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CRISPR THERAPEUTICS AG

(CRSP)
  Report
Delayed Nasdaq  -  04:00 2022-10-03 pm EDT
63.10 USD   -3.44%
09/30Insider Sell: Crispr Therapeutics
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09/30CRISPR Therapeutics to Present at the BMO Biopharma Spotlight Series, Gene Editing and Therapy
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CRISPR THERAPEUTICS AG Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

08/08/2022 | 08:13am EDT
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 ended December 31, 2021 filed with the Securities and
Exchange Commission, or the SEC, on February 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
ended December 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.

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. Dr. Charpentier and 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. We believe that our scientific expertise, together
with our gene-editing approach, may enable an entirely new class of highly
active and potentially curative therapies for patients, including those for whom
current biopharmaceutical approaches have had limited success.

We have established a portfolio of therapeutic programs in a broad range of disease areas across four core franchises: hemoglobinopathies, oncology, regenerative medicine and in vivo approaches.

Hemoglobinopathies


Our lead product candidate, CTX001, now known as exagamglogene autotemcel, or
exa-cel, 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. Exa-cel is being
developed under a joint development and commercialization agreement between us
and Vertex Pharmaceuticals Incorporated and certain of its subsidiaries, or
Vertex. We and Vertex are investigating exa-cel in two ongoing Phase 3
open-label clinical trials that are designed to assess the safety and efficacy
of a single dose of exa-cel in patients ages 12 to 35 with TDT (CLIMB-111) or
SCD (CLIMB-121), respectively. Enrollment is complete for both CLIMB-111 and
CLIMB-121. We and Vertex have also initiated two additional Phase 3 open-label
clinical trials of exa-cel in pediatric patients with TDT (CLIMB-141) and SCD
(CLIMB-151). Patients who received exa-cel in CLIMB-111, CLIMB-121, CLIMB-141 or
CLIMB-151 will be asked to participate in a long-term, open-label follow-up
trial, CLIMB-131, to evaluate the safety and efficacy of exa-cel. CLIMB-131 is
designed to follow participants for up to 15 years after exa-cel infusion. In
the second quarter of 2022, at the European Hematology Association Congress, we
presented updated clinical data from CLIMB-111 and CLIMB-121 for 44 patients
with TDT and 31 patients with SCD treated with exa-cel. Exa-cel 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. Exa-cel has also been granted Orphan Drug Designation from the
European Commission, as well as PRIME designation from the European Medicines
Agency, for the treatment of both TDT and SCD.

In addition, building upon exa-cel, we have next-generation efforts in targeted
conditioning and in vivo editing of hematopoietic stem cells, either of which
could broaden the number of patients that can benefit from our therapies.

Immuno-Oncology

We are developing a portfolio of wholly-owned 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.

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

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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 in adult patients. The COBALT™-LYM trial is
evaluating the safety and efficacy of CTX130 for the treatment of relapsed or
refractory T or B cell malignancies. The COBALT-RCC trial is evaluating the
safety and efficacy of CTX130 for the treatment of relapsed or refractory renal
cell carcinoma. CTX130 for the treatment of T cell lymphoma has received Orphan
Drug Designation from the FDA. In the second quarter of 2022, at the European
Hematology Association Congress, we released initial clinical data from the
ongoing COBALT-LYM trial for 18 patients with T cell lymphoma treated with
CTX130 who had reached at least 28 days of follow-up. Also in the second quarter
of 2022, we released preliminary clinical data from the COBALT-RCC trial for 14
patients.

Next-generation candidates

Our CRISPR/Cas9 platform enables us to innovate continuously by incorporating
incremental edits into next-generation products. We are advancing multiple
next-generation CAR-T product candidates, including CTX112TM targeting CD19 and
CTX131TM targeting CD70, which incorporate additional edits designed to enhance
CAR-T potency. In addition, as we previously disclosed, following our June 2022
disclosure of high-level data from our Phase 1 clinical trial investigating
CTX120TM, a healthy donor-derived gene-edited allogeneic CAR-T investigational
therapy targeting B-cell maturation antigen, or BCMA, for the treatment of
relapsed or refractory multiple myeloma, we announced plans to pivot to a
next-generation allogeneic CAR-T targeting BCMA, CTX121TM, which incorporates
proprietary edits to enhance the potency of the CAR-T cells.

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 allogeneic stem cell-derived
therapies using CRISPR/Cas9 gene editing to enable immune evasion, improve cell
function, and direct cell fate. Our first major effort in this area is in
diabetes, and we and ViaCyte, Inc., or ViaCyte, are advancing a series of
programs as part of a strategic collaboration for the discovery, development,
and commercialization of gene-edited stem cell therapies for the treatment of
diabetes.

We have a multi-staged product strategy that leverages our CRISPR/Cas9 platform
to advance multiple product candidates incorporating incremental edits designed
to increase benefit. Our initial product candidate, 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 to ViaCyte's proprietary stem cell
capabilities. VCTX210 has gene edits designed to promote immune evasion and cell
fitness. We and ViaCyte 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. Our next product candidate, VCTX211TM,
incorporates additional gene edits that aim to further enhance cell fitness.

In Vivo


Our in vivo gene editing strategy focuses on gene disruption and whole gene
correction - the two technologies required to address ~90% of the most prevalent
severe monogenic diseases. We have established a leading platform for in vivo
gene disruption, starting in the liver. We plan to advance a broad portfolio of
programs across both rare and common diseases with this platform, starting with
cardiovascular diseases. Gene editing has the potential to shift the treatment
paradigm for cardiovascular diseases by recapitulating the proven benefit of
natural human genetic variants in a single-dose format. In addition, we continue
to develop an expansive whole gene correction platform, starting with lipid
nanoparticles, or LNP, plus adeno-associated viral vectors, or AAV, in the liver
and advancing to AAV-free, HDR-independent methodologies.

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. In
December 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 exa-cel for TDT and SCD. In
April 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 exa-cel for TDT
and SCD in partnership with Vertex. We also entered into a strategic
collaboration and license agreement with Vertex in June 2019 for the development
and commercialization of products for the treatment of Duchenne muscular
dystrophy and myotonic dystrophy type 1.

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ViaCyte. We entered into a research and collaboration agreement in September
2018 with ViaCyte to pursue the discovery, development and commercialization of
gene-edited allogeneic stem cell therapies for the treatment of diabetes, and in
July 2021, we entered into a joint development and commercialization agreement
with ViaCyte, or the ViaCyte JDCA. In connection with entering into the ViaCyte
JDCA, our existing research collaboration agreement with ViaCyte expired in
accordance with its terms. Under the ViaCyte JDCA, we and ViaCyte are jointly
developing and will commercialize product candidates and shared products for use
in the treatment of diabetes type 1, diabetes type 2 and insulin
dependent/requiring diabetes, or the ViaCyte Collaboration Field, throughout the
world. The ViaCyte JDCA includes, among other things, provisions relating to
collaboration and program governance, clinical activities for the product
candidates and shared products under the agreement and continuing research by
the parties in the ViaCyte Collaboration Field. Unless otherwise mutually
agreed, research costs incurred by a party will be solely borne by such party.
The program expenses, as originally set forth in the research and collaboration
agreement, as applicable, incurred through the date of first commercial sale of
a shared product will be allocated 60% to us and 40% to ViaCyte. Following first
commercial sale of a shared product, such program expenses will be shared
equally between us and ViaCyte. Shared product revenues will be shared equally
by us and ViaCyte.

Bayer. We entered into an option agreement in the fourth quarter of 2019 with
Bayer pursuant to which Bayer has an option to co-develop and co-commercialize
two products that we advance 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.

Other Partnerships. We have entered into a number of additional collaborations
and license agreements to support and complement our hematopoietic stem cell,
immuno-oncology, regenerative medicine and in vivo programs and platform,
including agreements with: Nkarta, Inc. to co-develop and co-commercialize two
donor-derived, gene-edited CAR-NK cell product candidates and a product
candidate combining NK and T cells; Capsida Biotherapeutics, Inc. to develop in
vivo gene editing therapies delivered with engineered AAV vectors for the
treatment of amyotrophic lateral sclerosis and Friedreich's ataxia; Moffitt
Cancer Center and Roswell Park Comprehensive Cancer Center to advance autologous
CAR-T programs against new targets; MaxCyte, Inc. on ex vivo delivery for our
hemoglobinopathy and immuno-oncology programs; CureVac AG on optimized mRNA
constructs and manufacturing for certain in vivo programs; and KSQ Therapeutics,
Inc. on intellectual property for our allogeneic immuno-oncology programs.

Special Note About Coronavirus (COVID-19)


The ongoing COVID-19 pandemic is having widespread, rapidly-evolving, and
unpredictable impacts on global societies, economies, financial markets, and
business practices. Since March 2020, we have been evaluating the actual and
potential business impacts related to the spread of COVID-19, and we continue to
closely monitor actual and potential business impacts as a result of the
periodic resurgence of known variants of the COVID-19 virus, identification of
new variants of the COVID-19 virus, and related developments. As a result of the
ongoing COVID-19 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. Our
focus remains on promoting employee health and safety while continuing to
advance the research and development of our programs and pipeline of product
candidates. If negative developments relating to the COVID-19 pandemic continue,
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. The ultimate impact of the COVID-19 pandemic on our business
operations, including on our ongoing and planned clinical trials, remains
uncertain and subject to change and will depend on future developments, which
cannot be accurately predicted. We will continue to work closely with our
third-party vendors, collaborators, and other parties in order to seek to
advance our programs and pipeline of product candidates, while keeping the
health and safety of our employees and their families, partners, third-party
vendors, healthcare providers, patients and communities a top priority. Please
refer to our Risk Factors in Part II, Item IA of our Annual Report on Form 10-K
for further discussion of risks related to the COVID-19 pandemic.

Financial Overview


Since our inception in October 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.

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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,
defend, protect and expand 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.

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 and six months
ended June 30, 2022 was not material. Revenue recognized for the three and six
months ended June 30, 2021 was $900.7 million and $901.2 million, respectively.
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 ended December 31, 2021 filed with the SEC on February 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:

employee-related expenses, including salaries, benefits and equity-based compensation expense;

costs of services performed by third parties that conduct research and development and preclinical and clinical activities on our behalf;

costs of purchasing lab supplies and non-capital equipment used in our preclinical activities and in manufacturing preclinical and clinical study materials;


•
consultant fees;

facility costs, including rent, depreciation and maintenance expenses; and

fees and other payments related to acquiring and maintaining licenses under our third-party licensing agreements.


Our external research and development expenses support our various preclinical
and clinical programs, and as such we do not break down external research and
development expenses further. Our internal research and development expenses
consist of payroll and benefits expenses, facilities expense, and other indirect
research and development expenses incurred in support of overall research and
development activities and as such are not allocated to a specific development
stage or therapeutic area. 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:

successful completion of preclinical studies and IND-enabling studies;

successful enrollment in, and completion of, clinical trials;

receipt of marketing approvals from applicable regulatory authorities;

establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;

obtaining and maintaining patent and trade secret protection and non-patent exclusivity;

launching commercial sales of the product, if and when approved, whether alone or in collaboration with others;

acceptance of the product, if and when approved, by patients, the medical community and third-party payors;

effectively competing with other therapies and treatment options;

a continued acceptable safety profile following approval;

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enforcing and defending intellectual property and proprietary rights and claims; and

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.

Research and development activities are central to our business model. We expect
to continue to incur research and development costs consistent with research and
development at companies of our size and stage of development, which may
increase in the foreseeable future as our current development programs progress,
new programs are added and 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 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 expect to continue to incur general and administrative expenses consistent
with research and development at companies of our size and stage of development,
which may increase in the future to support continued research and development
activities, and potential commercialization of our product candidates. In
addition, we anticipate ongoing expenses related to the reimbursements of
third-party patent related expenses in connection with certain of our
in-licensed intellectual property, including related to the appeal of the U.S.
Patent and Trademark Office's Patent and Trial Appeal Board's February 2022
Decision of Priority and Judgment in an interference declared in June 2019
between Dr. Emmanuelle Charpentier, the University of Vienna and the Regents of
the University of California, or collectively, the CVC Group, and the Broad
Institute, Massachusetts Institute of Technology and, in some instances, the
President and Fellows of Harvard College, or collectively, the Broad, finding
that Broad has priority over CVC Group with respect to the subject matter of the
interference.

Collaboration Expense, Net

Collaboration expense, net, consists of operating expenses under our
collaboration with Vertex. We will continue to incur operating expenses under
our collaboration with Vertex in 2022. However, we anticipate that our operating
expenses will exceed the specified maximum amount per year set forth in the A&R
Vertex JDCA before year end, at which time we may defer a portion of our share
of current year operating expenses on the exa-cel program under our
collaboration with Vertex.

Other Income (Expense), Net

Other income (expense), net consists primarily of interest income earned on investments.

                                       21
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Results of Operations

Comparison of three months ended June 30, 2022 and 2021 (in thousands):


                                               Three Months Ended June 30,          Period to Period
                                                2022                 2021                Change
Revenue:
Collaboration revenue                      $           158       $    
900,202     $         (900,044 )
Grant revenue                                            -                 499                   (499 )
Total revenue                                          158             900,701               (900,543 )
Operating expenses:
Research and development                           123,223              82,332                 40,891
General and administrative                          26,273              28,806                 (2,533 )
Collaboration expense, net                          33,922              26,945                  6,977
Total operating expenses                           183,418             138,083                 45,335
(Loss) income from operations                     (183,260 )           762,618               (945,878 )
Other income, net                                    3,544                 750                  2,794
Net (loss) income before income taxes             (179,716 )           763,368               (943,084 )
Provision for income taxes                          (6,118 )            (4,143 )               (1,975 )
Net (loss) income                          $      (185,834 )     $     759,225     $         (945,059 )

Collaboration Revenue


Collaboration revenue for the three months ended June 30, 2022 was not material.
Collaboration revenue for the three months ended June 30, 2021 was $900.2
million which was primarily associated with the $900.0 million upfront payment
from Vertex in connection with the A&R JDCA. 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 $123.2 million for the three months ended
June 30, 2022, compared to $82.3 million for the three months ended June 30,
2021. The following table summarizes our research and development expenses for
the three months ended June 30, 2022 and 2021, together with the changes in
those items in dollars (in thousands):


                                                 Three Months Ended June 30,          Period to Period
                                                  2022                 2021                Change
External research and development expenses   $        55,990       $      29,906     $           26,084
Employee related expenses                             21,681              14,440                  7,241
Facility expenses                                     29,998              20,522                  9,476
Stock-based compensation expenses                     13,829              16,195                 (2,366 )
Other expenses                                           853                 588                    265
Sublicense and license fees                              872                 681                    191

Total research and development expenses $ 123,223 $ 82,332 $

           40,891




The increase of approximately $40.9 million was primarily attributable to the following:

$26.1 million of increased external research and development costs, primarily
associated with production of drug product and increased clinical trial expense
associated with our oncology programs;

$9.5 million of increased facility-related expenses, primarily related to our
new U.S. research and development headquarters located in Boston, Massachusetts;
and

$7.2 million of increased employee-related expenses primarily due to an increase in headcount to support overall growth.

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General and Administrative Expenses

General and administrative expenses were $26.3 million for the three months ended June 30, 2022, consistent with general and administrative expenses of $28.8 million for the three months ended June 30, 2021.

Collaboration Expense, Net


Collaboration expense, net, was $33.9 million for the three months ended June
30, 2022, compared to $26.9 million for the three months ended June 30, 2021.
The increase of approximately $7.0 million was primarily attributable to the
following:

$4.2 million of increased manufacturing costs; and

$3.4 million of increased pre-commercial expenses associated with our collaboration with Vertex.

Other Income, Net


Other income was $3.5 million for the three months ended June 30, 2022, compared
to $0.8 million of income for the three months ended June 30, 2021. The change
was primarily due to interest income earned on cash, cash equivalents and
marketable securities for the three months ended June 30, 2022.



Comparison of six months ended June 30, 2022 and 2021(in thousands):


                                               Six Months Ended June 30,          Period to Period
                                                2022                2021               Change
Revenue:
Collaboration revenue                      $          336       $   
900,404     $         (900,068 )
Grant revenue                                         762                836                    (74 )
Total revenue                                       1,098            901,240               (900,142 )
Operating expenses:
Research and development                          241,468            153,971                 87,497
General and administrative                         54,294             52,303                  1,991
Collaboration expense, net                         64,568             46,891                 17,677
Total operating expenses                          360,330            253,165                107,165
(Loss) income from operations                    (359,232 )          648,075             (1,007,307 )
Other income, net                                   3,907              2,705                  1,202
Net (loss) income before income taxes            (355,325 )          650,780             (1,006,105 )
Provision for income taxes                         (9,726 )           (4,718 )               (5,008 )
Net (loss) income                          $     (365,051 )     $    646,062     $       (1,011,113 )

Collaboration Revenue


Collaboration revenue for the six months ended June 30, 2022 was not material.
Collaboration revenue for the six months ended June 30, 2021 was $900.4 million
which was primarily associated with the $900.0 million upfront payment from
Vertex in connection with the A&R JDCA. 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.

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Research and Development Expenses


Research and development expenses were $241.5 million for the six months ended
June 30, 2022, compared to $154.0 million for the six months ended June 30,
2021. The following table summarizes our research and development expenses for
the six months ended June 30, 2022 and 2021, together with the changes in those
items in dollars (in thousands):


                                                 Six Months Ended June 30,          Period to Period
                                                 2022                2021                Change
External research and development expenses   $     101,628       $      52,336     $           49,292
Employee related expenses                           42,872              29,197                 13,675
Facility expenses                                   60,778              40,908                 19,870
Stock-based compensation expenses                   28,419              29,040                   (621 )
Other expenses                                       1,230                 845                    385
Sublicense and license fees                          6,541               1,645                  4,896

Total research and development expenses $ 241,468 $ 153,971 $

           87,497




The increase of approximately $87.5 million was primarily attributable to the following:

$49.3 million of increased external research and development costs, primarily
associated with production of drug product and increased clinical trial expense
associated with our oncology programs;

$19.9 million of increased facility-related expenses, primarily related to our
new U.S. research and development headquarters located in Boston, Massachusetts;
and

$13.7 million of increased employee-related expenses primarily due to an increase in headcount to support overall growth.

General and Administrative Expenses


General and administrative expenses were $54.3 million for the six months ended
June 30, 2022, compared to $52.3 million for the six months ended June 30, 2021.
The increase of approximately $2.0 million was primarily attributable to $1.5
million of increased employee-related expenses and an increase of $0.8 million
in stock compensation expense.

Collaboration Expense, Net

Collaboration expense, net, was $64.6 million for the six months ended June 30, 2022, compared to $46.9 million for the six months ended June 30, 2021. The increase of approximately $17.7 million was primarily attributable to the following:

$10.5 million of increased manufacturing costs; and

$5.7 million of increased pre-commercial expenses associated with our collaboration with Vertex.

Other Income, Net


Other income was $3.9 million for the six months ended June 30, 2022, compared
to $2.7 million of income for the six months ended June 30, 2021. The change was
primarily due to interest income earned on cash, cash equivalents and marketable
securities for the six months ended June 30, 2022.

Liquidity and Capital Resources


As of June 30, 2022, we had cash, cash equivalents and marketable securities of
approximately $2,073.7 million, of which approximately $16.0 million was held
outside of the United States.

In August 2019, we entered into an Open Market Sale AgreementSM with Jefferies
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 of CHF 0.03 per share, or the August 2019 Sales Agreement. In January
2021, in connection with the August 2019 Sales Agreement, we filed a prospectus
supplement with the SEC to offer and sell from time to time common shares having
aggregate gross proceeds of up to $600.0 million. In July 2021, we filed a new
prospectus supplement with the SEC, which replaced the previous prospectus
supplement filed in January 2021, to offer and sell, from time to time, the
common shares remaining under the original prospectus supplement having
aggregate gross proceeds of up to $419.8 million, or, together with the January
2021 prospectus supplement, the 2021 ATM. No shares were issued and sold under
the 2021 ATM for the six months ended June 30, 2022.

                                       24
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We have predominantly incurred losses and cumulative negative cash flows from
operations since our inception. As of June 30, 2022, we had $2,073.7 million in
cash, cash equivalents and marketable securities and an accumulated deficit of
$561.0 million. We anticipate that we will continue to incur losses for at least
the next several years. We expect to continue to incur research and development
costs and general and administrative expenses consistent with research and
development at companies of our size and stage of development, 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, defense and intellectual property maintenance costs,
and general overhead costs, including costs associated with operating as a
public company. We expect to continue to incur operating expenses consistent
with research and development at companies of our size and stage of development,
which may increase in the future to support continued research and development
activities, and potential commercialization of our product candidates.

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.

                                       25
--------------------------------------------------------------------------------

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, defending, 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):


                                               Six Months Ended June 30,    

Period to Period

                                                2022                2021               Change
Net cash (used in) provided by operating
activities                                  $    (277,195 )     $    706,339     $         (983,534 )
Net cash used in investing activities            (170,587 )         (461,534 )              290,947
Net cash provided by financing activities          21,002            234,434               (213,432 )
Effect of exchange rate changes on cash               (95 )               10                   (105 )
Net (decrease) increase in cash             $    (426,875 )     $    479,249     $         (906,124 )




Operating Activities

Net cash used in operating activities was $277.2 million for the six months
ended June 30, 2022, compared to cash provided by operating activities of $706.3
million for the six months ended June 30, 2021. The increase in cash used in
operating activities of $983.5 million was primarily driven by an increase in
net loss of $1,011.1 million, from net income of $646.1 million for the six
months ended June 30, 2021 to net loss of $365.1 million for the six months
ended June 30, 2022. The increase in cash used in operations was offset by an
increase in non-cash expense of $12.4 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 $15.2 million increase in net
changes of operating assets and liabilities.

Investing Activities


Net cash used in investing activities for the six months ended June 30, 2022 was
$170.6 million, compared to $461.5 million for the six months ended June 30,
2021. The decrease in net cash used in investing activities consisted primarily
of an increase in marketable securities maturities, in addition to a reduction
of purchases of marketable securities and property and equipment.

Financing Activities


Net cash provided by financing activities for the six months ended June 30, 2022
was $21.0 million, compared with $234.4 million for the six months ended June
30, 2021. Net cash provided by financing activities for the six months ended
June 30, 2022 consisted of option exercise proceeds, net of issuance costs. Net
cash provided by financing activities for the six months ended June 30, 2021
consisted primarily of $219.9 million in net proceeds from the sale of 1.4
million common shares issued in connection with our 2021 ATM, which was net of
$3.1 million of equity issuance costs and $2.2 million of stamp taxes, as well
as option exercise proceeds, net of issuance costs. No shares were issued and
sold under the 2021 ATM for the six months ended June 30, 2022.

                                       26
--------------------------------------------------------------------------------

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 with U.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 ended December 31, 2021 filed with the
SEC on February 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.

© Edgar Online, source Glimpses

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