Intellia Therapeutics(NTLA) - 2020 Q4 - Annual Report

PART I This part provides an overview of Intellia Therapeutics, Inc.'s business, strategy, pipeline, platform, collaborations, intellectual property, manufacturing, competition, regulatory environment, human capital, and corporate information Item 1. Business Intellia Therapeutics, Inc. is a clinical-stage genome editing company focused on developing CRISPR/Cas9-based therapeutics for severe diseases. The company's strategy involves advancing both in vivo and ex vivo therapies, leveraging a modular platform, and engaging in strategic partnerships to accelerate clinical development and expand its leadership in genome editing - Intellia Therapeutics is a clinical-stage genome editing company developing proprietary CRISPR/Cas9-based therapeutics[18][469][593] - The company's mission is to transform lives by developing curative genome editing treatments, focusing on: developing curative CRISPR/Cas9 based medicines, advancing science, being the best place to make therapies, and focusing on long-term sustainability[19][22] - Strategy includes pursuing in vivo liver indications (e.g., ATTR, HAE) with proprietary LNP delivery and actively developing ex vivo programs for immuno-oncology and autoimmune diseases (e.g., AML)[24][25] Overview Intellia Therapeutics is a leading clinical-stage genome editing company utilizing CRISPR/Cas9 technology to develop potentially curative therapeutics. The company aims to permanently edit or correct disease-associated genes and create engineered cell therapies, leveraging its scientific expertise and IP portfolio - Intellia is a clinical-stage genome editing company focused on CRISPR/Cas9-based therapeutics[18] - CRISPR/Cas9 technology has the potential to transform medicine by permanently editing disease-associated genes and creating engineered cell therapies[18] - The company's mission is to develop curative genome editing treatments for severe diseases, focusing on advancing science, being a leading therapy developer, and ensuring long-term sustainability[19][22] Strategy Intellia's strategy is to become a full-spectrum, integrated biotechnology company by focusing on indications suitable for CRISPR/Cas9, aggressively pursuing in vivo liver targets with proprietary delivery systems, expanding ex vivo therapeutic programs, leveraging strategic partnerships, and continuously growing its leadership in genome editing research - Strategy involves selecting indications based on edit type, delivery modality, regulatory pathways, and potential for improved therapeutic benefits[23][27] - Aggressively pursuing in vivo liver indications (ATTR, HAE) using proprietary LNP delivery for gene knockout and insertion platforms for restoring native proteins (hemophilia A/B)[24][44] - Actively developing ex vivo engineered cell therapies for cancers (AML) and autoimmune diseases, including TCR-engineered T cells and allogeneic cellular therapies[25][47] - Leveraging strategic partnerships with Regeneron and OSR to accelerate clinical development and broaden patient reach[26] Our Pipeline Intellia's pipeline includes advanced in vivo programs targeting genetic liver diseases like Transthyretin Amyloidosis (ATTR) and Hereditary Angioedema (HAE), and ex vivo programs for immuno-oncology, such as Acute Myeloid Leukemia (AML). The company is progressing NTLA-2001 (ATTR) into Phase 1 clinical trials and NTLA-5001 (AML) and NTLA-2002 (HAE) towards IND submissions - Lead in vivo candidate, NTLA-2001 for ATTR, is the first systemically delivered CRISPR/Cas9-based therapy in clinical evaluation (Phase 1 study initiated in November 2020)[19][36] - NTLA-2002 is a wholly-owned development candidate for Hereditary Angioedema (HAE), with an IND-equivalent submission planned for H2 2021[42][43] - Most advanced ex vivo program is NTLA-5001 for Acute Myeloid Leukemia (AML), targeting WT1 intracellular antigen, with an IND submission expected in mid-2021[19][53][54] - Novartis is developing two CRISPR/Cas9-edited HSC therapeutic candidates (OTQ923 and HIX763) for sickle cell disease, which have entered Phase 1/2 clinical studies[56] Our Genome-Editing Platform Intellia's genome-editing platform is modular, supporting both in vivo and ex vivo programs with proprietary components and delivery technologies. Key aspects include high-throughput informatics for gRNA design, engineered gRNAs for improved efficiency and stability, exploration of various Cas9 nucleases, and diverse editing strategies (knockout, gene insertion, consecutive editing). The platform emphasizes LNP delivery for in vivo liver applications and electroporation for ex vivo cell therapies - The platform includes high-throughput informatics for gRNA selection and off-target editing evaluation[58][60] - Engineered gRNAs are developed to improve editing efficiency, specificity, and stability, and to reduce immune response[59][61] - Utilizes Cas9 endonuclease for knockout edits and combination LNP-AAV approaches for gene insertion and consecutive editing in vivo[64][66][67] - Proprietary LNP platform is used for intravenous delivery of CRISPR/Cas9 to the liver in vivo, demonstrating high TTR reduction in NHPs[35][68][71] - Ex vivo delivery uses clinically proven methods like electroporation, alongside newly developed proprietary methods for engineered cell therapies[73] Collaborations Intellia maintains strategic collaborations with Regeneron, Novartis, and OSR to accelerate the development and commercialization of CRISPR/Cas9-based therapeutics. These partnerships provide resources, technical expertise, and expand the potential application of genome editing across various therapeutic areas, including liver diseases, immuno-oncology, and sickle cell disease - Collaboration with Regeneron (2016, amended 2020) focuses on in vivo genome editing in the liver, including co-development of ATTR, hemophilia A, and hemophilia B programs[75][76][314][315] - Collaboration with Novartis (2014, amended 2018) focuses on ex vivo CRISPR/Cas9-edited therapies using CAR-T cells, HSCs, and OSCs, with Novartis leading development of selected targets[78][313] - Collaboration with OSR (2017) involves research on novel WT1 TCRs for cancer treatment, with Intellia having exclusive rights to develop therapeutic products from this IP (e.g., NTLA-5001 for AML)[81] - Intellia is eligible for significant development, regulatory, and sales milestones, plus royalties, from its collaborations with Novartis and Regeneron[79][126] Intellectual Property Intellia has a broad intellectual property portfolio, including licensed foundational CRISPR/Cas9 patents from Caribou (sublicensing UC/Vienna/Charpentier IP) and Novartis (LNP technology), as well as internally developed patents. The company actively manages and defends its IP, which covers genome editing systems, delivery methods, and therapeutic applications, though it faces ongoing legal challenges and potential disputes regarding patent ownership and scope - Intellia's IP portfolio includes over 40 patent families filed since 2015, covering CRISPR/Cas9 improvements, delivery methods, disease treatment methods, and editing event analysis[86] - Exclusive worldwide license from Caribou Biosciences for human therapeutic uses of CRISPR/Cas9-related patents, including a sublicense to UC/Vienna/Charpentier IP[88][89] - Non-exclusive, royalty-free rights to 14 Novartis patent families for LNP compositions and methods of use in genome editing applications[108] - Ongoing arbitration with Caribou regarding exclusive license rights to gRNA modification technologies, with an interim award granting Caribou an equitable 'leaseback' for a specific CAR-T cell program[93][94][95] - Involvement in interference proceedings with Broad Institute and ToolGen regarding inventorship of CRISPR/Cas9 technology in eukaryotic cells, which could impact patent rights[101][102][379][380] Manufacturing Intellia relies on third-party suppliers and its own capabilities for manufacturing product candidates and components for preclinical and early-stage clinical trials. The company plans to ensure clinical and commercial quantities comply with FDA and other regulations, and will decide on establishing its own commercial manufacturing infrastructure as development progresses - Relies on third-party suppliers and internal capabilities for producing bulk compounds, formulated compounds, viral vectors, or engineered cells for IND-supporting activities and early clinical trials[112] - Clinical and commercial manufacturing must comply with FDA and other regulations[112] Competition Intellia operates in a highly competitive biotechnology and pharmaceutical industry, facing competition from companies developing genome editing, gene therapy, and traditional therapeutic modalities. Competitors include other CRISPR-based companies (e.g., Beam, Caribou, CRISPR Therapeutics, Editas, ToolGen) and those using alternative gene-editing technologies, many of whom possess greater resources - Operates in an extremely competitive industry with rapid technological change[113][226] - Competitors include other CRISPR-based companies (Beam, Caribou, CRISPR Therapeutics, Editas Medicine, ToolGen) and those using other gene-editing technologies (Allogene, bluebird bio, Cellectis, Precision Biosciences, Sangamo, Homology Medicines, Poseida Therapeutics)[114][115][227][228] - Many competitors have substantially greater R&D capabilities, financial, scientific, technical, IP, manufacturing, marketing, and distribution resources[231] Government Regulation and Product Approval Intellia's biopharmaceutical products are subject to extensive regulation by agencies like the FDA and EMA, particularly as gene and cell therapies. The approval process involves preclinical testing, IND submission, multi-phase clinical trials (Phase I, II, III), BLA submission, and post-approval requirements, including cGMP compliance and long-term safety monitoring. Expedited programs like Orphan Drug, Fast Track, Accelerated Approval, and RMAT designations exist to facilitate development for serious conditions - Product candidates are expected to be regulated as biologics, subject to the FD&C Act and PHS Act, requiring IND submission before clinical trials and BLA approval for marketing[120][121] - Clinical trials typically proceed through Phase I (safety), Phase II (safety, preliminary efficacy, dosage), and Phase III (efficacy, potency, safety in expanded population)[133] - FDA recommends up to a 15-year follow-up observation period for gene therapy-related delayed adverse events[128] - Expedited programs include Orphan Drug Designation (7 years exclusivity in U.S., 10 in EU), Fast Track, Priority Review, Accelerated Approval, and Breakthrough Therapy Designation[143][144][146][147][148][149] - Regenerative Medicine Advanced Therapies (RMAT) designation facilitates efficient development and expedited review for cell and gene therapies[152] - Post-approval, products are subject to ongoing cGMP compliance, adverse event reporting, and potential REMS programs[153][154] Other Government Regulation In addition to product approval regulations, Intellia is subject to environmental, health, safety, and laboratory animal welfare laws, as well as evolving local and state regulations related to public health crises like COVID-19, which may impact operations - Subject to environmental protection and hazardous substances laws (e.g., OSHA, RCRA, TSCA) governing use, handling, and disposal of biological, chemical, and radioactive materials[159] - Operations are affected by evolving local and state regulations related to the COVID-19 pandemic[179] Coverage and Reimbursement Significant uncertainty exists regarding coverage and reimbursement for Intellia's biological products, particularly novel gene and cell therapies. Obtaining adequate reimbursement from third-party payors (government, managed care, private insurers) is crucial for commercial success, but cost-containment efforts and lack of uniform policies pose challenges, potentially limiting profitability - Commercial success depends on adequate coverage and reimbursement from third-party payors (government, managed care, private insurers)[180] - No uniform policy for coverage and reimbursement of biological products in the U.S., making it a time-consuming and costly process to obtain approval from each payor[181] - Increasing efforts by governmental and third-party payors to cap or reduce healthcare costs may limit coverage and reimbursement for biological products[181][183] - Products administered by healthcare providers may be eligible for Medicare Part B coverage, requiring participation in Medicaid Drug Rebate Program and 340B Drug Pricing Program[186] Healthcare Reform Healthcare reform initiatives in the U.S. and abroad, such as the Affordable Care Act (ACA), aim to broaden healthcare access and control costs. These reforms introduce measures like biosimilar competition, changes to rebate programs, and new fees, which could significantly impact Intellia's business, revenues, and ability to develop product candidates, with ongoing political uncertainty regarding future modifications - The ACA subjects biological products to biosimilar competition and made changes to Medicaid Drug Rebate Program, increasing rebate liability and expanding eligible entities for discounts[190] - ACA imposed a 70% point-of-sale discount on branded drugs for Medicare Part D beneficiaries in the coverage gap (as of Jan 1, 2019)[190] - Ongoing political uncertainty and potential legislative changes to the ACA could further impact the business[190][192] Human Capital Intellia's success relies on attracting and retaining skilled employees through programs fostering engagement, diversity, equity, inclusion, growth, and competitive compensation. The company emphasizes a diverse workforce, with 50% female and 50% ethnically diverse senior/executive VPs, and 56% women overall. It invests in career development and maintains a strong ethical conduct policy - Success depends on attracting and retaining highly skilled employees through engagement, diversity, equity, inclusion, growth, and competitive compensation[194] - As of February 19, 2021, the employee population consists of 56% women and 44% men; Senior and Executive VPs are 50% female and 50% ethnically diverse[196][200] - Offers competitive benefits, conducts semi-annual pay equity analyses, and invests in employee career growth and leadership development[197][198] - Requires all employees to abide by a Code of Business Conduct and Ethics Policy[199] Our Corporate Information Intellia Therapeutics, Inc. was incorporated in Delaware in May 2014, with its principal executive offices located in Cambridge, Massachusetts - Incorporated in Delaware in May 2014[201] - Principal executive offices are at 40 Erie Street, Suite 130, Cambridge, Massachusetts 02139[201] Available Information Intellia's SEC filings (10-K, 10-Q, 8-K) and corporate governance documents are available free of charge on its website and the SEC's website - Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments are available on the company's website (www.intelliatx.com) and the SEC's website (www.sec.gov)[203](index=203&type=chunk)[204] - Corporate Governance Guidelines, Code of Conduct and Business Ethics, and committee charters are posted on the company's website[205] Item 1A. Risk Factors Investing in Intellia's common stock carries a high degree of risk due to the unproven nature of CRISPR/Cas9 technology for human therapeutic use, the lengthy and uncertain clinical development process, intense competition, and significant regulatory, manufacturing, and financial challenges. The company also faces risks related to intellectual property disputes, reliance on third-party collaborations, and potential impacts from public health crises like COVID-19 - CRISPR/Cas9 genome editing technology is not yet clinically validated for human therapeutic use, and approaches are unproven[207][208][209] - Clinical development is lengthy and expensive, with uncertain outcomes, and may incur additional costs or delays[213][215][216][217] - Significant competition exists from other genome editing, gene therapy, and traditional pharmaceutical companies, many with greater resources[226][231] - Reliance on third parties for manufacturing and clinical trials poses risks if they fail to meet obligations or comply with regulations[323][324][326][327] - Intellectual property disputes, particularly regarding foundational CRISPR/Cas9 patents, could prevent or delay product development and commercialization[368][370][371][378] - The company has incurred net losses since inception and anticipates continued losses, requiring substantial additional funding[300][303] Item 1B. Unresolved Staff Comments The company has no unresolved staff comments from the SEC - No unresolved staff comments[447] Item 2. Properties Intellia's headquarters are in Cambridge, Massachusetts, occupying approximately 65,000 square feet of office and laboratory space under a lease expiring in September 2026. The company also leases and subleases additional space in Cambridge, with a new lease for 39,000 square feet at 281 Albany Street commencing in March 2020 - Headquarters at 40 Erie Street, Cambridge, Massachusetts, with approximately 65,000 sq ft of office and lab space, under a lease expiring September 2026[448] - Leases and subleases approximately 24,000 sq ft at 130 Brookline Street, Cambridge, expiring in 2031 and 2021 respectively[448] - Entered into a new lease agreement in March 2020 for approximately 39,000 sq ft at 281 Albany Street, Cambridge, with a ten-year initial term[448] Item 3. Legal Proceedings Intellia is involved in an ongoing arbitration proceeding against Caribou Biosciences concerning the scope of its exclusive license for gRNA modification technologies. An interim award in September 2019 concluded these technologies were exclusively licensed to Intellia, but granted Caribou an equitable 'leaseback' for a specific CAR-T cell product directed at CD19, with terms still under negotiation or future adjudication - Initiated arbitration against Caribou Biosciences in October 2018, asserting violation of license terms regarding gRNA modification patent families[450] - Arbitration panel issued an interim award in September 2019, concluding gRNA modification technologies were exclusively licensed to Intellia, but granted Caribou an equitable 'leaseback' for a specific CAR-T cell product (CD19)[451] - The Caribou Award is limited to a particular ongoing Caribou program for a CAR-T cell product directed at CD19[451] - The potential implications and impact of the interim award cannot be predicted, and terms are subject to further negotiation or arbitration[453] Item 4. Mine Safety Disclosures This item is not applicable to Intellia Therapeutics, Inc - Not applicable[455] PART II This part covers Intellia's common stock market information, selected financial data, management's discussion and analysis of financial condition and results of operations, market risk disclosures, financial statements, and internal controls Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Intellia's common stock is traded on the Nasdaq Global Market under the symbol "NTLA". As of February 19, 2021, there were 19 holders of record. The company has never declared or paid cash dividends and does not intend to in the foreseeable future. A stock performance graph compares the cumulative total return of Intellia's common stock against the Nasdaq Composite and Nasdaq Biotechnology Indices - Common stock is traded on the Nasdaq Global Market under the symbol "NTLA"[457] - As of February 19, 2021, there were 19 holders of record of common stock[458] - The company has never declared or paid cash dividends and does not intend to in the foreseeable future[459] - A stock performance graph compares the cumulative total return of Intellia's common stock against the Nasdaq Composite Index and the Nasdaq Biotechnology Index from May 6, 2016, through December 31, 2020[461] - The company did not purchase any of its registered equity securities during the period covered by this Annual Report[464] Item 6. Selected Financial Data This item is reserved and no selected financial data is presented - This item is reserved[466] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's discussion and analysis of Intellia's financial condition and results of operations, focusing on collaboration revenue, research and development expenses, general and administrative expenses, and interest income. It details the financial performance for 2020 compared to 2019, outlines liquidity and capital resources, and discusses critical accounting policies, particularly revenue recognition and equity-based compensation Results of Operations (Years Ended December 31, 2020 and 2019) | Item | 2020 (in thousands) | 2019 (in thousands) | Period-to-Period Change (in thousands) | | :----------------------- | :------------------ | :------------------ | :------------------------------------- | | Collaboration revenue | $57,994 | $43,103 | $14,891 | | Research and development | $150,408 | $108,413 | $41,995 | | General and administrative | $44,169 | $41,058 | $3,111 | | Total operating expenses | $194,577 | $149,471 | $45,106 | | Operating loss | $(136,583) | $(106,368) | $(30,215) | | Interest income | $2,352 | $6,835 | $(4,483) | | Net loss | $(134,231) | $(99,533) | $(34,698) | - Collaboration revenue increased by $14.9 million in 2020, primarily due to an $8.4 million catch-up adjustment and $15.3 million from the Factor VIII license transfer under the Regeneron Agreement, partially offset by a decrease from the Novartis collaboration[477] - Research and development expenses increased by $42.0 million in 2020, driven by increased pipeline and platform development costs (manufacturing, preclinical studies for NTLA-2002/5001), higher employee-related expenses, and increased facility-related and stock-based compensation expenses[478][481] - General and administrative expenses increased by $3.1 million in 2020, mainly due to a $5.7 million increase in employee-related expenses, partially offset by a $2.2 million decrease in legal expenses[483] - Interest income decreased by $4.5 million in 2020 due to unfavorable market conditions[484] - As of December 31, 2020, the company had $597.4 million in cash, cash equivalents, and marketable securities[486] Cash Flows (Years Ended December 31, 2020 and 2019) | Cash Flow Activity | 2020 (in millions) | 2019 (in millions) | | :----------------------------------- | :----------------- | :----------------- | | Net cash used in operating activities | $(49.9) | $(103.2) | | Net cash (used in) provided by investing activities | $(214.5) | $25.2 | | Net cash provided by financing activities | $371.8 | $76.4 | - Net cash used in operating activities decreased in 2020 due to upfront and additional payments from Regeneron and Novartis, offsetting increased R&D spend[503] - Net cash used in investing activities in 2020 was primarily due to marketable securities purchases, partially offset by maturities[504] - Net cash provided by financing activities in 2020 included $296.6 million from follow-on offerings, $49.5 million from at-the-market offerings, and $12.6 million from a private placement to Regeneron[505] Item 7A. Quantitative and Qualitative Disclosures about Market Risk Intellia's primary market risk exposure is interest rate sensitivity due to its investments in interest-bearing money market accounts and marketable securities. Given the short-term duration and low-risk profile of its investments, a 100 basis point change in interest rates is not expected to materially affect the fair market value of its portfolio, though declines would reduce future investment income. The company does not use foreign currency or derivative financial instruments - Primary market risk exposure is interest rate sensitivity, affecting cash equivalents and marketable securities[534] - Investments are primarily in interest-bearing money market accounts, commercial paper, corporate/financial institution debt, U.S. Treasury, and asset-backed securities[534] - Due to short-term duration and low-risk profile, a 100 basis point change in interest rates is not expected to materially affect the fair market value of the investment portfolio[534] - Does not have foreign currency or derivative financial instruments[535] Item 8. Financial Statements and Supplementary Data The required financial statements and supplementary data are presented starting on page F-1 of this report - Financial statements and supplementary data are presented starting on page F-1[536] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in and disagreements with accountants on accounting and financial disclosure[537] Item 9A. Controls and Procedures Intellia's management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of December 31, 2020, concluding they were effective at a reasonable assurance level. Management also assessed internal control over financial reporting as effective based on the COSO framework. No material changes in internal control over financial reporting occurred during Q4 2020, despite the shift to remote work due to COVID-19 - Disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of December 31, 2020[539] - Management assessed internal control over financial reporting as effective as of December 31, 2020, based on the COSO (2013 framework) criteria[542] - Deloitte & Touche LLP, the independent registered public accounting firm, issued an unqualified attestation report on the effectiveness of internal control over financial reporting[543][548] - No material changes in internal control over financial reporting occurred during Q4 2020, despite the shift to remote work due to the COVID-19 pandemic[544] Item 9B. Other Information There is no other information to report under this item - None[554] PART III This part provides information on Intellia's directors, executive officers, corporate governance, executive compensation, security ownership, related party transactions, and principal accounting fees, all incorporated by reference from the company's Proxy Statement Item 10. Directors, Executive Officers and Corporate Governance Information regarding directors, executive officers, corporate governance, and compliance with Section 16(a) of the Exchange Act is incorporated by reference from the company's definitive Proxy Statement for its 2021 annual meeting of stockholders. The company has adopted a Code of Business Conduct and Ethics for all personnel - Information is incorporated by reference from the 2021 Proxy Statement[558] - A Code of Business Conduct and Ethics has been adopted for all directors, officers, and employees, available on the company's website[559] Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[560] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership of certain beneficial owners and management, and securities authorized for issuance under equity compensation plans, is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[561] Item 13. Certain Relationships and Related Transactions, and Director Independence Information regarding certain relationships and related transactions, and director independence, is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[562] Item 14. Principal Accounting Fees and Services Information regarding principal accounting fees and services is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[563] PART IV This part details the exhibits and financial statement schedules included in the Annual Report on Form 10-K, including the independent auditor's report, consolidated financial statements, and notes Item 15. Exhibits, Financial Statement Schedules This section lists the documents included in the Annual Report on Form 10-K, specifically the Report of Independent Registered Public Accounting Firm, Consolidated Financial Statements (Balance Sheets, Statements of Operations and Comprehensive Loss, Stockholders' Equity, Cash Flows, and Notes), and an Exhibit Index detailing other required exhibits - Includes the Report of Independent Registered Public Accounting Firm and Consolidated Financial Statements[566] - All financial schedules have been omitted as information is presented in consolidated financial statements or notes, or is not applicable[567] - An Exhibit Index lists exhibits required by Item 601 of Regulation S-K, which are incorporated by reference[567] Item 16. Form 10-K Summary The company has elected not to include summary information for Form 10-K - The Company has elected not to include summary information[565] Report of Independent Registered Public Accounting Firm Deloitte & Touche LLP issued an unqualified opinion on Intellia Therapeutics, Inc.'s consolidated financial statements for the three years ended December 31, 2020, and on the effectiveness of its internal control over financial reporting as of December 31, 2020. The critical audit matter identified related to revenue recognition from collaboration arrangements, specifically the accounting for a modified agreement and fair value measurement of common stock issued - Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements for the three years ended December 31, 2020[572] - An unqualified opinion was also expressed on the effectiveness of internal control over financial reporting as of December 31, 2020[573] - A critical audit matter involved revenue recognition from collaboration arrangements, particularly the accounting for a modified agreement and fair value measurement of common stock issued[578][579] Consolidated Balance Sheets The consolidated balance sheets show the financial position of Intellia Therapeutics, Inc. as of December 31, 2020, and 2019. Key changes include a significant increase in total assets, primarily driven by cash, cash equivalents, and marketable securities, and a corresponding increase in stockholders' equity Consolidated Balance Sheet Highlights (Amounts in thousands) | Item | December 31, 2020 | December 31, 2019 | | :---------------------------------- | :------------------ | :------------------ | | ASSETS: | | | | Cash and cash equivalents | $160,020 | $57,226 | | Marketable securities | $437,351 | $222,500 | | Total current assets | $616,517 | $289,481 | | Total Assets | $676,322 | $334,280 | | LIABILITIES AND STOCKHOLDERS' EQUITY: | | | | Total current liabilities | $64,254 | $35,633 | | Deferred revenue, net of current portion | $51,387 | $16,136 | | Total Stockholders' Equity | $527,072 | $269,881 | | Total Liabilities and Stockholders' Equity | $676,322 | $334,280 | - Cash and cash equivalents increased by $102.8 million (179.7%) from $57.2 million in 2019 to $160.0 million in 2020[583] - Marketable securities increased by $214.8 million (96.5%) from $222.5 million in 2019 to $437.4 million in 2020[583] - Total stockholders' equity increased by $257.2 million (95.3%) from $269.9 million in 2019 to $527.1 million in 2020[583] Consolidated Statements of Operations and Comprehensive Loss The consolidated statements of operations and comprehensive loss show Intellia's financial performance for the years ended December 31, 2020, 2019, and 2018. The company reported increased collaboration revenue and operating expenses, leading to a higher net loss in 2020 compared to previous years Consolidated Statements of Operations and Comprehensive Loss (Amounts in thousands except per share data) | Item | 2020 | 2019 | 2018 | | :------------------------------------------ | :------- | :------- | :------- | | Collaboration revenue | $57,994 | $43,103 | $30,434 | | Research and development | $150,408 | $108,413 | $89,115 | | General and administrative | $44,169 | $41,058 | $32,189 | | Total operating expenses | $194,577 | $149,471 | $121,304 | | Operating loss | $(136,583) | $(106,368) | $(90,870) | | Interest income | $2,352 | $6,835 | $5,527 | | Net loss | $(134,231) | $(99,533) | $(85,343) | | Net loss per share, basic and diluted | $(2.40) | $(2.11) | $(1.98) | | Weighted average shares outstanding, basic and diluted | 55,987 | 47,247 | 43,069 | | Other comprehensive (loss) income: Unrealized (loss) gain on marketable securities | $(260) | $289 | $(28) | | Comprehensive loss | $(134,491) | $(99,244) | $(85,371) | - Collaboration revenue increased by $14.9 million (34.5%) from $43.1 million in 2019 to $58.0 million in 2020[585] - Research and development expenses increased by $42.0 million (38.7%) from $108.4 million in 2019 to $150.4 million in 2020[585] - Net loss increased by $34.7 million (34.9%) from $99.5 million in 2019 to $134.2 million in 2020[585] - Net loss per share (basic and diluted) increased from $(2.11) in 2019 to $(2.40) in 2020[585] Consolidated Statements of Stockholders' Equity The consolidated statements of stockholders' equity detail changes in equity for the years ended December 31, 2017, 2018, 2019, and 2020. Significant increases in additional paid-in capital in 2020 resulted from follow-on offerings, at-the-market offerings, and a private placement to Regeneron, despite ongoing net losses Consolidated Statements of Stockholders' Equity Highlights (Amounts in thousands, except share data) | Item | December 31, 2020 | December 31, 2019 | December 31, 2018 | | :------------------------------------------ | :------------------ | :------------------ | :------------------ | | Common Shares Outstanding | 66,234,056 | 50,198,044 | 45,224,480 | | Additional Paid-In Capital | $962,173 | $570,493 | $478,968 | | Accumulated Deficit | $(435,109) | $(300,878) | $(201,025) | | Total Stockholders' Equity | $527,072 | $269,881 | $277,920 | - Additional paid-in capital increased by $391.7 million in 2020, primarily from follow-on offerings ($296.6 million), at-the-market offerings ($49.5 million), and a private placement to Regeneron ($12.6 million)[588] - Accumulated deficit increased by $134.2 million in 2020 due to the net loss for the year[588] - Total stockholders' equity increased by $257.2 million in 2020[588] Consolidated Statements of Cash Flows The consolidated statements of cash flows present the cash inflows and outflows for operating, investing, and financing activities for the years ended December 31, 2020, 2019, and 2018. In 2020, net cash used in operating activities decreased, while net cash used in investing activities increased significantly, and net cash provided by financing activities saw a substantial increase due to equity offerings Consolidated Statements of Cash Flows (Amounts in thousands) | Cash Flow Activity | 2020 | 2019 | 2018 | | :-------------------------------------------------- | :------- | :------- | :------- | | Net cash used in operating activities | $(49,912) | $(103,240) | $(61,257) | | Net cash (used in) provided by investing activities | $(214,487) | $25,176 | $(260,782) | | Net cash provided by financing activities | $371,779 | $76,434 | $40,217 | | Net increase (decrease) in cash, cash equivalents and restricted cash equivalents | $107,380 | $(1,630) | $(281,822) | | Cash, cash equivalents and restricted cash equivalents, end of period | $164,606 | $57,226 | $58,856 | - Net cash used in operating activities decreased by $53.3 million in 2020, primarily due to collaboration payments received[503][590] - Net cash used in investing activities increased by $239.7 million in 2020, mainly due to increased purchases of marketable securities[504][590] - Net cash provided by financing activities increased by $295.3 million in 2020, driven by proceeds from follow-on offerings and at-the-market offerings[505][590] - Cash, cash equivalents and restricted cash equivalents increased by $107.4 million, ending at $164.6 million in 2020[590] Notes to Consolidated Financial Statements The notes to the consolidated financial statements provide detailed information on Intellia's business, significant accounting policies, financial instruments, and specific financial accounts. They cover the company's nature of operations, liquidity, fair value measurements, property and equipment, accrued expenses, income taxes, commitments, collaboration agreements, leases, equity-based compensation, loss per share, stockholders' equity, related party transactions, 401(k) plan, and unaudited quarterly results - Intellia is an early clinical-stage genome editing company requiring substantial additional capital for R&D and commercialization[594] - As of December 31, 2020, the company had $597.4 million in cash, cash equivalents, and marketable securities, expected to fund operations for at least the next 24 months[486][499][595] - Collaboration revenue increased by $14.9 million in 2020, primarily due to a $8.4 million catch-up adjustment and $15.3 million from the Factor VIII license transfer under the Regeneron Agreement[477] - Research and development expenses increased by $42.0 million in 2020, driven by increased pipeline and platform development, employee-related expenses, and facility costs[478][481] - The company incurred a net loss of $134.2 million in 2020, increasing from $99.5 million in 2019[476] - Significant financing activities in 2020 included $296.6 million from follow-on offerings and $49.5 million from at-the-market offerings[505] 1. The Company Intellia Therapeutics, Inc. is a clinical-stage genome editing company focused on CRISPR/Cas9-based therapeutics. Founded in mid-2014, it requires substantial capital for R&D and faces risks common to early-stage biotech companies. As of December 31, 2020, it had $597.4 million in cash, cash equivalents, and marketable securities, projected to fund operations for at least 24 months - Intellia Therapeutics, Inc. is a clinical-stage genome editing company focused on CRISPR/Cas9-based therapeutics[593] - Requires substantial additional capital for R&D, preclinical/clinical testing, and regulatory approval[594] - As of December 31, 2020, had $597.4 million in cash, cash equivalents, and marketable securities, expected to fund operations for at least 24 months[595] 2. Summary of Significant Accounting Policies This section outlines Intellia's significant accounting policies, including the basis of presentation, use of estimates, fair value measurements, and accounting for cash, marketable securities, property and equipment, income taxes, revenue recognition (under ASC 606 and ASC 808), research and development expenses, and equity-based compensation. It also details the adoption of recent accounting pronouncements and notes the potential impact of the COVID-19 pandemic on estimates - Consolidated financial statements include Intellia Therapeutics, Inc. and its wholly-owned subsidiary, Intellia Securities Corp[596] - Significant estimates are made for revenues, R&D expenses, and equity-based compensation, with actual results potentially differing materially[597] - Marketable securities are accounted for as available-for-sale, recorded at fair value with unrealized gains/losses in OCI[605] - Revenue is recognized under ASC 606 (five-step model) for licenses and associated research, and under ASC 808 for collaborative arrangements like Co/Co agreements[618][624][630] - R&D costs are expensed as incurred, including salaries, lab supplies, and fees to subcontractors[631] - Adopted ASU 2018-13 (Fair Value Measurement) and ASU 2016-13 (Credit Losses) on January 1, 2020, with no material impact[637][639] 3. Marketable Securities Intellia's marketable securities are classified as available-for-sale and recorded at fair value. As of December 31, 2020, the portfolio primarily consisted of U.S. Treasury and other government securities, financial institution debt, corporate debt, and other asset-backed securities, with a total estimated fair value of $437.4 million. The company held no securities in a material unrealized loss position Marketable Securities (December 31, 2020, in thousands) | Type | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | | :-------------------------------- | :------------- | :--------------------- | :---------------------- | :------------------- | | U.S. Treasury and other government securities | $245,666 | $13 | $(11) | $245,668 | | Financial institution debt securities | $138,445 | $6 | $(8) | $138,443 | | Corporate debt securities | $41,765 | $3 | $(2) | $41,766 | | Other asset-backed securities | $11,474 | $1 | $(1) | $11,474 | | Total | $437,350 | $23 | $(22) | $437,351 | - No material realized gains or losses were recorded in 2020, 2019, or 2018[641] - No securities were in a material unrealized loss position at December 31, 2020 or 2019[641] - Short-term marketable securities mature within one year; noncurrent mature between one and five years[643] 4. Fair Value Measurements Intellia classifies fair value measurements using a three-level hierarchy. As of December 31, 2020, its financial assets recognized at fair value, totaling $601.2 million, were primarily in Level 1 (quoted market prices for identical assets) and Level 2 (observable inputs other than Level 1 prices), with no Level 3 assets Fair Value of Financial Assets (December 31, 2020, in thousands) | Item | Total Fair Value | Level 1 | Level 2 | Level 3 | | :------------------------------------------ | :--------------- | :-------- | :-------- | :-------- | | Cash equivalents and restricted cash equivalents | $163,805 | $163,805 | $- | $- | | Marketable securities: | | | | | | U.S. Treasury and other government securities | $245,668 | $241,664 | $4,004 | $- | | Financial institution debt securities | $138,443 | $- | $138,443 | $- | | Corporate debt securities | $41,766 | $- | $41,766 | $- | | Other asset-backed securities | $11,474 | $- | $11,474 | $- | | Total marketable securities | $437,351 | $241,664 | $195,687 | $- | | Total | $601,156 | $405,469 | $195,687 | $- | - Level 1 inputs are quoted market prices in active markets for identical assets[644] - Level 2 inputs are observable inputs other than Level 1, or corroborated by observable market data[644] - No Level 3 assets were held as of December 31, 2020 or 2019[645] 5. Property and Equipment, Net Intellia's net property and equipment decreased to $15.9 million as of December 31, 2020, from $18.0 million in 2019. This change reflects ongoing depreciation and amortization, which amounted to $6.3 million in 2020 Property and Equipment, Net (Amounts in thousands) | Item | December 31, 2020 | December 31, 2019 | | :---------------------------------- | :------------------ | :------------------ | | Laboratory equipment | $30,438 | $27,199 | | Office furniture and equipment | $1,181 | $1,121 | | Computer equipment | $1,076 | $1,051 | | Leasehold improvements | $1,520 | $1,474 | | Computer software | $1,059 | $1,019 | | Total property and equipment | $35,274 | $31,864 | | Less: accumulated depreciation and amortization | $(19,331) | $(13,868) | | Property and equipment, net | $15,943 | $17,996 | - Depreciation and amortization expense was $6.3 million in 2020, an increase from $5.6 million in 2019[647] 6. Accrued Expenses Intellia's accrued expenses significantly increased to $25.6 million as of December 31, 2020, from $13.3 million in 2019. This rise was primarily driven by higher employee compensation and benefits, and increased accrued research and development costs Accrued Expenses (Amounts in thousands) | Item | December 31, 2020 | December 31, 2019 | | :-------------------------------- | :------------------ | :------------------ | | Employee compensation and benefits | $10,920 | $6,311 | | Accrued research and development | $11,008 | $4,208 | | Accrued legal and professional expenses | $1,876 | $1,563 | | Accrued other | $1,750 | $1,191 | | Total accrued expenses | $25,554 | $13,273 | - Employee compensation and benefits increased by $4.6 million (73.0%) in 2020[648] - Accrued research and development increased by $6.8 million (161.8%) in 2020[648] 7. Income Taxes Intellia did not record net income tax benefits due to operating losses, offsetting deferred tax assets with a full valuation allowance. As of December 31, 2020, the company had federal net operating loss (NOL) carryforwards of $372.5 million and state NOLs of $373.1 million, with federal R&D credit carryforwards of $15.0 million. The CARES Act temporarily removed the 80% NOL deduction limit and allowed a five-year carryback for certain losses - No net income tax benefits recorded due to operating losses and a full valuation allowance against deferred tax assets[649][656] Federal Statutory vs. Effective Income Tax Rate | Year Ended December 31, | 2020 | 2019 | 2018 | | :-------------------------- | :----- | :----- | :----- | | Federal statutory income tax rate | (21.0)% | (21.0)% | (21.0)% | | Effective income tax rate | -% | -% | -% | - As of December 31, 2020, federal NOL carryforwards were $372.5 million (some expiring in 2034, others carried indefinitely with 80% deduction limit)[651][652] - State NOL carryforwards were $373.1 million, beginning to expire in 2034[654] - Federal tax credit carryforwards were $15.0 million (expiring in 2034); state R&D credits were $10.3 million (expiring in 2029)[655] - The CARES Act temporarily removed the 80% NOL deduction limit for certain years and allowed a five-year carryback for losses incurred between 2018-2020[653] 8. Commitments and Contingencies Intellia is involved in an arbitration proceeding with Caribou Biosciences regarding gRNA modification technologies, where an interim award granted Caribou a 'leaseback' for a specific CAR-T cell program. The company also has contingent payment obligations under various license agreements for development, regulatory, and commercial milestones, which are uncertain in timing and amount - Ongoing arbitration with Caribou Biosciences regarding exclusive license rights to gRNA modification technologies[660] - Interim award granted Caribou an equitable 'leaseback' for a specific CAR-T cell product directed at CD19, with terms under negotiation[661][662] - Party to license agreements with contingent payments for development, regulatory, and commercial milestones, which are uncertain and not reasonably estimable as of December 31, 2020[665] 9. Collaborations Intellia's collaborations with Regeneron and Novartis are key to its development strategy. The Regeneron agreement, amended in 2020, expanded targets and extended the collaboration term, leading to significant upfront payments and a private placement. The Novartis agreement, which ended its research term in 2019, continues to provide potential milestone and royalty payments, with a $5.0 million milestone recognized in 2020 for an IND acceptance for sickle cell disease Accounts Receivable and Contract Liabilities (Amounts in thousands) | Item | Balance at Beginning of Period (2020) | Additions (2020) | Deductions (2020) | Balance at End of Period (2020) | | :-------------------- | :---------------------------------- | :--------------- | :---------------- | :------------------------------ | | Accounts receivable | $4,620 | $103,116 | $(105,606) | $2,130 | | Deferred revenue | $28,810 | $87,477 | $(42,356) | $73,931 | - 2020 Regeneron Amendment extended the Technology Collaboration Term to April 2024, increased Regeneron's target cap, and granted Intellia an additional Co/Co option[674] - Regeneron paid Intellia an upfront payment of $70.0 million and purchased $30.0 million of common stock in a private placement as part of the 2020 Regeneron Amendment[677] - In 2020, Intellia recognized $5.0 million in collaboration revenue from Novartis due to FDA acceptance of an IND application for a sickle cell disease therapy[703] - As of December 31, 2020, $73.9 million of the aggregate transaction price from Amended Regeneron Agreements remained to be recognized through April 2024[699] 10. Leases Intellia has several operating lease agreements for office and laboratory space in Cambridge, Massachusetts. Key leases include 130 Brookline Street (extended to January 2031) and 40 Erie Street (amended in 2020 to nullify a termination option and extend the lease liability). A new lease for 281 Albany Street, with a ten-year initial term, was entered into in March 2020, but its commencement date for rent payment had not been met as of December 31, 2020 - Lease for 130 Brookline Street extended to January 2031, increasing right-of-use asset and liability by $7.3 million in Q1 2020[706][707] - Lease for 40 Erie Street amended in November 2020, nullifying a termination option and increasing right-of-use asset and liability by $18.5 million[709] - New lease for 281 Albany Street (39,000 sq ft) entered in March 2020, with a ten-year initial term and $44.3 million in committed rental payments[509][710] Lease Costs (Amounts in thousands) | Lease Cost Type | 2020 | 2019 | | :------------------ | :------- | :------- | | Operating lease cost | $8,447 | $7,431 | | Short-term lease cost | $56 | $53 | | Variable lease cost | $2,918 | $2,218 | | Total lease cost | $11,421 | $9,702 | - Weighted average remaining lease term was 6.7 years as of December 31, 2020[713] 11. Equity-Based Compensation Intellia's equity-based compensation includes restricted stock and stock options granted under the 2015 Plan. In 2020, total equity-based compensation expense was $19.9 million. The company granted 260,336 restricted stock units (RSUs) and 2,975,465 stock options in 2020, with a weighted average grant date fair value of $9.07 per option. Unrecognized compensation cost for stock options was $33.7 million, expected to be recognized over 2.5 years Equity-Based Compensation Expense (Amounts in thousands) | Expense Category | 2020 | 2019 | 2018 | | :----------------------- | :------- | :------- | :------- | | Research and development | $10,202 | $6,986 | $8,994 | | General and administrative | $9,701 | $8,105 | $8,052 | | Total | $19,903 | $15,091 | $17,046 | - Granted 260,336 RSUs in 2020, with 58,870 vesting due to development milestones[718][719] - Weighted average grant date fair value of options granted in 2020 was $9.07 per option[721] - Total intrinsic value of stock options exercised in 2020 was $20.3 million[722] - As of December 31, 2020, $33.7 million of unrecognized compensation cost related to stock options, to be recognized over a weighted average remaining vesting period of 2.5 years[725] 12. Loss Per Share Intellia reported a basic and diluted net loss per share of $(2.40) for the year ended December 31, 2020, compared to $(2.11) in 2019. Common stock equivalents, including unvested restricted stock and stock options, were excluded from diluted EPS calculation as their inclusion would have been anti-dilutive Loss Per Share (Amounts in thousands except per share data) | Item | 2020 | 2019 | 2018 | | :------------------------------------------ | :------- | :------- | :------- | | Net loss | $(134,231) | $(99,533) | $(85,343) | | Weighted average shares outstanding, basic and diluted | 55,987 | 47,247 | 43,069 | | Net loss per share, basic and diluted | $(2.40) | $(2.11) | $(1.98) | Common Stock Equivalents Excluded from Diluted EPS (Amounts in thousands) | Item | 2020 | 2019 | 2018 | | :---------------------- | :----- | :----- | :----- | | Unvested restricted stock | 194 | 72 | 109 | | Stock options | 6,977 | 5,366 | 5,038 | | Total | 7,171 | 5,438 | 5,147 | - Common stock equivalents were excluded from diluted loss per share calculation because their inclusion would have been anti-dilutive[727] 13. Stockholders' Equity Intellia significantly increased its stockholders' equity in 2020 through various equity offerings. This included $296.6 million from two follow-on public offerings, $49.5 million from at-the-market offerings, and $12.6 million from a private placement of common stock to Regeneron. As of December 31, 2020, $94.1 million in shares remained eligible for sale under the 2019 Sales Agreement - Received net proceeds of $107.7 million from a public offering of 6,301,370 shares in June 2020[728] - Received net proceeds of $188.9 million from a public offering of 5,513,699 shares in December 2020[729] - Issued 2,270,161 shares through at-the-market offerings in 2020, generating $49.5 million in net proceeds[732] - Sold 925,218 shares to Regeneron in a private placement for $30.0 million in May 2020, recorded as $12.6 million fair value in stockholders' equity[734] - As of December 31, 2020, $94.1 million in shares remained eligible for sale under the 2019 Sales Agreement[733] 14. Related Party Transactions Intellia may engage in transactions with related parties in the ordinary course of business, such as purchasing materials or supplies. These transactions are reviewed quarterly and have not been material to the consolidated financial statements to date - May purchase materials or supplies from related entities in the ordinary course of business[735] - Related party transactions have not been material to the consolidated financial statements[735] 15. 401(k) Plan Intellia established a 401(k) Plan in 2015 for its employees, offering matching contributions of 50% of the first 6% of employee contributions. The company's matching contributions totaled $1.1 million in 2020 - Established a 401(k) Plan in 2015 for employees[736] - Company makes matching contributions of 50% of the first 6% of employee contributions[736] - Matching contributions were $1.1 million in 2020, an increase from $0.8 million in 2019[736] 16. Unaudited Quarterly Results The unaudited quarterly results for