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SS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     .

Commission file number: 001-37923

 

CRISPR THERAPEUTICS AG

(Exact name of Registrant as specified in its charter)

 

 

Switzerland

Not Applicable

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

Baarerstrasse 14

6300 Zug, Switzerland

Not Applicable

(Address of principal executive offices)

(zip code)

+41 (0)41 561 32 77

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Shares, CHF 0.03 par value

CRSP

NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES      NO  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    YES      NO  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer

Accelerated filer

  

 

 

 

 

Non-accelerated filer

  

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES      NO  

As of October 24, 2019, there were 55,204,242 shares of registrant’s common shares outstanding.

 

 

 


Throughout this Quarterly Report on Form 10-Q, the “Company,” “CRISPR,” “CRISPR Therapeutics,” “we,” “us,” and “our,” except where the context requires otherwise, refer to CRISPR Therapeutics AG and its consolidated subsidiaries.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve substantial risks and uncertainties.  All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q are forward-looking statements. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations, although not all forward-looking statements contain these identifying words. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

 

the safety, efficacy and clinical progress of our various clinical programs including CTX001® and CTX110TM;

 

the status of clinical trials, development timelines and discussions with regulatory authorities related to product candidates under development by us and our collaborators;

 

the proposed transaction involving Casebia Therapeutics;

 

our intellectual property coverage and positions, including those of our licensors and third parties as well as the status and potential outcome of proceedings involving any such intellectual property;

 

the sufficiency of our cash resources; and

 

the therapeutic value, development, and commercial potential of CRISPR/Cas9 gene editing technologies and therapies.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and assumptions that could cause our actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q, if any, and in other Securities and Exchange Commission (“SEC”) filings.  You should not rely upon forward-looking statements as predictions of future events. Such forward-looking statements speak only as of the date of this report. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results, performance or achievements may be materially different from what we expect. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Investors and others should note that we announce material information to our investors using our investor relations website (https://crisprtx.gcs-web.com/), SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media to communicate with the public about our company, our business, our product candidates and other matters. It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels listed on our investor relations website.


Index

 

 

Page

Number

PART I: FINANCIAL INFORMATION

 

 

 

Item 1. Condensed Consolidated Financial Statements (unaudited)

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018

2

 

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2019 and 2018

3

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2019 and 2018

4

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018

5

 

 

Notes to Condensed Consolidated Financial Statements

6

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

26

 

 

Item 4. Controls and Procedures

26

 

 

PART II: OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

27

 

 

Item 6. Exhibits

28

 

 

SIGNATURES

29

 

 


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CRISPR Therapeutics AG

Condensed Consolidated Balance Sheets

(unaudited, in thousands, except share and per share data)

 

 

 

As of

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Assets

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

629,717

 

 

$

456,649

 

Accounts receivable, including related party amounts of $39 and $88 as of

   September 30, 2019 and December 31, 2018, respectively

 

 

39

 

 

 

88

 

Prepaid expenses and other current assets, including related party amounts of $28,875 and

   $3,417 as of September 30, 2019 and December 31, 2018, respectively

 

 

34,309

 

 

 

9,658

 

Total current assets

 

 

664,065

 

 

 

466,395

 

Property and equipment, net

 

 

21,074

 

 

 

18,500

 

Intangible assets, net

 

 

249

 

 

 

289

 

Restricted cash

 

 

3,915

 

 

 

3,163

 

Operating lease assets

 

 

30,619

 

 

 

 

Other non-current assets

 

 

668

 

 

 

669

 

Total assets

 

$

720,590

 

 

$

489,016

 

Liabilities and shareholders’ equity

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,374

 

 

$

5,069

 

Accrued expenses, including related party amounts of $4,537 and $1,700 as of

   September 30, 2019 and December 31, 2018, respectively

 

 

22,397

 

 

 

20,852

 

Deferred revenue current, including related party amounts of $47,725 and $102 as of

   September 30, 2019 and December 31, 2018, respectively

 

 

47,725

 

 

 

102

 

Accrued tax liabilities

 

 

1,478

 

 

 

402

 

Deferred rent

 

 

 

 

 

1,202

 

Operating lease liabilities

 

 

4,805

 

 

 

 

Other current liabilities

 

 

 

 

 

119

 

Total current liabilities

 

 

79,779

 

 

 

27,746

 

Deferred revenue non-current, including related party amounts of $11,871 and $57,780 as of

   September 30, 2019 and December 31, 2018, respectively

 

 

11,871

 

 

 

57,780

 

Deferred rent non-current

 

 

 

 

 

11,052

 

Operating lease liabilities, net of current portion

 

 

36,827

 

 

 

 

Other non-current liabilities

 

 

235

 

 

 

243

 

Total liabilities

 

 

128,712

 

 

 

96,821

 

Commitments and contingencies, see Note 4

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common shares, CHF 0.03 par value, 55,677,088 and 52,183,139 shares authorized at

   September 30, 2019 and December 31, 2018, respectively, 55,446,359 and 52,160,798 shares

   issued at September 30, 2019 and December 31, 2018, respectively, 55,189,370 and

   51,852,862 shares outstanding at September 30, 2019 and December 31, 2018, respectively,

   23,948,128 and 20,498,996 shares in conditional capital at September 30, 2019 and

   December 31, 2018, respectively.

 

 

1,684

 

 

 

1,584

 

Treasury shares, at cost, 256,989 and 307,936 shares at September 30, 2019 and December 31,

   2018, respectively

 

 

(57

)

 

 

(57

)

Additional paid-in capital

 

 

845,526

 

 

 

682,245

 

Accumulated deficit

 

 

(255,253

)

 

 

(291,569

)

Accumulated other comprehensive loss

 

 

(22

)

 

 

(8

)

Total shareholders' equity

 

 

591,878

 

 

 

392,195

 

Total liabilities and shareholders’ equity

 

$

720,590

 

 

$

489,016

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2


 

CRISPR Therapeutics AG

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(unaudited, in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Collaboration revenue (1)

 

$

211,928

 

 

$

563

 

 

$

212,574

 

 

$

3,009

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development (2)

 

 

57,246

 

 

 

39,820

 

 

 

130,601

 

 

 

84,972

 

General and administrative

 

 

15,519

 

 

 

10,175

 

 

 

46,216

 

 

 

31,752

 

Total operating expenses

 

 

72,765

 

 

 

49,995

 

 

 

176,817

 

 

 

116,724

 

Income (loss) from operations

 

 

139,163

 

 

 

(49,432

)

 

 

35,757

 

 

 

(113,715

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from equity method investment

 

 

(3,430

)

 

 

(1,012

)

 

 

(5,467

)

 

 

(3,256

)

Other income (expense), net

 

 

2,964

 

 

 

(130

)

 

 

6,470

 

 

 

(101

)

Total other income (expense), net

 

 

(466

)

 

 

(1,142

)

 

 

1,003

 

 

 

(3,357

)

Net income (loss) before income taxes

 

 

138,697

 

 

 

(50,574

)

 

 

36,760

 

 

 

(117,072

)

Provision for income taxes

 

 

(274

)

 

 

(137

)

 

 

(444

)

 

 

(319

)

Net income (loss)

 

 

138,423

 

 

 

(50,711

)

 

 

36,316

 

 

 

(117,391

)

Foreign currency translation adjustment

 

 

(12

)

 

 

(6

)

 

 

(14

)

 

 

(15

)

Comprehensive income (loss)

 

$

138,411

 

 

$

(50,717

)

 

$

36,302

 

 

$

(117,406

)

Reconciliation of net income (loss) to net income (loss)

   attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

138,423

 

 

$

(50,711

)

 

$

36,316

 

 

$

(117,391

)

Net income (loss) per share attributable to common shareholders—

   basic

 

$

2.52

 

 

$

(1.07

)

 

$

0.68

 

 

$

(2.51

)

Weighted-average common shares outstanding used in net income

   (loss) per share attributable to common shareholders—basic

 

 

54,829,057

 

 

 

47,391,988

 

 

 

53,380,123

 

 

 

46,709,388

 

Net income (loss) per share attributable to common shareholders—

   diluted

 

$

2.40

 

 

$

(1.07

)

 

$

0.65

 

 

$

(2.51

)

Weighted-average common shares outstanding used in net income

   (loss) per share attributable to common shareholders—diluted

 

 

57,598,901

 

 

 

47,391,988

 

 

 

55,821,420

 

 

 

46,709,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Including the following revenue from a related party, see Notes 6 & 11:

 

$

211,928

 

 

$

443

 

 

$

212,574

 

 

$

2,406

 

(2) Including the following research and development expense with a related party, see Notes 6 & 11:

 

$

17,563

 

 

$

418

 

 

$

32,022

 

 

$

2,770

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

3


 

CRISPR Therapeutics AG

Consolidated Statements of Shareholders’ Equity

(In thousands, except share and per share data)

 

 

Common Shares

 

Treasury Shares

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

Shares

 

CHF 0.03

Par Value

 

Shares

 

Amount,

at cost

 

Additional

Paid-in

Capital

 

Accumulated

Deficit

 

Other

Comprehensive

Income (Loss)

 

Total Shareholders’

Equity

 

Balance at December 31, 2017

 

40,592,248

 

 

1,240

 

 

444,873

 

 

 

 

312,018

 

 

(125,440

)

 

14

 

 

187,832

 

Cumulative effect of ASC 606 adoption

 

 

 

 

 

 

 

 

 

 

 

(1,148

)

 

 

 

(1,148

)

Issuance of common shares, net of issuance costs of $8.2 million

 

5,750,000

 

 

174

 

 

 

 

 

 

122,423

 

 

 

 

 

 

122,597

 

Vesting of restricted shares

 

10,042

 

 

 

 

 

 

 

 

13

 

 

 

 

 

 

13

 

Exercise of vested options

 

328,525

 

 

9

 

 

(6,253

)

 

 

 

2,647

 

 

 

 

 

 

2,656

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

6,673

 

 

 

 

 

 

6,673

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

12

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(28,300

)

 

 

 

(28,300

)

Balance at March 31, 2018

 

46,680,815

 

$

1,423

 

 

438,620

 

$

 

$

443,774

 

$

(154,888

)

$

26

 

$

290,335

 

Issuance of common shares, net of issuance costs of $0.0M

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Vesting of restricted shares

 

10,043

 

 

1

 

 

 

 

 

 

13

 

 

 

 

 

 

14

 

Exercise of vested options

 

380,977

 

 

11

 

 

(29,259

)

 

(50

)

 

3,768

 

 

 

 

 

 

3,729

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

9,477

 

 

 

 

 

 

9,477

 

Other Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

(21

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(38,380

)

 

 

 

(38,380

)

Balance at June 30, 2018

 

47,071,835

 

$

1,435

 

 

409,361

 

$

(50

)

$

457,032

 

$

(193,268

)

$

5

 

$

265,154

 

Issuance of common shares, net of issuance costs of $15.5M

 

4,210,526

 

 

137

 

 

 

 

 

 

184,319

 

 

 

 

 

 

184,456

 

Vesting of restricted shares

 

10,046

 

 

1

 

 

 

 

 

 

20

 

 

 

 

 

 

21

 

Exercise of vested options

 

161,388

 

 

2

 

 

(741

)

 

 

 

1,839

 

 

 

 

 

 

1,841

 

Repurchase of treasury shares

 

(64,952

)

 

 

 

64,952

 

 

(7

)

 

 

 

 

 

 

 

(7

)

Issuance of treasury shares to ViaCyte

 

165,636

 

 

 

 

(165,636

)

 

 

 

7,500

 

 

 

 

 

 

7,500

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

9,066

 

 

 

 

 

 

9,066

 

Other Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

(6

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(50,711

)

 

 

 

(50,711

)

Balance at September 30, 2018

 

51,554,479

 

$

1,575

 

 

307,936

 

$

(57

)

$

659,776

 

$

(243,979

)

$

(1

)

$

417,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

51,852,862

 

 

1,584

 

 

307,936

 

 

(57

)

 

682,245

 

 

(291,569

)

 

(8

)

 

392,195

 

Issuance of common shares, net of issuance costs of $1.2 million

 

631,580

 

 

 

 

 

 

 

 

23,472

 

 

 

 

 

 

23,472

 

Vesting of restricted shares

 

9,288

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

15

 

Exercise of vested options

 

141,915

 

 

5

 

 

 

 

 

 

1,827

 

 

 

 

 

 

1,832

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

10,696

 

 

 

 

 

 

10,696

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

8

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(48,408

)

 

 

 

(48,408

)

Balance at March 31, 2019

 

52,635,645

 

$

1,589

 

 

307,936

 

$

(57

)

$

718,255

 

$

(339,977

)

$

 

$

379,810

 

Issuance of common shares, net of issuance costs of $1.3 million

 

732,108

 

 

40

 

 

(47,297

)

 

 

 

28,074

 

 

 

 

 

 

28,114

 

Vesting of restricted shares

 

12,317

 

 

1

 

 

 

 

 

 

15

 

 

 

 

 

 

16

 

Exercise of vested options

 

118,987

 

 

 

 

(3,650

)

 

 

 

1,254

 

 

 

 

 

 

1,254

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

12,198

 

 

 

 

 

 

12,198

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10

)

 

(10

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(53,699

)

 

 

 

(53,699

)

Balance at June 30, 2019

 

53,499,057

 

$

1,630

 

 

256,989

 

$

(57

)

$

759,796

 

$

(393,676

)

$

(10

)

$

367,683

 

Issuance of common shares, net of issuance costs of $2.3 million

 

1,452,880

 

 

43

 

 

 

 

 

 

68,618

 

 

 

 

 

 

68,661

 

Vesting of restricted shares

 

34,328

 

 

1

 

 

 

 

 

 

11

 

 

 

 

 

 

12

 

Exercise of vested options

 

203,105

 

 

10