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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Editas Medicine, Inc.    EDIT

EDITAS MEDICINE, INC.

(EDIT)
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EDITAS MEDICINE : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

08/07/2020 | 08:23am EST
The following discussion and analysis of our financial condition and results of
operations should be read together with our condensed consolidated financial
statements and related notes appearing elsewhere in this Quarterly Report on
Form 10-Q and our Annual Report on Form 10-K for the year ended December 31,
2019, which was filed with the Securities and Exchange Commission ("SEC") on
February 26, 2020 (the "Annual Report").



This Quarterly Report on Form 10-Q contains forward-looking statements that
involve substantial risks and uncertainties. The words "anticipate," "believe,"
"estimate," "expect," "intend," "may," "plan," "predict," "project," "would" and
similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these identifying words.
There are a number of important risks and uncertainties that could cause our
actual results to differ materially from those indicated by forward-looking
statements. We may not actually achieve the plans, intentions or expectations
disclosed in our forward-looking statements, and you should not place undue
reliance on our forward-looking statements. Actual results or events could
differ materially from the plans, intentions and expectations disclosed in the
forward-looking statements we make. We have included important factors in the
cautionary statements included in this Quarterly Report on Form 10-Q,
particularly in the section entitled "Risk Factors" in Part II, Item 1A that
could cause actual results or events to differ materially from the
forward-looking statements that we make. Our forward-looking statements do not
reflect the potential impact of any future acquisitions, mergers, dispositions,
joint ventures or investments that we may make.



You should read this Quarterly Report on Form 10-Q and the documents that we
have filed as exhibits to this Quarterly Report on Form 10-Q completely and with
the understanding that our actual future results may be materially different
from what we expect. The forward-looking statements contained in this Quarterly
Report on Form 10-Q are made as of the date of this Quarterly Report
on Form 10-Q, and we do not assume any obligation to update any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as required by applicable law.



Overview



We are a leading, clinical stage genome editing company dedicated to developing
potentially transformative genomic medicines to treat a broad range of serious
diseases. We have developed a proprietary genome editing platform based on
CRISPR technology and we continue to expand its capabilities. Our product
development strategy is to target diseases of high unmet need where we aim to
make differentiated, transformational medicines using our gene editing platform.
We are advancing both in vivo CRISPR medicines, in which the medicine is
injected or infused into the patient to edit the cells inside their body, and
engineered cell medicines, in which cells are edited with our technology and
then administered to the patient. While our discovery efforts have ranged across
several diseases and therapeutic areas, the two areas where our programs are
more mature are ocular diseases and engineered cell medicines to treat
hemoglobinopathies and cancer.



In ocular diseases, our most advanced program is designed to address a specific
genetic form of retinal degeneration called Leber congenital amaurosis 10
("LCA10"), a disease for which we are not aware of any available therapies and
only one other potential treatment in clinical trials in the United States and
Europe. In mid-2019, we initiated a Phase 1/2 clinical trial for EDIT-101, an
experimental medicine to treat LCA10. The first patient was dosed in the first
quarter of 2020 and we plan to enroll approximately 18 patients in the United
States and Europe in up to five cohorts. This trial remains active and open for
enrollment. We aim to complete the dosing of the adult low-dose cohort and to
dose at least one patient of the adult mid-dose cohort by the end of 2020, with
the potential for data also by the end of 2020. For our engineered cell
medicines, our lead program is EDIT-301, an experimental medicine to treat
sickle cell disease and beta-thalassemia. We have initiated IND-enabling studies
for EDIT-301 and aim to submit to the U.S. Food and Drug Administration ("FDA")
an investigational new drug application ("IND") for EDIT-301 for the treatment
of sickle cell disease by the end of 2020. In addition, EDIT-201 is our
experimental allogeneic healthy-donor NK cell medicine for the treatment of
solid tumors. We aim to submit to the FDA an IND for EDIT-201 for the treatment
of certain solid tumors in the second half of 2021.



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In May 2015, we entered into a collaboration with Juno Therapeutics, Inc., a
wholly-owned subsidiary of Bristol-Myers Squibb Company ("Juno Therapeutics"), a
leader in the emerging field of immuno-oncology, to develop novel engineered
alpha-beta T cell therapies for cancer and autoimmune diseases, which was
amended and restated in each of May 2018 and November 2019, at which time we
also entered into a related license agreement with Juno Therapeutics, which we
collectively refer to as our collaboration with them.



In March 2017, we entered into a strategic alliance and option agreement with
Allergan Pharmaceuticals International Limited (which is referred to together
with its affiliates as "Allergan"), a leading global pharmaceutical company, to
discover, develop, and commercialize new gene editing medicines for a range of
ocular disorders. In July 2018, Allergan exercised its option to develop and
commercialize EDIT-101 and we subsequently entered into a co-development and
commercialization agreement with Allergan under which we will co-develop and
equally split profits and losses for EDIT-101 in the United States. Allergan was
acquired by AbbVie, Inc. in May 2020. On August 5, 2020, we entered into a
termination agreement with Allergan pursuant to which, among other things, we
and Allergan terminated the strategic alliance and option agreement and the
co-development and commercialization agreement.



As a result of the termination of our collaboration with Allergan, we have
regained full global rights to research, develop, manufacture, and commercialize
our ocular product candidates, including EDIT-101 for the treatment of LCA10.
Under the termination agreement, Allergan granted us a non-exclusive,
royalty-bearing right and license, including the right to grant sublicenses
(through multiple tiers), to certain Allergan know-how that is necessary to
develop, manufacture and commercialize EDIT-101. In addition, we are obligated
to use commercially reasonable efforts to develop and commercialize a product
directed to each of four collaboration targets, one of which is LCA10. Under the
termination agreement, we are obligated to make a payment to Allergan, as well
as certain payments based on the achievement of clinical and regulatory
milestones for the target programs and aggregate sales milestones for all target
programs, and pay royalties on net sales of specified products. We and Allergan
also entered into a transition services agreement to facilitate the transfer of
the LCA10 program from Allergan to us. As a result of the termination of the
agreements with Allergan, we will have full responsibility for the Phase 1/2
clinical trial for EDIT-101 and we expect that our research and development
expenses will increase significantly for the foreseeable future as our
development programs progress.



Since our inception in September 2013, our operations have focused on organizing
and staffing our company, business planning, raising capital, establishing our
intellectual property portfolio, assembling our core capabilities in genome
editing, seeking to identify potential product candidates, and undertaking
preclinical and clinical studies. Except for EDIT-101, all of our research
programs are still in the preclinical or research stage of development and the
risk of failure of all of our research programs is high. We have not generated
any revenue from product sales. We have primarily financed our operations
through various equity financings and payments received under our research
collaboration with Juno Therapeutics and our strategic alliance with Allergan.



Since inception, we have incurred significant operating losses. Our net losses
were $61.3 million and $63.0 million for the six months ended June 30, 2020 and
2019, respectively. As of June 30, 2020, we had an accumulated deficit of
$610.5 million. We expect to continue to incur significant expenses and
operating losses for the foreseeable future. Our net losses may fluctuate
significantly from quarter to quarter and from year to year. We anticipate that
our expenses will increase substantially as we continue our current research
programs and our preclinical development activities, including those related to
EDIT-301 and EDIT-201; progress the clinical development of EDIT-101; seek to
identify additional research programs and additional product candidates;
initiate preclinical testing and clinical trials for other product candidates we
identify and develop; maintain, expand, and protect our intellectual property
portfolio, including reimbursing our licensors for such expenses related to the
intellectual property that we in-license from such licensors; further develop
our genome editing platform; hire additional clinical, quality control, and
scientific personnel; and incur additional costs associated with operating as a
public company. We do not expect to be profitable for the year ending
December 31, 2020 or the foreseeable future.



Although we did not experience any significant impact on our financial
condition, results of operations or liquidity due to the ongoing coronavirus
disease of 2019 ("COVID-19") pandemic during the six months ended June 30, 2020,
the ultimate impact of the COVID-19 pandemic is highly uncertain and we do not
yet know the full extent of potential delays or impacts on our business, our
ability to continue to raise additional capital, the EDIT-101 clinical trial,

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ongoing preclinical activities, including those related to EDIT-301 and
EDIT-201, or the global economy as a whole. In March, we implemented a work from
home policy, and restricted on-site activities at our facilities in
Massachusetts and Colorado to certain manufacturing, laboratory and related
support activities in light of the COVID-19 pandemic. Under our return to onsite
work plans, we have resumed manufacturing, laboratory and related support
activities at our facilities in Massachusetts and Colorado using shifts to
comply with social distancing guidelines. As such, it is uncertain as to the
full magnitude that the pandemic will have directly or indirectly on our
financial condition, liquidity and future results of operations.



Financial Operations Overview



Revenue


To date, we have not generated any revenue from product sales and we do not
expect to generate any revenue from product sales for the foreseeable future. In
connection with our collaboration with Juno Therapeutics, we have received an
aggregate of $120.0 million in payments, which have primarily consisted of the
initial upfront and amendment payments, development milestone payments and
research funding support. We no longer receive research funding support. As of
June 30, 2020, we recorded $96.3 million of deferred revenue, of which $79.3
million is classified as long-term on our condensed consolidated balance sheet.
There was no revenue recognized under the collaboration with Juno Therapeutics
during the six months ended June 30, 2020. Under this collaboration, we will
recognize revenue upon delivery of option packages to Juno Therapeutics. We
expect that our revenue will fluctuate from quarter-to-quarter and year-to-year
as a result of the timing of when we deliver such option packages.

In connection with our strategic alliance with Allergan, we received an
aggregate of $130.0 million in payments, which consisted of the initial upfront
payment, an option exercise payment and a milestone payment. Prior to the
termination of our agreements with Allergan, certain of these payments were
deferred and were being recognized over the remaining contract term based on a
proportional performance metric. As of June 30, 2020, we recorded $78.2 million
of deferred revenue, of which $57.2 million is classified as long-term on our
condensed consolidated balance sheet. During the second quarter of 2020, we
recognized $3.1 million in collaboration revenue under our strategic alliance
with Allergan.

For additional information about our revenue recognition policy related to the
Juno Therapeutics collaboration or the Allergan strategic alliance, see
"-Critical Accounting Policies and Estimates-Revenue Recognition" included in
our Annual Report.

For the foreseeable future we expect substantially all of our revenue will be generated from our collaboration with Juno Therapeutics, and any other collaborations or agreements we may enter into.

Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research and development activities, which include:

? drug discovery efforts and preclinical and clinical studies under our research

programs;

? employee-related expenses including salaries, benefits, and stock-based

compensation expense;

? costs of funding research 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 study materials;


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 ? consultant fees;

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

fees for acquiring and maintaining licenses under our third-party licensing

? agreements, including any sublicensing or success payments made to our

licensors.

Research and development costs are expensed as incurred. At this time, we cannot reasonably estimate or know


the nature, timing, and 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, IND-enabling studies and natural

history studies;

? successful enrollment in, and completion of, clinical trials;

? receipt of marketing approvals from applicable regulatory authorities;

? establishing clinical, 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 a product, if and when approved, whether alone or

in collaboration with others;

? acceptance of a 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;

? enforcing and defending intellectual property and proprietary rights and

claims; and

? achieving desirable medicinal properties for the intended indications.


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A change in the outcome of any of these variables with respect to the
development of any product candidates we develop would significantly change the
costs, timing, and viability associated with the development of that product
candidate. As a result of the termination of our profit-sharing arrangement with
Allergan in the United States for EDIT-101, we will be obligated to fund all of
the total costs related to developing and commercializing the LCA10 program
in
the United States.


We do not track research and development costs on a program-by-program basis except for reimbursable amounts that relate to third-party arrangements.




Research and development activities are central to our business model. We expect
research and development costs to increase significantly for the foreseeable
future as our development programs progress, including as we continue to
progress the clinical development of EDIT-101 as well as supporting preclinical
studies for our other research programs, including EDIT-301.



General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other
related costs, including stock-based compensation for personnel in executive,
finance, investor relations, business development, legal, corporate affairs,
information technology, facilities and human resource functions. Other
significant costs include corporate facility costs not otherwise included in
research and development expenses, legal fees related to intellectual property
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 any product candidates we identify and develop. These
increases will include increased costs related to the hiring of additional
personnel and fees to outside consultants. We also anticipate increased expenses
related to reimbursement of third-party patent-related expenses and expenses
associated with operating as a public company, including costs for audit, legal,
regulatory, and tax-related services, director and officer insurance premiums,
and investor relations costs. With respect to reimbursement of third-party
intellectual property-related expenses specifically, given the ongoing nature of
the opposition, interference and re-examination proceedings involving the
patents licensed to us under our license agreements with The Broad Institute,
Inc. ("Broad") and the President and Fellows of Harvard College ("Harvard"), we
anticipate general and administrative expenses will continue to be significant.

Other Income, Net



For the six months ended June 30, 2020, other income, net consisted primarily of
changes in the fair value of equity securities, interest income and accretion of
discounts associated with other marketable securities.



For the six months ended June 30, 2019, other income, net consisted primarily of interest income and accretion of discounts associated with marketable securities, partially offset by loss on disposal of property and equipment.

Critical Accounting Policies and Estimates




Our management's discussion and analysis of our financial condition and results
of operations is based on our condensed consolidated financial statements, which
have been prepared in accordance with United States generally accepted
accounting principles. The preparation of our condensed consolidated financial
statements requires us to make judgments and estimates that affect the reported
amounts of assets, liabilities, revenues, and expenses, and the disclosure of
contingent assets and liabilities in our condensed consolidated financial
statements. We base our estimates on historical experience, known trends and
events, and various other factors that we believe to be reasonable under the
circumstances. Actual results may differ from these estimates under different
assumptions or conditions. On an ongoing basis, we evaluate our judgments and
estimates in light of changes in circumstances, facts, and experience. The
effects of material revisions in estimates, if any, will be reflected in the
condensed consolidated financial statements prospectively from the date of
change in estimates.



                                       21

  Table of Contents

There have been no material changes to our critical accounting policies from
those described in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in our Annual Report.



Results of Operations


Comparison of the Three Months ended June 30, 2020 and 2019

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




                                               Three Months Ended
                                                   June 30,
                                               2020          2019        Dollar Change      Percentage Change
Collaboration and other research and
development revenues                        $   10,749$    2,330    $         8,419               n/m
Operating expenses:
Research and development                        28,007        23,565              4,442                19  %
General and administrative                      14,081        14,414              (333)               (2)  %
Total operating expenses                        42,088        37,979              4,109                11  %
Other income, net:
Other income (expense), net                      7,175          (68)              7,243               n/m
Interest income, net                               592         1,931            (1,339)              (69)  %
Total other income, net                          7,767         1,863       
      5,904               n/m
Net loss                                    $ (23,572)$ (33,786)$        10,214              (30)  %




For our results of operations, we have included the respective percentage of
changes, unless greater than 100% or less than (100)%, in which case we have
denoted such changes as not meaningful (n/m).



Collaboration and other research and development revenues

Collaboration and other research and development revenues increased by $8.4
million, to $10.7 million for the three months ended June 30, 2020 from $2.3
million for three months ended June 30, 2019. This increase was primarily
attributable to $7.6 million in revenue recognized pursuant to an out-license
agreement we entered into during the second quarter of 2020 and a $0.8 million
increase in revenue recognized related to our strategic alliance with Allergan.



Research and development expenses




Research and development expenses increased by $4.4 million, to $28.0 million
for the three months ended June 30, 2020 from $23.6 million for the three months
ended June 30, 2019. The following table summarizes our research and development
expenses for the three months ended June 30, 2020 and 2019, together with the
changes in those items in dollars (in thousands) and the respective percentages
of change:






                                               Three Months Ended
                                                   June 30,
                                                2020         2019       Dollar Change     Percentage Change
Process and platform development expenses    $    9,076$ 10,623    $   
   (1,547)             (15)  %
Employee related expenses                         7,919       5,513              2,406               44  %
Sublicense and license fees                       3,730         606              3,124              n/m
Facility expenses                                 3,394       2,149              1,245               58  %
Stock-based compensation expenses                 2,673       3,853            (1,180)             (31)  %
Other expenses                                    1,215         821                394               48  %
Total research and development expenses      $   28,007$ 23,565    $   
     4,442               19  %




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  Table of Contents

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


approximately $3.1 million in increased sublicense fees that were owed to our

? licensors in connection with an out-license agreement that we entered into

during the second quarter of 2020 and additional license fees that we incurred

   during the quarter;



approximately $2.4 million in increased employee related expenses primarily due

? to an increase in the size of our workforce including the expansion of our

development organization; and

? approximately $1.2 million in increased facility related expenses.

These increases were partially offset by approximately $1.6 million in decreased process and platform development expenses and $1.2 million in decreased stock-based compensation expenses.




As a result of the termination of our agreements with Allergan, we expect that
our research and development costs will increase as we will be obligated to fund
all of the total costs related to developing and commercializing the LCA10
program in the United States. In addition, we anticipate that we will increase
headcount in our clinical and development organization as a result of the
transfer from Allergan to us of the Phase 1/2 clinical trial of EDIT 101 for the
treatment of LCA10.


General and administrative expenses




General and administrative expenses decreased by $0.3 million, to $14.1 million
for the three months ended June 30, 2020 from $14.4 million for the three months
ended June 30, 2019.The following table summarizes our general and
administrative expenses for the three months ended June 30, 2020 and 2019,
together with the changes in those items in dollars (in thousands) and the
respective percentages of change:




                                                   Three Months Ended
                                                       June 30,
                                                    2020         2019       Dollar Change     Percentage Change
Employee related expenses                        $    3,766$  2,760    $         1,006               36  %
Intellectual property and patent related fees         3,640       4,352              (712)             (16)  %
Stock-based compensation expenses                     2,744       2,640                104                4  %
Professional service expenses                         1,981       3,435            (1,454)             (42)  %
Other expenses                                        1,950       1,227                723               59  %

Total general and administrative expenses $ 14,081$ 14,414 $ (333)

              (2)  %




The decrease in general and administrative expenses for the three months ended
June 30, 2020 compared to the three months ended June 30, 2019 was primarily
attributable to:


? approximately $1.4 million in decreased professional service expenses due to a

decrease in our use of consulting services; and

? approximately $0.7 million in decreased intellectual property and patent

   related fees.




These decreases were partially offset by approximately $1.0 million in increased
employee related expenses due to an increase in the size of our workforce
including the hiring of key executives, approximately $0.7 million in increased
other expenses which includes facility costs, and $0.1 million in increased
stock-based compensation expenses.



                                       23

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Other income, net



For the three months ended June 30, 2020, other income, net was $7.8 million,
which was primarily attributable to the unrealized gains related to corporate
equity securities, interest income and accretion of discounts associated with
marketable securities.



For the three months ended June 30, 2019, other income, net was $1.9 million,
which was primarily attributable to interest income and accretion of discounts
associated with marketable securities, partially offset by a loss on disposal of
property and equipment


Comparison of the Six Months ended June 30, 2020 and 2019

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




                                               Six Months Ended
                                                  June 30,
                                              2020          2019        Dollar Change      Percentage Change
Collaboration and other research and
development revenues                       $   16,472$    4,339$        12,133               n/m
Operating expenses:
Research and development                       62,576        39,408             23,168                59  %
General and administrative                     31,852        31,903               (51)               (0)  %
Total operating expenses                       94,428        71,311             23,117                32  %
Other income, net:
Other (expense) income, net                    14,509         (111)             14,620               n/m
Interest income, net                            2,151         3,988            (1,837)              (46)  %
Total other income, net                        16,660         3,877             12,783               n/m
Net loss                                   $ (61,296)$ (63,095)    $         1,799               (3)  %




For our results of operations, we have included the respective percentage of
changes, unless greater than 100% or less than (100)%, in which case we have
denoted such changes as not meaningful (n/m).



Collaboration and other research and development revenues




Collaboration and other research and development revenues increased by $12.1
million, to $16.4 million for the six months ended June 30, 2020 from $4.3
million for six months ended June 30, 2019. This increase was primarily
attributable to $7.6 million in revenue recognized pursuant to an out-license
agreement we entered into during the second quarter of 2020, an increase of $3.1
million in revenue recognized related to our strategic alliance with Allergan
and a $1.3 million increase in revenue recognized pursuant to other license and
collaboration arrangements during the six months ended June 30, 2020.



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Research and development expenses




Research and development expenses increased by $23.2 million, to $62.6 million
for the six months ended June 30, 2020 from $39.4 million for the six months
ended June 30, 2019. The following table summarizes our research and development
expenses for the six months ended June 30, 2020 and 2019, together with the
changes in those items in dollars (in thousands) and the respective percentages
of change:




                                              Six Months Ended
                                                 June 30,
                                              2020        2019       Dollar Change     Percentage Change
Process and platform development expenses   $ 27,958$ 15,017    $      
 12,941               86  %
Employee related expenses                     16,517      10,697              5,820               54  %
Facility expenses                              6,292       3,870              2,422               63  %
Stock-based compensation expenses              5,730       7,235           
(1,505)             (21)  %
Sublicense and license fees                    3,940         833              3,107               22  %
Other expenses                                 2,139       1,756                383              n/m
Total research and development expenses     $ 62,576$ 39,408    $      
 23,168               59  %



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

approximately $12.9 million in increased process and platform development

? expenses due to increased manufacturing and clinical related costs, including

   under our profit-sharing arrangement with Allergan,



approximately $5.8 million in increased employee related expenses primarily due

? to an increase in the size of our workforce including the expansion of our

   development organization;



approximately $3.1 million in increased sublicense and license fees that were

? owed to our licensors in connection with an out-license agreement that we

entered into during the second quarter of 2020 and additional license fees that

we incurred during the quarter;

 ? approximately $2.4 million in increased facility related expenses; and

? approximately $0.4 million in increased other expenses.

These increases were partially offset by approximately $1.5 million in decreased stock-based compensation expenses.




As a result of the termination of our agreements with Allergan, we expect that
our research and development costs will increase as we will be obligated to fund
all of the total costs related to developing and commercializing the LCA10
program in the United States. In addition, we anticipate that we will increase
headcount in our clinical and development organization as a result of the
transfer from Allergan to us of the Phase 1/2 clinical trial of EDIT 101 for the
treatment of LCA10.



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  Table of Contents


General and administrative expenses




General and administrative expenses decreased by $0.05 million, to $31.9 million
for the six months ended June 30, 2020 from $31.9 million for the six months
ended June 30, 2019. The following table summarizes our general and
administrative expenses for the six months ended June 30, 2020 and 2019,
together with the changes in those items in dollars (in thousands) and the
respective percentages of change:




                                                  Six Months Ended
                                                     June 30,
                                                  2020        2019       Dollar Change     Percentage Change
Intellectual property and patent related fees   $  9,012$  9,343    $         (331)              (4)  %
Employee related expenses                          8,451       6,260              2,191               35  %
Stock-based compensation expenses                  5,907       7,113            (1,206)             (17)  %
Professional service expenses                      4,490       6,829            (2,339)             (34)  %
Other expenses                                     3,992       2,358              1,634               70  %
Total general and administrative expenses       $ 31,852$ 31,903    $  
       (51)                -  %



The decrease in general and administrative expenses for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 was primarily attributable to:

? approximately $2.3 million in decreased professional service expenses due to a

decrease in our use of consulting services;

? approximately $1.2 million in decreased stock-based compensation expenses; and

? approximately $0.3 million in decreased intellectual property and patent

   related fees.



These decreased were partially offset by approximately $2.2 million in increased employee related expenses and $1.6 million in increased other expenses.



Other income, net



For the six months ended June 30, 2020, other income, net was $16.7 million,
which was primarily attributable to the unrealized gains related to corporate
equity securities, interest income and accretion of discounts associated with
marketable securities.


For the six months ended June 30, 2019, other income, net was $3.9 million,
which was primarily attributable to interest income and accretion of discounts
associated with marketable securities, partially offset by a loss on disposal of
property and equipment.



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Liquidity and Capital Resources



Sources of Liquidity


In May 2020, we entered into a sales agreement with Cowen and Company, LLC
("Cowen") under which we are able from time to time to issue and sell shares of
our common stock through Cowen for aggregate gross sales proceeds of up to
$150.0 million (the "ATM Facility"). We have not sold any shares of our common
stock under this ATM Facility as of the date of this Quarterly Report on Form
10-Q. In June 2020, we completed a public offering whereby we sold 6,900,000
shares of our common stock, inclusive of 900,000 shares of common stock sold by
us pursuant to the full exercise of an option granted to the underwriters in
connection with the offering and received net process of approximately $203.7
million. As of June 30, 2020, we have raised an aggregate of $648.7 million in
net proceeds through the sale of shares of its common stock in public offerings
and at-the-market offerings. We also have funded our business from payments
received under our research collaboration with Juno Therapeutics and our
strategic alliance with Allergan, which was terminated in August 2020. As of
June 30, 2020, we had cash, cash equivalents and marketable securities of $598.7
million.



In addition to our existing cash, cash equivalents and marketable securities we
are eligible to earn milestone and other payments under our collaboration
agreement with Juno Therapeutics. Our ability to earn the milestone payments and
the timing of earning these amounts are dependent upon the timing and outcome of
our development, regulatory and commercial activities and, as such, are
uncertain at this time. As of June 30, 2020, our right to contingent payments
under our collaboration agreement with Juno Therapeutics is our only significant
committed potential external source of funds.

Cash Flows

The following table provides information regarding our cash flows for the six months ended June 30, 2020 and 2019 (in thousands):




                                                                 Six Months Ended
                                                                     June 30,
                                                                 2020         2019
Net cash (used in) provided by:
Operating activities                                          $ (84,942)$ (54,809)
Investing activities                                             120,637      126,736
Financing activities                                             214,200        3,902

Net increase in cash, cash equivalents, and restricted cash $ 249,895$ 75,829

Net Cash (Used in) Operating Activities

The use of cash in all periods resulted primarily from our net losses adjusted for non-cash charges and changes in components of working capital.




Net cash used in operating activities was approximately $84.9 million for the
six months ended June 30, 2020, which primarily consisted of operating expenses
that relate to our on-going preclinical and clinical activities, patent costs
and license fees, and increased costs as a result of staffing needs due to our
expanding operations. These expenses were partially offset by cash inflows from
license fees received in the period.



Net cash used in operating activities was approximately $54.8 million for the
six months ended June 30, 2019 which primarily consisted of an upfront payment
related to an out-license arrangement which increased deferred revenue. This
amount was offset by operating expenses that relate to our on-going preclinical
and clinical activities, patent costs and license fees, costs related to
obtaining additional research facilities and increased costs as a result of
staffing needs due to our expanding operations.

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Net Cash Provided by Investing Activities

Net cash provided by investing activities was approximately $120.6 million for
the six months ended June 30, 2020, primarily related to proceeds from
maturities of marketable securities of $191.0 million, partially offset by costs
to acquire marketable securities of $66.4 million and costs to acquire property
and equipment of $4.0 million.



Net cash provided by investing activities was approximately $126.7 million for
the six months ended June 30, 2019, primarily related to proceeds from
maturities of marketable securities of $235.5 million, partially offset by costs
to acquire marketable securities of $106.6 million and costs to acquire property
and equipment of $2.2 million.



Net Cash Provided by Financing Activities

Net cash provided by financing activities was approximately $214.2 million for
the six months ended June 30, 2020 and consisted of $203.7 million in net
proceeds received from offering of common stock, of which $0.3 million was
unpaid at quarter-end, and $9.9 million in proceeds received from exercises of
options for our common stock.



Net cash provided by financing activities was approximately $3.9 million for the
six months ended June 30, 2019, primarily related to $3.6 million in proceeds
for exercises of options for our common stock and $0.3 million from the issuance
of our common stock under our equity plans.



Funding Requirements



We expect our expenses to increase in connection with our ongoing activities,
particularly as we progress the clinical development of EDIT-101; further
advance our current research programs and our preclinical development
activities, including those related to EDIT-301 and EDIT-201; seek to identify
product candidates and additional research programs; initiate preclinical
testing and clinical trials for other product candidates we identify and
develop; maintain, expand, and protect our intellectual property portfolio,
including reimbursing our licensors for expenses related to the intellectual
property that we in-license from such licensors; hire additional clinical,
quality control, and scientific personnel; and incur costs associated with
operating as a public company. In addition, if we obtain marketing approval for
any product candidate that we identify and develop, we expect to incur
significant commercialization expenses related to product sales, marketing,
manufacturing, and distribution to the extent that such sales, marketing, and
distribution are not the responsibility of a collaborator. We do not expect to
generate significant recurring revenue unless and until we obtain regulatory
approval for and commercialize a product candidate. Furthermore, since 2016 we
have incurred, and in future years we expect to continue to incur, significant
costs associated with operating as a public company. Accordingly, we will need
to obtain substantial additional funding in connection with our continuing
operations. If we are unable to raise capital when needed or on attractive
terms, we would be forced to delay, reduce, or eliminate our research and
development programs or future commercialization efforts.

We expect that our existing cash, cash equivalents and marketable securities at
June 30, 2020 and anticipated interest income will enable us to fund our
operating expenses and capital expenditure requirements into 2023. We have based
our estimates on assumptions that may prove to be wrong, and we may use our
available capital resources sooner than we currently expect. Our future capital
requirements will depend on many factors, including:

the scope, progress, results, and costs of drug discovery, preclinical

? development, laboratory testing, and clinical or natural history study trials

for the product candidates we develop;

? the costs of progressing the clinical development of EDIT-101 to treat LCA10;

the costs of preparing, filing, and prosecuting patent applications,

? maintaining and enforcing our intellectual property and proprietary rights, and

defending intellectual property-related claims;



 ? the costs, timing, and outcome of regulatory review of the product candidates
   we develop;


                                       28
  Table of Contents

the costs of future activities, including product sales, medical affairs,

? marketing, manufacturing, and distribution, for any product candidates for

which we receive regulatory approval;

? the success of our collaboration with Juno Therapeutics;

whether Juno Therapeutics exercises any of its options to extend the research

? program term and/or to certain of the research programs under our

collaboration;

? our ability to establish and maintain additional collaborations on favorable

terms, if at all;

? the extent to which we acquire or in-license other medicines and technologies;

? the costs of reimbursing our licensors for the prosecution and maintenance of

the patent rights in-licensed by us; and

? the costs of operating as a public company.

Identifying potential product candidates and conducting preclinical studies and
clinical trials is a time-consuming, expensive, and uncertain process that takes
many years to complete, and we may never generate the necessary data or results
required to obtain marketing approval and achieve product sales. In addition,
any product candidate that we identify and develop, if approved, may not achieve
commercial success. Our commercial revenues, if any, will be derived from sales
of genomic medicines that we do not expect to be commercially available for many
years, if at all. Accordingly, we will need to continue to rely on additional
financing to achieve our business objectives. Adequate additional financing may
not be available to us on acceptable terms, or at all. Further, our ability to
continue to raise additional capital may be adversely impacted by potential
worsening global economic conditions and the recent disruptions to, and
volatility in, the credit and financial markets in the United States and
worldwide resulting from the ongoing COVID-19 pandemic.

Until such time, if ever, as we can generate substantial product revenues, we
expect to finance our cash needs through a combination of equity offerings, debt
financings, collaborations, strategic alliances, and licensing arrangements. To
the extent that we raise additional capital through the sale of equity or
convertible debt securities, our stockholders' ownership interests will be
diluted, and the terms of these securities may include liquidation or other
preferences that adversely affect the rights of our stockholders. Debt
financing, if available, may involve agreements that include covenants limiting
or restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures, or declaring dividends.

If we raise funds through additional collaborations, strategic alliances, or
licensing arrangements with third parties, we may have to relinquish valuable
rights to our technologies, future revenue streams, research programs, or
product candidates or to 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.

Contractual Obligations



During the six months ended June 30, 2020, there were no material changes to our
contractual obligations and commitments described under Management's Discussion
and Analysis of Financial Condition and Results of Operations in our Annual
Report.



Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

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  Table of Contents



Effects of Inflation



Inflation would generally affect our business by increasing our cost of labor
and clinical trial costs. We do not believe that inflation had a material effect
on our business, financial condition or results of operations during the six
months ended June 30, 2020 or 2019.

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2020 85,2 M - -
Net income 2020 -101 M - -
Net cash 2020 448 M - -
P/E ratio 2020 -17,9x
Yield 2020 -
Capitalization 2 132 M 2 132 M -
EV / Sales 2020 19,8x
EV / Sales 2021 62,8x
Nbr of Employees 208
Free-Float 98,4%
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Average target price 38,00 $
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Spread / Lowest Target -59,4%
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Managers
NameTitle
Cynthia L. Collins President, Chief Executive Officer & Director
James C. Mullen Chairman
Harry R. Gill Senior Vice President-Operations
Michelle Robertson Treasurer, Chief Financial & Accounting Officer
Charles Albright Chief Scientific Officer & Executive VP
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