CRISPR THERAPEUTICS AG The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (i) our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) our audited consolidated financial statements and related notes and management's discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 filed with theSecurities and Exchange Commission , or theSEC , onFebruary 15, 2022 . Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and impact and potential impacts on our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including, without limitation, those factors set forth in the "Risk Factors" section of our Annual Report on Form 10-K for the year endedDecember 31, 2021 and the "Risk Factors" section of subsequent Quarterly Reports on Form 10-Q, our actual results or timing of certain events could differ materially from the results or timing described in, or implied by, these forward-looking statements.
Special Note About Coronavirus (COVID-19)
SinceMarch 2020 , we have been evaluating the actual and potential business impacts related to the outbreak of a novel strain of virus named SARS-CoV-2 (severe acute respiratory syndrome 2), or coronavirus, which causes coronavirus disease, or COVID-19. As a result of the ongoing coronavirus pandemic, we have experienced, and may further experience, disruptions, pauses and/or delays that have and could further adversely impact our business operations, and/or associated timelines. We maintain temporary work-from-home procedures for all employees other than for those personnel and contractors who perform essential activities that must be completed on-site. If negative developments relating to the coronavirus pandemic continue, including "periodic resurgence" and additional "waves", we may be required to restrict on-site staff at our offices and laboratories again and at times have limited access to our offices on a temporary and intermittent basis; with respect to our hemoglobinopathies clinical trials, we may elect to pause patient dosing in certain of our trials again if ICU beds and related healthcare resources become significantly constrained again or governmental authorities impose additional business or travel restrictions; with respect to our immuno-oncology clinical trials, investigators participating in our clinical trials may not want to take the risk of exposing cancer patients to the coronavirus since the dosing of patients is conducted within an in-patient setting; and certain aspects of our supply chain could be disrupted if our third party suppliers and manufacturers paused their operations again in response to such negative developments and/or as a result of national and local regulations. The ultimate impact of the coronavirus pandemic on our business operations remains uncertain and subject to change and will depend on future developments, which cannot be accurately predicted. We will continue to monitor the situation closely.
Overview
We are a leading gene editing company focused on the development of CRISPR/Cas9-based therapeutics. CRISPR/Cas9 is a revolutionary gene editing technology that allows for precise, directed changes to genomic DNA. The application of CRISPR/Cas9 for gene editing was co-invented by one of our scientific founders, Dr.Emmanuelle Charpentier , who, along with her collaborators, published work elucidating how CRISPR/Cas9, a naturally occurring viral defense mechanism found in bacteria, can be adapted for use in gene editing. We are applying this technology to potentially treat a broad set of rare and common diseases by disrupting, correcting or regulating the genes related to such diseases. We believe that our scientific expertise, together with our approach, may enable an entirely new class of highly active and potentially curative therapies for patients for whom current biopharmaceutical approaches have had limited success. We have established a portfolio of therapeutic programs across a broad range of disease areas including hemoglobinopathies, oncology, regenerative medicine and rare diseases. Hemoglobinopathies Our lead product candidate, CTX001, is an investigational, autologous, gene-edited hematopoietic stem cell therapy that is being evaluated for the treatment of transfusion-dependent beta thalassemia, or TDT, and severe sickle cell disease, or SCD. CTX001 is being developed under a joint development and commercialization agreement between us and Vertex Pharmaceuticals Incorporated and certain of its subsidiaries, or Vertex. 16 -------------------------------------------------------------------------------- We and Vertex are investigating CTX001 in two ongoing Phase 3 open-label clinical trials that are designed to assess the safety and efficacy of a single dose of CTX001 in patients ages 12 to 35 with TDT (CLIMBTHAL -111) or SCD (CLIMB SCD-121), respectively. The first two patients in each trial were treated sequentially and, following data from the initial two patients indicating successful engraftment and an acceptable safety profile, the corresponding trial opened for concurrent dosing. CLIMBTHAL -111 and CLIMB SCD-121 are designed to follow patients for approximately two years after infusion. Each patient will be asked to participate in a long-term, open-label follow-up trial, CLIMB-131, to evaluate the safety and efficacy of CTX001 in patients who received CTX001. CLIMB-131 is designed to follow participants for up to 15 years after CTX001 infusion. Enrollment is complete for both CLIMBTHAL -111 and CLIMB SCD-121. In the second quarter of 2021, at theEuropean Hematology Association Congress , we presented updated clinical data from CLIMBTHAL -111 and CLIMB SCD-121 for the first fifteen patients with TDT and first seven patients with SCD treated with CTX001 who had reached at least three months of follow-up after CTX001 dosing.
We and Vertex have also initiated two additional Phase 3 clinical trials of CTX001 in pediatric patients with TDT and SCD.
CTX001 has been granted a number of regulatory designations from the FDA, including RMAT, Fast Track, Orphan Drug, and Rare Pediatric Disease designations for the treatment of both TDT and SCD. CTX001 has also been granted Orphan Drug Designation from theEuropean Commission , as well as PRIME designation from theEuropean Medicines Agency , for the treatment of both TDT and SCD.
Immuno-Oncology
In addition, we are developing our own portfolio of CAR-T cell product candidates based on our gene-editing technology.
CTX110. Our lead immuno-oncology product candidate, CTX110, is a healthy donor-derived gene-edited allogeneic CAR-T investigational therapy targeting Cluster of Differentiation 19, or CD19. CTX110 is being investigated in an ongoing Phase 1 single-arm, multi-center, open-label clinical trial, CARBON, that is designed to assess the safety and efficacy of several dose levels of CTX110 in adult patients with relapsed or refractory B-cell malignancies who have received at least two prior lines of therapy. CTX110 has been granted RMAT designation by the FDA.
In the fourth quarter of 2021, we released updated clinical data from the ongoing CARBON trial for 26 patients treated with CTX110 who had reached at least 28 days of follow-up.
CTX120. CTX120 is a healthy donor-derived gene-edited allogeneic CAR-T investigational therapy targeting B-cell maturation antigen. CTX120 is being investigated in an ongoing Phase 1 single-arm, multi-center, open-label clinical trial that is designed to assess the safety and efficacy of several dose levels of CTX120 for the treatment of relapsed or refractory multiple myeloma. CTX120 has received Orphan Drug Designation from the FDA. CTX130. CTX130 is a healthy donor-derived gene-edited allogeneic CAR-T investigational therapy targeting Cluster of Differentiation 70, or CD70, an antigen expressed on various solid tumors and hematologic malignancies. CTX130 is being developed for the treatment of both solid tumors, such as renal cell carcinoma, and T-cell and B-cell hematologic malignancies. CTX130 is being investigated in two ongoing independent Phase 1 single-arm, multi-center, open-label clinical trials that are designed to assess the safety and efficacy of several dose levels of CTX130 for the treatment of relapsed or refractory renal cell carcinoma and various types of lymphoma, respectively. CTX130 for the treatment of T-cell lymphoma has received Orphan Drug Designation from the FDA.
Regenerative Medicine
Regenerative medicine, or the use of stem cells to repair or replace tissue or organ function lost due to disease, damage or age, holds the potential to treat both rare and common diseases. We are pursuing gene-editing approaches to allow allogeneic use of stem cell-derived therapies by enabling immune evasion, improving existing cell function and directing cell fate using CRISPR/Cas9. Our first major effort in this area is in diabetes, and we andViaCyte, Inc. , orViaCyte , are advancing a program as part of a strategic collaboration for the discovery, development, and commercialization of gene-edited stem cell therapies for the treatment of diabetes. 17 -------------------------------------------------------------------------------- VCTX210. VCTX210 is an investigational, allogeneic, gene-edited, immune-evasive, stem cell-derived product candidate for the treatment of type 1 diabetes, or T1D, developed by applying our gene-editing technology toViaCyte's proprietary stem cell capabilities. We andViaCyte are investigating VCTX210 in an ongoing Phase 1 clinical trial that is designed to assess VCTX210's safety, tolerability, and immune evasion in patients with T1D.
In
In addition to our ex vivo programs, we are pursuing a number of in vivo gene-editing programs. Our initial in vivo applications target diseases of the liver, lung, muscle and central nervous system and leverage well-established delivery technologies for gene-based therapeutics, such as lipid nanoparticle-based delivery vehicles, or LNPs, and adeno-associated viral vectors, or AAV vectors.
Partnerships
Given the numerous potential therapeutic applications for CRISPR/Cas9, we have partnered strategically to broaden the indications we can pursue and accelerate development of programs by accessing specific technologies and/or disease-area expertise. We maintain broad partnerships to develop gene editing-based therapeutics in specific disease areas. Vertex. We established our initial collaboration agreement in 2015 with Vertex, which focused on TDT, SCD, cystic fibrosis and select additional indications. InDecember 2017 , we entered into a joint development and commercialization agreement with Vertex pursuant to which, among other things, we are co-developing and preparing to co-commercialize CTX001 for TDT and SCD. InApril 2021 , we and Vertex agreed to amend and restate our existing joint development and commercialization agreement, pursuant to which, among other things, we will continue to develop and prepare to commercialize CTX001 for TDT and SCD in partnership with Vertex. We also entered into a strategic collaboration and license agreement with Vertex inJune 2019 for the development and commercialization of products for the treatment of Duchenne muscular dystrophy and myotonic dystrophy type 1.ViaCyte . We entered into a research and collaboration agreement inSeptember 2018 withViaCyte to pursue the discovery, development and commercialization of gene-edited allogeneic stem cell therapies for the treatment of diabetes and inJuly 2021 , we entered into a joint development and commercialization agreement withViaCyte . Under the joint development and commercialization agreement, we andViaCyte will jointly develop and commercialize product candidates and shared products for use in the treatment of diabetes type 1, diabetes type 2 and insulin dependent/requiring diabetes throughout the world. Bayer. In the fourth quarter of 2019, we entered into a series of transactions, or the Bayer Transaction, pursuant to which we and Bayer terminated our 2015 agreement, which created the joint venture,Casebia Therapeutics Limited Liability Partnership , or Casebia, to discover, develop and commercialize CRISPR/Cas9 gene-editing therapeutics to treat the genetic causes of bleeding disorders, autoimmune disease, blindness, hearing loss and heart disease. In connection thereto, Casebia became a wholly-owned subsidiary of ours. We and Bayer also entered into a new option agreement pursuant to which Bayer has an option to co-develop and co-commercialize two products for the diagnosis, treatment or prevention of certain autoimmune disorders, eye disorders, or hemophilia A disorders for a specified period of time, or, under certain circumstances, exclusively license such optioned products. 18 -------------------------------------------------------------------------------- Nkarta. In the second quarter of 2021, we entered into a research and collaboration agreement with Nkarta, Inc., or Nkarta, to bring together our gene editing technology and T-cell expertise with Nkarta's leading natural killer, or NK, cell discovery, development and manufacturing capabilities. Under the collaboration, we and Nkarta are co-developing and co-commercializing two donor-derived, gene-edited CAR-NK cell product candidates, one of which targets CD70, and a product candidate combining NK and T cells. Capsida. In the second quarter of 2021, we entered into a strategic collaboration agreement withCapsida Biotherapeutics, Inc. , or Capsida, to develop in vivo gene editing therapies delivered with engineered AAV vectors for the treatment of amyotrophic lateral sclerosis, or ALS, and Friedreich's ataxia. Under the agreement, we lead research and development of the Friedreich's ataxia program and perform gene-editing activities for both programs, and Capsida leads research and development of the ALS program and conducts capsid engineering for both programs. Capsida's high-throughput AAV engineering platform aims to generate capsids optimized to target specific tissue types and limits transduction of tissues and cell types that are not relevant to the target disease, potentially improving the activity and tolerability of our gene editing investigational therapies. We and Capsida each have the option to co-develop and co-commercialize the program that the other leads.
Financial Overview
Since our inception inOctober 2013 , we have devoted substantially all of our resources to our research and development efforts, identifying potential product candidates, undertaking drug discovery and preclinical development activities, building and protecting our intellectual property estate, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations. To date, we have primarily financed our operations through private placements of our preferred shares, common share issuances, convertible loans and collaboration agreements with strategic partners. While we were in a net income position in certain previous years due to upfront payments associated with our collaborations with Vertex, we have a history of recurring losses and expect to continue to incur losses for the foreseeable future. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase significantly as we continue our current research programs and development activities; seek to identify additional research programs and additional product candidates; conduct initial drug application supporting preclinical studies and initiate clinical trials for our product candidates; initiate preclinical testing and clinical trials for any other product candidates we identify and develop; maintain, expand and protect our intellectual property estate; further develop our gene editing platform; hire additional research, clinical and scientific personnel; incur facilities costs associated with such personnel growth; develop manufacturing infrastructure and conduct related regulatory validation activities; and incur additional costs associated with operating as a public company. Please refer to Part I, Item 2 of our Annual Report on Form 10-K for the year endedDecember 31, 2021 filed with theSEC onFebruary 15, 2022 for more information about these facilities.
Revenue Recognition
We have not generated any revenue to date from product sales and do not expect to do so in the near future. Revenue recognized for the three months endedMarch 31, 2022 and 2021 was not material. For additional information about our revenue recognition policy, see Note 2, "Summary of Significant Accounting Policies," in our Annual Report on Form 10-K for the year endedDecember 31, 2021 filed with theSEC onFebruary 15, 2022 , as well as Note 7 of the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our product discovery efforts and the development of our product candidates, which include:
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employee-related expenses, including salaries, benefits and equity-based compensation expense;
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costs of services performed by third parties that conduct research and development and preclinical and clinical activities on our behalf;
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costs of purchasing lab supplies and non-capital equipment used in our preclinical activities and in manufacturing preclinical and clinical study materials;
• consultant fees;
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facility costs, including rent, depreciation and maintenance expenses; and
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fees and other payments related to acquiring and maintaining licenses under our third-party licensing agreements.
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Research and development costs are expensed as incurred. Nonrefundable advance
payments for research and development goods or services to be received in the
future are deferred and capitalized. The capitalized amounts are expensed as the
related goods are delivered or the services are performed. At this time, we
cannot reasonably estimate or know the nature, timing or estimated costs of the
efforts that will be necessary to complete the development of any product
candidates we may identify and develop. This is due to the numerous risks and
uncertainties associated with developing such product candidates, including the
uncertainty of:
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successful completion of preclinical studies and IND-enabling studies;
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successful enrollment in, and completion of, clinical trials;
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receipt of marketing approvals from applicable regulatory authorities;
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establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
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obtaining and maintaining patent and trade secret protection and non-patent exclusivity;
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launching commercial sales of the product, if and when approved, whether alone or in collaboration with others;
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acceptance of the product, if and when approved, by patients, the medical community and third-party payors;
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effectively competing with other therapies and treatment options;
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a continued acceptable safety profile following approval;
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enforcing and defending intellectual property and proprietary rights and claims; and
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achieving desirable medicinal properties for the intended indications.
A change in the outcome of any of these variables with respect to the development of any product candidates or the subsequent commercialization of any product candidates we may successfully develop could significantly change the costs, timing and viability associated with the development of that product candidate.
Except for activities we perform in connection with our collaborations with
Vertex and
Research and development activities are central to our business model. We expect our research and development costs to increase significantly for the foreseeable future as our current development programs progress, new programs are added and as we continue to prepare regulatory filings. These increases will likely include the costs related to the implementation and expansion of clinical trial sites and related patient enrollment, monitoring, program management and manufacturing expenses for current and future clinical trials.
General and Administrative Expenses
General and administrative expenses consist primarily of employee related expenses, including salaries, benefits and equity-based compensation, for personnel in executive, finance, accounting, business development and human resources functions. Other significant costs include pre-commercial expenses associated with our collaboration with Vertex, facility costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters and fees for accounting and consulting services. We anticipate that our general and administrative expenses will increase in the future to support continued research and development activities, and potential commercialization of our product candidates. In addition, we anticipate increased expenses related to the reimbursements of third-party patent related expenses in connection with certain of our in-licensed intellectual property.
Collaboration Expense, Net
Collaboration expense, net, consists of collaboration costs under our collaboration with Vertex.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income earned on investments.
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--------------------------------------------------------------------------------Results of Operations
Comparison of three months ended
Three Months Ended March 31, Period to Period
2022 2021 Change
Revenue:
Collaboration revenue $ 178 $ 202 $ (24 )
Grant revenue 762 337 425
Total revenue 940 539 401
Operating expenses:
Research and development 118,245 70,620 47,625
General and administrative 28,021 24,517 3,504
Collaboration expense, net 30,646 19,945 10,701 Total operating expenses 176,912 115,082 61,830 Loss from operations (175,972 ) (114,543 ) (61,429 ) Other income, net 363 1,955 (1,592 ) Net loss before income taxes (175,609 ) (112,588 ) (63,021 ) Provision for income taxes (3,608 ) (575 ) (3,033 ) Net loss$ (179,217 ) $ (113,163 ) $ (66,054 ) Collaboration Revenue Collaboration revenue for the three months endedMarch 31, 2022 and 2021 was not material. Please refer to Note 7 of the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further information.
Research and Development Expenses
Research and development expenses were$118.2 million for the three months endedMarch 31, 2022 , compared to$70.6 million for the three months endedMarch 31, 2021 . The increase of approximately$47.6 million was primarily attributable to the following:
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$24.6 million of increased variable research and development costs primarily associated with production of drug product and increased clinical trial expense associated with our oncology programs;
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$7.3 million of increased employee compensation, benefit and other headcount related expenses, of which$1.7 million is increased stock-based compensation expense, primarily due to an increase in headcount to support overall growth;
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General and Administrative Expenses
General and administrative expenses were$28.0 million for the three months endedMarch 31, 2022 , compared to$24.5 million for the three months endedMarch 31, 2021 . The increase of approximately$3.5 million was primarily attributable to the following:
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Collaboration Expense, Net
Collaboration expense, net, was$30.6 million for the three months endedMarch 31, 2022 , compared to$19.9 million for the three months endedMarch 31, 2021 . The increase of approximately$10.7 million was primarily attributable to the following:
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•
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Other Income, Net
Other income was$0.4 million for the three months endedMarch 31, 2022 , compared to$2.0 million of income for the three months endedMarch 31, 2021 . The change was primarily due to interest income earned on cash, cash equivalents and marketable securities for the three months endedMarch 31, 2022 .
Liquidity and Capital Resources
As ofMarch 31, 2022 , we had cash, cash equivalents and marketable securities of approximately$2,221.3 million , of which approximately$395.7 million was held outside ofthe United States . InAugust 2019 , we entered into an Open Market Sale AgreementSM withJefferies LLC , or Jefferies, under which we are able to offer and sell, from time to time at our sole discretion through Jefferies, as our sales agent, our common shares, par value ofCHF 0.03 per share, or theAugust 2019 Sales Agreement. InJanuary 2021 , in connection with theAugust 2019 Sales Agreement, we filed a prospectus supplement with theSEC to offer and sell from time to time common shares having aggregate gross proceeds of up to$600.0 million . InJuly 2021 , we filed a new prospectus supplement with theSEC , which replaced the previous prospectus supplement filed inJanuary 2021 , to offer and sell, from time to time, common shares having aggregate gross proceeds of up to$419.8 million , or the 2021 ATM. No shares were issued and sold under the 2021 ATM for the three months endedMarch 31, 2022 . We have predominantly incurred losses and cumulative negative cash flows from operations since our inception. As ofMarch 31, 2022 , we had$2,221.3 million in cash, cash equivalents and marketable securities and an accumulated deficit of$375.1 million . We anticipate that we will continue to incur losses for at least the next several years. We expect that our research and development and general and administrative expenses will continue to increase and, as a result, we will need additional capital to fund our operations, which we may raise through public or private equity or debt financings, strategic collaborations, or other sources. Funding Requirements Our primary uses of capital are, and we expect will continue to be, research and development activities, manufacturing activities, compensation and related expenses, laboratory and related supplies, legal and other regulatory expenses, patent prosecution filing and maintenance costs for our licensed intellectual property and general overhead costs, including costs associated with operating as a public company. We expect our expenses to increase compared to prior periods in connection with our ongoing activities, particularly as we continue research and development and preclinical and clinical activities and initiate preclinical studies to support initial drug applications. We also anticipate that we will incur significant capital expenditures as we develop our manufacturing infrastructure and facilities. Because our research programs are still in early stages of development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development, manufacture and commercialization of any current or future product candidates, if approved, or whether, or when, we may achieve profitability. Until such time as we can generate substantial product revenues, if ever, we expect to finance our cash needs through a combination of equity financings, debt financings and payments received in connection with our collaboration agreements. We are eligible to earn payments, in each case, on a per-product basis under our collaboration with Vertex. Except for this source of funding, we do not have any committed external source of liquidity. We intend to consider opportunities to raise additional funds through the sale of equity or debt securities when market conditions are favorable to us to do so. However, the trading prices for our common shares and other biopharmaceutical companies have been highly volatile. As a result, we may face difficulties raising capital through sales of our common shares or such sales may be on unfavorable terms. In addition, a recession, depression or other sustained adverse market event, including resulting from the spread of the coronavirus, could materially and adversely affect our business and the value of our common shares. To the extent that we raise additional capital through the future sale of equity or debt securities, the ownership interests of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing shareholders. If we raise additional funds through collaboration arrangements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. 22 --------------------------------------------------------------------------------
Outlook
Based on our research and development plans and our timing expectations related to the progress of our programs, we expect our existing cash will enable us to fund our operating expenses and capital expenditures for at least the next 24 months without giving effect to any additional proceeds we may receive under our collaboration with Vertex and any other capital raising transactions we may complete. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Given our need for additional financing to support the long-term clinical development of our programs, we intend to consider additional financing opportunities when market terms are favorable to us. Our ability to generate revenue and achieve profitability depends significantly on our success in many areas, including: developing our delivery technologies and our gene-editing technology platform; selecting appropriate product candidates to develop; completing research and preclinical and clinical development of selected product candidates; obtaining regulatory approvals and marketing authorizations for product candidates for which we complete clinical trials; developing a sustainable and scalable manufacturing process for product candidates; launching and commercializing product candidates for which we obtain regulatory approvals and marketing authorizations, either directly or with a collaborator or distributor; obtaining market acceptance of our product candidates, if approved; addressing any competing technological and market developments; negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; maintaining good relationships with our collaborators and licensors; maintaining, protecting and expanding our estate of intellectual property rights, including patents, trade secrets and know-how; and attracting, hiring and retaining qualified personnel.
Cash Flows
The following table provides information regarding our cash flows for each of the periods below (in thousands):
Three Months Ended March 31 , Period to Period
2022 2021 Change
Net cash used in operating activities
(114,515 ) (167,898 ) 53,383
Net cash provided by financing activities 10,649 225,991 (215,342 )
Effect of exchange rate changes on cash (27 ) 5 (32 )
Net decrease in cash $ (239,132 ) $ (42,565 ) $ (196,567 )
Operating Activities
Net cash used in operating activities was $135.2 million for the three months
ended March 31, 2022 , compared to cash used in operating activities of $100.7
million for the three months ended March 31, 2021 . The increase in cash used in
operating activities of $34.5 million was primarily driven by an increase in net
loss of $66.1 million , from a net loss of $113.2 million for the three months
ended March 31, 2021 to net loss of $179.2 million for the three months ended
March 31, 2022 . The increase in cash used in operations was offset by an
increase in non-cash expense of $11.0 million , primarily related to an increase
in stock compensation, fixed asset depreciation and amortization of premiums and
discounts on marketable securities, as well as a $20.5 million increase in net
changes of operating assets and liabilities.
Investing Activities
Net cash used in investing activities for the three months endedMarch 31, 2022 was$114.5 million , compared to$167.9 million for the three months endedMarch 31, 2021 . The decrease in net cash used in investing activities consisted primarily of a reduction in marketable securities maturities, offset by purchases of marketable securities and property and equipment.
Financing Activities
Net cash provided by financing activities for the three months endedMarch 31, 2022 was$10.6 million , compared with$226.0 million for the three months endedMarch 31, 2021 . Net cash provided by financing activities for the three months endedMarch 31, 2022 consisted of option exercise proceeds, net of issuance costs. Net cash provided by financing activities for the three months endedMarch 31, 2021 consisted primarily of$222.1 million of net cash proceeds related to the issuance of 1.4 million common shares in connection with our 2021 ATM. No shares were issued and sold under the 2021 ATM for the three months endedMarch 31, 2022 . 23 --------------------------------------------------------------------------------
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance withU.S. GAAP. We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as critical because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate, and different estimates-which also would have been reasonable-could have been used. On an ongoing basis, we evaluate our estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that our most critical accounting policies are those relating to revenue recognition, variable interest entities and equity-based compensation, and there have been no changes to our accounting policies discussed in our Annual Report on Form 10-K for the year endedDecember 31, 2021 filed with theSEC onFebruary 15, 2022 .
Recent Accounting Pronouncements
Refer to Note 1 of the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
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