Editas Medicine(EDIT) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Editas Medicine, Inc.'s unaudited condensed consolidated financial statements as of June 30, 2024, showing a net loss of $129.6 million for the six months ended June 30, 2024, and a decrease in total assets and stockholders' equity Condensed Consolidated Balance Sheets As of June 30, 2024, total assets decreased to $384.8 million from $499.2 million, primarily due to reduced cash, while total stockholders' equity declined to $232.0 million from $349.1 million Condensed Consolidated Balance Sheets (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $384,801 | $499,153 | | Total current assets | $286,354 | $340,829 | | Total Liabilities | $152,792 | $150,056 | | Total current liabilities | $74,306 | $63,217 | | Total Stockholders' Equity | $232,009 | $349,097 | Condensed Consolidated Statements of Operations For the three and six months ended June 30, 2024, the company reported increased net losses of $67.6 million and $129.6 million, respectively, driven by higher R&D expenses and reduced collaboration revenue Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | 6 Months 2024 | 6 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Collaboration and other revenues | $513 | $2,887 | $1,649 | $12,738 | | Research and development | $54,210 | $29,779 | $102,997 | $67,583 | | General and administrative | $18,206 | $17,202 | $37,545 | $40,211 | | Operating loss | $(71,903) | $(44,094) | $(138,893) | $(95,056) | | Net loss | $(67,607) | $(40,290) | $(129,557) | $(89,326) | | Net loss per share | $(0.82) | $(0.56) | $(1.58) | $(1.27) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash used in operating activities increased to $106.9 million, resulting in a net decrease in cash of $59.2 million, significantly impacted by lower financing proceeds Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(106,934) | $(74,479) | | Net cash provided by investing activities | $47,209 | $36,249 | | Net cash provided by financing activities | $514 | $117,525 | | Net (decrease) increase in cash | $(59,211) | $79,295 | Notes to Condensed Consolidated Financial Statements These notes detail the company's business, liquidity, and accounting policies, highlighting its accumulated deficit, expected cash runway, and the amended BMS collaboration agreement * The company is a clinical-stage gene editing company that has incurred net operating losses every year since inception and had an accumulated deficit of $1.4 billion as of June 30, 2024[14][18] * Management expects existing cash, cash equivalents, and marketable securities will be sufficient to fund operations and capital expenditures for at least twelve months from the issuance date of the financial statements (August 7, 2024)[18] * In March 2024, the collaboration agreement with BMS was amended, extending the term to November 2026 and providing BMS the ability to select new gene targets, with a total transaction price of approximately $56.7 million to be recognized prospectively[33][34][35] Stock-Based Compensation Expense (in thousands) | Category | Q2 2024 | Q2 2023 | 6 Months 2024 | 6 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $2,125 | $2,525 | $5,033 | $4,611 | | General and administrative | $2,885 | $2,690 | $7,562 | $5,111 | | Total | $5,010 | $5,215 | $12,595 | $9,722 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial condition and operations, detailing progress on the reni-cel program, trends in revenues and expenses, and liquidity, with current cash expected to fund operations into 2026 Overview Editas Medicine, a clinical-stage gene editing company, is advancing its lead reni-cel program for SCD and TDT with positive clinical data, while also developing in vivo gene editing medicines * The lead program, reni-cel, is being evaluated in the RUBY trial for severe SCD and the EdiTHAL trial for TDT, with enrollment complete for adult cohorts in both trials and the adolescent cohort in RUBY[49][50] * In the RUBY trial, all 18 treated SCD patients were free of vaso-occlusive events post-infusion, and in the EdiTHAL trial, all 7 treated TDT patients were transfusion-free[51][52] * The company is advancing its in vivo gene editing platform and is on track to establish preclinical proof-of-concept for an undisclosed indication by year-end 2024[53] Results of Operations This section analyzes the three and six months ended June 30, 2024, showing significant revenue decreases of 82% and 87%, respectively, alongside substantial increases in R&D expenses driven by the reni-cel program Comparison of Results for the Three Months Ended June 30 (in thousands) | Item | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $513 | $2,887 | $(2,374) | (82)% | | R&D Expenses | $54,210 | $29,779 | $24,431 | 82% | | G&A Expenses | $18,206 | $17,202 | $1,004 | 6% | | Net Loss | $(67,607) | $(40,290) | $(27,317) | 68% | * The $24.4 million increase in Q2 2024 R&D expenses was primarily due to a $19.9 million rise in external costs for the reni-cel program's clinical and manufacturing activities and in vivo research[72][73] Comparison of Results for the Six Months Ended June 30 (in thousands) | Item | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,649 | $12,738 | $(11,089) | (87)% | | R&D Expenses | $102,997 | $67,583 | $35,414 | 52% | | G&A Expenses | $37,545 | $40,211 | $(2,666) | (7)% | | Net Loss | $(129,557) | $(89,326) | $(40,231) | 45% | * The $35.4 million increase in six-month R&D expenses was driven by a $25.1 million rise in external costs for the reni-cel program and a $4.4 million increase in sublicense and license fees[78][79] Liquidity and Capital Resources As of June 30, 2024, Editas held $318.3 million in cash, cash equivalents, and marketable securities, with management projecting these resources, combined with Vertex payments, will fund operations into 2026 * The company had cash, cash equivalents, and marketable securities of $318.3 million as of June 30, 2024[84] * Management projects its current cash position, along with expected payments from Vertex, will be sufficient to fund operations and capital expenditures into 2026[91] Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Operating activities | $(106,934) | $(74,479) | | Investing activities | $47,209 | $36,249 | | Financing activities | $514 | $117,525 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its short-term, low-risk investment portfolio, with no material exposure to foreign currency exchange rate risk * The company's main market risk is interest rate sensitivity on its $64.4 million in cash and cash equivalents and $253.9 million in marketable securities[98] * Due to the short-term maturities and low risk of its investments, a 1% change in interest rates is not expected to have a material effect on their fair market value[98] * The company does not believe it has any material exposure to foreign currency exchange rate risk as liabilities are substantially denominated in U.S. dollars[99] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting during the quarter * As of June 30, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[100] * No material changes to the company's internal control over financial reporting occurred during the second quarter of 2024[101] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company may be involved in ordinary course legal proceedings, with intellectual property rights subject to validity disputes, as detailed in its Annual Report's Risk Factors * The company may become involved in litigation from the ordinary course of business and notes that its intellectual property rights are subject to validity disputes[103] Item 1A. Risk Factors This section refers to the comprehensive risk factors detailed in the company's 2023 Annual Report on Form 10-K, which could materially affect its business and financial condition * The company directs investors to the 'Risk Factors' section of its 2023 Annual Report on Form 10-K for a comprehensive discussion of risks affecting the business[104] Item 5. Other Information This section confirms that no directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the second quarter of 2024 * During the quarterly period ended June 30, 2024, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement[106] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and financial statements in Inline XBRL format * The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[108] * Financial statements are provided in Inline XBRL format as part of the filing[108]