Caribou Biosciences(CRBU) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Outlines the unaudited condensed consolidated financial statements, including balance sheets, operations, equity, cash flows, and related notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | ASSETS | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $29,417 | $16,293 | | Marketable securities, short-term | $179,048 | $193,244 | | Total current assets | $217,323 | $219,377 | | Total assets | $273,656 | $313,313 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $28,491 | $30,651 | | Total liabilities | $56,434 | $60,362 | | Total stockholders' equity | $217,222 | $252,951 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $273,656 | $313,313 | - Total assets decreased by $39.66 million from $313.313 million as of December 31, 2024, to $273.656 million as of March 31, 2025, primarily driven by a decrease in marketable securities (short-term and long-term)[11] - Total stockholders' equity decreased by $35.729 million from $252.951 million as of December 31, 2024, to $217.222 million as of March 31, 2025, mainly due to the accumulated deficit increasing to $488.381 million[11] Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Licensing and collaboration revenue | $2,353 | $2,429 | | Research and development | $35,531 | $33,788 | | General and administrative | $9,735 | $14,643 | | Total operating expenses | $45,266 | $48,431 | | Loss from operations | $(42,913) | $(46,002) | | Net loss | $(39,991) | $(41,234) | | Net loss per share, basic and diluted | $(0.43) | $(0.46) | - Net loss decreased by $1.243 million, from $41.234 million in Q1 2024 to $39.991 million in Q1 2025, primarily due to a significant decrease in general and administrative expenses[13] - Operating expenses decreased by $3.165 million, from $48.431 million in Q1 2024 to $45.266 million in Q1 2025, mainly driven by a $4.908 million reduction in general and administrative expenses[13] Condensed Consolidated Statements of Stockholders' Equity Changes in Stockholders' Equity (in thousands) | Item | December 31, 2024 | March 31, 2025 | | :-------------------------------- | :---------------- | :------------- | | Total Stockholders' Equity | $252,951 | $217,222 | | Additional Paid-In Capital | $701,077 | $705,427 | | Accumulated Deficit | $(448,390) | $(488,381) | | Common Stock Shares Outstanding | 92,378,577 | 93,004,602 | - Total stockholders' equity decreased by $35.729 million from December 31, 2024, to March 31, 2025, primarily due to a net loss of $39.991 million, partially offset by $3.882 million in stock-based compensation expense and $0.468 million from ESPP issuances[16] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(36,725) | $(37,203) | | Net cash provided by investing activities | $49,381 | $22,956 | | Net cash provided by financing activities | $468 | $12,485 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $13,124 | $(1,762) | | Cash, cash equivalents, and restricted cash — End of Period | $29,463 | $49,446 | - Net cash used in operating activities slightly decreased by $0.478 million to $36.725 million in Q1 2025 compared to $37.203 million in Q1 2024[19] - Net cash provided by investing activities significantly increased by $26.425 million to $49.381 million in Q1 2025, primarily due to lower purchases of marketable securities[19] - Net cash provided by financing activities substantially decreased by $12.017 million to $0.468 million in Q1 2025, mainly due to the absence of common stock issuances under the ATM Sales Agreement, which provided $11.329 million in Q1 2024[19] Notes to Unaudited Condensed Consolidated Financial Statements 1. Description of the Business, Organization, and Liquidity - Caribou Biosciences, Inc. is a clinical-stage CRISPR genome-editing biopharmaceutical company focused on developing allogeneic CAR-T cell therapies for devastating diseases[22] - The company has incurred operating losses and negative cash flows since inception, with an accumulated deficit of $488.4 million as of March 31, 2025[24] - Management expects existing cash, cash equivalents, and marketable securities of $212.5 million as of March 31, 2025, to fund operations for at least the next 12 months[24] 2. Summary of Significant Accounting Policies - No changes to significant accounting policies disclosed in the annual consolidated financial statements for the year ended December 31, 2024[25] - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include accounts of wholly-owned subsidiaries, with intercompany transactions eliminated[26] Licensee Revenue and Accounts Receivable/Contract Assets Concentration | Licensee | Revenue (3 Months Ended March 31, 2025) | Revenue (3 Months Ended March 31, 2024) | Accounts Receivable and Contract Assets (As of March 31, 2025) | Accounts Receivable and Contract Assets (As of December 31, 2024) | | :--------- | :-------------------------------------- | :-------------------------------------- | :------------------------------------------------------------- | :------------------------------------------------------------- | | Licensee A | 26.2 % | 25.3 % | * | * | | Licensee B | 16.8 % | 23.1 % | 60.7 % | 49.3 % | | Licensee C | 26.4 % | 25.6 % | * | * | | Licensee D | * | * | 10.9 % | * | | Total | 69.4 % | 74.0 % | 71.6 % | 49.3 % | - The company is evaluating the impact of new accounting pronouncements ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation), not expecting a material impact from ASU 2023-09[31][32] 3. Fair Value Measurements and Fair Value of Financial Instruments - Financial instruments are classified into Level 1 (money market funds, U.S. Treasury bills), Level 2 (commercial paper, corporate debt securities, U.S. government agency bonds), and Level 3 (MSKCC success payments liability) based on observability of inputs[33] Fair Value Measurements of Assets and Liabilities (in thousands) | Category | Total (March 31, 2025) | Level 1 (March 31, 2025) | Level 2 (March 31, 2025) | Level 3 (March 31, 2025) | | :-------------------------------- | :--------------------- | :----------------------- | :----------------------- | :----------------------- | | Total fair value of assets | $212,452 | $149,944 | $62,508 | $0 | | Total fair value of liabilities | $451 | $0 | $0 | $451 | | Total (December 31, 2024) | $249,386 | $181,123 | $68,263 | $0 | | Total (December 31, 2024) | $785 | $0 | $0 | $785 | - The MSKCC success payments liability, a Level 3 financial instrument, decreased from $785 thousand as of December 31, 2024, to $451 thousand as of March 31, 2025, reflecting a $334 thousand gain recognized in other income[34][37] - Key assumptions for MSKCC success payments liability valuation include a common stock fair value of $0.91 per share as of March 31, 2025 (down from $1.59 as of December 31, 2024), a risk-free interest rate of 4.58%, and expected volatility of 105%[38] 4. Significant Agreements - No material changes to significant agreements since December 31, 2024[39] - Agreements include nonrefundable upfront payments, annual license maintenance fees, sublicensing fees, patent prosecution reimbursements, success payments, regulatory/clinical/commercial milestones, and royalty payments, contingent on milestones and agreement effectiveness[40] - As of March 31, 2025, potential future payments for development, regulatory, and sales milestones under license and assignment agreements totaled approximately $159.9 million[42] 5. Revenue Revenue by Geographic Location (in thousands) | Geographic Location | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------ | :-------------------------------- | :-------------------------------- | | United States | $2,224 | $2,269 | | Rest of world | $129 | $160 | | Total | $2,353 | $2,429 | - The company recognized $1.8 million of revenue from performance obligations satisfied at a point in time and $0.6 million from performance obligations satisfied over time for both Q1 2025 and Q1 2024[43] - Transaction prices allocated to remaining unsatisfied performance obligations were approximately $5.4 million as of March 31, 2025, down from $8.3 million as of March 31, 2024. Approximately $2.8 million is expected to be recognized in the next 12 months[48] 6. Balance Sheet Items Prepaid Expenses and Other Current Assets (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Prepaid contract manufacturing and clinical costs | $3,315 | $3,919 | | Prepaid insurance | $540 | $889 | | Other | $2,263 | $1,781 | | Total | $6,118 | $6,589 | Property and Equipment, Net (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Total property and equipment, gross | $32,569 | $32,166 | | Less: accumulated depreciation and amortization | $(14,050) | $(12,885) | | Property and equipment, net | $18,519 | $19,281 | Accrued Expenses and Other Current Liabilities (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Accrued research and development expenses | $12,530 | $12,020 | | Accrued employee compensation and related expenses | $4,518 | $8,560 | | Accrued patent expenses | $731 | $769 | | Accrued expenses related to sublicensing revenues | $565 | $592 | | Other | $1,544 | $1,679 | | Total | $19,888 | $23,620 | 7. Related Party Transactions - No new related party transactions since December 31, 2024, except as noted[52] - Recognized $0.6 million in revenue from the Information Rights Agreement with Pfizer for both Q1 2025 and Q1 2024[53] - Related party deferred revenue from Pfizer was approximately $3.1 million as of March 31, 2025 ($2.5 million current, $0.6 million long-term), down from $3.7 million as of December 31, 2024[53] 8. Commitments and Contingencies - The company enters into various cancellable agreements (CMOs, CROs, licensors) in the ordinary course of business, with contingent payments for milestones that are uncertain to estimate[54] - No material indemnification claims were probable or reasonably possible as of March 31, 2025, or December 31, 2024[55] - The Bergman class action lawsuit was settled for $3.9 million, with final approval granted on February 18, 2025. The Saylor class action lawsuit was voluntarily dismissed without prejudice on April 27, 2025. Two shareholder derivative complaints were consolidated into a single action, which is at a preliminary stage[57][58][60] 9. Common Stock Common Stock Reserved for Future Issuances | Item | As of March 31, 2025 | As of December 31, 2024 | | :-------------------------------- | :------------------- | :---------------------- | | Stock options, issued and outstanding | 14,022,265 | 10,782,103 | | Stock options, authorized for future issuances | 7,902,961 | 7,618,931 | | Stock available under ESPP | 2,655,169 | 2,139,666 | | Unvested RSUs | 2,217,789 | 1,297,327 | | Total common stock reserved for future issuances | 26,798,184 | 21,838,027 | - The company has a shelf registration statement on Form S-3, effective until August 16, 2025, allowing for the sale of up to $400.0 million of various securities, with $239.4 million remaining available as of March 31, 2025[62][113] - Under its at-the-market (ATM) equity offering program, the company did not issue any shares during Q1 2025, but issued 1,594,171 shares for $11.3 million net proceeds in Q1 2024[63][64] 10. Stock-Based Compensation Stock Option Activity (Three Months Ended March 31, 2025) | Item | Stock Options | Weighted Average Exercise Price | | :-------------------------------- | :------------ | :------------------------------ | | Outstanding at December 31, 2024 | 10,782,103 | $7.47 | | Options granted | 3,335,888 | $1.43 | | Options cancelled or forfeited | (95,726) | $7.53 | | Outstanding at March 31, 2025 | 14,022,265 | $6.04 | | Exercisable at March 31, 2025 | 6,515,145 | $8.14 | - The weighted average grant date fair value for stock options granted in Q1 2025 was $1.07 (3,335,888 options), significantly lower than $4.59 in Q1 2024 (2,913,727 options)[67] Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Research and development | $1,743 | $1,617 | | General and administrative | $2,139 | $2,371 | | Total | $3,882 | $3,988 | | Stock options | $3,175 | $3,489 | | RSUs | $585 | $427 | | ESPP | $122 | $72 | - Total unrecognized stock-based compensation expense was $21.1 million for employee stock options (expected over 2.8 years) and $6.1 million for unvested RSUs (expected over 3.2 years) as of March 31, 2025[67][69] 11. Income Taxes - No income tax expense was recorded for the three months ended March 31, 2025, and March 31, 2024, due to operating losses[72] 12. Net Loss Per Share Net Loss Per Share (in thousands, except share and per share amounts) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(39,991) | $(41,234) | | Weighted-average common shares outstanding, basic and diluted | 92,679,493 | 89,302,937 | | Net loss per share, basic and diluted | $(0.43) | $(0.46) | - Basic and diluted net loss per share are the same due to the company being in a net loss position, making all common stock equivalents anti-dilutive[73] Potentially Dilutive Securities (Anti-Dilutive) | Item | As of March 31, 2025 | As of March 31, 2024 | | :------------------------ | :------------------- | :------------------- | | Stock options outstanding | 14,022,265 | 12,094,332 | | RSUs issued and outstanding | 2,217,789 | 1,128,191 | | Shares committed under ESPP | 509,727 | 108,788 | | Total | 16,749,781 | 13,331,311 | 13. Segment Information - The company operates as a single reportable segment focused on developing allogeneic CAR-T cell therapies[74] - The Chief Operating Decision Maker (CODM) assesses performance and allocates resources based on consolidated net loss[74] Reportable Segment Profit and Loss (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Licensing and collaboration revenue | $2,353 | $2,429 | | Research and development | $32,736 | $31,574 | | General and administrative | $7,484 | $12,158 | | Other segment items | $4,712 | $4,396 | | Other income, net | $(2,588) | $(4,465) | | Segment and consolidated net loss | $(39,991) | $(41,234) | 14. Subsequent Events - On April 24, 2025, the company announced a strategic pipeline prioritization, discontinuing the GALLOP phase 1 trial (CB-010 for lupus), AMpLify phase 1 clinical trial (CB-012 for AML), and preclinical research to focus on CB-010 and CB-011 oncology programs[76] - The strategic prioritization included a workforce reduction of 47 employees (approximately 32% of the company), with estimated expenses of $2.5 million to $3.5 million for severance and clinical trial wind-down costs[76] - On May 7, 2025, the company received a Nasdaq deficiency letter for its common stock closing below $1.00 for 30 consecutive business days, initiating a 180-calendar day period to regain compliance[77] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's analysis of financial condition and operations, detailing business overview, strategic shifts, and financial performance Overview - Caribou Biosciences is a clinical-stage CRISPR genome-editing biopharmaceutical company developing allogeneic CAR-T cell therapies, utilizing its chRDNA technology for precise genome editing[81] - The company is advancing two clinical-stage allogeneic CAR-T cell therapies for hematologic malignancies: CB-010 (anti-CD19 for r/r B-NHL) and CB-011 (anti-BCMA for r/r MM). CB-010 has RMAT and fast track designations, while CB-011 has fast track designation[82][83] - A strategic pipeline prioritization on April 24, 2025, led to the discontinuation of the GALLOP (CB-010 for lupus) and AMpLify (CB-012 for AML) clinical trials and preclinical research, along with a 32% workforce reduction, to focus resources on CB-010 and CB-011 oncology programs[85][76] - The company has incurred operating losses since inception, with a net loss of $40.0 million in Q1 2025 and an accumulated deficit of $488.4 million as of March 31, 2025[88] Components of Results of Operations - All revenue to date is from licensing and collaboration agreements, including upfront fees, annual maintenance fees, milestone payments, R&D payments, and royalties[91] - Research and development expenses include external costs (CMO/CRO services, licenses) and internal costs (personnel, facilities). These costs are expensed as incurred, with prepaid amounts deferred[94][97] - General and administrative expenses primarily cover personnel, intellectual property, consulting, and allocated overhead. These are expected to increase with clinical trial success and potential commercialization[101][102] - Other income mainly consists of interest income from cash and marketable securities and changes in the fair value of the MSKCC success payments liability[103] Results of Operations Summary of Results of Operations (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | | Licensing and collaboration revenue | $2,353 | $2,429 | $(76) | | Research and development | $35,531 | $33,788 | $1,743 | | General and administrative | $9,735 | $14,643 | $(4,908) | | Total operating expenses | $45,266 | $48,431 | $(3,165) | | Loss from operations | $(42,913) | $(46,002) | $3,089 | | Net loss | $(39,991) | $(41,234) | $1,243 | - Licensing and collaboration revenue slightly decreased by $0.076 million to $2.353 million in Q1 2025, with Pfizer contributing $0.622 million in both periods[105][106] - Research and development expenses increased by $1.7 million to $35.5 million in Q1 2025, driven by a $3.9 million increase in external CMO and CRO activities, partially offset by a $2.5 million decrease in license-related expenses[107] - General and administrative expenses decreased significantly by $4.9 million to $9.7 million in Q1 2025, primarily due to a $4.5 million reduction in legal expenses, including a $3.9 million securities class action litigation settlement expense in Q1 2024[108] - Total other income decreased by $1.8 million in Q1 2025, mainly due to a $1.9 million decrease in interest income from marketable securities[109][110] Liquidity, Capital Resources, and Capital Requirements - As of March 31, 2025, the company had $212.5 million in cash, cash equivalents, and marketable securities[112] - Management expects existing capital to fund operations for at least the next 12 months[115] - The company has a shelf registration statement with $239.4 million available as of March 31, 2025, and an ATM equity offering program with $83.1 million remaining[113] - Future funding requirements are dependent on clinical trial progress, regulatory approvals, manufacturing, personnel, intellectual property, and potential commercialization, with continued reliance on equity/debt financing or collaborations[117][119] Strategic Investment - On June 29, 2023, Pfizer invested approximately $25.0 million in Caribou Biosciences by purchasing 4,690,431 shares of common stock at $5.33 per share[121] - Proceeds from the Pfizer Investment are to be used for the development program of the allogeneic anti-BCMA CAR-T cell therapy product candidate (CB-011) for 36 months[121] - An Information Rights Agreement grants Pfizer a 30-day right of first negotiation for potential grants of rights to develop/commercialize a BCMA Product Candidate and provides Pfizer with quarterly updates and access to clinical data[122] Cash Flows Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Cash used in operating activities | $(36,725) | $(37,203) | $478 | | Cash provided by investing activities | $49,381 | $22,956 | $26,425 | | Cash provided by financing activities | $468 | $12,485 | $(12,017) | | Net increase (decrease) in cash, and cash equivalents, and restricted cash | $13,124 | $(1,762) | $14,886 | - Net cash provided by investing activities increased significantly by $26.4 million in Q1 2025, primarily due to lower purchases of marketable securities[125] - Net cash provided by financing activities decreased by $12.0 million in Q1 2025, mainly due to the absence of proceeds from ATM common stock issuances, which occurred in Q1 2024[126] Critical Accounting Policies and Significant Judgments and Estimates - No material changes to critical accounting policies or estimates since the audited consolidated financial statements for the year ended December 31, 2024[127] Recently Issued Accounting Pronouncements - Refer to Note 2 for information regarding recently issued accounting pronouncements, including ASU 2023-09 and ASU 2024-03[128] Item 3. Quantitative and Qualitative Disclosures About Market Risk States no material changes to market risk exposure during the quarter, referring to the previous Form 10-K for detailed discussion - No material changes to market risk during the three months ended March 31, 2025[129] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[131] - No changes in internal control over financial reporting materially affected or are reasonably likely to materially affect internal control during the three months ended March 31, 2025[132] PART II. OTHER INFORMATION Item 1. Legal Proceedings Details the company's legal proceedings, including class action lawsuits and shareholder derivative complaints, with updates on settlements and dismissals - The Bergman class action lawsuit, challenging disclosures related to CB-010, was settled for $3.9 million, with final court approval granted on February 18, 2025[135] - The Saylor class action lawsuit, alleging violations of the Exchange Act regarding CB-010's safety, efficacy, and financial statements, was voluntarily dismissed without prejudice on April 27, 2025[136] - Two shareholder derivative complaints, alleging breach of fiduciary duties by directors and officers, were consolidated into a single action (In re Caribou Biosciences, Inc. Derivative Litigation) and are currently in the preliminary stage[137] Item 1A. Risk Factors Updates risk factors, primarily concerning Nasdaq minimum bid price non-compliance, potential delisting, and impacts of a reverse stock split - The company is not in compliance with Nasdaq's Minimum Bid Price Rule, having received a deficiency letter on May 7, 2025, due to its common stock closing below $1.00 for 30 consecutive business days[139] - The company has 180 calendar days (until November 3, 2025) to regain compliance by having its stock close at or above $1.00 for at least 10 consecutive business days[140] - A reverse stock split may be implemented to regain compliance, but there is no assurance it will sustain the stock price or prevent delisting, and it could lead to dilution from future issuances[141][144] - Delisting from Nasdaq could negatively impact liquidity, market price, investor interest, ability to raise equity financing, and the company's reputation[142] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities Confirms no unregistered sales of equity securities by the company during the three months ended March 31, 2025 - No unregistered sales of equity securities occurred during the three months ended March 31, 2025[145] Item 5. Other Information Provides details on the Nasdaq deficiency notice, plans to address it, Rule 10b5-1 trading arrangements, and an advisory consulting agreement - The company received a Nasdaq Notice on May 7, 2025, for non-compliance with the $1.00 minimum bid price rule, with a compliance deadline of November 3, 2025[146][147] - The company is monitoring its stock price and evaluating options, including a potential reverse stock split, which requires stockholder approval at the upcoming June 12, 2025, Annual Meeting[149] - CFO Sriram Ryali entered into a Rule 10b5-1 'sell-to-cover' trading arrangement for RSUs on January 2, 2025. CEO Rachel Haurwitz's similar arrangement was modified on February 5, 2025, to allow cash payment of withholding taxes for a specific RSU vesting[151][152] - Steven B. Kanner, Ph.D., the Chief Scientific Officer, will retire on June 30, 2025, and has entered into a one-year advisory consulting agreement, effective July 1, 2025, for $6,400 per month[154] Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including corporate governance documents, employment agreements, certifications, and XBRL documents - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, Description of Common Stock, Officer Employment Agreement for Sri Ryali, Advisory Consulting Agreement for Steven B. Kanner, and various certifications (302 and 906)[155] - XBRL instance and taxonomy documents are also filed as exhibits[155] Signatures Contains the required signatures of the principal executive and financial officers, certifying the report's filing - The report is signed by Rachel E. Haurwitz, President and Chief Executive Officer, and Sriram Ryali, Chief Financial Officer, on May 8, 2025[160]