect to the clinically modified gRNAs, stated that it will declare that Caribou has an equitable “leaseback”, which it described as exclusive, perpetual and worldwide (the “Caribou Award”).

The Caribou Award does not include the structural guide modifications IP also at issue in the arbitration, any other IP exclusively licensed or sublicensed by Caribou to the Company under the Caribou License (including but not limited to the foundational CRISPR/Cas9 IP co-owned by the Regents of the University of California, University of Vienna and Dr.

Emmanuelle Charpentier), or any other of the Company’s IP.

On February 6, 2020, the panel clarified that the Caribou Award is limited to a particular on-going Caribou program, which seeks to develop a chimeric antigen receptor T (“CAR-T”) product directed at CD19.

As instructed by the panel, the parties have been negotiating the terms of the Caribou Award, including Caribou’s future payments to the Company.

License Agreements

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These payments will become payable if and when certain development, regulatory and commercial milestones are achieved.

As of September 30, 2020, the satisfaction and timing of the contingent payments is uncertain and not reasonably estimable .

As of March 31, 2021, the satisfaction and timing of the contingent payments is uncertain and not reasonably estimable .

Collaborations

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

As of September 30, 2020, the Company’s accounts receivable and contract liabilities were related to the Company’s collaboration with Regeneron Pharmaceuticals, Inc.

(“Regeneron”).

As of September 30, 2019, the Company’s accounts receivable and contract liabilities were related to the Company’s collaborations with Regeneron and Novartis Institutes for BioMedical Research (“Novartis”).

The following table presents changes in the Company’s accounts receivable and contract liabilities during the nine months ended September 30, 2020 and 2019 (in thousands):

As of March 31, 2021, the Company’s accounts receivable and contract liabilities were related to the Company’s collaboration with Regeneron.

As of March 31, 2020, the Company’s accounts receivable and contract liabilities were related to the Company’s collaborations with Regeneron and Novartis Institutes for BioMedical Research (“Novartis”).

The following table presents changes in the Company’s accounts receivable and contract liabilities during the three months ended March 31, 2021 and 2020 (in thousands):

Balance at End

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Accounts receivable

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Balance at End

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Accounts receivable

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Deferred revenue

During the nine months ended September 30, 2020 and 2019, the Company recognized the following revenues as a result of changes in the contract liability balance (in thousands):

Nine Months Ended September 30,

During the three months ended March 31, 2021 and 2020, the Company recognized the following revenues as a result of changes in the contract liability balance (in thousands):

Three Months Ended March 31,

Revenue recognized in the period from:

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Regeneron Pharmaceuticals, Inc.

License and Collaboration Agreement

In April 2016, the Company entered into a license and collaboration agreement with Regeneron (the “2016 Regeneron Agreement”).

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Under this agreement, the Company also may access the Regeneron Genetics Center and proprietary mouse models to be provided by Regeneron for a limited number of the Company’s liver programs.

At the inception of the 2016 Regeneron Agreement, Regeneron selected the first of its 10 targets, transthyretin amyloidosis (“ATTR”), which is subject to a co-development and co-promotion agreement between the Company and Regeneron (the “ATTR Co/Co”).

On May 30, 2020, the Company entered into (i) amendment no.

1 (the “2020 Regeneron Amendment”) to the 2016 Regeneron Agreement, (ii) co-development and co-funding agreements for the treatment of hemophilia A and hemophilia B (the “Hemophilia Co/Co”) agreements and (iii) a stock purchase agreement (the “2020 Stock Purchase Agreement”).

2016 Regeneron Agreement:

Under the initial six-year term of the 2016 Regeneron Agreement , Regeneron obtained exclusive rights for up to ten targets (the “Regeneron Target Cap”) to be chosen by Regeneron during the Technology Collaboration Term, as defined in the 2016 Regeneron Agreement, subject to a target selection process and various adjustments and limitations set forth in the 2016 Regeneron Agreement.

Of these ten total targets, Regeneron may select up to five non-liver targets, while the remaining targets must be focused in the liver.

The Company retains the exclusive right to solely develop certain in vivo products directed against specified genetic targets as well as certain non-liver targets from the Company’s ongoing and planned research activities.

During the collaboration term, and subject to a target selection process, the Company has the right to choose additional liver targets for its own development using commercially reasonable efforts.

Certain targets that either the Company or Regeneron select during the collaboration term may be subject to co-development and co-promotion (“Co/Co”) agreements at the Company or Regeneron’s option.

Regeneron has the option to enter into Co/Co agreements for up to five liver targets (other than the Company’s reserved liver targets) and the Company has the option to enter into one Intellia Independent Co/Co Option (as defined in the 2016 Regeneron Agreement).

At the inception of the 2016 Regeneron Agreement, Regeneron selected the first of its ten targets, transthyretin amyloidosis (“ATTR”), which is subject to a Co/Co agreement between the Company and Regeneron (the “ATTR Co/Co”).

The general terms and conditions for the ATTR Co/Co were outlined within the 2016 Regeneron Agreement.

In addition, the Company granted Regeneron a non-exclusive, worldwide license, pursuant to which the Company and Regeneron will engage in research related activities aimed at discovering and developing novel technologies and improvements to CRISPR/Cas technology to enhance the Company’s genome editing platform.

2016 Regeneron Agreement:

Financial Terms.

In connection with the 2016 Regeneron Agreement , the Company received a nonrefundable upfront payment of $ 75.0 million.

In addition, on Regeneron programs that are not subject to Co/Co agreements, the Company may be eligible to earn, on a per-licensed target basis, (i) up to $ 25.0 million in development milestones, including for the dosing of the first patient in each of Phase I, Phase II and Phase III clinical trials, (ii) up to $ 110.0 million in regulatory milestones, including for the acceptance of a regulatory filing in the U.S., and for obtaining regulatory approval in the U.S.

and in certain other identified countries and (iii) up to $ 185.0 million in sales-based milestone payments.

The Company is also eligible to earn royalties ranging from the high-single digits to low teens, in each case, on a per-product basis, which royalties are potentially subject to various reductions and offsets and incorporate the Company’s existing low- to mid-single-digit royalty obligations under a license agreement with Caribou Biosciences, Inc.

In connection with the 2016 Regeneron Agreement, Regeneron purchased $ 50.0 million of the Company’s common stock in a private placement under a stock purchase agreement concurrent with the Company’s IPO .

2020 Regeneron Amendment:

The 2020 Regeneron Amendment, among other things, (i) extends the Technology Collaboration Term until April 11, 2024, with a further option to extend an additional twenty-four months upon notice and a $ 30.0 million nonrefundable payment to the Company, (ii) increases the Regeneron Target Cap from ten to fifteen (with the additional five targets focused only in the liver) and (iii) allows for a second Intellia Independent Co/Co Option.

The Company also granted a non-exclusive license to Regeneron under certain CRISPR/Cas platform IP for the commercialization of up to ten ex vivo edited CRISPR Products (as defined in the 2020 Regeneron Amendment) made using certain cell types, subject to certain limitations on Regeneron’s activities in T cells.

The ex vivo license does not include access to the Company’s IP directed to its ex vivo targets, programs, or cell engineering processes.

This non-exclusive license is subject to royalty obligations such that the Company is eligible to earn royalties on ex vivo edited CRISPR Products ranging from the high-single

digits to low teens, in each case, on a per-product basis, subject to various reductions and offsets and the Company’s existing royalty obligations to Caribou .

The Company transferred the license to develop the Factor VIII target for the treatment of hemophilia A to Regeneron .

In addition, a target that was previously a Regeneron evaluation target was transferred back to the Company as an Intellia reserved liver target with certain reserved rights for Regeneron .

In connection with the 2020 Regeneron Amendment, the Company and Regeneron also entered into the Hemophilia Co/Co agreements, which are directed to Factor VIII and Factor IX for the treatment of hemophilia A and hemophilia B.

Factor VIII and Factor IX do not count toward the Regeneron Target Cap.

Under the Hemophilia Co/Co agreements, which are substantially based upon the terms and conditions as outlined under the 2016 Regeneron Agreement, the Company and Regeneron will collaborate to research, develop, manufacture, and commercialize CRISPR Products for the treatment of hemophilia A and hemophilia B, for which Regeneron will be the Lead Party (as discussed below).

Further, worldwide development costs and profits of any future products will be split between the Company and Regeneron, 35 % and 65 %, respectively, subject to certain deductions.

2020 Regeneron Amendment:

Financial Terms.

As part of the consideration for the 2020 Regeneron Amendment, Regeneron paid the Company an upfront payment of $ 70.0 million, which included the $ 25.0 million fee to extend the Technology Collaboration Term to April 2024 .

The potential future milestones and royalties remain unchanged from the 2016 Regeneron Agreement.

In addition, on May 30, 2020 , the Company and Regeneron entered into the 2020 Stock Purchase Agreement.

Under the 2020 Stock Purchase Agreement, the Company sold to Regeneron 925,218 shares of its common stock, par value $ 0.0001 per share, for aggregate cash consideration of $ 30.0 million, or $ 32.42 per share (the “Equity Transaction”), representing a 100 % premium over the volume-weighted average trading price of the Company’s common stock during the 30-day period prior to the closing of the Equity Transaction.

Under the 2020 Stock Purchase Agreement, Regeneron will not dispose of any shares of common stock it beneficially owns in the Company until the termination of the Technology Collaboration Term.

Research Collaboration.

Research activities under the 2016 Regeneron Agreement and the 2020 Regeneron Amendment (collectively the “Amended Agreements”) will be governed by evaluation and research and development plans that will outline the parties’ responsibilities under, anticipated timelines of and budgets for, the various programs.

The Company will assist Regeneron with the preliminary evaluation of its selected in vivo targets, and Regeneron will be responsible for preclinical research, conducting clinical development and manufacturing and commercialization of CRISPR Products directed to each of its exclusive selected targets.

The Company may assist, as requested by Regeneron, with the later discovery and research of product candidates directed to any selected target.

For each selected target, Regeneron is required to use commercially reasonable efforts to submit regulatory filings necessary to achieve investigational new drug (“IND”), or other regulatory acceptance for at least one product directed to each applicable target and, following IND or other regulatory acceptance, to develop and commercialize at least one such product.

Pursuant to the 2016 Regeneron Agreement, the parties formed a joint steering committee, which is responsible for setting research objectives and overseeing the general strategies and research and development activities undertaken by the parties.

Term and Termination .

Under the Amended Agreements, the Technology Collaboration Term ends in April 2024, except that Regeneron may make a one-time payment of $ 30.0 million to extend the Technology Collaboration Term for an additional two-year period.

The Amended Agreements will continue until the date when no royalty or other payment obligations are due, unless earlier terminated in accordance with the terms of the Amended Agreements.

Regeneron’s royalty payment obligations expire on a country-by-country and product-by-product basis upon the later of (i) the expiration of the last valid claim of the royalty-bearing patents covering such product in such country, (ii) twelve years from the first commercial sale of such product in such country, or (iii) the expiration of regulatory exclusivity for such product.

The Company may terminate the Amended Agreements on a target-by-target basis if Regeneron or any of its affiliates institutes a patent challenge against the Company’s CRISPR/Cas or certain other background patent rights or does not proceed with the development of a product directed to a selected target within specified periods of time.

Regeneron may terminate the Amended Agreements, without cause, upon 180 days written notice to the Company, either in its entirety or on a target-by-target basis, in which event, certain rights in the terminated targets and associated IP revert to the Company, as described in the Amended Agreements.

Following such termination, the Company may owe Regeneron royalties, in certain circumstances, up to mid-single digits on any terminated targets that the Company subsequently commercializes on a product-by-product basis for a period of twelve years after the first commercial sale of any such products.

Either party may terminate the Amended Agreements, either in their entirety or with

respect to the research collaboration or one or more of the targets selected by Regeneron, in the event of the other party’s uncured material breach .

Co-Development and Co-Promotion Agreements.

In July 2018, the Company and Regeneron finalized the form of the Co/Co agreement that will be used as the basis for each Co/Co agreement directed to a target.

Simultaneously, the Company and Regeneron executed the ATTR Co/Co agreement, for which the Company is the clinical and commercial Lead Party and Regeneron is the Participating Party (each, as defined in the Co/Co agreements, as applicable, and described below).

In May 2020, the Company and Regeneron executed the Hemophilia Co/Co agreements, for which Regeneron is the clinical and commercial Lead Party and the Company is the Participating Party.

Co-Development and Co-Promotion:

Agreement Structure.

Under the 2016 Regeneron Agreement, Regeneron had the right to exercise at least four options, after ATTR, to enter into a Co/Co agreement for the Company’s liver targets (other than the Company’s reserved liver targets), while the Company had the opportunity to exercise at least one option to enter into a Co/Co agreement for Regeneron’s liver targets, the exact number of options being subject to certain conditions of the target selection process.

In connection with the 2020 Regeneron Amendment, the Company received one additional option to enter into a Co/Co agreement, while Regeneron’s number of Co/Co options remained the same.

Each option to enter into a Co/Co agreement must be exercised (or forfeited) once a target reaches a defined preclinical stage.

One party will be the “Lead Party” and the other party the “Participating Party.” The Lead Party will have control and primary responsibility for the development, manufacturing, regulatory, and commercial activities.

The Participating Party will have the right to consult on these activities through its participation on the joint development and commercialization committees and will have the right to co-fund development and commercialization activities in exchange for a share of profits.

In general, under each Co/Co agreement, the parties will share equally in worldwide development costs and profits of any future products.

Prior to reaching a specific development milestone, the Participating Party may elect to reduce its share of worldwide development costs and profits by 50 %.

Pursuant to the ATTR Co/Co, on December 13, 2019, Regeneron informed the Company that it would exercise its rights 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.

As noted above, in connection with the 2020 Regeneron Amendment, the Company and Regeneron entered into two Hemophilia Co/Co agreements.

Under the Hemophilia Co/Co agreements, which are substantially based upon the Company and Regeneron’s previously agreed-upon form of Co/Co agreement, but do not count toward Regeneron’s total number of Co/Co options, the Company and Regeneron will collaborate to research, develop, manufacture, and commercialize CRISPR Products for the treatment of hemophilia A and hemophilia B.

Regeneron will be the clinical and commercial lead for such activities.

Co-Development and Co-Promotion:

The parties formed j oint development and commercialization committees to oversee all profit share products under the Co/Co agreements as discussed below.

The committees are responsible for overseeing the development, manufacture, regulatory matters, and commercialization (including pricing and reimbursement) efforts under the ATTR Co/Co and the Hemophilia Co/Co agreements.

Co-Development and Co-Promotion:

Either party may terminate a particular Co/Co agreement by providing 180 days written notice.

If the Company terminates, the product subject to the Co/Co agreement becomes a Regeneron product, and is subject to all future milestone and royalty payment obligations under the 2016 Regeneron Agreement.

If Regeneron terminates and has contributed at least $ 5.0 million in development costs under the particular Co/Co agreement, the Company will pay low- to mid-single-digit royalties on the net sales of the product, depending on co-funding percentage, stage at termination and, if any, Regeneron IP incorporated into the relevant product.

2016 Regeneron Agreement:

Accounting Analysis.

The Company determined that the 2016 Regeneron Agreement is within the scope of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and its related amendments (collectively known as “ASC 606”).

The Company evaluated the promised goods and services under the 2016 Regeneron Agreement and determined that it included three performance obligations:

(i) a combined performance obligation including the licenses to targets and the associated research activities and evaluation plans;

(ii) a combined performance obligation including the technology collaboration and associated research activities;

and (iii) the common stock.

Under the 2016 Regeneron Agreement, the Company determined that the transaction price was $ 125.0 million, consisting of the following consideration:

(i) the nonrefundable upfront payment of $ 75.0 million;

and (ii) the payment of the common stock of $ 50.0 million.

None of the clinical or regulatory milestones were included in the transaction price, as all milestone amounts were fully constrained.

As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of the milestones is outside the control of the Company and contingent upon success in future regulatory progress and the licensee’s efforts.

Any consideration related to sales-based milestones and royalties will be recognized when the related sales occur as they were determined to relate predominantly to the licenses granted to Regeneron and therefore have also been excluded from the transaction price.

The Company first allocated $ 50.0 million of the transaction price to the common stock.

The common stock was sold at its standalone selling price and the Company concluded that the total discount inherent in the arrangement is entirely attributable to the combined performance obligation including the licenses to targets and associated research activities and evaluation plans and the combined performance obligation including the technology collaboration and associated research activities.

As such, the remaining $ 75.0 million of the transaction price was allocated to the combined performance obligation including the licenses to targets and associated research activities and evaluation plans and the combined performance obligation including the technology collaboration and associated research activities on a relative standalone selling price basis.

The Company estimated the standalone selling price of each combined performance obligation by taking into consideration internal estimates of research and development personnel needed to perform the research and development services, estimates of expected cash outflows to third parties for services and supplies, selling prices of comparable transactions and typical gross profit margins.

As a result of this evaluation, the Company allocated $ 63.8 million to the combined performance obligation including the licenses to targets and associated research activities and evaluation plans and $ 11.2 million to the combined performance obligation including the technology collaboration and associated research activities.

The $ 63.8 million allocated to the combined performance obligation including the licenses to targets and associated research activities and evaluation plans is being recognized using a time elapsed inputs method over a period of six years , which, in management’s judgment, is the best measure of progress towards satisfying the performance obligation as this method provides the most faithful depiction of the entity’s performance in transferring control of the goods and services promised to Regeneron and represents the Company’s best estimate of the period of the obligation.

The $ 11.2 million allocated to the combined performance obligation including the technology collaboration and associated research activities is being recognized using a time elapsed inputs method over a period beginning with the inception of the technology collaboration in September 2016 through the end of the arrangement, which, in management’s judgment, is the best measure of progress towards satisfying the performance obligation as this method provides the most faithful depiction of the entity’s performance in transferring control of the goods and services promised to Regeneron and represents the Company’s best estimate of the period of the obligation.

2020 Regeneron Amendment:

Accounting Analysis.

The Company concluded that the accounting for the 2020 Regeneron Amendment is within the scope of ASC 606.

The Company evaluated the promised goods and services under the 2020 Regeneron Amendment and determined that it included three performance obligations:

(i) a combined performance obligation including the licenses to targets and the associated research activities and evaluation plans;

(ii) a combined performance obligation including the technology collaboration and associated research activities;

and (iii) the transfer of the license to develop the Factor VIII target for hemophilia A.

The 2020 Regeneron Amendment represents a contract modification.

The modification of the license to targets and the associated research activities and evaluation plans and the license to the technology collaboration and associated research activities are accounted for as if they were part of the original agreement and therefore form part of a performance obligation that was partially satisfied at the date of modification.

The Company therefore recorded a cumulative catch-up adjustment of $ 8.4 million on the modification date.

The Company accounted for the distinct performance obligation – specifically the obligation to transfer the license to develop the Factor VIII target for hemophilia A - as if it were a separate component of the modified contract.

The transaction price of the 2020 Regeneron Amendment was determined to be $ 110.9 million, which is comprised of the $ 23.5 million remaining consideration from the 2016 Regeneron Agreement transferred at the inception of the arrangement, the $ 70.0 million upfront payment received upon the execution of the 2020 Regeneron Amendment and $ 17.4 million on the sale of shares under the 2020 Stock Purchase Agreement.

The Company applied equity accounting guidance to measure the $ 12.6 million fair value recorded in the condensed consolidated statement of stockholders’ equity upon issuance of the shares.

All variable consideration will be fully constrained, until such point where the constraints can be lifted, at which point the Company will allocate the consideration to the performance obligations in the arrangement accordingly.

The $ 110.9 million transaction price was allocated to the performance obligations including the licenses to targets and associated research activities and evaluation plans, the combined performance obligation including the technology collaboration and associated research activities and the transfer of the license to develop the Factor VIII target for hemophilia A, on a relative standalone selling price basis.

The Company estimated the standalone selling price of the transfer of the license to develop the Factor VIII target for hemophilia A using the adjusted market assessment approach, whereby the Company estimated the market in which it sells goods or services and estimated the price that a customer in that market would be willing to pay for those goods or services.

The Company estimated the standalone selling price of the combined performance obligation of the technology collaboration and associated research activities by taking into consideration internal estimates of research and development personnel needed to perform the research and development services.

The estimated standalone selling price of the combined performance obligation, including the licenses to targets and the associated research activities and evaluation plans, was determined using selling prices of comparable transactions.

As a result of this evaluation, the Company allocated $ 91.9 million to the combined performance obligation including the licenses to targets and associated research activities and evaluation plans, $ 3.7 million to the combined performance obligation including the technology collaboration and associated research activities, and $ 15.3 million to the transfer of the license to develop the Factor VIII target for hemophilia A.

The $ 91.9 million allocated to the combined performance obligation, including the licenses to targets and associated research activities and evaluation plans, as well as the $ 3.7 million allocated to the combined performance obligation, including the technology collaboration and associated research activities, are being recognized using a time elapsed inputs method over the remaining period of the collaboration which, in management’s judgment, is the best measure of progress towards satisfying the performance obligation as this method provides the most faithful depiction of the entity’s performance in transferring control of the goods and services promised to Regeneron and represents the Company’s best estimate of the period of the obligation.

The Company will re-evaluate the measure of progress in each reporting period and when events whose outcome are resolved or other changes in circumstances occur.

The $ 15.3 million allocated to the transfer of the license to develop the Factor VIII target for hemophilia A was recognized when the Company transferred control of the hemophilia A target during the quarter ended September 30, 2020.

Co/Co Agreements:

Accounting Analysis.

The Company concluded that the ATTR Co/Co and Hemophilia Co/Co agreements meet the definition of a collaborative arrangement per Accounting Standards Codification 808, Collaborative Arrangements (“ASC 808”), which is outside of the scope of ASC 606.

Since ASC 808 does not provide recognition and measurement guidance for collaborative arrangements, the Company has analogized to ASC 606.

As such, the Company classifies cumulative amounts paid or received under the cost sharing provisions of the ATTR Co/Co and the Hemophilia Co/Co agreements as a component of revenues in the condensed consolidated statements of operations and comprehensive loss, to the extent that this does not result in a cumulative “negative revenue” amount, in which case the cumulative shortfall would be reclassified as an expense.

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

The collaboration was 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 exclusive 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.

Since December 31, 2020, there have been no material changes to the key terms of the 2016 Regeneron Agreement and the 2020 Regeneron Amendment (the “Amended Agreements”).

For further information on the terms and conditions of these agreements, please see the notes to the consolidated financial statements included in the Company’s Annual Report for the year ended December 31, 2020.

Revenue Recognition – Collaboration Revenue.

Through September 30, 2020, excluding amounts allocated to Regeneron’s purchase of the Company’s common stock, the Company recorded $ 145.0 million in upfront payments under the Amended Agreements and $ 33.8 million primarily for research and development services under the ATTR Co/Co agreement.

Through September 30, 2020 , the Company has recognized $ 116.7 million of collaboration revenue under all arrangements, including $ 22.2 million and $ 46.4 million during the three and nine months ended September 30, 2020, respectively, and $ 5.8 million and $ 17.8 million during the three and nine months ended September 30, 2019, respectively, in the condensed consolidated statements of operations and comprehensive loss.

This includes $ 1.2 million and $ 9.8 million during the three and nine months ended September 30, 2020, respectively, and $ 2.6 million and $ 8.4 million during the three and nine months ended September 30, 2019, respectively, primarily representing payments due from Regeneron pursuant to the ATTR Co/Co agreement.

As of September 30, 2020, there was approximately $ 79.6 million of the aggregate transaction price of the Amended Agreements remaining to be recognized, which the Company expects to be recognized ratably through April 2024 .

As of September 30, 2020 and December 31, 2019, the Company had accounts receivable of $ 1.2 million and $ 3.6 million, respectively, and deferred revenue of $ 79.6 million and $ 28.8 million, respectively, related to the Amended Agreements.

Through March 31, 2021, excluding amounts allocated to Regeneron’s purchase of the Company’s common stock, the Company recorded $ 145.0 million in upfront payments under the Amended Agreements and $ 35.6 million primarily for research and development services under the ATTR Co/Co agreement.

Through March 31, 2021 , the Company has recognized $ 129.7 million of collaboration revenue under all arrangements, including $ 6.4 million and $ 7.9 million during the three months ended March 31, 2021 and 2020, respectively, in the condensed consolidated statements of operations and comprehensive loss.

This includes $ 0.9 million and $ 4.8 million during the three months ended March 31, 2021 and 2020, respectively, primarily representing payments due from Regeneron pursuant to the ATTR Co/Co agreement.

As of March 31, 2021, there was approximately $ 68.4 million of the aggregate transaction price of the Amended Agreements remaining to be recognized, which the Company expects to be recognized during the research term through April 2024.

As of March 31, 2021 and December 31, 2020, the Company had accounts receivable of $ 1.0 million and $ 2.1 million, respectively, and deferred revenue of $ 68.4 million and $ 73.9 million, respectively, related to the Amended Agreements.

Novartis Institutes for BioMedical Research, Inc.

In December 2014, the Company entered into a strategic collaboration agreement with Novartis (the “2014 Novartis Agreement”), primarily focused on the research of new ex vivo CRISPR/Cas9-edited therapies using chimeric antigen receptor T (“CAR-T”) cells and hematopoietic stem cells (“HSCs”).

In December 2014, the Company entered into a strategic collaboration agreement with Novartis (the “2014 Novartis Agreement”), primarily focused on the research of new ex vivo CRISPR/Cas9-edited therapies using CAR-T cells and hematopoietic stem cells (“HSCs”).

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

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Revenue Recognition – Collaboration Revenue.

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

Through September 30, 2020 , the Company recognized $ 62.4 million of collaboration revenue.

No revenue was recognized during the three or nine months ended September 30, 2020 related to the 2014 Novartis Agreement and the Novartis Amendment.

The Company recognized $ 4.8 million and $ 14.3 million during the three and nine months ended September 30, 2019, in the condensed consolidated statements of operations and comprehensive loss related to the 2014 Novartis Agreement and the Novartis Amendment.

As of December 31, 2019, the aggregate transaction price had been recognized in full.

Revenue Recognition – Milestone .

During the nine months ended September 30, 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.

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

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

As a result of meeting this milestone, the Company recognized $ 5.0 million as collaboration revenue within the condensed consolidated statement of operations and comprehensive loss.

No other milestones under the 2014 Novartis Agreement and the Novartis Amendment were achieved during the three or nine months ended September 30, 2020 or 2019.

No other milestones under the 2014 Novartis Agreement and the Novartis Amendment were achieved during the three months ended March 31, 2021 or 2020.

The Company is eligible to receive additional downstream success-based milestones and royalties.

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

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

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

In October 2014, the Company entered into an agreement to lease office and laboratory space at 130 Brookline Street (the “130 Brookline Lease”) in Cambridge, Massachusetts under an operating lease agreement with a term through January 2020 , with an option to extend the term of the lease for an additional five-year period.

In April 2019, the Company executed an amendment to the lease to extend the term of the lease for the additional five-year period, through January 2025 .

Upon the execution of the original lease, the Company provided a $ 0.3 million security deposit.

The Company has recorded this security deposit in other assets on the condensed consolidated balance sheets.

In March 2020, the Company entered into a second amendment to the 130 Brookline Lease (the “Second Amendment”).

The Second Amendment amends certain terms of the Company’s existing lease, dated October 21, 2014, as amended on April 5, 2019.

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 September 30, 2020.

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

In the first quarter of 2020, the Company recognized a right-of-use asset and lease liability of approximately $ 7.3 million related to the Second Amendment.

As of March 31, 2021 and December 31, 2020, the Company had no accounts receivable or deferred revenue related to the 2014 Novartis Agreement and the Novartis Amendment.

In March 2020, the Company entered into an agreement to lease approximately 39,000 square feet of office and laboratory space at 281 Albany Street in Cambridge, Massachusetts under an operating lease agreement (the “281 Albany Lease”).

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The initial term of the 281 Albany Lease is ten years following the Rent Commencement Date.

As of September 30, 2020 the Company determined, in accordance with Accounting Standards Codification 842, “Leases (Topic 842)” , that the lease commencement date has not been met as the Company does not control the underlying asset.

As of March 31, 2021 the Company determined, in accordance with Accounting Standards Codification 842, “Leases (Topic 842)” , that the commencement date of the lease has been met as the facility was substantially complete and available for use and, accordingly, the Company recognized a right-of-use asset and a lease liability of approximately $ 40.4 million and $ 34.8 million, respectively, in the first quarter of 2021 related to the 281 Albany Lease.

In determining the lease liability, the Company used an incremental borrowing rate of 5.52 % based on a number of factors including the total lease payments, the Company’s credit rating, and the lease term.

In addition, the Company had prepaid approximately $ 5.6 million in lease payments as of March 31, 2021 under the terms of this lease, which are included in the recognized right-of-use asset.

The base rent under the 281 Albany Lease is $ 99.00 per square foot per year during the first year of the term, which is subject to scheduled annual increases up to $ 128.87 per square foot per year during the last year of the initial term, plus certain operating expenses and taxes.

In addition, the landlord will contribute an aggregate of $ 4.4 million toward the cost of construction and tenant improvements for the premises.

In accordance with the 281 Albany Lease, the Company is required to maintain a letter of credit in the amount of $ 1.9 million that is restricted for the term of the lease.

In addition, the landlord agreed to contribute an aggregate of $ 4.4 million toward the cost of construction and tenant improvements for the premises.

In accordance with the 281 Albany Lease, the Company is required to maintain a letter of credit in the amount of $ 1.9 million that is restricted for the

term of the lease.

These restricted cash equivalents are reported in “Other Assets” in the Company’s condensed consolidated balance sheet.

The Company has the option to extend the 281 Albany Lease for two successive five-year terms .

The option for this extension is not included as part of the lease liability and right-of-use asset at March 31, 2021, as it is not reasonably certain that it will be exercised.

Equity-Based Compensation

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The maximum term of stock options granted under the 2015 Plan is ten years .

As of September 30, 2020, there were 2,144,877 shares available for future issuance.

As of March 31, 2021, there were 2,890,540 shares available for future issuance.

The number of shares reserved for issuance under the 2015 Plan shall be cumulatively increased by four percent of the number of shares of stock issued and outstanding on the immediately preceding December 31 or such lesser number of shares of stock as determined by the board of directors.

Equity-based compensation expense is classified in the condensed consolidated statements of operations and comprehensive loss as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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Restricted stock is measured at fair value based on the quoted price of the Company’s common stock.

The following table summarizes the Company’s restricted stock activity for the nine months ended September 30, 2020:

The following table summarizes the Company’s restricted stock activity for the three months ended March 31, 2021:

Average Grant

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Unvested restricted stock as of December 31, 2020

Unvested restricted stock as of September 30, 2020

As of September 3 0 , 20 20 , there was $ 1.7 million of unrecognized equity-based compensation expense related to restricted stock that is expected to vest.

These costs are expected to be recognized over a weighted average remaining vesting period of 1 .

As of September 3 0 , 2020, 47,916 of the unvested restricted stock outstanding are performance-based RSUs that vest upon obtaining certain scientific and regulatory milestones through 2020.

During the three months ended September 30, 2020, 23,959 performance-based RSUs were cancelled as the performance criteria had not been met as of the milestone measurement date.

The outstanding performance-based RSUs are not included in computing the diluted loss per share because the performance criteria had not been met as of the end of the reporting period .

In January 2020, the Company granted 181,020 RSUs to certain non-executive employees that include a performance condition in addition to a service condition.

Unvested restricted stock as of March 31, 2021

In March 2021, the Company granted 259,839 RSUs with a service condition to executive and non-executive employees as part of their annual grant, which vest over a period of four years .

The weighted average grant date fair value of these RSUs was $ 57.71 .

The vesting start date for these RSUs is January 1, 2021.

Included in the unvested restricted stock as of March 31, 2021 are 107,360 RSUs that include a performance condition in addition to a service condition.

The RSUs vest over a period of three years and are subject to accelerated vesting based on the Company’s programs achieving certain development milestones before December 1, 2022.

The fair value of the RSUs at date of grant was $ 15.05 .

As of September 30, 2020, the Company had not accelerated the vesting of the RSUs.

There has been no additional vesting of these shares in the three months ended March 31, 2021.

As of March 31, 2021, there was $ 17.8 million of unrecognized equity-based compensation expense related to restricted stock that is expected to vest.

These costs are expected to be recognized over a weighted average remaining vesting period of 3.6 years.

Stock Options

The weighted average grant date fair value of options, estimated as of the grant date using the Black-Scholes option pricing model, was $ 13.38 and $ 8.55 per option for those options granted during the three and nine months ended September 30, 2020 and $ 9.66 and $ 9.21 per option for those options granted during the three and nine months ended September 30, 2019, respectively.

The total intrinsic value (the amount by which the fair market value exceeded the exercise price) of stock options exercised during the three and nine months ended September 30, 2020 was $ 0.9 million and $ 1.7 million, respectively, and during the three and nine months ended September 30, 2019 was $ 0.2 million and $ 1.6 million, respectively.

Key assumptions used to apply this pricing model were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

The weighted average grant date fair value of options, estimated as of the grant date using the Black-Scholes option pricing model, was $ 36.64 and $ 7.96 per option for those options granted during the three months ended March 31, 2021 and 2020, respectively.

The total intrinsic value (the amount by which the fair market value exceeded the exercise price) of stock options exercised during the three months ended March 31, 2021 and 2020 was $ 54.8 million and $ 0.3 million, respectively.

Weighted average assumptions used to apply this pricing model were as follows:

Three Months Ended March 31,

Risk-free interest rate

Expected life of options

5.5-6.0 years

Expected volatility of underlying stock

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Expected Volatility.

The expected volatility was derived from a blend of average historical stock volatilities of several peer companies within the Company’s industry and the Company’s historical volatility, both over a period equivalent to the expected term of the stock option grants.

The expected volatility was derived from a blend of the Company’s historical volatility and an average of the historical stock volatilities of several peer companies within the Company’s industry, both over a period equivalent to the expected term of the stock option grants.

Expected Term.

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The Company uses the market closing price of its common stock as reported on the Nasdaq Global Select Market to determine the fair value of the shares of common stock underlying stock options.

The following is a summary of stock option activity for the nine months ended September 3 0 , 20 20 :

The following is a summary of stock option activity for the three months ended March 3 1 , 20 2 1 :

(In thousands)

Outstanding at December 31, 2020

Outstanding at September 30, 2020

Exercisable at September 30, 2020

As of September 30, 2020, there was $ 35.5 million of unrecognized compensation cost related to stock options that have not yet vested.

Outstanding at March 31, 2021

Exercisable at March 31, 2021

As of March 31, 2021, there was $ 86.9 million of unrecognized compensation cost related to stock options that have not yet vested.

These costs are expected to be recognized over a weighted average remaining vesting period of 3.2 years.

Of the unvested stock options outstanding as of September 30, 2020, 135,832 are performance-based stock options that vest upon obtaining certain scientific and regulatory milestones through 2020 .

During the nine months ended September 30, 2020, 77,918 performance-based options were cancelled as the performance criteria had not been met as of the milestone measurement date.

At September 30, 2020, 95,832 performance-based options are not included in computing the diluted loss per share because the performance criteria had not been met as of the end of the reporting period.

Loss Per Share

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Basic and diluted loss per share was calculated as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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The following common stock equivalents were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive:

Three and Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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Stockholders’ Equity

The following tables present changes in stockholders’ equity for the nine-month periods ended September 30, 2020 and 2019 (in thousands, except share data):

The following tables present changes in stockholders’ equity for the three-month periods ended March 31, 2021 and 2020 (in thousands, except share data):

Comprehensive

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Equity-based compensation

Other comprehensive income

Balance at March 31, 2020

Issuance of common stock through follow-on

offering, net of issuance costs of $ 369

Issuance of common stock in private placement

with Regeneron

Issuance of common stock through at-the-market

offerings, net of issuance costs of $ 23

Exercise of stock options

Issuance of shares under employee stock

purchase plan

Equity-based compensation

Other comprehensive loss

Balance at June 30, 2020

Exercise of stock options

Equity-based compensation

Other comprehensive loss

Balance at September 30, 2020

Balance at March 31, 2021

Comprehensive

Stockholders’

(Loss) Income

Balance at December 31, 2019

Retroactive adjustment to beginning

accumulated deficit for adoption of ASC 842

Issuance of common stock through at-the-market

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Balance at March 31, 2020

Issuance of common stock through at-the-market

offerings, net of issuance costs of $ 3

Exercise of stock options

Issuance of shares under employee stock

purchase plan

Equity-based compensation

Other comprehensive income

Balance at June 30, 2019

Issuance of common stock through at-the-market

offerings, net of issuance costs of $ 199

Exercise of stock options

Equity-based compensation

Other comprehensive gain

Balance at September 30, 2019

Follow-on Offering

On June 1, 2020, the Company entered into an underwriting agreement related to a public offering of 6,301,370 shares of its 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 the Company 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 above, in May 2020 the Company entered into an amendment to its collaboration agreement with Regeneron that was entered into in April 2016.

Simultaneously, the Company and Regeneron entered into the 2020 Stock Purchase Agreement , under which the Company sold to Regeneron 925,218 shares of its 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 the Company’s 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 the Company 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

I n October 2018, the Company 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 its common stock having aggregate gross proceeds of up to $ 100.0 million.

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

T he Company issued 5,890,648 shares of its 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 .

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

The Company agreed to pay 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, the Company issued 287,231 shares of its 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 nine months ended September 30, 2020, the Company issued 1,107,100 shares of its 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 September 30, 2020, $ 130.0 million in shares of common stock remain eligible for sale under the 2019 Sales Agreement.

Please refer to the Company’s Annual Report for the year ended December 31, 2020 for additional information regarding these offerings.

During the three months ended March 31, 2021, the Company issued 641,709 shares of its common stock in a series of sales at an average price of $ 72.79 per share in accordance with the 2019 Sales Agreement, for aggregate net proceeds of $ 45.3 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.

During the three months ended March 31, 2020, the Company issued 351,252 shares of its common stock in a series of sales at an average price of $ 15.05 per share in accordance with the 2019 Sales Agreement, for aggregate net proceeds of $ 5.1 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 March 31, 2021, $ 47.4 million in shares of common stock remain eligible for sale under the 2019 Sales Agreement.

Related Party Transactions

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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 1. Financial Statements