CARIBOU BIOSCIENCES, INC. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1, of this Form 10-Q and with the audited consolidated financial statements and the related notes for the fiscal year endedDecember 31, 2021 included in our Form 10-K filed with theSecurities and Exchange Commission (the "SEC") onMarch 21, 2022 .
Special Note Regarding Forward-Looking Statements
This Form 10-Q contains forward-looking statements. All statements other than
statements of historical facts contained in this Form 10-Q, including statements
regarding our business strategy, plans, and objectives; expectations regarding
our clinical and preclinical development programs, including our timing
expectations with respect to such programs and the expected timing of disclosure
of initial data from such programs; future regulatory filings; our results of
operations and financial position; plans and objectives of management for future
operations; and the like, are forward-looking statements. In some cases, you can
identify forward-looking statements by terms such as "may," "will," "should,"
"expect," "plan," "anticipate," "could," "intend," "target," "project,"
"contemplate," "believe," "estimate," "predict," "potential," or "continue" or
the negative of these terms or other similar expressions, although not all
forward-looking statements contain these words.
As a result of many factors, including but not limited to risks related to our
financial position and our ability to raise additional capital as needed to fund
our operations and product candidate development; risks associated with the
initiation, cost, timing, progress, and results of current and future research
and development programs, preclinical studies, and clinical trials; risks
related to our ability to obtain and maintain regulatory approval for our
product candidates; risks that our product candidates, if approved, may not gain
market acceptance due to negative public opinion and increased regulatory
scrutiny of cell therapies involving genome editing; risks related to our
ability to meet future regulatory standards with respect to our products; risks
related to our ability to establish and/or maintain intellectual property rights
covering our product candidates and genome-editing technology; risks of third
parties asserting that our product candidates infringe their patents; risks
related to developments of our competitors and our industry; risks related to
our reliance on third parties to conduct our clinical trials and manufacture our
product candidates; risks caused by the impact of COVID-19 or geopolitical
events on our business and operations; and other risks described in greater
detail in the section of our Form 10-K titled "Risk Factors," the events and
circumstances reflected in our forward-looking statements may not be achieved or
may not occur, and actual results could differ materially from those described
in or implied by the forward-looking statements contained in the following
discussion and analysis. As a result of these risks, you should not place undue
reliance on these forward-looking statements. We assume no obligation to revise
or update any forward-looking statements for any reason, except as required by
law.
Overview
We are a clinical-stage CRISPR genome-editing biopharmaceutical company
dedicated to developing innovative, transformative therapies for patients with
devastating diseases. We are advancing a pipeline of allogeneic, or
off-the-shelf, CAR-T and CAR-NK cell therapies for the treatment of patients
with hematologic malignancies and solid tumors. Our renowned founders, including
a Nobel Prize laureate, are pioneers in the field of CRISPR genome editing. Our
chRDNA genome-editing technology has demonstrated superior specificity and high
efficiency in preclinical studies and enables us to perform multiple, precise
genomic edits, while maintaining genomic integrity.
Our lead product candidate, CB-010, to our knowledge, is the first
clinical-stage allogeneic anti-CD19 CAR-T cell therapy with programmed cell
death protein 1 ("PD-1") removed from the CAR-T cell surface by a genome-edited
knockout of the PDCD1 gene. We have demonstrated in preclinical models that the
PD-1 knockout improves the persistence of antitumor activity by disrupting a
pathway that leads to rapid T cell exhaustion. CB-010 is being evaluated in our
ANTLER phase 1 clinical trial in patients with relapsed or refractory B cell
non-Hodgkin lymphoma. We presented initial clinical data from cohort 1 at dose
level 1 (40x106 CAR-T cells) from our ANTLER trial in June 2022 at the European
Hematology Association 2022 Congress , and we expect to share additional clinical
data from cohort 1 by the end of 2022. The ANTLER trial is currently enrolling
patients at dose level 2 (80x106 CAR-T cells).
Our CB-011 product candidate is an allogeneic CAR-T cell product candidate that
targets B cell maturation antigen ("BCMA"). To our knowledge, it is the first
anti-BCMA CAR-T cell therapy incorporating an immune cloaking approach that
includes both the removal of the endogenous beta-2 microglobulin ("B2M") protein
by a genome-edited knockout of the B2M gene and insertion of a
B2M-human-leukocyte-antigen-E-peptide transgene ("B2M-HLA-E"), enabling
expression of HLA-E on the CAR-T cell surface. This strategy is designed to
blunt CAR-T cell rejection by both patient T cells and natural killer ("NK")
cells to enable more durable antitumor activity. CB-011 is in preclinical
development for relapsed or refractory multiple myeloma. We expect to submit an
investigational new drug ("IND") application for CB-011 in the fourth quarter of
2022.
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CB-012 is our allogeneic armored CAR-T cell product candidate targeting CLL-1
(also known as CD371), currently in preclinical development for the treatment of
relapsed or refractory acute myeloid leukemia ("AML"). CLL-1 is an attractive
target for AML due to its expression on myeloid cancer cells, its enrichment in
leukemic stem cells, and its absence on hematopoietic stem cells. We expect to
submit an IND application for CB-012 in 2023.
We are also developing allogeneic CAR-NK cell therapies derived from
genome-edited iPSCs for the treatment of solid tumors. CB-020 is our first
CAR-NK product candidate and it will contain genome edits designed to overcome
some of the challenges of targeting solid tumors, such as trafficking, tumor
infiltration, heterogeneity, and the immunosuppressive tumor microenvironment.
We expect to select a tumor cell-surface target for our CB-020 product candidate
in the fourth quarter of 2022. Also in the fourth quarter of 2022, we expect to
disclose armoring strategies we are developing for our CAR-NK platform.
Since our founding in 2011, we have devoted substantially all of our resources
to organizing and staffing, business planning, raising capital, developing our
genome-editing platform technologies, developing our product candidates and
building our pipeline, creating and maintaining our intellectual property
portfolio, and establishing arrangements with third parties for the manufacture
and testing of our product candidates. We do not have any products approved for
commercial sale and have not generated any revenue from product sales. We have
incurred net losses since commencement of our operations.
To date, we have primarily funded our operations through revenue from our license agreements, license and collaboration agreements, and a service agreement; the sale of shares of Intellia common stock that we received as consideration for the Intellia License Agreement; the sale of our convertible preferred stock in private placements before our initial public offering ("IPO"); and proceeds from our IPO.
Our net losses for the three months endedJune 30, 2022 and 2021 were$26.7 million and$14.3 million , respectively. Our net losses for the six months endedJune 30, 2022 and 2021 were$45.8 million and$27.5 million , respectively. We had an accumulated deficit of$143.6 million as ofJune 30, 2022 . Our net losses and operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of our clinical trials and nonclinical studies and our other research and development expenses. In addition, we are incurring increased costs associated with operating as a public company, including legal, audit, and accounting fees; maintaining compliance with the rules and regulations of theSEC and Nasdaq; director and officer insurance premiums; investor and public relations activities; and other accompanying compliance and governance requirements. We anticipate that our expenses will increase substantially if and as we:
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progress our ANTLER phase 1 clinical trial for our CB-010 product candidate;
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continue our current research programs and our preclinical and clinical development of our other current product candidates, including CB-011, CB-012, and CB-020, and any other product candidates we identify and choose to develop;
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hire additional clinical, quality control, and scientific personnel;
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seek to identify additional research programs and additional product candidates;
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further develop our genome-editing technologies;
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acquire or in-license technologies;
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expand, maintain, enforce, and defend our intellectual property portfolio;
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seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical trials, if any;
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establish and expand manufacturing capabilities and supply chain capacity for our product candidates;
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add operational, legal, financial, and management information systems and personnel;
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experience any delays, challenges, or other issues associated with any of the above, including the failure of clinical trials meeting endpoints, the generation of unanticipated preclinical results or clinical trial data subject to differing interpretations, or the occurrence of potential safety issues or other development or regulatory challenges;
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make royalty, milestone, or other payments under current, and any future, in-license or assignment agreements;
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establish a sales, marketing, and distribution infrastructure to commercialize any product candidates for which we obtain marketing approval; and
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continue to operate as a public company.
We do not own or operate any manufacturing facilities and we outsource a substantial portion of our clinical trial studies to third parties. We use multiple CMOs to individually manufacture, under cGMP, chRDNA guides, Cas proteins, plasmids, and AAV6
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vectors used in the manufacture of our CAR-T cells as well as our CAR-NK cell
therapy product candidates. We expect to rely on our CMOs for the manufacturing
of our product candidates to expedite readiness for future clinical trials, and
most of these CMOs have capabilities for commercial manufacturing. Additionally,
we may decide to build our own manufacturing facility in the future to provide
us greater flexibility and control over our clinical or commercial manufacturing
needs.
Because of the numerous risks and uncertainties associated with therapeutic
product development, we may never achieve profitability and, unless and until we
are able to develop and commercialize our product candidates, we will need to
continue to raise additional capital. Until such time as we can generate
significant revenue from product sales, if ever, we expect to finance our
operations through public or private equity or debt financings, collaborations,
strategic alliances, and licensing arrangements with third parties. There are no
assurances that we will be successful in obtaining an adequate level of
financing to support our business plans when needed on acceptable terms, or at
all. If we raise additional funds through collaborations, strategic alliances,
or licensing arrangements with third parties, we may have to relinquish valuable
rights to our intellectual property, future revenue streams, research programs,
or product candidates or grant licenses on terms that may not be favorable to
us. If we are unable to raise capital as and when needed or on attractive terms,
we may have to significantly delay, reduce, or discontinue the development and
commercialization of our product candidates or scale back or terminate our
pursuit of new in-licenses and acquisitions.
Impact of the COVID-19 Pandemic and Geopolitical Events
We are unable to predict the effect that the COVID-19 pandemic or national or international political events may have on our operations. To the extent the COVID-19 pandemic or geopolitical events adversely affect our business prospects, financial condition, and results of operation, they may also have the effect of exacerbating many of the other risks described or referenced in the section of our Form 10-K titled "Risk Factors," such as those relating to the supply of materials for our product candidates, and the timing and possible disruptions of our ongoing and future preclinical studies and clinical trials, and our access to the financial markets.
Components of Results of Operations
Licensing and Collaboration Revenue
We have not generated any revenue from product sales to date and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval and commercialization, we may generate revenue in the future from product sales. We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our product candidates if we succeed in obtaining regulatory approval for these product candidates. To date, all of our revenue consists of licensing and collaboration revenue earned from collaboration and/or licensing agreements entered into with third parties, including related parties. Under these agreements, we license rights to certain intellectual property controlled by us. The terms of these arrangements typically include payments to us of one or more of the following: nonrefundable, upfront license fees or exclusivity fees; annual maintenance fees; regulatory and/or commercial milestone payments; research and development payments; and royalties on the net sales of products and/or services. Each of these payments results in licensing and collaboration revenue. Revenue under such licensing and collaboration agreements was$4.2 million and$1.5 million for the three months endedJune 30, 2022 and 2021, respectively, and$6.9 million and$3.1 million for the six months endedJune 30, 2022 and 2021, respectively. See Notes 4 and 5 to our condensed consolidated financial statements included elsewhere in this Form 10-Q. For additional information about our revenue recognition policy related to our licensing and collaboration agreements, see Note 2 to the annual consolidated financial statements included in our Form 10-K.
For the foreseeable future we expect substantially all of our revenue will be generated from licensing and collaboration agreements.
Operating Expenses
Research and Development Expenses
Our research and development expenses consist of internal and external expenses
incurred in connection with the development of our product candidates,
development of our platform technologies, and our in-licensing and assignment
agreements.
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External costs include:
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costs associated with acquiring technology and intellectual property licenses that have no alternative future uses;
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costs incurred in connection with the preclinical and clinical development of our product candidates, including under agreements with CROs and clinical sites;
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costs of supplying the components for, and the manufacturing of, our product candidates for use in our preclinical studies and clinical trials; and
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other research and development costs, including laboratory materials and supplies, and consulting services.
Internal costs include:
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personnel-related costs, including salaries, benefits, and share-based compensation expense, for our research and development personnel; and
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allocated facilities and other overhead expenses, including expenses for rent, facilities maintenance, and depreciation.
We expense research and development costs as incurred. Costs of certain activities are recognized based on an evaluation of the progress to completion of specific tasks. However, payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized as prepaid expenses and other current assets on our condensed consolidated balance sheets. The capitalized amounts are recognized as expense as the goods are delivered or as related services are performed. Historically, we have not tracked external costs by clinical program. We intend to separately track certain external costs for each clinical program. However, we do not currently track, and do not intend to track, costs that are deployed across multiple programs. Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially for the foreseeable future as we continue to implement our business strategy; advance our CB-010 product candidate through clinical trials and later stages of development; conduct preclinical studies and clinical trials for our other product candidates; seek regulatory approvals for any product candidates that successfully complete clinical trials; expand our research and development efforts and incur expenses associated with hiring additional personnel to support our research and development efforts; and seek to identify, in-license, acquire, and/or develop additional product candidates. The successful development of our CB-010, CB-011, CB-012, and CB-020 product candidates, as well as other potential future product candidates, is highly uncertain. Accordingly, at this time, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the development of our product candidates. We are also unable to predict when, if ever, we will generate revenue and material net cash inflows from the commercialization and sale of any of our product candidates for which we may obtain marketing approval. We may never succeed in achieving regulatory approval for any of our product candidates. The duration, costs, and timing of preclinical studies, clinical trials, and development of our product candidates will depend on a variety of factors, including:
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sufficiency of our financial and other resources;
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acceptance of our CRISPR chRDNA genome-editing technology;
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ability to develop differentiating features so that our products have a competitive edge;
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completion of preclinical studies;
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establishment, maintenance, enforcement, and defense of our patents and other intellectual property rights;
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our ability to not infringe, misappropriate, or otherwise violate third-party intellectual property rights;
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clearance of IND applications to initiate clinical trials on product candidates;
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successful enrollment in, and completion of, our clinical trials on our product candidates;
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data from our clinical trials that support an acceptable risk-benefit profile of
our product candidates for the intended patient populations and that demonstrate
safety and efficacy;
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entry into collaborations to further the development of our product candidates or for the development of new product candidates;
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successful development of our internal process development and transfer to larger-scale facilities;
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establishment of agreements with CMOs for clinical and commercial supplies and scaling up manufacturing processes and capabilities to support our clinical trials;
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receipt of marketing approvals from applicable regulatory authorities;
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grant of regulatory exclusivity for our product candidates;
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establishment of sales, marketing, and distribution capabilities necessary for commercialization of our product candidates if and when approved, whether by us or in collaboration with third parties;
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maintenance of a continued acceptable safety profile of our products post-approval;
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acceptance of our product candidates, if and when approved by the applicable regulatory authorities, by patients, the medical community, and third-party payors;
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ability of our products to compete with other therapies and treatment options;
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establishment and maintenance of healthcare coverage and adequate reimbursement; and
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expanded indications and patient populations for our products.
The following table summarizes our research and development expenses for the periods indicated:
Three Months Ended June 30, For the Six Months Ended June 30,
2022 2021 2022 2021
(in thousands) (in thousands)
External costs:
Expenses related to licensing,
sublicensing revenue, and milestones $ 554 $ 2,606 $ 862 $ 4,466
Services provided by CROs, CMOs, and
other third parties that conduct
preclinical studies and clinical trials
on our behalf 9,661 3,835 13,633 6,694
Other research and development expenses 4,994 1,626 7,330 3,660
Total external costs 15,209 8,067 21,825 14,820
Internal costs:
Personnel-related expenses 5,294 2,769 10,891 5,204
Facilities and other allocated expenses 2,076 1,491 3,787 2,467
Total internal costs 7,370 4,260 14,678 7,671
Total research and development expenses
General and Administrative Expenses
Our general and administrative expenses consist primarily of personnel-related costs, intellectual property costs, consulting costs, and allocated overhead, including rent, equipment depreciation, and utilities. Personnel-related costs consist of salaries, benefits, and stock-based compensation for our general and administrative personnel. Intellectual property costs include expenses for filing, prosecuting, and maintaining patents and patent applications, including certain patents and patent applications that we license from third parties. We are entitled to receive reimbursement from third parties of a portion of the costs for filing, prosecuting, and maintaining certain patents and patent applications. We accrue for these reimbursements as the respective expenses are incurred and classify such reimbursements as a reduction of general and administrative expenses. During the three months endedJune 30, 2022 and 2021, we recorded$0.7 million and$2.4 million , respectively, of patent cost reimbursements as a reduction to general and administrative expense. During the six months endedJune 30, 2022 and 2021, we recorded$2.1 million and$4.5 million , respectively, of patent cost reimbursements as a reduction to general and administrative expense.
We expect that our general and administrative expenses may increase in the
future as a result of expanding our operations, including hiring personnel,
preparing for potential commercialization of our product candidates, and
additional facility occupancy costs. In addition, once we cease to be an
emerging growth company we expect increased costs associated with operating as a
public company (including legal, audit, and accounting fees; maintaining
compliance with the rules and regulations of the
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and other accompanying compliance and governance requirements). We also expect
to increase the size of our administrative function to support the growth of our
business.
Other Income (Expense)
Other income (expense) consists primarily of interest income earned on cash and
marketable securities, change in the fair value of our equity investments,
change in fair value of the MSKCC success payments liability under the MSKCC
Agreement.
Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the periods
indicated:
Three Months Ended June 30,
2022 2021 Change
(in thousands)
Licensing and collaboration revenue $ 4,192 $ 1,476 $ 2,716
Operating expenses
Research and development 22,579 12,327 10,252
General and administrative 10,044 5,113 4,931
Total operating expenses 32,623 17,440 15,183
Loss from operations (28,431 ) (15,964 ) (12,467 )
Other income (expense)
Change in fair value of equity securities (16 ) - (16 )
Change in fair value of the MSKCC success
payments liability 1,052 - 1,052
Gain on extinguishment of PPP Loan - 1,584 (1,584 )
Other income, net 698 69 629
Total other income (expense) 1,734 1,653 81
Net loss $ (26,697 ) $ (14,311 ) $ (12,386 ) Licensing and Collaboration Revenue
Licensing and collaboration revenue increased by$2.7 million , or 184%, to$4.2 million for the three months endedJune 30, 2022 from$1.5 million for the three months endedJune 30, 2021 . This increase was primarily related to increases of$2.4 million related to recognition of revenue under the AbbVie Agreement and$0.4 million related to other license agreements with various licensees. The following table summarizes our revenue by licensee for the periods indicated: Three Months Ended June 30, 2022 2021 Change (in thousands) AbbVie$ 2,864 $ 507$ 2,357 Other licensees 1,328 969 359 Total licensing revenue$ 4,192 $ 1,476 $ 2,716
Research and Development Expenses
Research and development expenses increased by$10.3 million , or 83%, to$22.6 million for the three months endedJune 30, 2022 from$12.3 million for the three months endedJune 30, 2021 . This increase was primarily related to increases of$6.0 million in external activities related to our ANTLER phase 1 clinical trial and contract manufacturing for CB-010 and our preclinical product candidates;$3.3 million in other research and development expenses to advance IND-enabling studies for CB-011 and preclinical research for additional programs, as well as other consulting services related to research and development;$2.5 million in personnel-related expenses (which include an increase in stock-based compensation expense of$0.7 million ) due to incremental hiring; and$0.6 million in other facilities and allocated expenses; partially offset by a decrease of$2.1 million in expenses related to licensing, sublicensing revenue, and milestones. 28 --------------------------------------------------------------------------------
General and Administrative Expenses
General and administrative expenses increased by$4.9 million , or 96%, to$10.0 million for the three months endedJune 30, 2022 from$5.1 million for the three months endedJune 30, 2021 . This increase was primarily related to increases of$3.3 million in personnel-related expenses (which include an increase in stock-based compensation expense of$1.6 million ) due to incremental hiring;$1.1 million in facilities and other allocated expenses; and$0.8 million in legal, accounting, insurance, and other expenses associated with being a public company; partially offset by a$0.3 million decrease in patent cost reimbursements.
Total Other Income (Expense)
We recognized other income related to the change in the fair value of the MSKCC success payments liability in the amount of$1.1 million for the three months endedJune 30, 2022 . The PPP Loan was forgiven inMay 2021 , and we recognized gain on the PPP Loan extinguishment of$1.6 million for the three months endedJune 30, 2021 . No such gain was recognized for the three months endedJune 30, 2022 . Other income, net during the three months endedJune 30, 2022 increased to$0.6 million from less than$0.1 million during the three months endedJune 30, 2021 primarily due to an increase in interest income related to increased market rates and growth of our marketable securities portfolio.
Comparison of the Six Months Ended
The following table summarizes our results of operations for the periods
indicated:
Six Months Ended June 30,
2022 2021 Change
(in thousands)
Licensing and collaboration revenue $ 6,856 $ 3,062 $ 3,794
Operating expenses
Research and development 36,503 22,491 14,012
General and administrative 19,637 9,709 9,928
Total operating expenses 56,140 32,200 23,940
Loss from operations (49,284 ) (29,138 ) (20,146 )
Other income (expense)
Change in fair value of equity securities (104 ) - (104 )
Change in fair value of the MSKCC success
payments liability 2,648 - 2,648
Gain on extinguishment of PPP Loan - 1,584 (1,584 )
Other income, net 955 84 871
Total other income (expense) 3,499 1,668 1,831
Net loss $ (45,785 ) $ (27,470 ) $ (18,315 ) Licensing and Collaboration Revenue
Licensing and collaboration revenue increased by$3.8 million , or 124%, to$6.9 million for the six months endedJune 30, 2022 from$3.1 million for the six months endedJune 30, 2021 . This increase was primarily related to increases of$3.3 million related to recognition of revenue under the AbbVie Agreement and$0.5 million related to other license agreements with various licensees. The following table summarizes our revenue by licensee for the periods indicated: Six Months Ended June 30, 2022 2021 Change (in thousands) AbbVie$ 3,797 $ 507 $ 3,290 Other licensees 3,059 2,555 504 Total licensing revenue$ 6,856 $ 3,062 $ 3,794 29
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Research and Development Expenses
Research and development expenses increased by$14.0 million , or 62%, to$36.5 million for the six months endedJune 30, 2022 from$22.5 million for the six months endedJune 30, 2021 . This increase was primarily related to increases of$7.2 million in external activities related to our ANTLER phase 1 clinical trial and contract manufacturing for CB-010 and our preclinical product candidates;$5.7 million in personnel-related expenses (which include an increase in stock-based compensation expense of$1.6 million ) due to incremental hiring;$3.4 million in other research and development expenses to advance IND-enabling studies for CB-011 and preclinical research for additional programs, as well as other consulting services related to research and development; and$1.3 million in other facilities and allocated expenses; partially offset by a decrease of$3.6 million in expenses related to licensing, sublicensing revenue, and milestones.
General and Administrative Expenses
General and administrative expenses increased by$9.9 million , or 102%, to$19.6 million for the six months endedJune 30, 2022 from$9.7 million for the six months endedJune 30, 2021 . This increase was primarily related to increases of$6.4 million in personnel-related expenses (which include an increase in stock-based compensation expense of$3.4 million ) due to incremental hiring;$2.7 million in facilities and other allocated expenses; and$1.8 million in legal, accounting, insurance, and other expenses associated with being a public company; partially offset by a$0.9 million decrease in patent cost reimbursements. Other Income (Expense)
We recognized other income related to the change in the fair value of the MSKCC
success payments liability in the amount of
The PPP Loan was forgiven inMay 2021 , and we recognized gain on the PPP Loan extinguishment of$1.6 million for the six months endedJune 30, 2021 . No such gain was recognized for the six months endedJune 30, 2022 . Other income, net during the six months endedJune 30, 2022 increased to$0.9 million from less than$0.1 million during the six months endedJune 30, 2021 primarily due to an increase in interest income related to increased market rates and growth of our marketable securities portfolio.
Liquidity, Capital Resources, and Capital Requirements
Sources of Liquidity
Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. We have funded our operations through sales of our convertible preferred stock, which generated approximately$150.1 million in aggregate net proceeds, and from our IPO, which generated approximately$321.0 million in net proceeds. We have also received approximately$88.4 million in net proceeds from the sale of Intellia common stock that we received under the Intellia Agreement. Additionally, throughJune 30, 2022 , we received approximately$79.4 million from licensing agreements, licensing and collaboration agreements, a service agreement, patent assignments, and government grants, including$30.4 million that was received from AbbVie under the AbbVie Agreement. As ofJune 30, 2022 , we had cash, cash equivalents, and marketable securities of$366.1 million . We will continue to be dependent upon equity financing, debt financing, collaborations and licensing arrangements, and/or other forms of capital raises at least until we are able to generate significant positive cash flows from our operations. We have no current ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, except for our lease commitments as described in Note 9 to our condensed consolidated financial statements included elsewhere in this Form 10-Q, and payments under certain of our license agreements as described in Note 4 to our condensed consolidated financial statements included elsewhere in this Form 10-Q. Based on our current operating plan, we expect that our existing cash and cash equivalents will enable us to fund our current operating plan for at least the next 12 months from the date of this Form 10-Q. We have based these estimates on our current assumptions, which may require future adjustments based on our ongoing business decisions.
Funding Requirements
Our primary use of cash is to fund operating expenses and research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses, and prepaid expenses.
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--------------------------------------------------------------------------------Our future funding requirements will depend on many factors, including the following:
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the initiation, progress, timing, costs, and results of preclinical studies and clinical trials for our product candidates;
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the clinical development plans we establish for these product candidates;
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the number and characteristics of the product candidates that we develop;
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the increase in the number of our employees and expansion of our physical facilities to support growth initiatives;
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the outcome, timing, and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;
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whether we enter into any additional collaboration agreements and the terms of any such agreements;
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the cost of filing and prosecuting our patent applications, and maintaining and enforcing our patents and other intellectual property rights;
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the extent to which we acquire or in-license other product candidates and technologies;
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the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against our products after we receive regulatory approval;
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the effect of competing technological and market developments;
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the cost and timing of completion of commercial-scale outsourced manufacturing activities or the cost and timing of completion of clinical-scale and commercial-scale internal manufacturing activities;
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the cost of establishing sales, marketing, and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products without a partner;
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the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;
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the achievement of milestones or occurrence of other developments that trigger payments by or to third parties under any collaboration or licensing agreements;
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our implementation of various computerized informational systems and efforts to enhance operational systems;
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the impact of the COVID-19 pandemic or geopolitical events on our clinical development or operations;
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the impact of inflationary pressures on the cost of our operations; and
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the costs associated with being a public company.
Furthermore, our operating plans may change, and we may need additional funds to
meet operational needs and capital requirements for clinical trials and other
research and development expenditures.
If we need to raise additional capital to fund our operations, funding may not
be available to us on acceptable terms, or at all. If we are unable to obtain
adequate financing when needed, we may have to delay, reduce the scope of, or
suspend one or more of our preclinical studies, clinical trials, research and
development programs, and/or commercialization efforts. We may seek to raise any
necessary additional capital through a combination of public or private equity
offerings, debt financings, collaborations, and licensing arrangements. If we
raise additional capital through debt financing, we may be subject to covenants
limiting or restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures, or declaring dividends. If we
raise additional capital through the sale of equity or convertible debt
securities, the issuance of these securities could result in dilution to our
stockholders. If we raise additional capital through marketing and distribution
arrangements or other collaborations, strategic alliances, or licensing
arrangements with third parties, we may have to relinquish certain valuable
rights to our product candidates, technologies, future revenue streams, or
research programs or grant licenses on terms that may not be favorable to us.
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--------------------------------------------------------------------------------Cash Flows
Comparison of the Six Months Ended
The following summarizes our cash flows for the periods indicated:
Six Months Ended June 30,
2022 2021 Change
(in thousands)
Cash (used in) provided by operating
activities $ (43,546 ) $ 3,837 $ (47,383 )
Cash used in investing activities (86,080 ) (506 ) (85,574 )
Cash provided by financing activities 1,352 110,286 (108,934 )
Net (decrease) increase in cash and cash
equivalents $ (128,274 ) $ 113,617 $ (241,891 ) Cash (Used in) Provided by Operating Activities
Net cash used in operating activities was$43.5 million for the six months endedJune 30, 2022 , and net cash provided by operating activities was$3.8 million for the six months endedJune 30, 2021 . Cash used in operating activities for the six months endedJune 30, 2022 was primarily due to our net loss of$45.8 million , adjusted by non-cash charges of$5.6 million and net changes in our operating assets and liabilities of$3.4 million . Our non-cash charges were primarily comprised of$5.9 million of stock-based compensation, non-cash lease expense of$1.0 million ,$0.7 million of depreciation and amortization expense, amortization of investment premiums of$0.4 million , and acquired in-process research and development of$0.3 million , which were partially offset by the change in the fair value of the MSKCC success payments liability of$2.6 million . The changes in our operating assets and liabilities were due to decreases of$0.6 million in accounts receivable and$2.4 million in other receivables, and an increase of$1.1 million in accrued expenses and other current liabilities, offset by increases in contract assets of$0.6 million , prepaid expenses and other current assets of$0.3 million , other assets of$0.3 million , and decreases of$3.6 million in accounts payable,$2.5 million in deferred revenue, and$0.2 million in operating lease liabilities. Cash provided by operating activities in the six months endedJune 30, 2021 was primarily due to our net loss for the year of$27.5 million adjusted by non-cash charges of$2.0 million and net changes in our net operating assets and liabilities of$29.3 million . Our non-cash charges were comprised of a change in the fair value of success payments liability of$1.2 million ,$1.0 million of acquired in-process research development accrued at period end,$0.9 million of stock-based compensation, and$0.5 million of depreciation and amortization expense, which were offset by the PPP Loan extinguishment gain upon the loan forgiveness of$1.6 million . The changes in our net operating assets and liabilities were due to increases of$31.8 million in deferred revenue,$1.0 million in accounts payable,$1.0 million in accrued expenses and other current liabilities,$0.7 million in deferred rent and lease incentive liability, and a decrease of$0.5 million in contract assets, offset by increases of$3.9 million in other receivables and$1.8 million in prepaid expenses and other current assets.
Cash Used in Investing Activities
During the six months endedJune 30, 2022 , cash used in investing activities was$86.1 million . During the six months endedJune 30, 2021 cash used in investing activities was$0.5 million . Cash used in investing activities for the six months endedJune 30, 2022 , was primarily due to purchases of marketable securities of$181.8 million and property and equipment of$3.3 million , partially offset by the proceeds from maturities of marketable securities of$99.0 million .
Cash used in investing activities for the six months ended
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--------------------------------------------------------------------------------Cash Provided by Financing Activities
During the six months ended
Cash provided by financing activities for the six months endedJune 30, 2022 was due to the exercise of stock options and purchases of common stock under the 2021 ESPP plan of$1.4 million . Cash provided by financing activities for the six months endedJune 30, 2021 was primarily due to our receipt of net proceeds from the issuance of Series C convertible preferred stock in the amount of$108.8 million , proceeds from the exercise of our common stock options of$1.1 million , and repayment of the promissory note issued to the Company's President and Chief Executive Officer in the amount of$1.2 million , partially offset by principal payments for a capital lease of$0.1 million and payment of deferred issuance costs of$0.7 million .
Critical Accounting Policies and Significant Judgments and Estimates
Our critical accounting policies are disclosed in our audited consolidated financial statements for the year endedDecember 31, 2021 , and the related notes included in our Form 10-K. Since the date of such financial statements, there have been no material changes to our significant accounting policies other than those described in Note 2 to our condensed consolidated financial statements included elsewhere in this Form 10-Q. There have been no material changes to our critical accounting estimates as compared to those disclosed in our Form 10-K.
Recently Issued Accounting Pronouncements
See Note 2 to our condensed consolidated financial statements included elsewhere in this Form 10-Q for more information regarding recently issued accounting pronouncements.
Indemnification Agreements As permitted under Delaware General Corporation Law and in accordance with our amended and restated bylaws, we indemnify our executive officers and directors for certain events or occurrences while such officer or director is or was serving in such capacity. We are also party to indemnification agreements with our executive officers, directors, and controller. We believe the fair value of the indemnification rights and agreements is minimal. Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as ofJune 30, 2022 .
Emerging Growth Company Status
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (a) are no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our condensed consolidated financial statements may not be comparable to those of companies that comply with the new or revised accounting pronouncements as of public company effective dates. We expect to use the extended transition period for any other new or revised accounting standards during the period in which we remain an emerging growth company. As described in Note 2 to our condensed consolidated financial statements included elsewhere in this Form 10-Q, we have early adopted certain accounting standards, because the JOBS Act does not preclude an emerging growth company from adopting a new or revised accounting standard earlier than the time that such standard applies to private companies, to the extent early adoption is allowed by the accounting standard.
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