Editas Medicine(EDIT) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The unaudited condensed consolidated financial statements for Editas Medicine, Inc. as of June 30, 2025, reflect significant asset and equity declines due to operating losses and $66.9 million in restructuring charges Condensed Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $182,796 | $289,315 | | Total Assets | $210,581 | $341,589 | | Total Current Liabilities | $65,937 | $77,225 | | Total Liabilities | $191,392 | $207,315 | | Total Stockholders' Equity | $19,189 | $134,274 | - Total assets decreased significantly from $341.6 million at the end of 2024 to $210.6 million as of June 30, 2025. This was driven by a reduction in marketable securities, accounts receivable, and property and equipment[9] - Total stockholders' equity saw a sharp decline from $134.3 million to $19.2 million over the six-month period, largely due to the accumulated deficit increasing from $1.47 billion to $1.60 billion[9] Condensed Consolidated Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $3,578 | $513 | $8,236 | $1,649 | | Research and development | $16,181 | $54,210 | $42,774 | $102,997 | | General and administrative | $12,859 | $18,206 | $26,234 | $37,545 | | Restructuring and impairment charges | $26,082 | $— | $66,935 | $— | | Operating Loss | ($51,544) | ($71,903) | ($127,707) | ($138,893) | | Net Loss | ($53,235) | ($67,607) | ($129,323) | ($129,557) | | Net loss per share | ($0.63) | ($0.82) | ($1.54) | ($1.58) | - The company incurred significant restructuring and impairment charges of $26.1 million in Q2 2025 and $66.9 million in H1 2025, which were not present in the prior year[11] - Research and development expenses decreased substantially to $42.8 million for the six months ended June 30, 2025, from $103.0 million in the same period of 2024, reflecting a strategic shift and cost-cutting measures[11] Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($98,011) | ($106,934) | | Net cash provided by investing activities | $99,037 | $47,209 | | Net cash provided by financing activities | $5,975 | $514 | | Net increase (decrease) in cash | $7,001 | ($59,211) | - Cash used in operating activities for the first six months of 2025 was $98.0 million, a decrease from $106.9 million in the prior year period, despite a similar net loss, due to changes in working capital and non-cash charges like impairment[19] - Financing activities provided $6.0 million in cash, primarily from an at-the-market equity offering which generated $8.6 million in proceeds[19] Notes to Condensed Consolidated Financial Statements - The company expects its existing cash, cash equivalents, and marketable securities of $178.5 million (as of June 30, 2025) will be sufficient to fund operations for at least twelve months from the issuance date of the financial statements[25][27] - In December 2024, the company discontinued the clinical development of its reni-cel program, leading to a workforce reduction of approximately 180 positions (65%). This resulted in total restructuring and impairment charges of $79.2 million since the plan's inception[59][60] Restructuring and Impairment Charges Incurred (in thousands) | Charge Type | Q2 2025 | H1 2025 | | :--- | :--- | :--- | | Employee termination benefits | $813 | $4,322 | | Contract costs | $23,466 | $52,341 | | Accelerated expense/lease termination | $1,803 | $6,548 | | Impairment charges | $— | $3,724 | | Total | $26,082 | $66,935 | - The company sold future revenues from its Vertex License Agreement to DRI Healthcare for an upfront payment of $57.0 million in October 2024. This transaction is accounted for as debt with an estimated effective interest rate of 15.1%[54][55][56] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic pivot to in vivo gene editing, the financial impact of reni-cel discontinuation, and the company's liquidity position expected to fund operations into Q2 2027 Overview - The company is now focused on developing in vivo gene editing medicines using functional upregulation, aiming to increase the expression of normal genes to treat diseases[77] - In December 2024, Editas discontinued the commercialization of its reni-cel program for sickle cell disease to optimize its cost structure and accelerate its pivot to in vivo gene editing medicines[78] - Key strategic goals include selecting a lead development candidate by September 2025, submitting an investigational new drug (IND) application by mid-2026, and achieving human proof-of-concept by year-end 2026[77] Results of Operations Comparison of Three Months Ended June 30, 2025 and 2024 (in thousands) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $3,578 | $513 | $3,065 | n/m | | R&D Expenses | $16,181 | $54,210 | ($38,029) | (70)% | | G&A Expenses | $12,859 | $18,206 | ($5,347) | (29)% | | Restructuring Charges | $26,082 | $— | $26,082 | 100% | | Net Loss | ($53,235) | ($67,607) | $14,372 | (21)% | - The $38.0 million decrease in Q2 2025 R&D expenses was primarily driven by a $24.4 million reduction in external costs related to the discontinued reni-cel program and a $5.6 million decrease in employee-related expenses from the workforce reduction[102][104] Comparison of Six Months Ended June 30, 2025 and 2024 (in thousands) | Metric | H1 2025 | H1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $8,236 | $1,649 | $6,587 | n/m | | R&D Expenses | $42,774 | $102,997 | ($60,223) | (58)% | | G&A Expenses | $26,234 | $37,545 | ($11,311) | (30)% | | Restructuring Charges | $66,935 | $— | $66,935 | 100% | | Net Loss | ($129,323) | ($129,557) | $234 | —% | - For the first half of 2025, R&D expenses fell by $60.2 million compared to H1 2024, mainly due to a $34.5 million decrease in external reni-cel program costs and an $8.0 million reduction in employee expenses[111][113] Liquidity and Capital Resources - As of June 30, 2025, the company had $178.5 million in cash, cash equivalents, and marketable securities[117] - Management expects that existing cash, combined with payments from the Vertex license agreement, will fund operating expenses and capital requirements into the second quarter of 2027[131] - The company has an At-The-Market (ATM) facility with TD Cowen, with $141.4 million remaining available for issuance as of June 30, 2025[118] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity related to its $178.5 million in cash, cash equivalents, and marketable securities, with no material foreign currency exposure - The company's primary market risk exposure is to interest rate changes affecting its $178.5 million in cash and investments[140] - Due to the short-term maturities and low-risk profile of its investments (primarily money market funds and U.S. government securities), a 1% change in interest rates is not expected to have a material impact on their fair market value[140] - The company does not have any material exposure to foreign currency exchange rate risk as liabilities are substantially denominated in U.S. dollars[141] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - As of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[142] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[143] PART II. OTHER INFORMATION Legal Proceedings The company may face litigation in the ordinary course of business, and its intellectual property rights are subject to ongoing priority and validity disputes - The company may become involved in litigation from the ordinary course of business[146] - Certain intellectual property rights are subject to priority and validity disputes, which could have a material adverse effect on the business[146] Risk Factors This section details significant risks from ongoing intellectual property disputes concerning CRISPR/Cas9 patents in the U.S. and Europe, where unfavorable outcomes could lead to loss of valuable IP rights - The company's in-licensed patents for CRISPR/Cas9 technology are subject to significant priority and validity disputes in the U.S. and Europe[148] - A second interference proceeding between the Broad Institute (Editas's licensor) and CVC (University of California) is ongoing. A May 2025 court decision affirmed-in-part and vacated-in-part a prior ruling, remanding the case back to the Patent Trial and Appeal Board (PTAB) for further review[151] - Additional interference proceedings involving ToolGen, Inc. and Sigma-Aldrich have been declared and are currently suspended pending the outcome of the Broad and CVC appeal[153][154] - In Europe, certain in-licensed patents from Broad have been revoked by the European Patent Office Opposition Division, with appeals pending. Unfavorable outcomes could materially harm the company's business[158][159] Other Information This section discloses that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarterly period[163] Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including required certifications and financial data in Inline XBRL format - Lists the exhibits filed with the Form 10-Q, including the CEO and CFO certifications (Rule 13a-14(a)) and XBRL data files[165]