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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
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 001-37687
EDITAS MEDICINE, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
11 Hurley Street
Cambridge, Massachusetts
(Address of principal executive offices)
46-4097528
(I.R.S. Employer
Identification No.)
02141
(Zip Code)
(617) 401-9000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.0001 par value per share
Trading Symbol(s)
EDIT
Name of each exchange on which registered
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 an emerging growth company. See
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
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 the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s Common Stock held by non-
affiliates of the registrant was approximately $1,840,064,425 based upon the closing price of the registrant’s Common Stock on June 30, 2020.
The number of shares of the registrant’s Common Stock outstanding as of February 14, 2021 was 67,362,791.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement for its 2021 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days of the end of the registrant’s fiscal
year ended December 31, 2020 are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent stated herein.
Table of Contents
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Editas Medicine, Inc.
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Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Exhibits, Financial Statement Schedules
Form 10-K Summary
SIGNATURES
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References to Editas
Throughout this Annual Report on Form 10-K, the “Company,” “Editas,” “Editas Medicine,” “we,” “us,” and
“our,” except where the context requires otherwise, refer to Editas Medicine, Inc. and its consolidated subsidiary, and “our
board of directors” refers to the board of directors of Editas Medicine, Inc.
Special Note Regarding Forward-Looking Statements and Industry Data
This Annual Report on Form 10-K contains forward-looking statements regarding, among other things, our future
discovery and development efforts, our future operating results and financial position, our business strategy, and other
objectives for our operations. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,”
“project,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-
looking statements contain these identifying words. There are a number of important risks and uncertainties that could
cause our actual results to differ materially from those indicated by forward-looking statements. We may not actually
achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue
reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary
statements included in this Annual Report on Form 10-K, particularly in the section entitled “Risk Factors” in Part I that
could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-
looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or
investments that we may make.
You should read this Annual Report on Form 10-K and the documents that we have filed as exhibits to this Annual
Report on Form 10-K completely and with the understanding that our actual future results may be materially different from
what we expect. The forward-looking statements contained in this Annual Report on Form 10-K are made as of the date of
this Annual Report on Form 10-K, and we do not assume any obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise, except as required by applicable law.
This Annual Report on Form 10-K includes statistical and other industry and market data, which we obtained
from our own internal estimates and research, as well as from industry and general publications and research, surveys, and
studies conducted by third parties. Industry publications, studies, and surveys generally state that they have been obtained
from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information.
While we believe that each of these studies and publications is reliable, we have not independently verified market and
industry data from third-party sources. While we believe our internal company research is reliable and the market
definitions are appropriate, neither such research nor these definitions have been verified by any independent source.
Risk Factor Summary:
● We have incurred significant losses since inception. We expect to incur losses for the foreseeable future and may
never achieve or maintain profitability.
● We will need substantial additional funding, which may cause dilution to our stockholders, restrict our operations
or require us to relinquish rights to our technologies or product candidates.
● We have never generated revenue from product sales and may never be profitable.
● We intend to identify and develop product candidates based on a novel genome editing technology, which makes it
difficult to predict the time and cost of product candidate development.
● Because genome editing is novel and the regulatory landscape that will govern any product candidates we
develop is uncertain and may change, we cannot predict the time and cost of obtaining regulatory approval, if we
receive it at all, for any product candidates we develop.
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● Adverse public perception of genomic medicines, and genome editing in particular, may negatively impact
regulatory approval of, or demand for, our potential products.
● The genome editing field is relatively new and is evolving rapidly. We are focusing our research and development
efforts on CRISPR gene editing technology using Cas9 and Cas12a enzymes, but other genome editing
technologies may be discovered that provide significant advantages over CRISPR/Cas9 or CRISPR/Cas12a.
● Except for EDIT-101 and EDIT-301, all of our product development programs are at the preclinical or research
stage. Preclinical testing and clinical trials of product candidates may not be successful.
● If serious adverse events, undesirable side effects, or unexpected characteristics are identified during the
development of any product candidates we develop, we may need to abandon or limit our further clinical
development of those product candidates, and it may delay or prevent their regulatory approval, limit the
commercial potential, or result in significant negative consequences following any potential marketing approval.
● We have not extensively tested any of our proposed delivery modes and product candidates in clinical trials.
● If we are unable to successfully identify patients who are likely to benefit from therapy with any medicines we
develop, or experience significant delays in doing so, we may not realize the full commercial potential of any
medicines we may develop.
● We face significant competition in an environment of rapid technological change, and our competitors may
achieve regulatory approval before us or develop therapies that are safer or more advanced or effective than
ours.
● Due to the novel nature of our technology and the potential for some of our product candidates to offer
therapeutic benefit in a single administration or limited number of administrations, we face uncertainty related to
pricing and reimbursement for these product candidates.
● Genomic medicines are novel, and our product candidates may be complex and difficult to manufacture. We could
experience production problems that result in delays in our development or commercialization programs, limit the
supply of our products, or otherwise harm our business.
● We expect to depend on collaborations with third parties for the research, development, and commercialization of
certain of the product candidates we develop, for development of certain of our research programs, and to
conduct our clinical trials and some aspects of our research and preclinical testing.
● If we are unable to obtain and maintain patent protection for any products we develop and for our technology, or
if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and
commercialize products and technology similar or identical to ours.
● Our rights to develop and commercialize our technology and product candidates are subject, in part, to the terms
and conditions of licenses granted to us by others.
● Some of our in-licensed patents are subject to priority and validity disputes. Our owned and in-licensed patents,
patent applications and other intellectual property may be subject to further priority and validity disputes, and
other similar intellectual property proceedings including inventorship disputes. If we or our licensors are
unsuccessful in any of these proceedings, we may be required to obtain licenses from third parties, which may not
be available on commercially reasonable terms or at all, or to cease the development, manufacture, and
commercialization of one or more of the product candidates we develop.
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● Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is
expensive, time-consuming, and uncertain and may prevent us from obtaining approvals for the
commercialization of any of our product candidates.
● Our future success depends on our ability to attract and retain key executives and to attract, retain, and motivate
qualified personnel.
● The market price of our common stock may be volatile, which could result in substantial losses for our
stockholders.
● We do not expect to pay any dividends for the foreseeable future. Accordingly, stockholders must rely on capital
appreciation, if any, for any return on their investments.
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Item 1. Business
PART I
We are a leading, clinical stage gene editing company dedicated to developing potentially transformative gene-
editing medicines to treat a broad range of serious diseases. The promise of genomic medicines is supported by the
advancing knowledge of the human genome and by harnessing the progress in technologies for cell therapy, gene therapy,
and, most recently, gene editing. We believe this progress sets the stage for us to create medicines with the potential to have
a durable benefit for patients. Our core capability in gene editing uses the technology known as CRISPR (clustered,
regularly interspaced, short palindromic repeats) to allow us to create molecules that efficiently and specifically edit DNA.
Our mission is to translate the promise of gene editing into a broad class of differentiated, transformational medicines for
diseases with high unmet need.
We have developed a proprietary genome editing platform based on CRISPR technology and we continue to
expand its capabilities. CRISPR uses a protein-RNA complex composed of an enzyme, including either Cas9 (CRISPR
associated protein 9) or Cas12a (CRISPR from Prevotella and Francisella 1, also known as Cpf1), bound to a guide RNA
molecule designed to recognize a particular DNA sequence. Once the complex binds to the DNA sequence it was designed
to recognize, the complex makes a specific cut in the DNA. We believe we are the only human genome editing company
with a platform that includes CRISPR/Cas9, CRISPR/Cas12a, and engineered forms of both of these CRISPR systems.
Because of the broad nature of this platform, we believe we can create gene editing molecules for over 95% of the human
genome.
Our Strategy
Our product development strategy is to target diseases of high unmet need where we aim to make differentiated,
transformational medicines using our gene editing platform. We are advancing both in vivo gene-editing medicines, in
which the medicine is injected or infused into the patient to edit the cells inside their body, and ex vivo gene-edited cell
medicines, in which cells are edited with our technology and then administered to the patient. While our discovery efforts
have ranged across several diseases and therapeutic areas, the two areas where our programs are more mature are our in
vivo medicines to treat ocular diseases and ex vivo gene-edited cell medicines to treat hemoglobinopathies and cancer.
For our in vivo gene-editing medicines, we are leveraging an adeno-associated virus (“AAV”)-mediated editing
platform with our proprietary Staphylococcus aureus Cas9 (“SaCas9”) to develop these medicines. In ocular diseases, our
most advanced program is designed to address a specific genetic form of retinal degeneration called Leber congenital
amaurosis 10 (“LCA10”), a disease that leads to blindness and for which we are not aware of any available therapies and
only one other potential treatment is in clinical trials in the United States and Europe. In mid-2019, we initiated our Phase
1/2 BRILLIANCE clinical trial for EDIT-101, an experimental gene-editing medicine to treat LCA10. We plan to enroll up
to 18 patients in the United States and Europe in up to five cohorts. We completed dosing of the first cohort, the adult low-
dose cohort, in 2020. Due to an absence of severe adverse events or dose limited toxicity in adults treated in the first
cohort, the inclusion criteria of the protocol was modified to allow inclusion of subjects with better than light perception
vision only. Although we experienced slowed enrollment in 2020 for subsequent cohorts due to the ongoing impact of the
COVID-19 pandemic, in the first quarter of 2021 we initiated dosing of the second cohort, the adult mid-dose cohort. We
expect to announce initial clinical data in 2021.
We believe our preclinical results to date with EDIT-101 validate our platform technology, including its potential
application to other ocular diseases, such as Usher syndrome 2A (“USH2A”), a form of retinitis pigmentosa that also
includes hearing loss, and autosomal dominant retinitis pigmentosa 4 (“adRP4”), a progressive form of retinal degeneration
characterized by initial night blindness early in life followed by loss of peripheral vision and eventual complete blindness,
as well as diseases of other organs and tissues. In 2019, we achieved in vivo preclinical proof of concept and declared a
development candidate, referred to as EDIT-102, for USH2A. We have also advanced preclinical studies for our adRP4
program, and expect to declare a development candidate for the treatment of adRP4 by the end of 2021.
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We are leveraging our AAV-mediated editing platform and expertise in ocular therapies to pursue additional
therapeutic areas to treat other organ and tissues that are accessible by AAV. For example, in 2019, we entered into a
research collaboration with Asklepios BioPharmaceutical, Inc., a fully integrated AAV gene therapy company (“AskBio”)
that was acquired by Bayer AG in December 2020, to explore the use of our AAV-mediated editing platform to treat
neurological diseases.
In addition to developing in vivo gene-editing medicines, the development of ex vivo gene-edited cell medicines is
a core part of our research effort and product pipeline. We believe that advances in genome editing will both improve the
characteristics of current cellular medicines and also expand the universe of cellular medicines that can be developed. To
this end, we have established capabilities to efficiently and specifically edit hematopoietic stem cells (“HSCs”), natural
killer (“NK”) cells and T cells, which we believe can lead to best-in-class medicines for hemoglobinopathies and cancer.
For our ex vivo gene-edited cell medicines, our lead program is EDIT-301, an experimental medicine to treat
sickle cell disease, a severe inherited blood disease that causes premature death, and beta-thalassemia, another inherited
blood disorder characterized by severe anemia. In December 2020, we submitted an investigational new drug application
(“IND”) to the U.S. Food and Drug Administration (“FDA”) for the initiation of a Phase 1/2 clinical trial of EDIT-301,
which we refer to as our RUBY trial, for the treatment of sickle cell disease. In January 2021, the FDA cleared the start of
enrollment and dosing of patients in the first phase of the study (which will validate the safety and beneficial effects of the
cell editing process). Dosing of the first subject is expected to occur in 2021. In parallel, the FDA has imposed a partial
clinical hold and requested we develop a potency assay to ensure that the characteristics of the product released are as
expected and confirmed by clinical data collected in the first patients treated. We also aim to file an IND for EDIT-301 for
the treatment of beta-thalassemia by the end of 2021. The CRISPR nuclease used in our EDIT-301 program is a proprietary
engineered form of Cas12a for which we have exclusively licensed the foundational intellectual property to develop and
commercialize human therapeutics. We believe our editing approach, including targeting the HBG1 and HBG2 promoters
in the beta-globin locus where naturally occurring fetal hemoglobin inducing mutations reside (“HBG1/2”) as well as the
use of Cas12a, differentiates us from other genome editing companies with sickle cell disease programs and positions us to
develop a potentially best-in-class medicine to treat sickle cell disease and beta-thalassemia.
We have also continued to develop our capabilities to generate cells from induced pluripotent stem cells (“iPSCs”)
to develop engineered cell medicines to treat cancer. For example, in 2019, we advanced development of engineered iPSC-
derived NK (“iNK”) cell medicines for solid tumors using technology from BlueRock Therapeutics LP (“BlueRock”) and
generated edited NK cells from iPSCs with significantly increased anti-cancer activity. We aim to accelerate the
development of iNK cell medicines for the treatment of solid tumor cancers in 2021. We are also advancing alpha-beta T
cell experimental medicines in collaboration with Juno Therapeutics, Inc., a wholly owned subsidiary of Bristol-Myers
Squibb Company (“Juno Therapeutics”). For our allogeneic, off-the-shelf medicines, we edit cells from iPSCs that are
subsequently differentiated into effector cells, such as NK cells or T cells. The engineered cells are then administered to the
patient. We believe these approaches and expertise will allow us to develop allogeneic, off-the-shelf engineered cell
medicines, as opposed to relying on obtaining cells directly from a patient. These allogeneic cell medicines have the
potential to greatly reduce the costs and complexity of engineered cells and increase the number and type of cancers that
we can potentially address.
Our Core Capability — Gene Editing
Gene editing is the process of revising, removing, or repairing defective DNA in situ. In general, gene editing
corrects the defective DNA in its native genomic location, and consequently the repaired genetic region retains the cell’s
normal control and feedback mechanisms. Gene editing typically takes advantage of naturally occurring DNA repair
mechanisms, including non-homologous end joining (“NHEJ”) and homology directed repair (“HDR”), to achieve its
desired therapeutic outcome. Edits that are repaired by NHEJ typically disrupt a gene or eliminate a disease-causing
mutation. Edits that are repaired by HDR, including targeted insertion, aim to correct or replace aberrant DNA sequences.
The diversity of genetic drivers of disease demands a variety of solutions. Gene editing has the potential to deliver a variety
of types of genome modification to address a broad range of diseases.
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CRISPR technology uses a protein-RNA complex composed of a type of enzyme, referred to as a DNA
endonuclease, bound to an RNA molecule, referred to as a guide RNA, that has been designed to recognize a particular
DNA sequence. A DNA endonuclease is an enzyme that cleaves DNA. This combination of a DNA endonuclease and a
guide RNA only bind and cut DNA when two criteria are met: first, the protein recognizes a short DNA specific to the
enzyme called the protospacer adjacent motif (“PAM”), and second, the appropriate portion of the guide RNA matches the
adjacent DNA sequence. The PAM sequence that is recognized by the DNA endonuclease creates a second layer of
recognition in addition to the guide RNA. We believe that CRISPR technology has three principal advantages for genome
editing:
● Rapid, comprehensive, and systematic identification of product candidates. The key targeting mechanism for
the endonuclease, whether it is Cas9 or Cas12a, is a guide RNA, which can be rapidly replaced with a
different guide RNA or optimized by changes as small as a single nucleotide. This allows for the flexible
design, synthesis, and testing of hundreds of guide RNA/endonuclease combinations for each genetic target
in order to find those that cut the DNA target with the optimal efficiency and specificity. In contrast, other
commonly used DNA nucleases for gene editing have inherently limited flexibility. For example, zinc finger
nucleases, engineered meganucleases, and transcription activator-like effector nucleases use proteins for
DNA sequence recognition to bring the endonuclease to the site of the genome where cleavage is desired,
requiring the creation of an entirely new protein for each target site.
● Simultaneous and efficient targeting of multiple sites. In CRISPR technology, multiple guide RNAs can be
provided along with the same endonuclease, enabling the simultaneous and efficient targeting of multiple
sites. This ability to target multiple DNA sequences expands the applicability of CRISPR technology and
also creates the potential for self-regulating systems that control exposure to the editing machinery. To
address more than one target, other gene editing technologies require the engineering, characterization,
manufacture, and delivery of distinct nuclease proteins for each target.
● Ability to achieve a range of different types of edits. The inherent differences in Cas9 and Cas12a and the
availability of different engineered variants of both enzymes allow for different types of cuts for gene editing.
We are able to make a blunt cut, cut either strand of the DNA, or create overhangs of differing length. This
may be a critical component of improved HDR-driven approaches because the type of DNA cut can
influence the type of repair mechanism used by a cell in response to that cut. We believe the ability to modify
CRISPR technology to allow for different types of cuts will expand the potential of our gene editing
platform.
Our Gene Editing Platform
We have developed a proprietary gene-editing platform that includes different natural and engineered variants of
Cas9 and Cas12a. We have characterized different Cas9 and Cas12a enzymes for several reasons. Firstly, a lower molecular
weight enzyme will have advantages for delivering the endonuclease using a viral vector due to the inherent size
limitations of most such delivery systems. For example, the Cas9 enzyme from Staphylococcus aureus (“S. aureus” or
“SaCas9”) is significantly smaller than that from Streptococcus pyogenes (“S. pyogenes” or “SpCas9”) (3,159 vs. 4,104
base pairs), and this decreased size is important when working with AAV as a delivery vector, which has an effective
packaging limit of approximately 4,700 base pairs. Secondly, we have gained access to modified versions of Cas12a and
Cas12a guide RNAs that increase Cas12a activity. This increased activity may allow us to use Cas12a editing in more
indications where editing at a Cas12a susceptible site is desirable from a biological perspective but technically difficult
with the wild-type Cas12a editing system. EDIT-301 for sickle cell disease and beta-thalassemia is one such example.
Thirdly, identifying Cas9 and Cas12a enzymes with different editing properties will expand the number of potential editing
sites in the human genome. The range of natural and engineered variants of Cas9 and Cas12a have significantly expanded
the number of sites in the human genome that we can potentially target. As compared to the most commonly used,
naturally occurring version of Cas9, from the bacterial species S. pyogenes, the range of endonucleases in our platform can
target approximately ten times as many genomic sites. Thus, while the S. pyogenes Cas9 can target approximately 1 in 10
bases in the human genome, we have the potential to hit over 95% of all bases due to the wide range of endonucleases at
our disposal.
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The guide RNA molecule is another component of our gene editing platform. We have made substantial advances
in the design, synthesis, modification, analysis, and characterization of guide RNAs. For example, in order to accelerate
and standardize the selection of guide RNAs, we have created proprietary analytical software that supports guide RNA
design through single nucleotide polymorphism analysis, specificity prediction, and assessment of relative importance of
potential off target sites.
Of critical importance in determining the activity and specificity of an endonuclease-guide RNA complex is
understanding the quality and composition of the guide RNA. The ability to understand the quality and composition of the
guide RNA is an essential component to developing product candidates that have the potential to be safe and efficacious
medicines. In addition to state-of-the-art mass spectrometry and sequencing methodologies to understand the absolute
composition of our guide RNAs, we have developed two-step synthesis methods which results in guide RNAs which we
believe are significantly superior to those generated by other approaches. This method allows us to independently
synthesize and purify guide RNAs in multiple parts and covalently couple them using a proprietary catalyst-free chemistry.
These covalently coupled, dual-guide RNAs retain the advantages afforded by a single guide RNA and we believe are of
higher quality than a guide RNA made by a single synthesis reaction. We believe this method will lead to higher quality
gene editing medicines.
Our gene editing platform includes multiple modular delivery modes that can be efficiently adapted to deliver
different CRISPR gene editing components to address the specific needs of each disease targeted. Our strategy is to
leverage existing delivery technologies to target cell types of interest while developing next generation capabilities as
warranted. We are currently using, and will continue to use, a variety of delivery approaches, including AAVs and
electroporation. For example, we have taken advantage of the smaller S. aureus Cas9 and existing AAV technology to
construct an “all-in-one” viral vector that is able to deliver the DNA coding for the nuclease protein and one or two guide
RNAs directly to cells. We believe our ability to configure all the components for gene editing in an “all-in-one” AAV
vector has substantial advantages for manufacturing and delivery compared to approaches that rely on multiple vectors. In
addition, we have also made substantial advances in the ex vivo delivery of CRISPR systems to a number of cell types. We
have been able to demonstrate greater than 90% ex vivo editing on multiple genetic targets simultaneously in human T cells
and greater than 90% ex vivo editing in hematopoietic stem cells using ribonucleoprotein complexes, which consist of the
Cas9 or Cas12a endonuclease complexed with its guide RNA. These results are consistent across multiple cell donors and
multiple target genes.
To optimize the specificity of our product candidates, there are a number of different aspects of the product
configuration that we customize in addition to the sequence and quality of the guide RNA, including the length of the guide
RNA, the type of Cas9 or Cas12a enzyme, including engineered forms, the delivery vector, the use of tissue-selective
promoters, and the duration of exposure all contribute to overall specificity. For example, to reduce the potential
persistence of gene editing activity, we are developing self-regulating gene editing systems designed to deliver not only the
endonuclease-guide RNA complex, but also an “off switch” that reduces the presence of the endonuclease-guide RNA
complex over time. We have completed studies of these systems that demonstrate the ability to both maintain on-target
editing and also reduce levels of editing components once the on-target edit is expected to have been completed.
Our Gene Editing Medicine Programs
We have initiated a diversified range of research programs across multiple therapeutic and disease areas. Our
product development strategy is to target diseases where gene editing can be used to enable or enhance therapeutic
outcomes for patients. We believe the therapeutic programs and delivery technologies we have chosen to date will
demonstrate the depth and breadth of our ability to deploy our genome editing platform to develop differentiated,
transformational medicines for patients with high unmet need. The following summarizes our product candidates, research
programs and disease areas:
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In Vivo Gene Editing Medicines - Ocular
Our initial focus for our in vivo gene-edited medicines is ocular diseases. We estimate that over 5 million people
worldwide suffer from autosomal recessive inherited retinal diseases. In ocular diseases, our most advanced in vivo gene-
edited medicine, EDIT-101, is designed to treat LCA10. We are leveraging our experience with the LCA10 program to
support the development of therapies for other eye diseases, including USH2A and adRP4.
Leber Congenital Amaurosis 10
Leber congenital amaurosis (“LCA”) is a heterogeneous group of inherited retinal dystrophies caused by
mutations in at least 18 different genes and is the most common cause of inherited childhood blindness, with an incidence
of two to three per 100,000 live births worldwide. Symptoms of LCA appear within the first year of life with significant
vision loss, rapid involuntary movements of the eyes, painful eye response to bright light, and absence of measurable
electroretinogram recordings due to a lack of functional photoreceptor cells. The most common form of the disease is
LCA10, a monogenic disorder that represents approximately 20-30% of all LCA subtypes. LCA10 is caused by autosomal
recessive mutations in the CEP290 gene, which encodes a protein required for the survival and proper function of
photoreceptor cells. The most frequently found mutation within the CEP290 gene, occurring in approximately 85% of
north and west European patients with LCA10, is an A to G nucleotide change that disrupts normal splicing, or processing,
of the gene message, ultimately resulting in a deficiency of functional CEP290 protein. Decreased CEP290 protein leads to
loss of the outer segments of photoreceptor cells and function over time, which leads to blindness. We believe there are
approximately 4,000 LCA10 patients in the United States and Europe and over 30,000 in the rest of the world.
EDIT-101 uses an AAV5 vector to deliver the DNA encoding SaCas9 and two guide RNAs to photoreceptor cells
in the eye. EDIT-101 is designed to eliminate a disease-causing A to G nucleotide change in a non-coding region, or intron,
of the CEP290 gene by cutting out that nucleotide and surrounding DNA. We believe this genome editing approach has the
potential to restore normal protein expression and function of the remaining photoreceptor cells, which could improve
vision or arrest the further loss of vision in LCA patients. Certain clinical research studies estimated that retention of 10%
of photoreceptors can impart meaningful vision in humans. Based on these studies, we have prespecified a therapeutic
target of 10% productive editing of photoreceptors with the assumption that each productively edited photoreceptor will be
fully functional. We tested EDIT-101 in preclinical studies by delivering several dose quantities of EDIT-101 subretinally
in mice that had a humanized CEP290 gene. Subretinal delivery of EDIT-101 in humanized CEP290 mice showed rapid
and sustained CEP290 gene editing. These studies demonstrated that EDIT-101 edited the relevant cells at therapeutically
relevant levels as early as a week following dosing and greater than 10% editing at AAV dose levels that have been safely
administered to humans based on prior clinical studies.
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To investigate genome editing in vivo, we conducted studies in non-human primates using subretinal injection of
an AAV5 expressing SaCas9 and nonhuman primate specific guide RNAs. After either six or 13 weeks, animals were
euthanized and retinal tissue from the injected region was removed for analysis. These studies showed that AAV genomes
and Cas9 expression were limited to photoreceptors. In addition, we estimate that 12-22% and 50% of CEP-290 alleles
were productively edited at six weeks and at 13 weeks, respectively. In these studies, productive editing is defined as the
proportion of photoreceptor cells edited in a manner that we believe will restore CEP290 protein function. All of these
values exceed our prespecified therapeutic target of 10% productive editing. Furthermore, these doses were shown in
subsequent studies to be well tolerated in non-human primates based on visual and immunohistochemical analysis. Similar
studies in mice showed that editing was rapid, achieving maximum levels by six weeks, and stable with changes
maintained for the 26 weeks of the study at an AAV dose that has been safely administered to humans.
In mid-2019, we and our then-partner Allergan Pharmaceuticals International Limited (together with its affiliates,
“Allergan”) initiated an initial Phase 1/2 clinical trial which is an open-label, single ascending dose trial of EDIT-101 in
adult and pediatric (i.e., ages 3 to 17 years) patients with retinal degeneration caused by a homozygous or compound
heterozygous mutation of the CEP290 gene, which is referred to as an IVS26 mutation. Patients will receive a single dose
of EDIT-101 administered via subretinal injection in one eye. Approximately 18 patients will be enrolled at approximately
eight trial centers in the United States and Europe. Up to five cohorts across three doses will be enrolled in this clinical
trial. The primary endpoint of the trial is an assessment of safety and tolerability, and the secondary endpoint is to evaluate
and identify endpoints of efficacy of a single dose of EDIT-101 on change from baseline in various parameters. Efficacy
will be evaluated at multiple timepoints, including core measures every three months for the first year and then less
frequently thereafter. In March 2020, we announced the first patient in this clinical trial was dosed, and we completed
dosing of the adult low-dose cohort by the end of 2020. To date, there have been no reported severe adverse events or dose
limited toxicity with respect to the patients in the first cohort. We experienced slowed enrollment for subsequent cohorts
due to the ongoing impact of the COVID-19 pandemic. However, we initiated dosing of the adult mid-dose cohort in the
first quarter of 2021. We expect to announce initial clinical data in 2021. As a result of the termination of our collaboration
with Allergan in August 2020, we have regained full responsibility for this clinical trial.
Other Eye Diseases
We are also pursuing the development of therapies for eye diseases other than LCA10, including USH2A and
adRP4. We believe that our experience with the LCA10 program supports the development of therapies for these other eye
diseases. For example, the successful construction and testing of the components of the AAV vector we are pursuing for
EDIT-101 continue to inform our approach to treating the most common cause of USH2A.
Usher Syndrome 2A
USH2A gene mutations are the most common cause of Usher syndrome, a form of retinitis pigmentosa that also
includes hearing loss. Loss of the usherin protein encoded by the USH2A gene leads to a degeneration of the retina and
progressive vision loss. More than 200 mutations have been identified for this gene. Our initial goal in this research
program is to address mutations within exon 13, which contains the highest percentage of USH2A gene mutations. We
believe there are over 4,500 USH2A patients with the mutation we aim to correct in the United States and Europe and over
40,000 in the rest of the world. We have declared a development candidate, EDIT-102, to treat USH2A patients. EDIT-102
is comprised of the same proprietary enzyme, vector and promoter as EDIT-101.
We tested EDIT-102 in preclinical studies of human cell lines and demonstrated approximately 47% productive
editing in the cells that resulted in such cells expressing 60% more USH2A messenger RNA as compared to the unedited
cells. In other preclinical studies, we tested EDIT-102 in humanized retinal organoids, which are three-dimensional
structures derived from human pluripotent stem cells and can serve as an in vitro model of retinas. These studies
demonstrated noticeable increases in the proper localization of the usherin complex in the photoreceptor cells at 120-140
days, as compared to retinal organoids formed from cells that contained a patient-derived mutation in exon 13.
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Retinitis Pigmentosa
Mutations in the human rhodopsin (“RHO”) gene account for 25% of all forms of adRP4, a progressive form of
retinal degeneration characterized by initial night blindness early in life followed by loss of peripheral vision and eventual
complete blindness. More than 150 mutations in the RHO gene have been identified, with the most prevalent allele in the
United States representing approximately 10% of all patients with adRP4. We believe there are over 18,000 adRP4 patients
with mutations in the RHO gene in the United States and Europe and over 15,000 in the rest of the world. Leveraging our
EDIT-101 and EDIT-102 learnings, we are developing a novel approach to treat all forms of adRP4 resulting from
mutations in the RHO gene and aim to declare a development candidate, potentially using the same enzyme and vector as
EDIT-101, by the end of 2021.
In Vivo Gene Editing Medicines – Early Discovery Programs
We believe the curative potential for gene editing is significant in light of the over 6,000 human genetic disorders.
In addition to our ocular programs, we hope to leverage our expertise in developing gene-editing medicines utilizing AAV
delivery to expand our in vivo programs to treat additional diseases and therapeutic areas, including neuromuscular, liver,
hematological, central nervous system and cardiological disorders. Under our research collaboration with AskBio, we are
aiming to develop a therapy to treat a neurological disease.
Ex Vivo Gene Editing Cell Medicines
Our most advanced ex vivo gene-edited cell medicine, EDIT-301, is designed to treat sickle cell disease and beta-
thalassemia. We are also developing multiple ex vivo gene-edited cell medicines for the potential treatment of different
cancers, including solid tumors. In our collaboration with Juno Therapeutics, we are researching and developing
engineered alpha-beta T cell therapies to treat cancer and autoimmune diseases. In our wholly owned oncology programs,
we are further developing our capabilities to generate certain engineered NK cells from iPSCs that we edit to treat solid
tumors. We are also collaborating with BlueRock to increase our technical capabilities in such programs.
Ex Vivo Gene Editing Cell Medicines – Hemoglobinopathies
We are developing an approach for gene editing in HSCs to support the advancement of research programs to treat
non-malignant hematological diseases, including sickle cell disease and beta thalassemia.
There are over 165,000 sickle cell disease patients, and over 15,000 beta-thalassemia patients, in the United States
and Europe. Patients suffering from sickle cell disease have a median life expectancy of 42-47 years, while those with beta-
thalassemia typically suffer from chronic anemia, often requiring lifelong blood transfusions that can result in iron overload
that requires separate treatment. We are actively pursuing a distinct gene editing approach to treating these
hemoglobinopathies. Our primary criteria for a successful product candidate include high and pancellular fetal hemoglobin
("HbF") with a best-in-class safety profile. To this end, we have developed EDIT-301, an experimental, autologous cell
therapy that targets the HBG1/2 promoter in the beta-globin gene to stimulate HbF production, to treat sickle cell disease.
EDIT-301 is the first experimental medicine in development generated using CRISPR/Cas12a (also known as Cpf1) gene
editing.
We have focused our efforts on editing a site within the beta-globin locus that we believe has the potential to
create superior expression of fetal hemoglobin since patients with elevated fetal hemoglobin levels have better clinical
outcomes. We believe that EDIT-301 has the potential to impact beta-globin expression by increasing HbF and decreasing
sickle globin. In particular, our preclinical data shows that EDIT-301 induces more HbF than the approach of targeting
the BCL11A erythroid enhancer (“BC11Ae”). Likewise, we believe our approach will reduce the sickle globin and,
therefore, not have to compete for alpha globin in the same cell unlike lentiviral gene therapy approaches. Our preclinical
studies identified the potential that BC11Ae might result in deleterious lineage skewing when editing the BCL11Ae locus.
Finally, gene editing is more specific than lentiviral expression. To get the high levels of beta-globin required for an
efficacious therapy, there will be cells in the CD34+ population, which are cells that contain the long-term stem cells that
repopulate the hematopoietic lineages, that carry more than twenty copies of the viral genome. These random integration
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events have the potential to inadvertently activate or inactivate genes involved in cell function and tumorigenesis. As such,
we believe our approach to editing the beta-globin locus provides the highest likelihood of providing clinical benefit in
patients while minimizing potential safety risks.
Using our approach in preclinical studies, we tested the ability of CD34+ cells obtained from healthy donors and
edited at the beta-globin locus to induce fetal hemoglobin. As predicted from our preclinical in vitro studies, editing at the
beta-globin site with Cas12a caused a robust, pancellular induction of HbF of approximately 45% above the background
levels.
We also tested CD34+ cells obtained from sickle cell patients, which we edited at the beta-globin locus. These
studies showed that editing was highly efficient and reproducible, with approximately 90% editing in multiple sickle
patient donors. We found that EDIT-301 derived red blood cells had more than 50% HbF expression. Further, EDIT-301
derived red blood cells had a significant improvement in deformability, which could aid red blood cell transit without
sickling, and a four-fold decrease in sickling, when subjected to reduced oxygen levels compared to unedited control cells.
These data suggest EDIT-301 can provide potential clinical benefit for sickle patients. In vivo studies revealed editing was
highly efficient with greater than 90% editing in bone marrow cells from mice infused with edited CD34+ cells 16 weeks
post-infusion. In these mice, HbF expression was increased by approximately 50% in the red blood cells derived from these
edited cells. We also observed that approximately 90% of these cells were HbF positive, demonstrating that HbF
expression was pan-cellular, which we believe is likely a critical property for potential clinical benefit. For these reasons,
we believe our approach of editing the hemoglobin locus to increase fetal hemoglobin has the potential to generate
differentiated medicines to benefit patients with sickle cell disease and beta thalassemia.
In January 2021, the FDA cleared the initiation of the safety phase of our Phase 1/2 RUBY clinical trial for EDIT-
301 for sickle cell disease, and permitted us to begin dosing patients, which we expect to occur in 2021. This trial is a
single-arm, open-label, multi-center Phase 1/2 study designed to assess the safety and efficacy of EDIT-301 in patients with
sickle cell disease. Enrolled patients will receive a single administration of EDIT-301. We are manufacturing components
of the clinical trial materials. We also aim to file an IND for EDIT-301 for the treatment of beta-thalassemia by the end of
2021.
Our IND for EDIT-301 permits us to proceed with the safety portion of our Phase 1/2 RUBY clinical trial.
Prior to commencing the efficacy portion of the RUBY clinical trial, we will be required to resolve the partial clinical
hold on EDIT-301 related to developing a potency assay to ensure that the characteristics of the product released are as
expected and confirmed by clinical data collected in the first patients treated. We do not expect that the overall timing
for clinical development of EDIT-301 will be affected by the partial clinical hold. Further, the partial clinical hold does
not impact our ability to conduct our clinical development activities of EDIT-301 for the safety portion of the trial. If the
partial clinical hold is not lifted on the Phase 1/2 RUBY clinical trial, we will not be able to collect the efficacy data of
EDIT-301 necessary to support an application for approval.
Ex Vivo Gene Edited Cell Medicines – Oncology
Natural Killer Cells
We are developing gene-edited NK cell medicines to treat solid tumors. The American Cancer Society estimates
that there are over 1.3 million new cases of solid tumor cancers, linked to over 400,000 deaths, annually in the United
States. NK cells are innate immune cells that can recognize tumor cells by a variety of mechanisms, including multiple
innate receptors that recognize cells that do not express T cell antigens and cells that express stress ligands. NK cells are
also part of a process known as antibody-directed cellular cytotoxicity (“ADCC”) by which therapeutic antibodies are
directed to and kill tumor cells. Further, NK cells have a lower risk of causing graft versus host disease. If we are
successful, genome-edited NK cells have the potential to increase the signaling power of ADCC pathways, improve the
persistence of NK cells and/or increase tumor microenvironment resistance. Genome-edited NK cells may be further
engineered with one or more chimeric antigen receptors (“CARs”) or innate receptors to further improve one or more of
these properties. For example, gene-edited engineered NK cells could be used to improve recognition of tumor cells
lacking T cell antigens, including PD-1 non-responding tumors.
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We obtain NK cells by differentiating iPSCs into such cells. Once we have obtained the cells, we then edit them to
increase certain of the natural properties of the cell to better enable them to treat solid tumors, such as the cells persistence
in vivo, its ability to withstand the tumor micro-environment, improved ability to cause ADCC and improved recognition
of tumor cells. In preclinical studies, we achieved 70-100% editing in five genes in iPSCs. For one such edited iPSC, the
resulting edited iNKs killed 74% of cultured cells while unedited cells only killed 2% of cultured cells. We aim to
accelerate the development of iNK cell medicines for the treatment of solid tumor cancers in 2021.
Alpha-Beta T Cells
Engineered T cells, including alpha-beta T cells, have shown encouraging clinical activity against multiple
cancers, culminating in the recent approval of two such therapies in the United States. Because of these promising results,
there is significant interest in the medical community in expanding the application of this technology across a broader
range of cancers and patients. We believe that our genome editing technology has the potential to improve multiple
properties of these alpha-beta T cell therapies. Alpha-beta cells are part of the adaptive immune system and recognize
tumors with endogenous alpha-beta T cell receptors or CARs or engineered T cell receptors (“Engineered TCRs”). If we
are successful, genome-edited engineered alpha-beta T cells have the potential to significantly expand the types of cancers
treatable by CAR/ Engineered TCR alpha-beta T cells and to improve the outcomes of these therapies.
Through our collaboration with Juno Therapeutics, we have applied our genome editing technology to multiple
gene targets in order to improve the efficacy and safety of CAR/ Engineered TCR alpha-beta T cells directed against a
range of tumor types. In addition, we have optimized genome editing components and delivery methods compatible with
engineered alpha-beta T cell manufacturing methods developed by Juno Therapeutics.
Gamma Delta T Cells
Like NK cells, gamma delta T cells are part of the innate immune system. We have retained rights to develop
gamma delta T cell therapies to treat cancer, and we hope to leverage our capabilities and expertise in alpha-beta T cells
and our NK cell programs to develop such therapies.
Our Collaborations and Licensing Strategy
Juno Therapeutics Collaboration and License Agreement
In May 2015, we entered into a collaboration and license agreement with Juno Therapeutics for the research and
development of engineered T cells with CARs and Engineered TCRs that have been genetically modified to recognize and
kill other cells. We and Juno Therapeutics amended and restated this agreement in May 2018 and November 2019 (the
“Juno Collaboration Agreement”) and, in connection with the amendment and restatement in November 2019, we entered
into a license agreement with Juno Therapeutics (such agreement, the “Juno License Agreement,” and together with the
Juno Collaboration Agreement, the “Juno Agreements”). Under the terms of the Juno Collaboration Agreement, we
received an upfront payment of $25.0 million, amendment fees totaling $75.0 million and have received five milestone
payments totaling $15.0 million, in addition to certain opt-in fees.
The Juno Agreements relate to technology used to edit or modify the genome of a cell in connection with the
research, development, manufacture, commercialization or other exploitation of T cells that express or have ever expressed
T cell receptor dimers consisting of an alpha (α) chain and a beta (β) chain (such cells, “Alpha-beta T Cells”), and T cells
derived from pluripotent stem cells or any other precursor cell (such cells, “Other Derived T Cells”), subject to certain
exclusions for certain of our existing obligations. The exploitation of Alpha-beta T Cells and Other Derived T Cells
specifically excludes the exploitation of T Cells that express a T cell receptor dimer consisting of a gamma (γ) chain and a
delta (δ) chain, which we refer to as gamma-delta T Cells. As such, we may develop such gamma delta T Cells.
During the research term under the Juno Collaboration Agreement, we may research ribonucleoprotein complexes
comprising an RNA-guided engineered nuclease paired with an oligonucleotide (“RNP Complexes”) that
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recognize or modulate the expression of up to twenty gene targets selected by Juno Therapeutics (each, a “Research
Program”) for the purpose of identifying the RNP Complexes that may be used in the creation of potential drug
development candidates. The initial research term is five years from the effective date of the Juno Collaboration
Agreement. Juno Therapeutics may extend the research term for up to two one-year periods upon written notice to us and
payment to us of a mid to high single digit million-dollar payment upon each extension. Juno Therapeutics’ right to extend
the research term for the second one-year period is subject to our consent.
Under the Juno Collaboration Agreement, if Juno Therapeutics elects to opt-in with respect to a Research
Program, it shall make a mid-six digit dollar payment to us and we shall amend the Juno License Agreement to include
such Research Program by executing a licensed program addendum for such Research Program. Following Juno
Therapeutic’s opt-in for each program we shall grant to Juno Therapeutics an exclusive (even as to us), royalty-bearing
worldwide right and license under specified intellectual property rights to research, develop, manufacture commercialize or
otherwise exploit the RNP Complexes in such Research Program to create products containing, incorporating, comprising
or containing Alpha-beta T Cells and/or Other Derived T Cells, in each case modified using the RNP Complexes in such
Research Program (each, a “Juno Licensed Product”).
We are entitled to receive high single-digit to low double-digit percentage royalties on net sales made by Juno
Therapeutics, its affiliates and sublicensees of any Juno Licensed Products, subject to reductions in certain circumstances.
We are also entitled to receive development milestones totaling up to $135.0 million in the aggregate upon achievement of
certain clinical milestones and specified regulatory approvals and commercial milestone payments totaling up to $60.0
million in the aggregate for each of the first two Juno Licensed Products to achieve specified net sales milestones.
We have agreed during the term of the Juno Collaboration Agreement not to use (directly or indirectly), or license
others to use, genome editing technology in connection with any research, development, manufacture, commercialization
or other exploitation of any Alpha-beta T Cells or Other Derived T Cells. Our exclusivity obligation will not apply to
activities related to (i) any identified RNP Complexes in a program for which Juno Therapeutics elects not to exercise its
opt-in right, (ii) certain of our existing obligations to third parties, and (iii) certain existing programs of an acquiror of our
company in a change of control.
We have agreed during the term of any licensed program addendum under the Juno License Agreement not to use
(directly or indirectly), or license others to use, any genome editing technology that modulates or recognizes a gene target
covered by such licensed program addendum for the conduct of any research, development, manufacture,
commercialization or other exploitation with respect to any product that constitutes, incorporates, comprises or contains
any Alpha-beta T Cell or Other Derived T Cells.
The Juno Collaboration Agreement continues in effect until the later of expiration of the research term or
expiration of the last to expire of Juno Therapeutics’ right to opt-in with respect to any Research Program. Juno
Therapeutics may terminate the Juno Collaboration Agreement in its discretion upon six months’ prior written notice to us.
Either party may terminate the Juno Collaboration Agreement for uncured material breach of the other party, provided that
the breaching party has had sixty days to cure such breach, or in the event of insolvency or bankruptcy of the other party.
The Juno License Agreement continues in effect on a Juno Licensed Product-by-Juno Licensed Product and
country-by-country basis until the expiration of the royalty term with respect to such licensed product in such country and
in its entirety upon the expiration of all royalty terms with respect to all Juno Licensed Products in all countries. Juno
Therapeutics may terminate the Juno License Agreement in its entirety or on a Juno Licensed Product-by-Juno Licensed
Product basis in its discretion upon ninety days’ prior written notice to us. Either party may terminate the Juno License
Agreement on a Juno Licensed Product-by-Juno Licensed Product basis in the event of an uncured material breach of the
other party, provided that the breaching party has had sixty days to cure such breach, or in the event of insolvency or
bankruptcy of the other party. We have the right to terminate the Juno License Agreement on a program-by-program basis
in the event that Juno Therapeutics fails to make any undisputed payment to us and has not cured such payment breach
within the cure period. Other than Juno Therapeutics’ right to wind-down its operations with respect to
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Juno Licensed Products during the twelve months following the date of effectiveness of termination, all licenses and other
exclusive rights granted under the Juno License Agreement shall terminate.
Allergan Agreement
In March 2017, we entered into a strategic alliance and option agreement with Allergan to discover, develop, and
commercialize new gene editing medicines for a range of ocular disorders. Pursuant to this agreement, we granted Allergan
an exclusive option to exclusively license from us up to five collaboration development programs for the treatment of
ocular disorders, including EDIT-101. In July 2018, Allergan exercised its option to develop and commercialize EDIT-101
and we subsequently entered into a co-development and commercialization agreement with Allergan under which we
agreed to co-develop and equally split profits and losses for EDIT-101 in the United States. In connection with entering
into this agreement, Allergan paid us a one-time up-front payment of $90.0 million. Allergan also paid us $15.0 million in
connection with Allergan exercising its option for the LCA10 program and $25.0 million in connection with the acceptance
of the IND for the LCA10 program.
Allergan was acquired by AbbVie Inc. in May 2020. On August 5, 2020, we entered into a termination agreement
with Allergan pursuant to which, among other things, we and Allergan terminated the strategic alliance and option
agreement and the co-development and commercialization agreement. As a result of the termination of our collaboration
with Allergan, we regained full global rights to research, develop, manufacture, and commercialize our ocular product
candidates, including EDIT-101 for the treatment of LCA10. Under the termination agreement, Allergan granted us a non-
exclusive, royalty-bearing right and license, including the right to grant sublicenses (through multiple tiers), to certain
Allergan know-how that is necessary to develop, manufacture and commercialize EDIT-101. In addition, we are obligated
to use commercially reasonable efforts to develop and commercialize a product directed to each of four collaboration
targets, one of which is LCA10. In connection with our entry into the termination agreement, we made a one-time
aggregate payment of $20.0 million to Allergan. In addition, we will make certain payments on achievements of clinical
and regulatory milestones up to $20.0 million for each target program and aggregated sales milestones for all products
covered by the termination agreement up to $90.0 million. We are also obligated to pay royalties in a low-single digit
percentage, subject to reduction under specified circumstances, on net sales of specified products. Our obligation to pay
royalties will expire on a country-by-country and product-by-product basis upon the later of the expiration of regulatory-
based exclusivity with respect to such product in such country and the tenth anniversary of the first commercial sale of
such product.
Intellectual Property Licenses
We are a party to a number of license agreements under which we license patents, patent applications, and other
intellectual property from third parties. The licensed intellectual property covers, in part, CRISPR-related compositions of
matter and their use for genome editing. These licenses impose various diligence and financial payment obligations on us.
We expect to continue to enter into these types of license agreements in the future. We consider the following license
agreements to be material to our business.
The Broad Institute and President and Fellows of Harvard College License Agreement
In October 2014, we entered into a license agreement with The Broad Institute, Inc. (“Broad”) and the President
and Fellows of Harvard College (“Harvard”), for specified patent rights. In December 2016, we amended and restated this
license agreement and further amended the agreement in March 2017 (as amended, the “Cas9-I License Agreement”).
Among other things, the Cas9-I License Agreement amended the original license agreement by excluding additional fields
from the scope of the exclusive license granted to us; converting the exclusive license to three specified targets to a non-
exclusive license, subject to specified limitations; revising certain provisions relating to the rights of Harvard and Broad to
grant further licenses under specified circumstances to third parties that wish to develop and commercialize products that
target a particular gene and that otherwise would fall within the scope of our exclusive license; and providing Harvard and
Broad with certain rights to designate, and reserve all rights to, gene targets for which the designating institution has an
interest in researching and developing products that would otherwise be covered by rights licensed to us. The licenses
granted to us under the Cas9-I License Agreement include rights to certain patents solely owned by Harvard (the “Harvard
Cas9-I Patent Rights”), certain patents co-owned by the Massachusetts Institute
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of Technology (“MIT”) and Broad, certain patents co-owned by MIT, The Rockefeller University (“Rockefeller”), and
Broad, and certain patents co-owned by MIT, Broad and Harvard. We refer to all the patents and patent applications
licensed to us under the Cas9-I License Agreement as the Harvard/Broad Cas9-I Patent Rights.
Certain patent applications in the Harvard/Broad Cas9-I Patent Rights are jointly owned by Rockefeller. In
February 2017, Broad and Rockefeller entered into an inter-institutional agreement pursuant to which Rockefeller
authorized Broad to act as its sole and exclusive agent for the purposes of licensing Rockefeller’s rights in such
Harvard/Broad Cas9-I Patent Rights and any additional related patents or patent applications that Rockefeller may jointly
own with Broad. The March 2017 amendment to the Cas9-I License Agreement included a license to Rockefeller’s rights
in such patents and patent applications.
The Harvard/Broad Cas9-I Patent Rights are directed, in part, to certain CRISPR/Cas9 compositions of matter and
their use for genome editing and to certain CRISPR/Cas9 related delivery technologies. Pursuant to the Cas9-I License
Agreement, and as of December 31, 2020, we have certain rights under 54 U.S. patents, 56 pending U.S. patent
applications, 30 European patents and related validations, 29 pending European patent applications, and other related
patent applications in jurisdictions outside of the United States and Europe.
Pursuant to the Cas9-I License Agreement, Harvard and Broad granted us an exclusive, worldwide, royalty-
bearing, sublicensable license to the Harvard/Broad Cas9-I Patent Rights to make, have made, use, sell, offer for sale, have
sold, import, and export products and services in the field of the prevention and treatment of human disease, subject to
certain limitations and retained rights. The exclusive license granted by Broad and Harvard excludes certain fields,
including the modification of animals or animal cells for the creation and sale of organs suitable for xenotransplantation
into humans; the research, development and commercialization of products or services in the field of livestock
applications; plant-based agricultural products; and, subject to certain limitations, products providing nutritional benefits.
Moreover, the license granted by Broad is non-exclusive with respect to the treatment of medullary cystic kidney disease 1
and three other specified targets, subject to the limitation that for such three targets, each of Broad and Harvard is only
permitted to grant a non-exclusive license to one third party at a time with respect to each such target within the field of
exclusive license granted to us. Harvard and Broad also granted us a non-exclusive, worldwide, royalty-bearing,
sublicensable license to the Harvard/Broad Cas9-I Patent Rights for all purposes, with the exception that the non-exclusive
license to certain Harvard Cas9-I Patent Rights excludes the modification of animals or animal cells for the creation and
sale of organs suitable for xenotransplantation into humans and the development and commercialization of products or
services in the field of livestock applications. In addition to the exclusions described above, the following are excluded
from the scope of both the exclusive and non-exclusive licenses granted to us under the Cas9-I License Agreement: human
germline modification; the stimulation of biased inheritance of particular genes or traits within a population of plants or
animals; the research, development, manufacturing, or commercialization of sterile seeds; and the modification of the
tobacco plant with specified exceptions.
We are obligated to use commercially reasonable efforts to research, develop, and commercialize products for the
prevention or treatment of human disease under the Cas9-I License Agreement. Also, we are required to achieve certain
development milestones within specified time periods for products incorporating the technologies covered by the
Harvard/Broad Cas9-I Patent Rights. Harvard and Broad have the right to terminate our license with respect to the
Harvard/Broad Cas9-I Patent Rights covering the technology or technologies with respect to which we fail to achieve these
development milestones.
The licenses granted by Broad and Harvard to us under the Cas9-I License Agreement are subject to retained
rights of the U.S. government in the Harvard/Broad Cas9-I Patent Rights and the rights retained by Broad, Harvard, MIT,
and Rockefeller on behalf of themselves and other academic, government and non-profit entities, to practice the
Harvard/Broad Cas9-I Patent Rights for research, educational, or teaching purposes. In addition, certain rights granted to us
under the Cas9-I License Agreement are further subject to a non-exclusive license to the Howard Hughes Medical Institute
for research purposes. Our exclusive license rights also are subject to rights retained by Broad, Harvard, MIT, and
Rockefeller any third party to research, develop, make, have made, use, offer for sale, sell, have sold, import or otherwise
exploit the Harvard/Broad Cas9-I Patent Rights and licensed products as research products or research tools, or for research
purposes.
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We have the right to sublicense our licensed rights provided that the sublicense agreement must be in compliance
and consistent with the terms of the Cas9-I License Agreement. Any sublicense agreement cannot include the right to grant
further sublicenses without the written consent of Broad and Harvard. In addition, any sublicense agreements must contain
certain terms, including a provision requiring the sublicensee to indemnify Harvard, Broad, MIT, and Howard Hughes
Medical Institute according to the same terms as are provided in the Cas9-I License Agreement and a statement that Broad,
Harvard, MIT, and Howard Hughes Medical Institute are intended third party beneficiaries of the sublicense agreement for
certain purposes.
Under the agreement, Harvard and Broad also retained rights to grant further licenses under specified
circumstances to third parties, other than specified entities, that wish to develop and commercialize products that target a
particular gene and that otherwise would fall within the scope of our exclusive license from Harvard and Broad. If a third
party requests a license under the Harvard/Broad Cas9-I Patent Rights for the development and commercialization of a
product that would be subject to our exclusive license grant from Harvard and Broad under the Cas9-I License Agreement,
Harvard and Broad may notify us of the request (the “Cas9-I Third Party Proposed Product Requests”). Our process to
address Cas9-I Third Party Proposed Product Requests has been conformed to the same process established in our Cpf1
license agreement described below.
The Cas9-I License Agreement also provides Broad with the right, after a specified period of time and subject to
certain limitations, to designate gene targets for which Broad, whether alone or together with an affiliate or third party, has
an interest in researching and developing products that would otherwise be covered by rights licensed to us under the Cas9-
I License Agreement. Broad may not so designate any gene target for which we, directly or through any of our affiliates,
sublicensees, or collaborators, are researching, developing, or commercializing a product, or for which we can demonstrate
to Broad’s reasonable satisfaction that we are interested in researching, developing, and commercializing a product, that we
have a commercially reasonable research, development, and commercialization plan to do so, and we commence and
continue reasonable commercial efforts under such plan. If we directly or through any of our affiliates, sublicensees, or
collaborators, are not researching, developing, or commercializing a product directed toward the gene target designated by
Broad and are not able to develop and implement a plan reasonably satisfactory to Broad, Broad is entitled to reserve all
rights under the Cas9-I License Agreement, including the right to grant exclusive or non-exclusive licenses to third parties,
to develop and commercialize products directed to such gene target and our license granted with respect to such gene target
will terminate, and we will not be entitled under the Cas9-I License Agreement to develop and commercialize products
directed to that gene target.
Under the Cas9-I License Agreement, we paid Broad and Harvard an upfront license fee in the low six figures and
issued a single-digit percentage of shares of our common stock to Broad (with Broad holding a right to request re-issuance
to its designees, including MIT or MIT’s designee) and Harvard. We also must pay an annual license maintenance fee
ranging from the low- to mid-five figures to the low-six figures, depending on the calendar year. This annual license
maintenance fee is creditable against royalties owed on licensed products and services in the same year as the maintenance
fee is paid. We are obligated to reimburse Broad and Harvard for expenses associated with the prosecution and
maintenance of the Harvard/Broad Cas9-I Patent Rights, including expenses associated with any interference proceedings
in the USPTO, any opposition proceedings in the EPO, or any other inter partes or other post grant proceedings in these or
other jurisdictions where we are seeking patent protection. Therefore, we are obligated to reimburse Broad and/or Harvard
for expenses associated with the interference and opposition proceedings involving patents licensed to us under this
agreement (described in more detail under “Risk Factors—Risks Related to Our Intellectual Property—Some of Our In-
Licensed Patents are Subject to Priority and Validity Disputes” in Part I, Item 1A of this Annual Report on Form 10-K).
Broad and Harvard are collectively entitled to receive clinical and regulatory milestone payments totaling up to
$14.8 million in the aggregate per licensed product approved in the United States, the European Union and Japan for the
prevention or treatment of a human disease that afflicts at least a specified number of patients in the aggregate in the United
States. If we undergo a change of control during the term of the Cas9-I License Agreement, these clinical and regulatory
milestone payments will be increased by a certain percentage in the mid double-digits. We are also obligated to make
additional payments to Broad and Harvard, collectively, of up to an aggregate of $54.0 million upon the occurrence of
certain sales milestones per licensed product for the prevention or treatment of a human disease that afflicts at least a
specified number of patients in the aggregate in the United States. Broad and Harvard are collectively
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entitled to receive clinical and regulatory milestone payments totaling up to $4.1 million in the aggregate per licensed
product approved in the United States and at least one jurisdiction outside the United States for the prevention or treatment
of a human disease that afflicts fewer than a specified number of patients in the aggregate in the United States or a
specified number of patients per year in the United States, which we refer to as an ultra-orphan disease. We are also
obligated to make additional payments to Broad and Harvard, collectively, of up to an aggregate of $36.0 million upon the
occurrence of certain sales milestones per licensed product for the prevention or treatment of an ultra-orphan disease.
Broad and Harvard, collectively, are entitled to receive mid single-digit percentage royalties on net sales of
licensed products for the prevention or treatment of human disease, and ranging from low single-digit to high single-digit
percentage royalties on net sales of other licensed products and services, made by us, our affiliates, or our sublicensees.
The royalty percentage depends on the licensed product and licensed service, and whether such licensed product or
licensed service is covered by a valid claim within the Harvard/Broad Cas9-I Patent Rights. If we are legally required to
pay royalties to a third party on net sales of our licensed products because such third party holds patent rights that cover
such licensed product, then we can credit up to a mid double-digit percentage of the amount paid to such third party against
the royalties due to Harvard and Broad in the same period. Our obligation to pay royalties will expire on a product-by-
product and country-by-country basis upon the later of the expiration of the last to expire valid claim of the Harvard/Broad
Cas9-I Patent Rights that cover the composition, manufacture, or use of each covered product or service in each country or
the tenth anniversary of the date of the first commercial sale of the licensed product or licensed service. If we sublicense
any of the Harvard/Broad Cas9-I Patent Rights to a third party pursuant to our exclusive license under the Cas9-I License
Agreement, Broad and Harvard, collectively, had the right to receive a low to mid double-digit percentage of the sublicense
income, which percentage decreased to a low double-digit percentage in 2018 and may still decrease to a low of a high
single-digit percentage for licensed products for the prevention or treatment of human disease under sublicenses executed
after we meet a certain clinical milestone.
Broad and Harvard retain control of the prosecution of their respective patent rights. If an interference is declared
or a derivation proceeding is initiated, with respect to any Harvard/Broad Cas9-I Patent Rights, then our prosecution
related rights, including our right to receive correspondence from a patent office, will be suspended with respect to the
patent rights involved in the interference or derivation proceeding until, under some circumstances, we enter into a
common interest agreement with that institution. Nevertheless, we remain responsible for the cost of such interference or
derivation proceeding. We are responsible for the cost of the interference proceeding and appeal with respect to these
patents and this patent application. Broad and Harvard are required to maintain any application or patent within the
Harvard/Broad Patents Rights so long as we meet our obligation to reimburse Broad and Harvard for expenses related to
prosecution and there is a good faith basis for doing so. If we cease payment for the prosecution of any Harvard/Broad
Patent Right, then any license granted to us with respect to such Harvard/Broad Patent Right will terminate.
We have the first right, but not the obligation, to enforce the Harvard/Broad Cas9-I Patent Rights with respect to
our licensed products so long as certain conditions are met, such as providing Broad and Harvard with evidence
demonstrating a good faith basis for bringing suit against a third party. We are solely responsible for the costs of any
lawsuits we elect to initiate and cannot enter into a settlement without the prior written consent of Broad and Harvard (and
MIT and Rockefeller, if applicable). Any sums recovered in such lawsuits will be shared between us, Broad, and Harvard.
Unless terminated earlier, the term of the Cas9-I License Agreement will expire on a country-by-country basis,
upon the expiration of the last to expire valid claim of the Harvard/Broad Cas9-I Patent Rights in such country. However,
our royalty obligations, discussed above, may survive expiration or termination. We have the right to terminate the
agreement at will upon four months’ written notice to Broad and Harvard. Broad and Harvard may terminate the agreement
upon a specified period of notice in the event of our uncured material breach, such notice period varying depending on the
nature of the breach. Both Broad and Harvard may terminate the Cas9-I License Agreement immediately if we challenge
the enforceability, validity, or scope of any Harvard/Broad Patent Right or assist a third party to do so, or in the event of
our bankruptcy or insolvency. Neither Broad nor Harvard acting alone has the right to terminate the Cas9-I License
Agreement. However, Broad and Harvard may separately terminate the licenses granted to us with respect to their
respective patent rights upon the occurrence of the same events that would give rise to the right of both institutions acting
collectively to terminate the Cas9-I License Agreement.
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The Broad Institute—Cpf1 License Agreement
In December 2016, we entered into a license agreement with Broad, for specified patent rights (“Cpf1 Patent
Rights”) related primarily to Cas12a compositions of matter and their use for gene editing (as amended, the “Cpf1 License
Agreement”). Pursuant to the Cpf1 License Agreement, Broad, on behalf of itself, Harvard, MIT, Wageningen University
(“Wageningen”), and the University of Tokyo (“Tokyo” and collectively with the other institutions, the “Cpf1 Institutions”)
granted us an exclusive, worldwide, royalty-bearing, sublicensable license to the Cpf1 Patent Rights, to make, have made,
use, have used, sell, offer for sale, have sold, export and import products solely in the field of the prevention or treatment of
human disease using gene therapy, editing of genetic material, or targeting of genetic material, subject to certain limitations
and retained rights (collectively, the “Exclusive Cpf1 Field”), as well as a non-exclusive, worldwide, royalty-bearing,
sublicensable license to the Cpf1 Patent Rights for all other purposes, subject to certain limitations and retained rights. The
licenses granted to us under the Cpf1 License Agreement exclude certain fields, including human germline modification;
the stimulation of biased inheritance of particular genes or traits within a population of plants or animals; the research,
development, manufacturing, or commercialization of sterile seeds; and the modification of the tobacco plant with
specified exceptions.
Tokyo and the National Institute of Health (“NIH”) are joint owners on certain Cpf1 Patent Rights. Broad has only
granted a license to us with respect to its interests and to Tokyo’s interests in these U.S. patent applications but not to any
foreign equivalents thereof. Broad does not, and does not purport to, grant any rights in NIH’s interest in these U.S. patent
applications under our agreement. As a result, we may not have exclusive rights under any U.S. patents that issue from
these U.S. patent applications and we may not have any rights under any foreign patents that issue from any foreign
equivalents thereof.
Pursuant to the Cpf1 License Agreement, and as of December 31, 2020, we have certain rights under three U.S.
patent, 12 pending U.S. patent applications, five European patents and related validations, six pending European patent
applications, and other related patent applications in jurisdictions outside of the United States and Europe.
We are obligated to use commercially reasonable efforts to research, develop, and commercialize licensed
products in the Exclusive Cpf1 Field. We are also required to achieve certain development milestones within specified time
periods for products covered by the Cpf1 Patent Rights, with Broad having the right to terminate the Cpf1 License
Agreement if we fail to achieve these milestones within the required time periods. We have the right to sublicense our
licensed rights provided that the sublicense agreement must be in compliance and consistent with the terms of the Cpf1
License Agreement. Any sublicense agreement cannot include the right to grant further sublicenses without the written
consent of Broad. In addition, any sublicense agreements must contain certain terms, including a provision requiring the
sublicensee to indemnify the Cpf1 Institutions according to the same terms as are provided in the Cpf1 License Agreement
and a statement that the Cpf1 Institutions are intended third party beneficiaries of the sublicense agreement for certain
purposes.
The licenses granted to us under the Cpf1 License Agreement are subject to retained rights of the U.S. government
in the Cpf1 Patent Rights and rights retained by the Cpf1 Institutions on behalf of themselves and other academic,
government and non-profit entities, to practice the Cpf1 Patent Rights for research, teaching, or educational purposes. Our
exclusive license rights also are subject to rights retained by the Cpf1 Institutions for themselves and any third party to
research, develop, make, have made, use, offer for sale, sell, have sold, import or otherwise exploit the Cpf1 Patent Rights
and licensed products as research products or research tools, or for research purposes.
Under the Cpf1 License Agreement, Broad also retained rights to grant further licenses under specified
circumstances to third parties that wish to develop and commercialize products that target a particular gene and that
otherwise would fall within the scope of our exclusive license from Broad. If a third party requests a license under the Cpf1
Patent Rights for the development and commercialization of a product that would be subject to our exclusive license grant
from Broad (a “Cpf1 Third Party Proposed Product Request”), Broad may notify us of such request. A Cpf1 Third Party
Proposed Product Request must be accompanied by a research, development and commercialization plan reasonably
satisfactory to Broad, including evidence that the third party has, or reasonably expects to have, access to any necessary
intellectual property and funding. Broad may not grant a Cpf1 Third Party Proposed Product Request
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(i) if we, directly or through any of our affiliates, sublicensees, or collaborators are researching, developing, or
commercializing a product directed to the same gene target that is the subject of the Cpf1Third Party Proposed Product
Request (“Cpf1 Licensee Product”) and we can demonstrate such ongoing efforts to Broad’s reasonable satisfaction, or
(ii) if we, directly or through any of our affiliates or sublicensees, wish to do so either alone or with a collaboration partner,
and we can demonstrate to Broad’s reasonable satisfaction that we are interested in researching, developing, and
commercializing a Cpf1 Licensee Product, that we have a commercially reasonable research, development, and
commercialization plan to do so, and we commence and continue reasonable commercial efforts under such plan. If we,
directly or through any of our affiliates, sublicensees, or collaborators, are not researching, developing, or commercializing
a Cpf1 Licensee Product nor able to develop and implement a plan reasonably satisfactory to Broad, Broad may grant an
exclusive or non-exclusive license to the third party on a gene target-by-gene target basis.
The Cpf1 License Agreement also provides Broad with the right, subject to certain limitations, to designate gene
targets for which Broad, whether alone or together with a Cpf1 Institution, affiliate or third party, has an interest in
researching and developing products that would otherwise be covered by rights licensed to us under the Cpf1 License
Agreement. Broad may not so designate any gene target for which we, directly or through any of our affiliates,
sublicensees, or collaborators, are researching, developing, or commercializing a product, or for which we can demonstrate
to Broad’s reasonable satisfaction that we are interested in researching, developing, and commercializing a product, that we
have a commercially reasonable research, development, and commercialization plan to do so, and we commence and
continue reasonable commercial efforts under such plan. If we, directly or through any of our affiliates, sublicensees, or
collaborators, are not researching, developing, or commercializing a product directed toward the gene target designated by
Broad and are not able to develop and implement a plan reasonably satisfactory to Broad, Broad is entitled to reserve all
rights under the Cpf1 License Agreement, including the right to grant exclusive or non-exclusive licenses to third parties,
to develop and commercialize products directed to such gene target, our license with respect to such gene target will
terminate, and we will not be entitled under the Cpf1 License Agreement to develop and commercialize products directed
to such gene target.
Under the Cpf1 License Agreement, we paid Broad and Wageningen an aggregate upfront license fee in the mid
seven digits and issued to Broad and Wageningen promissory notes (the “Initial Promissory Notes”) in an aggregate
principal amount of $10.0 million, which we settled in full in 2017. Broad and Wageningen are collectively entitled to
receive clinical and regulatory milestone payments totaling up to $20.0 million in the aggregate per licensed product
approved in the United States, the European Union and Japan for the prevention or treatment of a human disease that
afflicts at least a specified number of patients in the aggregate in the United States. If we undergo a change of control
during the term of the Cpf1 License Agreement, certain of these clinical and regulatory milestone payments will be
increased by a certain percentage in the mid double-digits. We are also obligated to make additional payments to Broad and
Wageningen, collectively, of up to an aggregate of $54.0 million upon the occurrence of certain sales milestones per
licensed product for the prevention or treatment of a human disease that afflicts at least a specified number of patients in
the aggregate in the United States. Broad and Wageningen are collectively entitled to receive clinical and regulatory
milestone payments totaling up to $6.0 million in the aggregate per licensed product approved in the United States, the
European Union and Japan for the prevention or treatment of an ultra-orphan disease. We are also obligated to make
additional payments to Broad and Wageningen, collectively, of up to an aggregate of $36.0 million upon the occurrence of
certain sales milestones per licensed product for the prevention or treatment of an ultra-orphan disease.
Broad and Wageningen, collectively, are entitled to receive mid single-digit percentage royalties on net sales of
products for the prevention or treatment of human disease, and ranging from sub single-digit to high single-digit percentage
royalties on net sales of other products and services, made by us, our affiliates, or our sublicensees. The royalty percentage
depends on the product and service, and whether such licensed product or licensed service is covered by a valid claim
within the Cpf1 Patent Rights. If we are legally required to pay royalties to a third party on net sales of our products
because such third party holds patent rights that cover such licensed product, then we can credit up to a mid double-digit
percentage of the amount paid to such third party against the royalties due to Broad and Wageningen in the same period.
Our obligation to pay royalties will expire on a product-by-product and country-by-country basis upon the later of the
expiration of the last to expire valid claim of the Cpf1 Patent Rights that covers each licensed product or licensed service in
each country or the tenth anniversary of the date of the first commercial sale of the product or service. If we sublicense any
of the Cpf1 Patent Rights to a third party, Broad and Wageningen, collectively, have the right to
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receive high single-digit to low double-digit percentages of the sublicense income, depending on the stage of development
of the products or services in question at the time of the sublicense.
Under the Cpf1 License Agreement, Broad and Wageningen are also entitled, collectively, to receive success
payments in the event our market capitalization reaches specified thresholds ascending from a high nine digit dollar
amount to $10.0 billion (“Market Cap Success Payments”) or sale of our company for consideration in excess of those
thresholds, (“Company Sale Success Payments,” which with the Market Cap Success Payments, the “Success Payments”).
Market Cap Success Payments are payable by us in cash, in shares of our common stock, with such shares being valued for
such purpose at the closing price of our common stock as reported the Nasdaq Stock Market for the trading day
immediately preceding the date of such payment if our common stock was then listed on the Nasdaq Stock Market, or in
the form of promissory notes (the “Promissory Notes”). The Promissory Notes bear interest at 4.8% per annum. Principal
and interest on the Promissory Notes are payable on, subject to certain exceptions, 150 days following issuance (or if
earlier, a specified period of time following a sale of our company). We could elect to make any payment of amounts
outstanding under the Promissory Notes either in the form of cash or, subject to certain conditions, in shares of our
common stock of equal value, with such shares being valued for such purpose at the closing price of our common stock as
reported the Nasdaq Stock Market for the trading day immediately preceding the date of such payment if our common
stock was then listed on the Nasdaq Stock Market. In the event of a change of control of our company or a sale of our
company, we are required to pay all remaining principal and accrued interest on the Promissory Notes in cash within a
specified period following such event. Following a change in control of our company, Market Cap Success Payments are
required to be made in cash. Company Sale Success Payments are payable solely in cash. In 2017, two Market Cap Success
Payments of $5.0 million each became due and payable and we issued Promissory Notes in such amounts, which we fully
settled by issuing shares of our common stock in 2017 and 2018. In December 2020, an additional Market Cap Success
Payment of $15.0 million became due and payable, which we settled through the issuance of shares of our common stock
in January 2021. The remaining Success Payments that may be paid to Broad and Wageningen range from a low-eight digit
dollar amount to a mid-eight digit dollar amount, and collectively will not exceed, in aggregate, $100.0 million, which
maximum would be payable only if we achieve a market capitalization threshold of $10.0 billion and have at least one
product candidate covered by a claim of a patent right licensed to us under either the Cpf1 License Agreement or the Cas9-
I License Agreement that is or was the subject of a clinical trial pursuant to development efforts by us or any of our
affiliates or sublicensees.
In addition, in the event that a sale of our company or change of control has occurred and the maximum amount of
potential Success Payments under the Cpf1 License Agreement has not been paid to Broad and Wageningen, Broad and
Wageningen are entitled to receive, upon the subsequent achievement of specified regulatory milestones, percentages
ranging from high single digits to mid-to-low double digits of the remaining unpaid maximum amount of Success
Payments. Broad and Wageningen are further entitled to receive up to the full remaining unpaid maximum amount of
Success Payments upon the subsequent achievement of specified sales milestones. All such post-sale or post-change of
control milestone payments are required to be made in cash.
Broad retains control of the prosecution and maintenance of the Cpf1 Patent Rights. We have the right to provide
input in the prosecution of the Cpf1 Patent Rights, including to direct Broad to file and prosecute patents in certain
countries. We are also obligated to reimburse Broad and Wageningen for all unreimbursed expenses incurred by them in
connection with the prosecution and maintenance of the Cpf1 Patent Rights prior to the date of the Cpf1 License
Agreement, and to reimburse Broad for expenses associated with the prosecution and maintenance of the Cpf1 Patent
Rights following the date of the Cpf1 License Agreement.
We have the first right, but not the obligation, to enforce the Cpf1 Patent Rights with respect to our licensed
products in the Exclusive Cpf1 Field so long as certain conditions are met, such as providing Broad and the applicable
Cpf1 Institutions with evidence demonstrating a good faith basis for bringing suit against a third party. We are solely
responsible for the costs of any lawsuits we elect to initiate and cannot enter into a settlement without the prior written
consent of Broad. Any sums recovered in such lawsuits will be shared between Broad, Wageningen, and us.
Unless terminated earlier, the term of the Cpf1 License Agreement will expire on a country-by-country basis,
upon the expiration of the last to expire valid claim of the Cpf1 Patent Rights in such country. However, our royalty
obligations, discussed above, may survive expiration or termination. We have the right to terminate the Cpf1 License
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Agreement at will upon four months’ written notice to Broad. Either party may terminate the Cpf1 License Agreement
upon a specified period of notice in the event of the other party’s uncured material breach of a material obligation, such
notice period varying depending on the nature of the breach. Broad may terminate the Cpf1 License Agreement
immediately if we challenge the enforceability, validity, or scope of any Cpf1 Patent Right or assist a third party to do so,
or in the event of our bankruptcy or insolvency.
Other Broad Agreements
In addition to the Cas9-I License Agreement and the Cpf1 License Agreement, in December 2016, we entered into
a license agreement with Broad for certain Cas9 compositions of matter and their use for gene editing (the “Cas9-II
Agreement”), and, in December 2018, we entered into a Sponsored Research Agreement with Broad providing for Broad to
conduct research useful or relevant to genome editing in the field of genomic medicines for the prevention of treatment of
human diseases with funding from us (the “Sponsored Research Agreement”). Under the Cas9-II Agreement and the
Sponsored Research Agreement, we have potential obligations with respect to success payments, which are described in
Note 8 to the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Intellectual Property
Our success depends in part on our ability to obtain and maintain proprietary protection for our platform
technology, programs, and know-how related to our business, defend and enforce our intellectual property rights, in
particular, our patent rights, preserve the confidentiality of our trade secrets, and operate without infringing valid and
enforceable intellectual property rights of others. We seek to protect our proprietary position by, among other things,
exclusively licensing and filing U.S. and certain foreign patent applications related to our platform technology, existing and
planned programs, and improvements that are important to the development of our business, where patent protection is
available. We also rely on trade secrets, know-how, continuing technological innovation, and confidential information to
develop and maintain our proprietary position and protect aspects of our business that are not amenable to, or that we do
not consider appropriate for, patent protection. We seek to protect our proprietary technology and processes, in part, by
confidentiality agreements with our employees, consultants, scientific advisors, and contractors. We also seek to preserve
the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical
and electronic security of our information technology systems.
Our in-licensed patents and patent applications cover various aspects of our genome editing platform technology,
including CRISPR systems that employ Cas9 including S. aureus Cas9, high-fidelity Cas9 nucleases and Cas9 PAM
variants, self-inactivating forms of Cas9, Cas9 nickases, CRISPR systems that employ Cas12a including Cas12a nickases
and other variants and self-inactivating forms of Cas12a, and also CRISPR systems that employ viral vectors for delivery,
single guide RNAs, or modified guide RNAs, including guide nucleic acids containing both DNA and RNA components.
We also have filed patent applications and have in-licensed rights to filed patent applications directed to each of the four
components of our genome editing platform technology. We intend to pursue, when possible, additional patent protection,
including composition of matter, method of use, and process claims, directed to each component of our platform
technology. We also intend to obtain rights to existing delivery technologies through one or more licenses from third
parties.
Notwithstanding these efforts, we cannot be sure that patents will be granted with respect to any patent
applications we have licensed or filed or may license or file in the future, and we cannot be sure that any patents we have
licensed or patents that may be licensed or granted to us in the future will not be challenged, invalidated, or circumvented
or that such patents will be commercially useful in protecting our technology. Moreover, trade secrets can be difficult to
protect. While we have confidence in the measures we take to protect and preserve our trade secrets, such measures can be
breached, and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise
become known or be independently discovered by competitors. For more information regarding the risks related to our
intellectual property, please see “Risk Factors—Risks Related to Our Intellectual Property.”
The term of individual patents depends upon the legal term for patents in the countries in which they are granted.
In most countries, including the United States, the patent term is 20 years from the earliest claimed filing date of
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a non-provisional patent application in the applicable country. In the United States, a patent’s term may, in certain cases, be
lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining
and granting a patent, or may be shortened if a patent is terminally disclaimed over a commonly owned patent or a patent
naming a common inventor and having an earlier expiration date. The Drug Price Competition and Patent Term Restoration
Act of 1984 extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product
approval, only one patent applicable to each regulatory review period may be extended and only those claims covering the
approved drug or a method for using it may be extended.
CRISPR
As of December 31, 2020, we owned nine U.S. patents, 64 pending U.S. non-provisional patent applications,
seven European patents and related validations, 56 pending European patent applications, five pending U.S. provisional
patent applications, seven pending PCT patent applications, and other related patent applications in jurisdictions outside the
United States and Europe that are related to our CRISPR technology and which include claims directed to our genome
editing platform, including our directed editing component, as well as composition of matter and method of use claims for
our therapeutic programs, including LCA10 and other genetic and infectious eye disorders, and engineered T cells. Three
of these U.S. patents, one of these European patents and their U.S., European and foreign counterpart applications are co-
owned with Broad and Iowa and we have obtained an exclusive license to such co-ownership rights from these third parties
in the field of prevention or treatment of human disease using gene therapy or genome editing. In addition, one of these
pending PCT patent applications and 12 of these pending U.S. non-provisional patent applications are co-owned with
certain of our collaborators because they encompass inventions developed under our collaborations. Our current issued
U.S. patents, if the appropriate maintenance fees are paid, are expected to expire between 2034 and 2038, excluding any
additional term for patent term adjustments or patent term extensions. If issued as U.S. patents, and if the appropriate
maintenance fees are paid, the U.S. patent applications would be expected to expire between 2035 and 2040, excluding any
additional term for patent term adjustments or patent term extensions.
As of December 31, 2020, we in-licensed 88 U.S. patents, 44 European patents and related validations, and
approximately 500 pending patent applications, including 92 pending U.S. non-provisional patent applications, 58 pending
European patent applications, and other related patents and patent applications in jurisdictions outside the United States
and Europe that are related to our CRISPR technology collectively from various universities and institutions. The patents
and patent applications outside of the United States and Europe are held primarily in Canada, Japan, and Australia,
although some of our in-licensed patent families were filed in a larger number of countries. The claims from our in-
licensed portfolio include claims to compositions of matter, methods of use, and certain processes. These include claims
directed to CRISPR systems that employ Cas9 including Cas9 nickases, S. aureus Cas9, high-fidelity Cas9 nucleases, Cas9
PAM variants and self-inactivating forms of Cas9, CRISPR systems that employ Cas12a including Cas12a nickases and
other variants and self-inactivating forms of Cas12a, and also CRISPR systems that employ viral vectors for delivery,
single guide RNAs, or modified guide RNAs. Our current in-licensed U.S. patents, if the appropriate maintenance fees are
paid, are expected to expire between 2033 and 2039, excluding any additional term for patent term adjustments or patent
term extensions. If issued as U.S. patents, and if the appropriate maintenance fees are paid, the U.S. patent applications
would be expected to expire between 2034 and 2040, excluding any additional term for patent term adjustments or patent
term extensions.
Our in-licensed patents and patent applications claim the inventions of investigators at various universities and
institutions and the majority of these licensed patents and patent applications are licensed on an exclusive basis. The
exclusive licenses are, in some cases, limited to certain technical fields. Certain U.S. patent applications licensed to us by
Broad include Tokyo and NIH as joint applicants. Broad has only granted a license to us with respect to its interests and to
Tokyo’s interests in these U.S. patent applications but not to any foreign equivalents thereof. Broad does not and does not
purport to grant any rights in NIH’s interest in these U.S. patent applications under our agreement. As a result, we may not
have exclusive rights under any U.S. patents that issue from these U.S. patent applications and we may not have any rights
under any foreign patents that issue from any foreign equivalents thereof. For more information regarding these license
agreements, please see the section of this Annual Report on Form 10-K titled “Business —Intellectual Property Licenses.”
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LCA10
As of December 31, 2020, we owned two U.S. patents, five pending U.S. non-provisional patent applications, one
European patent and related validations, two pending European patent applications, and seven pending foreign patent
applications, which are directed to compositions of matter, including guide RNAs directed to CEP290, and methods of use
for the treatment of LCA10. Our current issued U.S. patents, if the appropriate maintenance fees are paid, are expected to
expire in 2035, excluding any additional term for patent term extensions. If issued as a U.S. patent, and if the appropriate
maintenance fees are paid, the U.S. patent applications would be expected to expire between 2035 and 2039, excluding any
additional term for patent term adjustments or patent term extensions.
Trademarks
As of December 31, 2020, our registered trademark portfolio consisted of registrations in the United States for
EDITAS, EDITAS in Stylized Letters and the Infinity Logo, registrations in Australia, China, the European Union, Japan
and Switzerland for EDITAS, registrations in Australia, China, the European Union, Japan and Switzerland for the Infinity
Logo and a registration in the European Union for UDITAS.
Competition
The biotechnology and pharmaceutical industries, including in the gene therapy, genome editing and cell therapy
fields, are characterized by rapidly advancing technologies, intense competition, and a strong emphasis on intellectual
property and proprietary products. While we believe that our technology, development experience, and scientific
knowledge provide us with competitive advantages, we face potential competition from many different sources, including
major pharmaceutical, specialty pharmaceutical, biotechnology companies, governmental agencies, and public and private
research institutions. Any product candidates that we successfully develop and commercialize may compete with existing
therapies and new therapies may become available in the future.
We compete in the segments of the pharmaceutical, biotechnology, and other related markets that utilize
technologies encompassing genomic medicines to create therapies, including genome editing and gene therapy. There are
additional companies that are working to develop therapies in areas related to our research programs. Our platform and
product focus is the development of therapies using CRISPR technology. Other companies developing CRISPR technology
or therapies using CRISPR technology include Arbor Biotechnologies, Caribou Biosciences, CRISPR Therapeutics, ERS
Genomics, Intellia Therapeutics, Locus Biosciences, ToolGen Inc. TRACR Hematology and Vertex Pharmaceuticals. In
addition, there have been and may continue to be discoveries of new CRISPR-based gene editing technologies. There are
additional companies developing therapies using other genome editing technologies, including base editing, prime editing,
transcription activator-like effector nucleases, meganucleases, Mega-TALs and zinc finger nucleases. The companies
developing these other genome editing technologies include Beam Therapeutics, Prime Medicine, bluebird bio, Cellectis,
Poseida Therapeutics, Precision Biosciences and Sangamo Therapeutics. Additional companies developing cell and gene
therapy products include Abeona Therapeutics, Adverum Biotechnologies, AGTC Therapeutics, Audentes Therapeutics,
Fate Therapeutics, Inc., Graphite Bio, Homology Medicines, Nkarta, Inc., REGENXBIO, Sarepta Therapeutics, Solid
Biosciences, Spark Therapeutics, uniQure and Voyager Therapeutics. In addition to competition from other genome editing
therapies, gene therapies or cell medicine therapies, any products that we may develop may also face competition from
other types of therapies, such as small molecule, antibody, protein, oligonucleotide, or ribonucleic acid therapies. For
example, ProQR Therapeutics N.V. is conducting a Phase I/II clinical trial for its experimental treatment using antisense
oligonucleotide technology for LCA10.
In addition, many of our current or potential competitors, either alone or with their collaboration partners, may
have greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting
clinical trials, and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical,
biotechnology, and gene therapy industries may result in even more resources being concentrated among a smaller number
of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through
collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and
retaining qualified scientific and management personnel and establishing clinical trial sites and patient
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registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Our
commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are
safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products
that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly
than we may obtain approval for ours, which could result in our competitors establishing a strong market position before
we are able to enter the market. The key competitive factors affecting the success of all of our programs are likely to be
their efficacy, safety, convenience, and availability of reimbursement.
If our current programs are approved for the indications for which we are currently planning clinical trials, they
may compete with other products currently under development, including genome editing and gene therapy products.
Competition with other related products currently under development may include competition for clinical trial sites,
patient recruitment, and product sales.
Manufacturing
We currently perform some manufacturing activities such as the production of guide RNA for our various internal
and partner programs and some pre-clinical and early-phase clinical production for our ex vivo gene edited cell medicines.
These activities are performed on site at our existing facilities or, in the case of EDIT-301 for sickle cell disease, at current
good manufacturing practice-compliant space leased by us and staffed by our employees. We contract with third parties for
the manufacturing of all other materials for preclinical studies and our clinical trials. We have limited manufacturing
operations and do not own or operate any substantial manufacturing facilities for the production of our program materials.
We currently have no plans to build our own clinical or commercial scale manufacturing capabilities. The use of contracted
manufacturing and reliance on collaboration partners is relatively cost-efficient and has eliminated the need for our direct
investment in manufacturing facilities and additional staff early in development. Although we rely on contract
manufacturers, we have personnel with manufacturing experience to oversee our contract manufacturers. We expect third-
party manufacturers to be capable of providing sufficient quantities of our program materials to meet anticipated needs for
preclinical studies and clinical trials. To meet our projected needs for commercial manufacturing, third parties with whom
we currently work might need to increase their scale of production or we will need to secure alternate suppliers. We believe
that there are alternate sources of supply that can satisfy our preclinical, clinical, and commercial requirements, although
we cannot be certain that identifying and establishing relationships with such sources, if necessary, would not result in
significant delay or material additional costs.
Commercialization
We currently intend to build the commercial infrastructure in the United States and Europe necessary to
effectively support the commercialization of all of our programs, if and when we first believe a regulatory approval of a
product candidate under one of our programs in a particular geographic market appears probable. The commercial
infrastructure for orphan products typically consists of a targeted, specialty sales force that calls on a limited and focused
group of physicians supported by sales management, medical liaisons, internal sales support, an internal marketing group,
and distribution support.
Additional capabilities important to the orphan marketplace include the management of key accounts such as
managed care organizations, group purchasing organizations, specialty pharmacies, and government accounts. To develop
the appropriate commercial infrastructure, we will have to invest significant amounts of financial and management
resources, some of which will be committed prior to any confirmation that any product candidate we may develop will be
approved.
Outside of the United States and Europe, where appropriate, we may elect in the future to utilize strategic partners,
distributors, or contract sales forces to assist in the commercialization of our products. In certain instances, we may
consider building our own commercial infrastructure.
As product candidates advance through our pipeline, our commercial plans may change. In particular, some of our
research programs target potentially larger indications. Data, the size of the development programs, the size of the
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target market, the size of a commercial infrastructure, and manufacturing needs may all influence our strategies in the
United States, Europe, and the rest of the world.
Government Regulation and Licensure of Products
Government authorities in the United States, at the federal, state and local level, and in other countries and
jurisdictions, including the European Union, extensively regulate, among other things, the research, development, testing,
manufacture, pricing, reimbursement, sales, quality control, approval, packaging, storage, recordkeeping, labeling,
advertising, promotion, distribution, marketing, post-approval monitoring and reporting, and import and export of
pharmaceutical products, including biological products. The processes for obtaining marketing approvals in the United
States and in foreign countries and jurisdictions, along with subsequent compliance with applicable statutes and regulations
and other regulatory authorities, require the expenditure of substantial time and financial resources.
Licensure and Regulation of Biologics in the United States
In the United States, our candidate products would be regulated as biological products, or biologics, under the
Public Health Service Act (the “PHSA”) and the Federal Food, Drug and Cosmetic Act (the “FDCA”) and its
implementing regulations and guidances. The failure to comply with the applicable U.S. requirements at any time during
the product development process, including non-clinical testing, clinical testing, the approval process or post-approval
process, may subject an applicant to delays in the conduct of the study, regulatory review and approval, and/or
administrative or judicial sanctions.
An applicant seeking approval to market and distribute a new biologic in the United States generally must
satisfactorily complete each of the following steps:
● preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the
FDA’s Good Laboratory Practice (“GLP”) regulations;
● completion of the manufacture, under current Good Manufacturing Practices (“cGMP”) conditions, of the
drug substance and drug product that the sponsor intends to use in human clinical trials along with required
analytical and stability testing;
● submission to the FDA of an IND application for human clinical testing, which must become effective before
human clinical trials may begin;
● approval by an independent institutional review board (“IRB”) representing each clinical site before each
clinical trial may be initiated;
● performance of adequate and well-controlled human clinical trials to establish the safety, potency, and purity
of the product candidate for each proposed indication, in accordance with current Good Clinical Practices
(“GCP”);
● preparation and submission to the FDA of a Biologic License Application (“BLA”) for a biologic product
requesting marketing for one or more proposed indications, including submission of detailed information on
the manufacture and composition of the product in clinical development and proposed labelling;
● review of the product by an FDA advisory committee, where appropriate or if applicable;
● satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities, including
those of third parties, at which the product, or components thereof, are produced to assess compliance with
cGMP requirements and to assure that the facilities, methods, and controls are adequate to preserve the
product’s identity, strength, quality, and purity, and, if applicable, the FDA’s current good tissue practice
(“GTP”) for the use of human cellular and tissue products;
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● satisfactory completion of any FDA audits of the non-clinical and clinical trial sites to assure compliance
with GCPs and the integrity of clinical data in support of the BLA;
● payment of user Prescription Drug User Free Act (“PDUFA”) securing FDA approval of the BLA and
licensure of the new biologic product; and
● compliance with any post-approval requirements, including the potential requirement to implement a Risk
Evaluation and Mitigation Strategy (“REMS”) and any post-approval studies required by the FDA.
Preclinical Studies and Investigational New Drug Application
Before testing any biologic product candidate in humans, including a gene therapy product candidate, the product
candidate must undergo preclinical testing. Preclinical tests include laboratory evaluations of product chemistry,
formulation and stability, as well as studies to evaluate the potential for efficacy and toxicity in animal studies. The conduct
of the preclinical tests and formulation of the compounds for testing must comply with federal regulations and
requirements. The results of the preclinical tests, together with manufacturing information and analytical data, are
submitted to the FDA as part of an IND application.
An IND is an exemption from the FDCA that allows an unapproved product candidate to be shipped in interstate
commerce for use in an investigational clinical trial and a request for FDA authorization to administer such investigational
product to humans. The IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the
FDA raises concerns or questions about the product or conduct of the proposed clinical trial, including concerns that
human research subjects will be exposed to unreasonable health risks. In that case, the IND sponsor and the FDA must
resolve any outstanding FDA concerns before the clinical trials can begin or recommence.
As a result, submission of the IND may result in the FDA not allowing the trials to commence or allowing the trial
to commence on the terms originally specified by the sponsor in the IND. If the FDA raises concerns or questions either
during this initial 30-day period, or at any time during the IND process, it may choose to impose a partial or complete
clinical hold. Clinical holds are imposed by the FDA whenever there is concern for patient safety and may be a result of
new data, findings, or developments in clinical, nonclinical, and/or chemistry, manufacturing, and controls. This order
issued by the FDA would delay either a proposed clinical study or cause suspension of an ongoing study, until all
outstanding concerns have been adequately addressed and the FDA has notified the company that investigations may
proceed. This could cause significant delays or difficulties in completing planned clinical studies in a timely manner.
Expanded Access to an Investigational Drug for Treatment Use
Expanded access, sometimes called “compassionate use,” is the use of investigational products outside of clinical
trials to treat patients with serious or immediately life-threatening diseases or conditions when there are no comparable or
satisfactory alternative treatment options. The rules and regulations related to expanded access are intended to improve
access to investigational products for patients who may benefit from investigational therapies. FDA regulations allow
access to investigational products under an IND by the company or the treating physician for treatment purposes on a case-
by-case basis for: individual patients (single-patient IND applications for treatment in emergency settings and non-
emergency settings); intermediate-size patient populations; and larger populations for use of the investigational product
under a treatment protocol or treatment IND application.
When considering an IND application for expanded access to an investigational product with the purpose of
treating a patient or a group of patients, the sponsor and treating physicians or investigators will determine suitability when
all of the following criteria apply: patient(s) have a serious or immediately life-threatening disease or condition, and there
is no comparable or satisfactory alternative therapy to diagnose, monitor, or treat the disease or condition; the potential
patient benefit justifies the potential risks of the treatment and the potential risks are not unreasonable in the context or
condition to be treated; and the expanded use of the investigational drug for the requested treatment will not interfere
initiation, conduct, or completion of clinical investigations that could support marketing approval of the product or
otherwise compromise the potential development of the product.
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There is no obligation for a sponsor to make its drug products available for expanded access; however, as required
by the 21st Century Cures Act (the “Cures Act”), passed in 2016, if a sponsor has a policy regarding how it responds to
expanded access requests, it must make that policy publicly available. Although these requirements were rolled out over
time, they have now come into full effect. Sponsors are required to make such policies publicly available upon the earlier
of initiation of a Phase 2 or Phase 3 study; or 15 days after the investigational drug or biologic receives designation as a
breakthrough therapy, fast track product, or regenerative medicine advanced therapy.
In addition, on May 30, 2018, the Right to Try Act, was signed into law. The law, among other things, provides a
federal framework for certain patients to access certain investigational products that have completed a Phase I clinical trial
and that are undergoing investigation for FDA approval. Under certain circumstances, eligible patients can seek treatment
without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program. There
is no obligation for a manufacturer to make its investigational products available to eligible patients as a result of the Right
to Try Act.
Human Clinical Trials in Support of a BLA
Clinical trials involve the administration of the investigational product candidate to healthy volunteers or patients
with the disease to be treated under the supervision of a qualified principal investigator in accordance with GCP
requirements. Clinical trials are conducted under study protocols detailing, among other things, the objectives of the study,
inclusion and exclusion criteria, the parameters to be used in monitoring safety, and the effectiveness criteria to be
evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part
of the IND.
A sponsor who wishes to conduct a clinical trial outside the United States may, but need not, obtain FDA
authorization to conduct the clinical trial under an IND. When a foreign clinical trial is conducted under an IND, all FDA
IND requirements must be met unless waived. When a foreign clinical trial is not conducted under an IND, the sponsor
must ensure that the trial complies with certain regulatory requirements of the FDA in order to use the trial as support for
an IND or application for marketing approval. Specifically, the FDA requires that such trials be conducted in accordance
with GCP, including review and approval by an independent ethics committee and informed consent from subjects. The
GCP requirements encompass both ethical and data integrity standards for clinical trials. The FDA’s regulations are
intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical trials, as well as the quality
and integrity of the resulting data. They further help ensure that non-IND foreign trials are conducted in a manner
comparable to that required for clinical trials in the United States.
Further, each clinical trial must be reviewed and approved by an IRB either centrally or individually at each
institution at which the clinical trial will be conducted. The IRB will consider, among other things, clinical trial design,
patient informed consent, ethical factors, the safety of human subjects, and the possible liability of the institution. An IRB
must operate in compliance with FDA regulations. The FDA, IRB, or the clinical trial sponsor may suspend or discontinue
a clinical trial at any time for various reasons, including a finding that the clinical trial is not being conducted in accordance
with FDA requirements or the subjects or patients are being exposed to an unacceptable health risk. Clinical testing also
must satisfy extensive GCP rules and the requirements for informed consent.
Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the
clinical trial sponsor, known as a data safety monitoring board (“DSMB”). This group may recommend continuation of the
study as planned, changes in study conduct, or cessation of the study at designated check points based on certain available
data from the study to which only the DSMB has access. Finally, research activities involving infectious agents, hazardous
chemicals, recombinant DNA, and genetically altered organisms and agents may be subject to review and approval of an
Institutional Biosafety Committee in accordance with NIH Guidelines for Research Involving Recombinant or Synthetic
Nucleic Acid Molecules.
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Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined.
Additional studies may be required after approval.
● Phase 1 clinical trials are initially conducted in a limited population to test the product candidate for safety,
including adverse effects, dose tolerance, absorption, metabolism, distribution, excretion, and
pharmacodynamics in healthy humans or, on occasion, in patients, such as patients suffering from LCA10,
sickle cell disease or cancer.
● Phase 2 clinical trials are generally conducted in a limited patient population to identify possible adverse
effects and safety risks, evaluate the efficacy of the product candidate for specific targeted indications and
determine dose tolerance and optimal dosage. Multiple Phase 2 clinical trials may be conducted by the
sponsor to obtain information prior to beginning larger and more costly Phase 3 clinical trials.
● Phase 3 clinical trials may proceed if the Phase 2 clinical trials demonstrate that a dose range of the product
candidate is potentially effective and has an acceptable safety profile. Phase 3 clinical trials are undertaken
within an expanded patient population to further evaluate dosage, provide substantial evidence of clinical
efficacy, and further test for safety in an expanded and diverse patient population at multiple, geographically
dispersed clinical trial sites. A well-controlled, statistically robust Phase 3 trial may be designed to deliver
the data that regulatory authorities will use to decide whether or not to approve, and, if approved, how to
appropriately label a biologic; such Phase 3 studies are referred to as “pivotal.”
In some cases, the FDA may approve a BLA for a product candidate but require the sponsor to conduct additional
clinical trials to further assess the product candidate’s safety and effectiveness after approval. Such post-approval trials are
typically referred to as Phase 4 clinical trials. These studies are used to gain additional experience from the treatment of
patients in the intended therapeutic indication and to document a clinical benefit in the case of biologics approved under
accelerated approval regulations. If the FDA approves a product while a company has ongoing clinical trials that were not
necessary for approval, a company may be able to use the data from these clinical trials to meet all or part of any Phase 4
clinical trial requirement or to request a change in the product labeling. Failure to exhibit due diligence with regard to
conducting Phase 4 clinical trials could result in withdrawal of approval for products.
Information about clinical trials must be submitted within specific timeframes to the NIH for public dissemination
on its ClinicalTrials.gov website.
Pediatric Studies
Under the Pediatric Research Equity Act of 2003, a BLA or supplement thereto must contain data that are
adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric
subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and
effective. Sponsors must also submit pediatric study plans prior to the assessment data. Those plans must contain an outline
of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, any
deferral or waiver requests, and other information required by regulation. The applicant, the FDA, and the FDA’s internal
review committee must then review the information submitted, consult with each other, and agree upon a final plan. The
FDA or the applicant may request an amendment to the plan at any time.
For products intended to treat a serious or life-threatening disease or condition, the FDA must, upon the request of
an applicant, meet to discuss preparation of the initial pediatric study plan or to discuss deferral or waiver of pediatric
assessments. In addition, FDA will meet early in the development process to discuss pediatric study plans with sponsors
and FDA must meet with sponsors by no later than the end-of-phase 1 meeting for serious or life-threatening diseases and
by no later than 90 days after FDA’s receipt of the study plan.
The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all
pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data
requirements. Additional requirements and procedures relating to deferral requests and requests for extension of
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deferrals are contained in the Food and Drug Administration Safety and Innovation Act, or FDASIA. The FDA maintains
a list of diseases that are exempt from PREA requirements due to low prevalence of disease in the pediatric population.
Congress amended the FDA Reauthorization Act of 2017, or FDARA. Previously, drugs that had been granted orphan drug
designation were exempt from the requirements of the Pediatric Research Equity Act. Under the amended section 505B,
beginning on August 18, 2020, the submission of a pediatric assessment, waiver or deferral will be required for certain
molecularly targeted cancer indications with the submission of an application or supplement to an application.
Special Regulations and Guidance Governing Gene Therapy Products
It is possible that the procedures and standards applied to gene therapy products and cell therapy products may be
applied to any CRISPR product candidates we may develop, but that remains uncertain at this point. The FDA has defined
a gene therapy product as one that mediates its effects by transcription and/or translation of transferred genetic material
and/or by integrating into the host genome and which are administered as nucleic acids, viruses, or genetically engineered
microorganisms. The products may be used to modify cells in vivo or transferred to cells ex vivo prior to administration to
the recipient.
Within the FDA, the Center for Biologics Evaluation and Research (“CBER”) regulates gene therapy products.
Within the CBER, the review of gene therapy and related products is consolidated in the Office of Cellular, Tissue and
Gene Therapies, and the FDA has established the Cellular, Tissue and Gene Therapies Advisory Committee to advise
CBER on its reviews. The NIH, including its Novel and Exceptional Technology Research Advisory Committee
(“NExTRAC”), also advises the FDA on gene therapy issues and other issues related to emerging biotechnologies. The
FDA and the NIH have published guidance documents with respect to the development and submission of gene therapy
protocols.
The FDA has issued various guidance documents regarding gene therapies, including recent final guidance
documents released in January 2020 relating to chemistry, manufacturing and controls information for gene therapy INDs,
long-term follow-up after the administration of gene therapy products, gene therapies for rare diseases and gene therapies
for retinal disorders, as well as draft guidance in January 2021 for Human Gene Therapy for Neurodegenerative Diseases.
Although the FDA has indicated that these and other guidance documents it previously issued are not legally binding,
compliance with them is likely necessary to gain approval for any gene therapy product candidate. The guidance
documents provide additional factors that the FDA will consider at each of the above stages of development and relate to,
among other things, the proper preclinical assessment of gene therapies; the chemistry, manufacturing, and control
information that should be included in an IND application; the proper design of tests to measure product potency in support
of an IND or BLA application; and measures to observe delayed adverse effects in subjects who have been exposed to
investigational gene therapies when the risk of such effects is high. Further, the FDA usually recommends that sponsors
observe subjects for potential gene therapy-related delayed adverse events for a 15-year period, including a minimum of
five years of annual examinations followed by 10 years of annual queries, either in person or by questionnaire.
Until 2019, most gene therapy clinical trials required pre-review by the predecessor of NExTRAC before being
submitted for approval by the IRBs and any local biosafety boards. In 2019, the NIH eliminated the pre-review process and
going forward, the review of future gene therapy clinical trial protocols would be largely handled by IRBs. Furthermore, in
2019, the NIH removed from public access the Genetic Modification Clinical Research Information System database,
which previously contained substantial amounts of safety and other patient information regarding human gene therapy
studies performed to date.
Compliance with cGMP and GTP Requirements
Before approving a BLA, the FDA typically will inspect the facility or facilities where the product is
manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities
are in full compliance with cGMP requirements and adequate to assure consistent production of the product within required
specifications. The PHSA emphasizes the importance of manufacturing control for products like biologics whose attributes
cannot be precisely defined.
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For a gene therapy product, the FDA also will not approve the product if the manufacturer is not in compliance
with GTP. These standards are found in FDA regulations and guidances that govern the methods used in, and the facilities
and controls used for, the manufacture of human cells, tissues, and cellular and tissue-based products (“HCT/Ps”), which
are human cells or tissue intended for implantation, transplant, infusion, or transfer into a human recipient. The primary
intent of the GTP requirements is to ensure that cell and tissue-based products are manufactured in a manner designed to
prevent the introduction, transmission, and spread of communicable disease. FDA regulations also require tissue
establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening
and testing.
Manufacturers and others involved in the manufacture and distribution of products must also register their
establishments with the FDA and certain state agencies. Both domestic and foreign manufacturing establishments must
register and provide additional information to the FDA upon their initial participation in the manufacturing process. Any
product manufactured by or imported from a facility that has not registered, whether foreign or domestic, is deemed
misbranded under the FDCA. Establishments may be subject to periodic unannounced inspections by government
authorities to ensure compliance with cGMPs and other laws. Inspections must follow a “risk-based schedule” that may
result in certain establishments being inspected more frequently. Manufacturers may also have to provide, on request,
electronic or physical records regarding their establishments. Delaying, denying, limiting, or refusing inspection by the
FDA may lead to a product being deemed to be adulterated.
Review and Approval of a BLA
The results of product candidate development, preclinical testing, and clinical trials, including negative or
ambiguous results as well as positive findings, are submitted to the FDA as part of a BLA requesting license to market the
product. The BLA must contain extensive manufacturing information and detailed information on the composition of the
product and proposed labeling as well as payment of a user fee. Under federal law, the submission of most BLAs is subject
to an application user fee, which for federal fiscal year 2021 is $2,875,842 for an application requiring clinical data. The
sponsor of a licensed BLA is also subject to an annual program fee, which for fiscal year 2021 is $336,432. Certain
exceptions and waivers are available for some of these fees, such as an exception from the application fee for products with
orphan designation and a waiver for certain small businesses.
The FDA has 60 days after submission of the application to conduct an initial review to determine whether it is
sufficient to accept for filing based on the agency’s threshold determination that it is sufficiently complete to permit
substantive review. Once the submission has been accepted for filing, the FDA begins an in-depth review of the
application. Under the goals and policies agreed to by the FDA under the PDUFA, the FDA has ten months in which to
complete its initial review of a standard application and respond to the applicant, and six months for a priority review of the
application. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs. The review process may
often be significantly extended by FDA requests for additional information or clarification. The review process and the
PDUFA goal date may be extended by three months if the FDA requests or if the applicant otherwise provides additional
information or clarification regarding information already provided in the submission within the last three months before
the PDUFA goal date.
Under the PHSA, the FDA may approve a BLA if it determines that the product is safe, pure, and potent and the
facility where the product will be manufactured meets standards designed to ensure that it continues to be safe, pure, and
potent.
On the basis of the FDA’s evaluation of the application and accompanying information, including the results of the
inspection of the manufacturing facilities and any FDA audits of non-clinical and clinical trial sites to assure compliance
with GCPs, the FDA may issue an approval letter or a complete response letter. An approval letter authorizes commercial
marketing of the product with specific prescribing information for specific indications. If the application is not approved,
the FDA will issue a complete response letter, which will contain the conditions that must be met in order to secure final
approval of the application, and when possible will outline recommended actions the sponsor might take to obtain approval
of the application. Sponsors that receive a complete response letter may submit to the FDA information that represents a
complete response to the issues identified by the FDA. Such resubmissions are classified under PDUFA as either Class 1 or
Class 2. The classification of a resubmission is based on the information submitted by
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an applicant in response to an action letter. Under the goals and policies agreed to by the FDA under PDUFA, the FDA has
two months to review a Class 1 resubmission and six months to review a Class 2 resubmission. The FDA will not approve
an application until issues identified in the complete response letter have been addressed.
The FDA may also refer the application to an advisory committee for review, evaluation, and recommendation as
to whether the application should be approved. In particular, the FDA may refer applications for novel biologic products or
biologic products that present difficult questions of safety or efficacy to an advisory committee. Typically, an advisory
committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates, and
provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not
bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making
decisions.
If the FDA approves a new product, it may limit the approved indications for use of the product. It may also
require that contraindications, warnings or precautions be included in the product labeling. In addition, the FDA may call
for post-approval studies, including Phase 4 clinical trials, to further assess the product’s safety after approval. The agency
may also require testing and surveillance programs to monitor the product after commercialization, or impose other
conditions, including distribution restrictions or other risk management mechanisms, including REMS, to help ensure that
the benefits of the product outweigh the potential risks. REMS can include medication guides, communication plans for
healthcare professionals, and elements to assure safe use (“ETASU”). ETASU can include, but are not limited to, special
training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and
the use of patent registries. The FDA may prevent or limit further marketing of a product based on the results of post-
market studies or surveillance programs. After approval, many types of changes to the approved product, such as adding
new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and
FDA review and approval.
Fast Track, Breakthrough Therapy, Priority Review and Regenerative Advanced Therapy Designations
The FDA is authorized to designate certain products for expedited review if they are intended to address an unmet
medical need in the treatment of a serious or life-threatening disease or condition. These programs are referred to as fast
track designation, breakthrough therapy designation, priority review designation and regenerative advanced therapy
designation.
Specifically, the FDA may designate a product for fast track review if it is intended, whether alone or in
combination with one or more other products, for the treatment of a serious or life-threatening disease or condition, and it
demonstrates the potential to address unmet medical needs for such a disease or condition. For fast track products, sponsors
may have greater interactions with the FDA and the FDA may initiate review of sections of a fast track product’s
application before the application is complete. This rolling review may be available if the FDA determines, after
preliminary evaluation of clinical data submitted by the sponsor, that a fast track product may be effective. The sponsor
must also provide, and the FDA must approve, a schedule for the submission of the remaining information and the sponsor
must pay applicable user fees. However, the FDA’s time period goal for reviewing a fast track application does not begin
until the last section of the application is submitted. In addition, the fast track designation may be withdrawn by the FDA if
the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.
Second, in 2012, Congress enacted the Food and Drug Administration Safety and Innovation Act (“FDASIA”).
This law established a new regulatory scheme allowing for expedited review of products designated as “breakthrough
therapies.” A product may be designated as a breakthrough therapy if it is intended, either alone or in combination with one
or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates
that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant
endpoints, such as substantial treatment effects observed early in clinical development. The FDA may take certain actions
with respect to breakthrough therapies, including holding meetings with the sponsor throughout the development process;
providing timely advice to the product sponsor regarding development and approval; involving more senior staff in the
review process; assigning a cross-disciplinary project lead for the review team; and taking other steps to design the clinical
trials in an efficient manner.
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Third, the FDA may designate a product for priority review if it is a product that treats a serious condition and, if
approved, would provide a significant improvement in safety or effectiveness. The FDA determines, on a case-by-case
basis, whether the proposed product represents a significant improvement when compared with other available therapies.
Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition,
elimination or substantial reduction of a treatment-limiting product reaction, documented enhancement of patient
compliance that may lead to improvement in serious outcomes, and evidence of safety and effectiveness in a new
subpopulation. A priority designation is intended to direct overall attention and resources to the evaluation of such
applications, and to shorten the FDA’s goal for taking action on a marketing application from ten months to six months.
With passage of the Cures Act in December 2016, Congress authorized the FDA to accelerate review and approval
of products designated as regenerative advanced therapies. A product is eligible for this designation if it is a regenerative
medicine therapy that is intended to treat, modify, reverse or cure a serious or life-threatening disease or condition and
preliminary clinical evidence indicates that the product has the potential to address unmet medical needs for such disease or
condition. The benefits of a regenerative advanced therapy designation include early interactions with FDA to expedite
development and review, benefits available to breakthrough therapies, potential eligibility for priority review and
accelerated approval based on surrogate or intermediate endpoints.
Accelerated Approval Pathway
The FDA may grant accelerated approval to a product for a serious or life-threatening condition that provides
meaningful therapeutic advantage to patients over existing treatments based upon a determination that the product has an
effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant accelerated
approval for such a condition when the product has an effect on an intermediate clinical endpoint that can be measured
earlier than an effect on irreversible morbidity or mortality (“IMM”) and that is reasonably likely to predict an effect on
IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or
lack of alternative treatments. Products granted accelerated approval must meet the same statutory standards for safety and
effectiveness as those granted traditional approval.
For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement,
radiographic image, physical sign, or other measure that is thought to predict clinical benefit, but is not itself a measure of
clinical benefit. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. An
intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely to predict the
clinical benefit of a product, such as an effect on IMM. The FDA has limited experience with accelerated approvals based
on intermediate clinical endpoints, but has indicated that such endpoints generally may support accelerated approval where
the therapeutic effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a
basis for concluding that the therapeutic effect is reasonably likely to predict the ultimate clinical benefit of a product.
The accelerated approval pathway is most often used in settings in which the course of a disease is long and an
extended period of time is required to measure the intended clinical benefit of a product, even if the effect on the surrogate
or intermediate clinical endpoint occurs rapidly. Thus, accelerated approval has been used extensively in the development
and approval of products for treatment of a variety of cancers in which the goal of therapy is generally to improve survival
or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large trials to
demonstrate a clinical or survival benefit.
The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner,
additional post-approval confirmatory studies to verify and describe the product’s clinical benefit. As a result, a product
candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion
of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-
approval studies, or confirm a clinical benefit during post-marketing studies, would allow the FDA to withdraw the product
from the market on an expedited basis. All promotional materials for product candidates approved under accelerated
regulations are subject to prior review by the FDA.
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Post-Approval Regulation
If regulatory approval for marketing of a product or new indication for an existing product is obtained, the sponsor
will be required to comply with all regular post-approval regulatory requirements as well as any post-approval
requirements that the FDA have imposed as part of the approval process. The sponsor will be required to report certain
adverse reactions and production problems to the FDA, provide updated safety and efficacy information and comply with
requirements concerning advertising and promotional labeling requirements. Manufacturers and certain of their
subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to
periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory
requirements, including cGMP regulations, which impose certain procedural and documentation requirements upon
manufacturers. Accordingly, the sponsor and its third-party manufacturers must continue to expend time, money, and effort
in the areas of production and quality control to maintain compliance with cGMP regulations and other regulatory
requirements.
A product may also be subject to official lot release, meaning that the manufacturer is required to perform certain
tests on each lot of the product before it is released for distribution. If the product is subject to official lot release, the
manufacturer must submit samples of each lot, together with a release protocol showing a summary of the history of
manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot, to the FDA. The FDA may in
addition perform certain confirmatory tests on lots of some products before releasing the lots for distribution. Finally, the
FDA will conduct laboratory research related to the safety, purity, potency, and effectiveness of pharmaceutical products.
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and
standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously
unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing
processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new
safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of
distribution or other restrictions under a REMS program. Other potential consequences include, among other things:
● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the
market or product recalls;
● fines, warning letters or holds on post-approval clinical trials;
● refusal of the FDA to approve pending applications or supplements to approved applications, or suspension
or revocation of product license approvals;
● product seizure or detention, or refusal to permit the import or export of products; or
● injunctions or the imposition of civil or criminal penalties.
The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the
market. Pharmaceutical products may be promoted only for the approved indications and in accordance with the provisions
of the approved label. Although health care providers may prescribe products for off-label uses in their professional
judgment, drug manufacturers are prohibited from soliciting, encouraging or promoting unapproved uses of a product. The
FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a
company that is found to have improperly promoted off-label uses may be subject to significant liability.
The FDA strictly regulates the marketing, labeling, advertising and promotion of prescription drug products
placed on the market. This regulation includes, among other things, standards and regulations for direct-to-consumer
advertising, communications regarding unapproved uses, industry-sponsored scientific and educational activities and
promotional activities involving the Internet and social media. Promotional claims about a drug’s safety or effectiveness are
prohibited before the drug is approved. After approval, a drug product generally may not be promoted for uses that
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are not approved by the FDA, as reflected in the product’s prescribing information. In the United States, health care
professionals are generally permitted to prescribe drugs for such uses not described in the drug’s labeling, known as off-
label uses, because the FDA does not regulate the practice of medicine. However, FDA regulations impose rigorous
restrictions on manufacturers’ communications, prohibiting the promotion of off-label uses. It may be permissible, under
very specific, narrow conditions, for a manufacturer to engage in nonpromotional, non-misleading communication
regarding off-label information, such as distributing scientific or medical journal information.
If a company is found to have promoted off-label uses, it may become subject to adverse public relations and
administrative and judicial enforcement by the FDA, the Department of Justice, or the Office of the Inspector General of
the Department of Health and Human Services, as well as state authorities. This could subject a company to a range of
penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially
restrict the manner in which a company promotes or distributes drug products. The federal government has levied large
civil and criminal fines against companies for alleged improper promotion, and has also requested that companies enter
into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.
Orphan Drug Designation and Exclusivity
Orphan drug designation in the United States is designed to encourage sponsors to develop products intended for
rare diseases or conditions. In the United States, a rare disease or condition is statutorily defined as a condition that affects
fewer than 200,000 individuals in the United States or that affects more than 200,000 individuals in the United States and
for which there is no reasonable expectation that the cost of developing and making available the biologic for the disease or
condition will be recovered from sales of the product in the United States.
Orphan drug designation qualifies a company for tax credits and market exclusivity for seven years following the
date of the product’s marketing approval if granted by the FDA. An application for designation as an orphan product can be
made any time prior to the filing of an application for approval to market the product. A product becomes an orphan when
it receives orphan drug designation from the Office of Orphan Products Development at the FDA based on acceptable
confidential requests made under the regulatory provisions. The product must then go through the review and approval
process like any other product.
A sponsor may request orphan drug designation of a previously unapproved product or new orphan indication for
an already marketed product. In addition, a sponsor of a product that is otherwise the same product as an already approved
orphan drug may seek and obtain orphan drug designation for the subsequent product for the same rare disease or condition
if it can present a plausible hypothesis that its product may be clinically superior to the first drug. More than one sponsor
may receive orphan drug designation for the same product for the same rare disease or condition, but each sponsor seeking
orphan drug designation must file a complete request for designation.
If a product with orphan designation receives the first FDA approval for the disease or condition for which it has
such designation or for a select indication or use within the rare disease or condition for which it was designated, the
product generally will receive orphan drug exclusivity. Orphan drug exclusivity means that the FDA may not approve
another sponsor’s marketing application for the same product for the same indication for seven years, except in certain
limited circumstances. In particular, the concept of what constitutes the "same drug" for purposes of orphan drug
exclusivity remains in flux in the context of gene therapies, and the FDA has issued recent draft guidance suggesting that it
would not consider two gene therapy products to be different drugs solely based on minor differences in the transgenes or
vectors. If a product designated as an orphan drug ultimately receives marketing approval for an indication broader than
what was designated in its orphan drug application, it may not be entitled to exclusivity.
The period of exclusivity begins on the date that the marketing application is approved by the FDA and applies
only to the indication for which the product has been designated. The FDA may approve a second application for the same
product for a different use or a second application for a clinically superior version of the product for the same use. The
FDA cannot, however, approve the same product made by another manufacturer for the same indication during the market
exclusivity period unless it has the consent of the sponsor or the sponsor is unable to provide sufficient quantities.
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Pediatric Exclusivity
Pediatric exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted,
provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory
exclusivity, including the non-patent and orphan exclusivity. This six-month exclusivity may be granted if a BLA sponsor
submits pediatric data that fairly respond to a written request from the FDA for such data. The data do not need to show the
product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the
FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted
by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection
cover the product are extended by six months. This is not a patent term extension, but it effectively extends the regulatory
period during which the FDA cannot approve another application.
Biosimilars and Exclusivity
The 2010 Patient Protection and Affordable Care Act, which was signed into law in March 2010, included a
subtitle called the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”). The BPCIA established a
regulatory scheme authorizing the FDA to approve biosimilars and interchangeable biosimilars. A biosimilar is a biological
product that is highly similar to an existing FDA-licensed “reference product.” As of January 1, 2021, the FDA has
approved 29 biosimilar products for use in the United States. No interchangeable biosimilars, however, have been
approved. The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars.
Additional guidances are expected to be finalized by the FDA in the near term.
Under the BPCIA, a manufacturer may submit an application for licensure of a biologic product that is “biosimilar
to” or “interchangeable with” a previously approved biological product or “reference product.” In order for the FDA to
approve a biosimilar product, it must find that there are no clinically meaningful differences between the reference product
and proposed biosimilar product in terms of safety, purity, and potency. For the FDA to approve a biosimilar product as
interchangeable with a reference product, the agency must find that the biosimilar product can be expected to produce the
same clinical results as the reference product, and (for products administered multiple times) that the biologic and the
reference biologic may be switched after one has been previously administered without increasing safety risks or risks of
diminished efficacy relative to exclusive use of the reference biologic.
Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years
following the date of approval of the reference product. The FDA may not approve a biosimilar product until 12 years from
the date on which the reference product was approved. Even if a product is considered to be a reference product eligible for
exclusivity, another company could market a competing version of that product if the FDA approves a full BLA for such
product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to
demonstrate the safety, purity, and potency of their product. The BPCIA also created certain exclusivity periods for
biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed
“interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy
law. Since the passage of the BPCIA, many states have passed laws or amendments to laws, including laws governing
pharmacy practices, which are state-regulated, to regulate the use of biosimilars.
Patent Term Restoration and Extension
A patent claiming a new biologic product, its method of use or its method of manufacture may be eligible for a
limited patent term extension under the Hatch-Waxman Act, which permits a patent restoration of up to five years for
patent term lost during product development and FDA regulatory review. The restoration period granted on a patent
covering a product is typically one-half the time between the effective date of a clinical investigation involving human
beings is begun and the submission date of an application, plus the time between the submission date of an application and
the ultimate approval date. Patent term restoration cannot be used to extend the remaining term of a patent past a total of
14 years from the product’s approval date. Only one patent applicable to an approved product is eligible for the extension,
and the application for the extension must be submitted prior to the expiration of the patent in question. A patent that
covers multiple products for which approval is sought can only be extended in connection with one of the
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approvals. The USPTO reviews and approves the application for any patent term extension or restoration in consultation
with the FDA.
FDA Approval of Companion Diagnostics
In August 2014, the FDA issued final guidance clarifying the requirements that will apply to approval of
therapeutic products and in vitro companion diagnostics. According to the guidance, for novel drugs, a companion
diagnostic device and its corresponding therapeutic should be approved or cleared contemporaneously by the FDA for the
use indicated in the therapeutic product’s labeling. Approval or clearance of the companion diagnostic device will ensure
that the device has been adequately evaluated and has adequate performance characteristics in the intended population. In
July 2016, the FDA issued a draft guidance intended to assist sponsors of the drug therapeutic and in vitro companion
diagnostic device on issues related to co-development of the products.
The 2014 guidance also explains that a companion diagnostic device used to make treatment decisions in clinical
trials of a biologic product candidate generally will be considered an investigational device, unless it is employed for an
intended use for which the device is already approved or cleared. If used to make critical treatment decisions, such as
patient selection, the diagnostic device generally will be considered a significant risk device under the FDA’s
Investigational Device Exemption (“IDE”) regulations. Thus, the sponsor of the diagnostic device will be required to
comply with the IDE regulations. According to the guidance, if a diagnostic device and a product are to be studied together
to support their respective approvals, both products can be studied in the same investigational study, if the study meets both
the requirements of the IDE regulations and the IND regulations. The guidance provides that depending on the details of
the study plan and subjects, a sponsor may seek to submit an IND alone, or both an IND and an IDE.
Under the FDCA, in vitro diagnostics, including companion diagnostics, are regulated as medical devices. In the
United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern,
among other things, medical device design and development, preclinical and clinical testing, premarket clearance or
approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution,
export and import, and post-market surveillance. Unless an exemption applies, diagnostic tests require marketing clearance
or approval from the FDA prior to commercial distribution.
The FDA previously has required in vitro companion diagnostics intended to select the patients who will respond
to the product candidate to obtain pre-market approval (“PMA”) simultaneously with approval of the therapeutic product
candidate. The PMA process, including the gathering of clinical and preclinical data and the submission to and review by
the FDA, can take several years or longer. It involves a rigorous premarket review during which the applicant must prepare
and provide the FDA with reasonable assurance of the device’s safety and effectiveness and information about the device
and its components regarding, among other things, device design, manufacturing and labeling. PMA applications are
subject to an application fee. For federal fiscal year 2021, the standard fee is $365,657 and the small business fee is
$91,414.
A clinical trial is typically required for a PMA application and, in a small percentage of cases, the FDA may
require a clinical study in support of a 510(k) submission. A manufacturer that wishes to conduct a clinical study involving
the device is subject to the FDA’s IDE regulation. The IDE regulation distinguishes between significant and non-significant
risk device studies and the procedures for obtaining approval to begin the study differ accordingly. Also, some types of
studies are exempt from the IDE regulations. A significant risk device presents a potential for serious risk to the health,
safety, or welfare of a subject. Significant risk devices are devices that are substantially important in diagnosing, curing,
mitigating, or treating disease or in preventing impairment to human health. Studies of devices that pose a significant risk
require both FDA and an IRB approval prior to initiation of a clinical study. Non-significant risk devices are devices that
do not pose a significant risk to the human subjects. A non-significant risk device study requires only IRB approval prior to
initiation of a clinical study.
After a device is placed on the market, it remains subject to significant regulatory requirements. Medical devices
may be marketed only for the uses and indications for which they are cleared or approved. Device manufacturers must also
establish registration and device listings with the FDA. A medical device manufacturer’s manufacturing
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processes and those of its suppliers are required to comply with the applicable portions of the Quality System Regulation,
which covers the methods and documentation of the design, testing, production, processes, controls, quality assurance,
labeling, packaging and shipping of medical devices. Domestic facility records and manufacturing processes are subject to
periodic unscheduled inspections by the FDA. The FDA also may inspect foreign facilities that export products to the
United States.
Regulation and Procedures Governing Approval of Medicinal Products in the European Union
In order to market any product outside of the United States, a company must also comply with numerous and
varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing,
among other things, clinical trials, marketing authorization, commercial sales and distribution of products. Whether or not
it obtains FDA approval for a product, an applicant will need to obtain the necessary approvals by the comparable foreign
regulatory authorities before it can commence clinical trials or marketing of the product in those countries or jurisdictions.
Specifically, the process governing approval of medicinal products in the European Union generally follows the same lines
as in the United States. It entails satisfactory completion of preclinical studies and adequate and well-controlled clinical
trials to establish the safety and efficacy of the product for each proposed indication. It also requires the submission to the
relevant competent authorities of a marketing authorization application (“MAA”) and granting of a marketing authorization
by these authorities before the product can be marketed and sold in the European Union.
Clinical Trial Approval
Pursuant to the currently applicable Clinical Trials Directive 2001/20/EC and the Directive 2005/28/EC on GCP, a
system for the approval of clinical trials in the European Union has been implemented through national legislation of the
member states. Under this system, an applicant must obtain approval from the competent national authority of a European
Union member state in which the clinical trial is to be conducted, or in multiple member states if the clinical trial is to be
conducted in a number of member states. Furthermore, the applicant may only start a clinical trial at a specific study site
after the competent ethics committee has issued a favorable opinion. The clinical trial application must be accompanied by
an investigational medicinal product dossier with supporting information prescribed by Directive 2001/20/EC and
Directive 2005/28/EC and corresponding national laws of the member states and further detailed in applicable guidance
documents.
In April 2014, the EU adopted a new Clinical Trials Regulation (EU) No 536/2014, which is set to replace the
current Clinical Trials Directive 2001/20/EC. The new Clinical Trials Regulation will become directly applicable to and
binding in all 28 EU Member States without the need for any national implementing legislation. It will overhaul the current
system of approvals for clinical trials in the EU. Specifically, the new legislation aims at simplifying and streamlining the
approval of clinical trials in the EU. Under the new coordinated procedure for the approval of clinical trials, the sponsor of
a clinical trial will be required to submit a single application for approval of a clinical trial to a reporting EU Member State
(RMS) through an EU Portal. The submission procedure will be the same irrespective of whether the clinical trial is to be
conducted in a single EU Member State or in more than one EU Member State.
The Regulation was published on June 16, 2014 but has not yet become effective. As of January 1, 2020, the
website of the European Commission reported that the implementation of the Clinical Trials Regulation was dependent on
the development of a fully functional clinical trials portal and database, which would be confirmed by an independent
audit, and that the new legislation would come into effect six months after the European Commission publishes a notice of
this confirmation. The website indicated that the audit was expected to commence in December 2020. In late 2020, the
EMA indicated that it plans to focus on the findings of a system audit; improving the usability, quality and stability of the
clinical trial information system; and knowledge transfer to prepare users and their organizations for the new clinical trial
system. The EMA has indicated that the system will go live in December 2021.
Parties conducting certain clinical studies must, as in the U.S., post clinical trial information in the European
Union at the EudraCT website: https://eudract.ema.europa.eu.
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PRIME Designation in the EU
In March 2016, the European Medicines Agency (“EMA”) launched an initiative to facilitate development of
product candidates in indications, often rare, for which few or no therapies currently exist. The PRIority Medicines
(“PRIME”) scheme is intended to encourage drug development in areas of unmet medical need and provides accelerated
assessment of products representing substantial innovation reviewed under the centralized procedure. Products from small-
and medium-sized enterprises may qualify for earlier entry into the PRIME scheme than larger companies. Many benefits
accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive
regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements,
and accelerated marketing authorization application assessment once a dossier has been submitted. Importantly, a dedicated
EMA contact and rapporteur from the Committee for Human Medicinal Products (“CHMP”) or Committee for Advanced
Therapies are appointed early in the PRIME scheme facilitating increased understanding of the product at the EMA’s
Committee level. A kick-off meeting initiates these relationships and includes a team of multidisciplinary experts at the
EMA to provide guidance on the overall development and regulatory strategies.
Pediatric Studies
Applicants developing a new medicinal product must agree upon a Pediatric Investigation Plan (“PIP”) with the
EMA’s pediatric committee (“PDCO”), and must conduct pediatric clinical trials in accordance with that PIP, unless a
waiver applies (e.g., because the relevant disease or condition occurs only in adults). The PIP sets out the timing and
measures proposed to generate data to support a pediatric indication of the drug for which marketing authorization is being
sought. The marketing authorization application for the product must include the results of pediatric clinical trials
conducted in accordance with the PIP, unless a waiver applies, or a deferral has been granted by the PDCO of the
obligation to implement some or all of the measures of the PIP until there are sufficient data to demonstrate the efficacy
and safety of the product in adults, in which case the pediatric clinical trials must be completed at a later date.
Marketing Authorization
To obtain a marketing authorization for a product under the European Union regulatory system, an applicant must
submit an MAA, either under a centralized procedure administered by the EMA or one of the procedures administered by
competent authorities in European Union Member States (decentralized procedure, national procedure, or mutual
recognition procedure). A marketing authorization may be granted only to an applicant established in the European Union.
Regulation (EC) No 1901/2006 provides that prior to obtaining a marketing authorization in the European Union, an
applicant must demonstrate compliance with all measures included in an EMA-approved PIP, covering all subsets of the
pediatric population, unless the EMA has granted a product-specific waiver, class waiver, or a deferral for one or more of
the measures included in the PIP.
The centralized procedure provides for the grant of a single marketing authorization by the European Commission
that is valid for all EU member states. Pursuant to Regulation (EC) No. 726/2004, the centralized procedure is compulsory
for specific products, including for medicines produced by certain biotechnological processes, products designated as
orphan medicinal products, advanced therapy products and products with a new active substance indicated for the
treatment of certain diseases, including products for the treatment of cancer. For products with a new active substance
indicated for the treatment of other diseases and products that are highly innovative or for which a centralized process is in
the interest of patients, the centralized procedure may be optional. Manufacturers must demonstrate the quality, safety, and
efficacy of their products to the EMA, which provides an opinion regarding the MAA. The European Commission grants
or refuses marketing authorization in light of the opinion delivered by the EMA.
Specifically, the grant of marketing authorization in the European Union for products containing viable human
tissues or cells such as gene therapy medicinal products is governed by Regulation 1394/2007/EC on advanced therapy
medicinal products, read in combination with Directive 2001/83/EC of the European Parliament and of the Council,
commonly known as the Community code on medicinal products. Regulation 1394/2007/EC lays down specific rules
concerning the authorization, supervision, and pharmacovigilance of gene therapy medicinal products, somatic cell therapy
medicinal products, and tissue engineered products. Manufacturers of advanced therapy medicinal products must
demonstrate the quality, safety, and efficacy of their products to EMA which provides an opinion regarding the
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application for marketing authorization. The European Commission grants or refuses marketing authorization in light of the
opinion delivered by EMA.
Under the centralized procedure, the CHMP established at the EMA is responsible for conducting an initial
assessment of a product. Under the centralized procedure in the European Union, the maximum timeframe for the
evaluation of an MAA is 210 days, excluding clock stops when additional information or written or oral explanation is to
be provided by the applicant in response to questions of the CHMP. Accelerated evaluation may be granted by the CHMP
in exceptional cases, when a medicinal product is of major interest from the point of view of public health and, in
particular, from the viewpoint of therapeutic innovation. If the CHMP accepts such a request, the time limit of 210 days
will be reduced to 150 days, but it is possible that the CHMP may revert to the standard time limit for the centralized
procedure if it determines that it is no longer appropriate to conduct an accelerated assessment.
Specialized Procedures for Gene Therapies
The grant of marketing authorization in the European Union for gene therapy products is governed by Regulation
1394/2007/EC on advanced therapy medicinal products, read in combination with Directive 2001/83/EC of the European
Parliament and of the Council, commonly known as the Community code on medicinal products. Regulation
1394/2007/EC includes specific rules concerning the authorization, supervision, and pharmacovigilance of gene therapy
medicinal products. Manufacturers of advanced therapy medicinal products must demonstrate the quality, safety, and
efficacy of their products to the EMA, which provides an opinion regarding the MAA. The European Commission grants
or refuses marketing authorization in light of the opinion delivered by the EMA.
Regulatory Data Protection in the European Union
In the European Union, new chemical entities approved on the basis of a complete independent data package
qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity
pursuant to Regulation (EC) No 726/2004, as amended, and Directive 2001/83/EC, as amended. Data exclusivity prevents
regulatory authorities in the European Union from referencing the innovator’s data to assess a generic (abbreviated)
application for a period of eight years. During the additional two-year period of market exclusivity, a generic marketing
authorization application can be submitted, and the innovator’s data may be referenced, but no generic medicinal product
can be marketed until the expiration of the market exclusivity. The overall ten-year period will be extended to a maximum
of eleven years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization
for one or more new therapeutic indications which, during the scientific evaluation prior to authorization, is held to bring a
significant clinical benefit in comparison with existing therapies. Even if a compound is considered to be a new chemical
entity so that the innovator gains the prescribed period of data exclusivity, another company may market another version of
the product if such company obtained marketing authorization based on an MAA with a complete independent data
package of pharmaceutical tests, preclinical tests and clinical trials.
Patent Term Extensions in the European Union and Other Jurisdictions
The European Union also provides for patent term extension through Supplementary Protection Certificates, or
SPCs. The rules and requirements for obtaining an SPC are similar to those in the United States. An SPC may extend the
term of a patent for up to five years after its originally scheduled expiration date and can provide up to a maximum of
fifteen years of marketing exclusivity for a drug. These periods can be extended for six additional months if pediatric
exclusivity is obtained, which is described in detail below. Although SPCs are available throughout the European Union,
sponsors must apply on a country-by-country basis. Similar patent term extension rights exist in certain other foreign
jurisdictions outside the European Union.
Periods of Authorization and Renewals
A marketing authorization is valid for five years, in principle, and it may be renewed after five years on the basis
of a reevaluation of the risk-benefit balance by the EMA or by the competent authority of the authorizing member state. To
that end, the marketing authorization holder must provide the EMA or the competent authority with a
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consolidated version of the file in respect of quality, safety and efficacy, including all variations introduced since the
marketing authorization was granted, at least six months before the marketing authorization ceases to be valid. Once
renewed, the marketing authorization is valid for an unlimited period, unless the European Commission or the competent
authority decides, on justified grounds relating to pharmacovigilance, to proceed with one additional five-year renewal
period. Any authorization that is not followed by the placement of the drug on the EU market (in the case of the centralized
procedure) or on the market of the authorizing member state within three years after authorization ceases to be valid.
Regulatory Requirements after Marketing Authorization
Following approval, the holder of the marketing authorization is required to comply with a range of requirements
applicable to the manufacturing, marketing, promotion and sale of the medicinal product. These include compliance with
the European Union’s stringent pharmacovigilance or safety reporting rules, pursuant to which post-authorization studies
and additional monitoring obligations can be imposed. In addition, the manufacturing of authorized products, for which a
separate manufacturer’s license is mandatory, must also be conducted in strict compliance with the EMA’s GMP
requirements and comparable requirements of other regulatory bodies in the European Union, which mandate the methods,
facilities, and controls used in manufacturing, processing and packing of drugs to assure their safety and identity. Finally,
the marketing and promotion of authorized products, including industry-sponsored continuing medical education and
advertising directed toward the prescribers of drugs and/or the general public, are strictly regulated in the European Union
under Directive 2001/83EC, as amended.
Orphan Drug Designation and Exclusivity
Regulation (EC) No 141/2000 and Regulation (EC) No. 847/2000 provide that a product can be designated as an
orphan drug by the European Commission if its sponsor can establish: that the product is intended for the diagnosis,
prevention or treatment of (1) a life-threatening or chronically debilitating condition affecting not more than five in ten
thousand persons in the European Union when the application is made, or (2) a life-threatening, seriously debilitating or
serious and chronic condition in the European Union and that without incentives it is unlikely that the marketing of the
drug in the European Union would generate sufficient return to justify the necessary investment. For either of these
conditions, the applicant must demonstrate that there exists no satisfactory method of diagnosis, prevention, or treatment of
the condition in question that has been authorized in the European Union or, if such method exists, the drug will be of
significant benefit to those affected by that condition.
An orphan drug designation provides a number of benefits, including fee reductions, regulatory assistance, and the
possibility to apply for a centralized European Union marketing authorization. Marketing authorization for an orphan drug
leads to a ten-year period of market exclusivity. During this market exclusivity period, neither the EMA nor the European
Commission or the member states can accept an application or grant a marketing authorization for a “similar medicinal
product.” A “similar medicinal product” is defined as a medicinal product containing a similar active substance or
substances as contained in an authorized orphan medicinal product, and which is intended for the same therapeutic
indication. The market exclusivity period for the authorized therapeutic indication may, however, be reduced to six years if,
at the end of the fifth year, it is established that the product no longer meets the criteria for orphan drug designation
because, for example, the product is sufficiently profitable not to justify market exclusivity.
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Pediatric Exclusivity
Products that are granted a marketing authorization with the results of the pediatric clinical trials conducted in
accordance with the PIP are eligible for a six month extension of the protection under a supplementary protection
certificate (if any is in effect at the time of approval) even where the trial results are negative. In the case of orphan
medicinal products, a two year extension of the orphan market exclusivity may be available. This pediatric reward is
subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and
submitted.
Brexit and the Regulatory Framework in the United Kingdom
On June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the EU, commonly referred to as
Brexit. Following protracted negotiations, the United Kingdom left the EU on January 31, 2020. Under the withdrawal
agreement, there is a transitional period until December 31, 2020 (extendable by up to two years). On December 24, 2020,
the United Kingdom and the European Union entered into a Trade and Cooperation Agreement. The agreement sets out
certain procedures for approval and recognition of medical products in each jurisdiction. Since the regulatory framework
for pharmaceutical products in the United Kingdom covering quality, safety and efficacy of pharmaceutical products,
clinical trials, marketing authorization, commercial sales and distribution of pharmaceutical products is derived from EU
directives and regulations, Brexit could materially impact the future regulatory regime which applies to products and the
approval of product candidates in the UK, as the UK legislation now has the potential to diverge from EU legislation. It
remains to be seen how Brexit will impact regulatory requirements for product candidates and products in the UK in the
long-term. The MHRA has recently published detailed guidance for industry and organizations to follow from January 1,
2021 now the transition period is over, which will be updated as the UK’s regulatory position on medicinal products
evolves over time.
Furthermore, while the Data Protection Act of 2018 in the United Kingdom that “implements” and complements
the European Union’s General Data Protection Regulation, or GDPR, has achieved Royal Assent on May 23, 2018 and is
now effective in the United Kingdom, it is still unclear whether transfer of data from the European Economic Area, or
EEA, to the United Kingdom will remain lawful under GDPR. The Trade and Cooperation Agreement provides for a
transitional period during which the United Kingdom will be treated like an European Union member state in relation to
processing and transfers of personal data for four months from January 1, 2021. This may be extended by two further
months. After such period, the United Kingdom will be a “third country” under the GDPR unless the European
Commission adopts an adequacy decision in respect of transfers of personal data to the United Kingdom. The United
Kingdom has already determined that it considers all of the EU 27 and EEA member states to be adequate for the purposes
of data protection, ensuring that data flows from the United Kingdom to the EU/EEA remain unaffected.
General Data Protection Regulation
The collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the EU,
including personal health data, is subject to the EU General Data Protection Regulation (“GDPR”), which became effective
on May 25, 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process
personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the
individuals to whom the personal data relates, providing information to individuals regarding data processing activities,
implementing safeguards to protect the security and confidentiality of personal data, providing notification of data
breaches, and taking certain measures when engaging third-party processors. The GDPR also imposes strict rules on the
transfer of personal data to countries outside the EU, including the U.S., and permits data protection authorities to impose
large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues,
whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge
complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from
violations of the GDPR. Compliance with the GDPR will be a rigorous and time-intensive process that may increase the
cost of doing business or require companies to change their business practices to ensure full compliance.
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Coverage, Pricing, and Reimbursement
Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we
may seek regulatory approval by the FDA or other government authorities. In the United States and markets in other
countries, patients who are prescribed treatments for their conditions and providers performing the prescribed services
generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use
any product candidates we may develop unless coverage is provided and reimbursement is adequate to cover a significant
portion of the cost of such product candidates. Even if any product candidates we may develop are approved, sales of such
product candidates will depend, in part, on the extent to which third-party payors, including government health programs in
the United States such as Medicare and Medicaid, commercial health insurers, and managed care organizations, provide
coverage, and establish adequate reimbursement levels for, such product candidates. The process for determining whether a
payor will provide coverage for a product may be separate from the process for setting the price or reimbursement rate that
the payor will pay for the product once coverage is approved. Third-party payors are increasingly challenging the prices
charged, examining the medical necessity, and reviewing the cost-effectiveness of medical products and services and
imposing controls to manage costs. Third-party payors may limit coverage to specific products on an approved list, also
known as a formulary, which might not include all of the approved products for a particular indication.
In order to secure coverage and reimbursement for any product that might be approved for sale, a company may
need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness
of the product, in addition to the costs required to obtain FDA or other comparable marketing approvals. Nonetheless,
product candidates may not be considered medically necessary or cost effective. A decision by a third-party payor not to
cover any product candidates we may develop could reduce physician utilization of such product candidates once approved
and have a material adverse effect on our sales, results of operations and financial condition. Additionally, a payor’s
decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Further,
one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage
and reimbursement for the product, and the level of coverage and reimbursement can differ significantly from payor to
payor. Third-party reimbursement and coverage may not be available to enable us to maintain price levels sufficient to
realize an appropriate return on our investment in product development.
The containment of healthcare costs also has become a priority of federal, state and foreign governments and the
prices of pharmaceuticals have been a focus in this effort. Governments have shown significant interest in implementing
cost-containment programs, including price controls, restrictions on reimbursement, and requirements for substitution of
generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in
jurisdictions with existing controls and measures, could further limit a company’s revenue generated from the sale of any
approved products. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable
coverage and reimbursement status is attained for one or more products for which a company or its collaborators receive
marketing approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
Outside the United States, ensuring adequate coverage and payment for any product candidates we may develop
will face challenges. Pricing of prescription pharmaceuticals is subject to governmental control in many countries. Pricing
negotiations with governmental authorities can extend well beyond the receipt of regulatory marketing approval for a
product and may require us to conduct a clinical trial that compares the cost effectiveness of any product candidates we
may develop to other available therapies. The conduct of such a clinical trial could be expensive and result in delays in our
commercialization efforts.
In the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries
provide that products may be marketed only after a reimbursement price has been agreed. Some countries may require the
completion of additional studies that compare the cost-effectiveness of a particular product candidate to currently available
therapies (so called health technology assessments) in order to obtain reimbursement or pricing approval. For example, the
European Union provides options for its member states to restrict the range of products for which their national health
insurance systems provide reimbursement and to control the prices of medicinal products for human use. European Union
member states may approve a specific price for a product or it may instead adopt a system
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of direct or indirect controls on the profitability of the company placing the product on the market. Other member states
allow companies to fix their own prices for products, but monitor and control prescription volumes and issue guidance to
physicians to limit prescriptions. Recently, many countries in the European Union have increased the amount of discounts
required on pharmaceuticals and these efforts could continue as countries attempt to manage healthcare expenditures,
especially in light of the severe fiscal and debt crises experienced by many countries in the European Union. The
downward pressure on health care costs in general, particularly prescription products, has become intense. As a result,
increasingly high barriers are being erected to the entry of new products. Political, economic, and regulatory developments
may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained.
Reference pricing used by various European Union member states, and parallel trade (arbitrage between low-priced and
high-priced member states), can further reduce prices. There can be no assurance that any country that has price controls or
reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for
any of our products, if approved in those countries.
Healthcare Law and Regulation
Healthcare providers and third-party payors play a primary role in the recommendation and prescription of
pharmaceutical products that are granted marketing approval. Arrangements with providers, consultants, third-party payors,
and customers are subject to broadly applicable fraud and abuse, anti-kickback, false claims laws, reporting of payments to
physicians and teaching physicians and patient privacy laws and regulations and other healthcare laws and regulations that
may constrain our business and/or financial arrangements. Restrictions under applicable federal and state healthcare laws
and regulations, include the following:
● the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from
knowingly and willfully soliciting, offering, paying, receiving, or providing remuneration, directly or
indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order
or recommendation of, any good or service, for which payment may be made, in whole or in part, under a
federal healthcare program such as Medicare and Medicaid;
● the federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary
penalties laws, which prohibit individuals or entities from, among other things, knowingly presenting, or
causing to be presented, to the federal government, claims for payment that are false, fictitious, or fraudulent
or knowingly making, using, or causing to made or used a false record or statement to avoid, decrease, or
conceal an obligation to pay money to the federal government;
● the federal civil monetary penalty and false statement laws and regulations relating to pricing and submission
of pricing information for government programs, including penalties for knowingly and intentionally
overcharging 340b eligible entities and the submission of false or fraudulent pricing information to
government entities;
● the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created additional
federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to
execute, a scheme to defraud any healthcare benefit program or making false statements relating to
healthcare matters;
● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their
respective implementing regulations, including the Final Omnibus Rule published in January 2013, which
impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security,
and transmission of individually identifiable health information;
● the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or
covering up a material fact or making any materially false statement in connection with the delivery of or
payment for health care benefits, items or services;
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● the Foreign Corrupt Practices Act, which prohibits companies and their intermediaries from making, or
offering or promising to make improper payments to non-U.S. officials for the purpose of obtaining or
retaining business or otherwise seeking favorable treatment;
● the federal transparency requirements known as the federal Physician Payments Sunshine Act, under the
Patient Protection and Affordable Care Act (“PPACA”), as amended by the Health Care Education
Reconciliation Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to
report annually to the Centers for Medicare & Medicaid Services (“CMS”) within the U.S. Department of
Health and Human Services, information related to payments and other transfers of value made by that entity
to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and
their immediate family members; and
● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which
may apply to healthcare items or services that are reimbursed by non-governmental third-party payors,
including private insurers.
Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary
compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to
requiring pharmaceutical manufacturers to report information related to payments to physicians and other health care
providers or marketing expenditures. State and foreign laws also govern the privacy and security of health information in
some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus
complicating compliance efforts.
Healthcare Reform
A primary trend in the U.S. healthcare industry and elsewhere is cost containment. There have been a number of
federal and state proposals during the last few years regarding the pricing of pharmaceutical and biopharmaceutical
products, limiting coverage and reimbursement for drugs and other medical products, government control and other
changes to the healthcare system in the United States.
By way of example, the United States and state governments continue to propose and pass legislation designed to
reduce the cost of healthcare. In March 2010, the United States Congress enacted the PPACA, which, among other things,
includes changes to the coverage and payment for products under government health care programs. In addition, other
legislative changes have been proposed and adopted since the ACA was enacted. In August 2011, the Budget Control Act
of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit
Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021,
was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government
programs. These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year,
which went into effect in April 2013 and will remain in effect through 2030 under the Coronavirus Aid, Relief, and
Economic Security Act, or the CARES Act. The American Taxpayer Relief Act of 2012, among other things, reduced
Medicare payments to several providers and increased the statute of limitations period for the government to recover
overpayments to providers from three to five years. These laws may result in additional reductions in Medicare and other
healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may
obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.
Since enactment of the ACA, there have been, and continue to be, numerous legal challenges and Congressional
actions to repeal and replace provisions of the law. For example, with enactment of the Tax Cuts and Jobs Act of 2017,
which was signed by President Trump on December 22, 2017, Congress repealed the “individual mandate.” The repeal of
this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019.
Further, on December 14, 2018, a U.S. District Court judge in the Northern District of Texas ruled that the individual
mandate portion of the ACA is an essential and inseverable feature of the ACA, and therefore because the mandate was
repealed as part of the Tax Cuts and Jobs Act, the remaining provisions of the ACA are invalid as well. On December 18,
2019, the Court of Appeals for the Fifth Circuit court affirmed the lower court’s ruling that the individual mandate
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portion of the ACA is unconstitutional and it remanded the case to the district court for reconsideration of the severability
question and additional analysis of the provisions of the ACA. Thereafter, the U.S. Supreme Court agreed to hear this case.
Oral argument in the case took place on November 10, 2020. On February 10, 2021, the Biden Administration withdrew
DOJ’s support for this lawsuit. A ruling by the Court is expected sometime this year. Litigation and legislation over the
ACA are likely to continue, with unpredictable and uncertain results.
The Trump Administration also took executive actions to undermine or delay implementation of the ACA, including
directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or
delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states,
individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. On January 28,
2021, however, President Biden rescinded those orders and issued a new Executive Order which directs federal agencies to
reconsider rules and other policies that limit Americans’ access to health care, and consider actions that will protect and
strengthen that access. Under this Order, federal agencies are directed to re-examine: policies that undermine protections
for people with pre-existing conditions, including complications related to COVID-19; demonstrations and waivers under
Medicaid and the ACA that may reduce coverage or undermine the programs, including work requirements; policies that
undermine the Health Insurance Marketplace or other markets for health insurance; policies that make it more difficult to
enroll in Medicaid and the ACA; and policies that reduce affordability of coverage or financial assistance, including for
dependents.
The costs of prescription pharmaceuticals have also been the subject of considerable discussion in the United
States To date, there have been several recent U.S. congressional inquiries, as well as proposed and enacted state and
federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship
between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government
program reimbursement methodologies for drug products. To those ends, President Trump issued five executive orders
intended to lower the costs of prescription drug products but it is unclear whether, and to what extent, these orders will
remain in force under the Biden Administration. Further, on September 24, 2020, the Trump Administration finalized a
rulemaking allowing states or certain other non-federal government entities to submit importation program proposals to the
FDA for review and approval. Applicants are required to demonstrate that their importation plans pose no additional risk to
public health and safety and will result in significant cost savings for consumers. The FDA has issued draft guidance that
would allow manufacturers to import their own FDA-approved drugs that are authorized for sale in other countries (multi-
market approved products).
At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations
designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints,
discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some
cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional health care
authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products
and which suppliers will be included in their prescription drug and other health care programs. These measures could
reduce the ultimate demand for our products, once approved, or put pressure on our product pricing. We expect that
additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts
that federal and state governments will pay for healthcare products and services, which could result in reduced demand for
our product candidates or additional pricing pressures.
Additional Regulations
In addition to the foregoing, state, and federal laws regarding environmental protection and hazardous substances,
including the Occupational Safety and Health Act, the Resource Conservation and Recovery Act, and the Toxic Substances
Control Act, affect our business. These and other laws govern the use, handling, and disposal of various biologic, chemical,
and radioactive substances used in, and wastes generated by, operations. If our operations result in contamination of the
environment or expose individuals to hazardous substances, we could be liable for damages and governmental fines.
Equivalent laws have been adopted in third countries that impose similar obligations.
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Human Capital
As of February 1, 2021, we had 235 full-time employees, including 61 employees with M.D. or Ph.D. degrees. Of
these full-time employees, 185 employees are engaged in research and development activities. None of our employees are
represented by a labor union or covered by a collective bargaining agreement. We experienced significant growth in the
number of our employees in 2020, particularly in our research and development organization. We anticipate that we will
continue to increase headcount in our clinical and development organization as we progress the clinical development of
EDIT-101 to treat LCA10 and EDIT-301 to treat sickle cell disease, and further advance our current research programs and
our preclinical development activities.
Our values – community, innovation, and results – are built on the foundation that our people and the way we treat
one another promote creativity in all aspects of our work and drive us as a team to achieve our mission of translating the
promise of gene editing into a broad class of differentiated, transformational medicines for diseases with high unmet need.
Our human capital is integral to our future success. For that reason, our human capital resources objectives include
attracting, retaining, developing and motivating a diverse team of highly skilled employees at all levels. We value our
employees and provide them with competitive salaries and bonuses, opportunities for equity ownership, including stock-
based compensation awards and an employee stock purchase plan, development programs that enable continued learning
and growth and an employment package that promotes well-being across all aspects of their lives, including health care,
retirement planning and paid time off. We regularly benchmark these total rewards against our industry peers to ensure we
remain competitive and attractive to potential new hires. In addition, we regularly conduct employee surveys to gauge
employee engagement and solicit feedback, and enhance our understanding of the views of our employees, work
environment and culture. The results from engagement surveys are used to implement programs and processes designed to
enhance employee engagement and improve the employee experience.
Our Corporate Information
We were incorporated under the name Gengine, Inc. as a Delaware corporation in September 2013, and we
changed our name to Editas Medicine, Inc. in November 2013. Our principal executive offices are located at 11 Hurley St.,
Cambridge, Massachusetts, 02141, and our telephone number is (617) 401-9000.
Available Information
We maintain an internet website at www.editasmedicine.com and make available free of charge through our
website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act of 1934, or the
Exchange Act. We make these reports available through our website as soon as reasonably practicable after we
electronically file such reports with, or furnish such reports to, the Securities and Exchange Commission, or the SEC. You
can review our electronically filed reports and other information that we file with the SEC on the SEC’s web site at
http://www.sec.gov. We also make available, free of charge on our website, the reports filed with the SEC by our executive
officers, directors and 10% stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable
after copies of those filings are provided to us by those persons. In addition, we regularly use our website to post
information regarding our business, product development programs and governance, and we encourage investors to use our
website, particularly the information in the section entitled “Investors & Media,” as a source of information about us.
The information on our website is not incorporated by reference into this Annual Report on Form 10-K and should
not be considered to be a part of this Annual Report on Form 10-K. Our website address is included in this Annual Report
on Form 10-K as an inactive technical reference only.
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Item 1A. Risk Factors
Our business is subject to numerous risks. The following important factors, among others, could cause our actual
results to differ materially from those expressed in forward-looking statements made by us or on our behalf in this Annual
Report on Form 10-K and other filings with the Securities and Exchange Commission (the “SEC”), press releases,
communications with investors, and oral statements. Actual future results may differ materially from those anticipated in
our forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result
of new information, future events, or otherwise.
Risks Related to Our Financial Position and Need for Additional Capital
We have incurred significant losses since inception. We expect to incur losses for the foreseeable future and may never
achieve or maintain profitability.
Since inception, we have incurred significant operating losses. Our net losses were $116.0 million, $133.7 million,
and $110.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, we had
an accumulated deficit of $665.2 million. We have financed our operations primarily through public offerings of our
common stock, private placements of our preferred stock, our collaboration with Juno Therapeutics, Inc., a wholly-owned
subsidiary of Bristol-Myers Squibb Company (“Juno Therapeutics”), and payments under our strategic alliance with
Allergan Pharmaceuticals International Limited (which was acquired by AbbVie Inc. in May 2020 and is referred to
together with its affiliates as “Allergan”), which was terminated in August 2020. We have devoted substantially all of our
efforts to research and development. We expect to continue to incur significant expenses and increasing operating losses for
the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter. We anticipate that our
expenses will increase substantially if and as we:
● progress the clinical development of EDIT-101 to treat Leber congenital amaurosis (“LCA”) 10 (“LCA10”);
● continue our current research programs and our preclinical and clinical development of product candidates
from our current research programs, including EDIT-301, our experimental medicine to treat sickle cell
disease and beta-thalassemia;
● seek to identify additional research programs and additional product candidates;
● initiate preclinical testing and clinical trials for any product candidates we identify and develop;
● maintain, expand, and protect our intellectual property portfolio and provide reimbursement of third-party
expenses related to our patent portfolio;
● seek marketing approvals for any of our product candidates that successfully complete clinical trials;
● ultimately establish a sales, marketing, and distribution infrastructure to commercialize any medicines for
which we may obtain marketing approval;
● further develop our genome editing platform;
● hire additional clinical, quality control, and scientific personnel;
● add operational, financial, and management information systems and personnel, including personnel to
support our product development;
● acquire or in-license other medicines and technologies;
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● validate a commercial-scale current Good Manufacturing Practices (“cGMP”) manufacturing facility; and
● continue to operate as a public company.
We are in the early stages of the clinical development of EDIT-101 and expect that it will be many years, if ever,
before we have a product candidate ready for commercialization. As a result of the termination of our agreements with
Allergan in August 2020, we are now obligated to fund all of the costs related to developing and commercializing the
LCA10 program in the United States, including the costs of the clinical development of EDIT-101. To become and remain
profitable, we must develop and eventually commercialize a medicine or medicines with significant market potential. This
will require us to be successful in a range of challenging activities, including identifying product candidates, completing
preclinical testing and clinical trials of product candidates, obtaining marketing approval for these product candidates,
manufacturing, marketing, and selling those medicines for which we may obtain marketing approval, and satisfying any
post-marketing requirements. We may never succeed in these activities and, even if we do, may never generate revenues
that are significant or large enough to achieve profitability. Other than EDIT-101 and EDIT-301, we are currently only in
the preclinical testing stages for our most advanced research programs. If we do achieve profitability, we may not be able
to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would
decrease the value of our company and could impair our ability to raise capital, maintain our research and development
efforts, expand our business, or continue our operations. A decline in the value of our company could cause our
stockholders to lose all or part of their investments in us.
We will need substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay,
reduce, or eliminate our research and product development programs or commercialization efforts.
We expect our expenses to increase in connection with our ongoing activities, particularly as we identify, continue
the research and development of, initiate clinical trials of, and seek marketing approval for, product candidates. In addition,
if we obtain marketing approval for any product candidates we develop, we expect to incur significant commercialization
expenses related to product sales, marketing, manufacturing, and distribution to the extent that such sales, marketing,
manufacturing, and distribution are not the responsibility of a collaborator. Accordingly, we will need to obtain substantial
additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on
attractive terms, we would be forced to delay, reduce, or eliminate our research and product development programs or
future commercialization efforts.
We expect that our existing cash, cash equivalents, and marketable securities at December 31, 2020 and
anticipated interest income will enable us to fund our operating expenses and capital expenditure requirements into 2023.
Our future capital requirements will depend on many factors, including:
● the costs of progressing the clinical development of EDIT-101 to treat LCA10 and EDIT-301 to treat sickle
cell disease;
● the scope, progress, results, and costs of drug discovery, preclinical development, laboratory testing, and
clinical or natural history study trials for the product candidates we develop;
● the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual
property and proprietary rights, and defending intellectual property-related claims;
● the costs, timing, and outcome of regulatory review of the product candidates we develop;
● the costs of future activities, including product sales, medical affairs, marketing, manufacturing, and
distribution, for any product candidates for which we receive regulatory approval;
● the success of our collaboration with Juno Therapeutics;
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● whether Juno Therapeutics exercises any of its options to extend the research program term and/or to certain
of the research programs under our collaboration;
● our ability to establish and maintain additional collaborations on favorable terms, if at all;
● the extent to which we acquire or in-license other medicines and technologies;
● the costs of reimbursing our licensors for the prosecution and maintenance of the patent rights in-licensed by
us; and
● the costs of operating as a public company.
Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming,
expensive, and uncertain process that takes years to complete, and we may never generate the necessary data or results
required to obtain marketing approval and achieve product sales. In addition, even if we successfully identify and develop
product candidates and those are approved, we may not achieve commercial success. Our commercial revenues, if any, will
be derived from sales of medicines that we do not expect to be commercially available for many years, if at all.
Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate
additional financing may not be available to us on acceptable terms, or at all.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish
rights to our technologies or product candidates.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs
through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, and
licensing arrangements. We do not have any significant committed external source of funds. To the extent that we raise
additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders may
be materially diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the
rights of our stockholders. Debt financing, if available, may involve agreements that include covenants limiting or
restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring
dividends.
If we raise funds through additional collaborations, strategic alliances, or licensing arrangements with third
parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or
product candidates, or we may have to grant licenses on terms that may not be favorable to us.
Our short operating history may make it difficult for our stockholders to evaluate the success of our business to date
and to assess our future viability.
We were founded and commenced operations in the second half of 2013. Our operations to date have been limited
to organizing and staffing our company, business planning, raising capital, acquiring and developing our technology,
identifying potential product candidates, undertaking preclinical studies and preparing to undertake clinical trials. Except
for EDIT-101 and EDIT-301, all of our research programs are still in the preclinical or research stage of development, and
the risk of failure of all of our research programs is high. We have not yet demonstrated an ability to successfully complete
any clinical trials, including large-scale, pivotal clinical trials, obtain marketing approvals, manufacture a commercial-scale
medicine, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for
successful commercialization. In addition, we may encounter unforeseen expenses, difficulties, complications, delays, and
other known and unknown factors.
We expect that our financial condition and operating results will continue to fluctuate significantly from quarter-
to-quarter and year-to-year due to a variety of factors, many of which are beyond our control. Accordingly, our
stockholders should not rely upon the results of any quarterly or annual periods as indications of future operating
performance.
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We have never generated revenue from product sales and may never be profitable.
Our ability to generate revenue from product sales and achieve profitability depends on our ability, alone or with
collaboration partners, to successfully complete the development of, and obtain the regulatory approvals necessary to
commercialize, product candidates we may identify for development. We do not anticipate generating revenues from
product sales for the next several years, if ever.
Even if one or more of the product candidates we develop is approved for commercial sale, we anticipate
incurring significant costs associated with commercializing any approved product candidate. Our expenses could increase
beyond expectations if we are required by the U.S. Food and Drug Administration (the “FDA”), the European Medicines
Agency (the “EMA”), or other regulatory authorities to perform clinical and other studies in addition to those that we
currently anticipate. Even if we are able to generate revenues from the sale of any approved products, we may not become
profitable and may need to obtain additional funding to continue operations.
Risks Related to Discovery, Development, and Commercialization
We intend to identify and develop product candidates based on a novel genome editing technology, which makes it
difficult to predict the time and cost of product candidate development. No therapeutic products that utilize genome
editing technology have been approved in the United States or in Europe, and there have only been a limited number of
human clinical trials of a genome editing product candidate.
We have concentrated our research and development efforts on our genome editing platform, which uses CRISPR
technology. Our future success depends on the successful development of this novel genome editing therapeutic approach.
To date, no therapeutic product that utilizes genome editing, including CRISPR technology, has been approved in the
United States or Europe and there have been only a limited number of clinical trials involving the use of a therapeutic
utilizing genome editing technologies. It is difficult for us to predict the time and cost of product candidate development,
and we cannot predict whether the application of our genome editing platform, or any similar or competitive genome
editing platforms, will result in the identification, development, and regulatory approval of any medicines. There can be no
assurance that any development problems we experience in the future related to our genome editing platform or any of our
research programs will not cause significant delays or unanticipated costs, or that such development problems can be
solved. We may also experience delays in developing a sustainable, reproducible, and scalable manufacturing process or
transferring that process to commercial partners. Any of these factors may prevent us from completing our preclinical
studies or any clinical trials that we may initiate or commercializing any product candidates we develop on a timely or
profitable basis, if at all.
Because genome editing is novel and the regulatory landscape that will govern any product candidates we develop is
uncertain and may change, we cannot predict the time and cost of obtaining regulatory approval, if we receive it at all,
for any product candidates we develop.
The regulatory requirements that will govern any novel genome editing product candidates we develop are not
entirely clear and may change. Within the broader genomic medicine field, we are aware of a limited number of gene
therapy products that have received marketing authorization from the FDA and the EMA. Even with respect to more
established products that fit into the categories of gene therapies or cell therapies, the regulatory landscape is still
developing. Regulatory requirements governing gene therapy products and cell therapy products have changed frequently
and will likely continue to change in the future. Moreover, there is substantial, and sometimes uncoordinated, overlap in
those responsible for regulation of existing gene therapy products and cell therapy products. For example, in the United
States, the FDA has established the Office of Tissues and Advanced Therapies within its Center for Biologics Evaluation
and Research (“CBER”) to consolidate the review of gene therapy and related products, and the Cellular, Tissue and Gene
Therapies Advisory Committee to advise CBER on its review. Gene therapy clinical trials are also subject to review and
oversight by an institutional biosafety committee (“IBC”), a committee that reviews and oversees the use of biological
agents. Although the FDA decides whether individual gene therapy protocols may proceed, the review process and
determinations of other reviewing bodies can impede or delay the initiation of a clinical trial, even if the FDA has reviewed
the trial and allowed its initiation. The same applies in the European Union. The EMA’s Committee for Advanced
Therapies (“CAT”) is responsible for assessing the quality, safety, and efficacy of advanced-
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therapy medicinal products. The role of the CAT is to prepare a draft opinion on an application for marketing authorization
for a gene therapy medicinal candidate that is submitted to the EMA. The EMA may issue new guidelines concerning the
development and marketing authorization for gene therapy medicinal products and require that we comply with these new
guidelines.
Adverse developments in clinical trials conducted by others of gene therapy products, cell therapy products, or
products developed through the application of a CRISPR or other genome editing technology may cause the FDA, the
EMA, and other regulatory bodies to revise the requirements for approval of any product candidates we develop or limit
the use of products utilizing genome editing technologies, either of which could materially harm our business. In addition,
the clinical trial requirements of the FDA, the EMA, and other regulatory authorities and the criteria these regulators use to
determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty, and
intended use and market of the potential products. The regulatory approval process for novel product candidates such as
ours can be more expensive and take longer than for other, better known, or more extensively studied pharmaceutical or
other product candidates. Regulatory agencies administering existing or future regulations or legislation may not allow
production and marketing of products utilizing genome editing technology in a timely manner or under technically or
commercially feasible conditions. In addition, regulatory action or private litigation could result in expenses, delays, or
other impediments to our research programs or the commercialization of resulting products.
Adverse public perception of genomic medicines, and genome editing in particular, may negatively impact regulatory
approval of, or demand for, our potential products.
Our potential therapeutic products involve editing the human genome. The clinical and commercial success of our
potential products will depend in part on public understanding and acceptance of the use of genome editing therapy for the
prevention or treatment of human diseases. Public attitudes may be influenced by claims that genome editing is unsafe,
unethical, or immoral, and, consequently, our products may not gain the acceptance of the public or the medical
community. Adverse public attitudes may adversely impact our ability to enroll clinical trials. Moreover, our success will
depend upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of product
candidates we develop in lieu of, or in addition to, existing treatments with which they are already familiar and for which
greater clinical data may be available.
In addition, genome editing technology is subject to public debate and heightened regulatory scrutiny due to
ethical concerns relating to the application of genome editing technology to human embryos or the human germline. For
example, academic scientists in several countries, including the United States, have reported on their attempts to edit the
genome of human embryos as part of basic research and, in November 2018, Dr. Jiankui He, a Chinese biophysics
researcher who was an associate professor in the Department of Biology of the Southern University of Science and
Technology in Shenzhen, China, announced he had created the first human genetically edited babies, twin girls and helped
create a second gene-edited pregnancy. The announcement was negatively received by the public, in particular by those in
the scientific community. In the United States, germline editing for clinical application has been expressly prohibited since
enactment of a December 2015 U.S. FDA ban on such activity. Prohibitions are also in place in the United Kingdom,
across most of Europe, in China, and many other countries around the world. In the United States, the NIH has announced
that it would not fund any use of genome editing technologies in human embryos, noting that there are multiple existing
legislative and regulatory prohibitions against such work, including the Dickey-Wicker Amendment, which prohibits the
use of appropriated funds for the creation of human embryos for research purposes or for research in which human
embryos are destroyed. Laws in the United Kingdom prohibit genetically modified embryos from being implanted into
women, but embryos can be altered in research labs under license from the Human Fertilisation and Embryology Authority.
Basic research on embryos is more tightly controlled in many other European countries.
Although we do not use our technologies to edit human embryos or the human germline, such public debate about
the use of genome editing technologies in human embryos and heightened regulatory scrutiny could prevent or delay our
development of product candidates. More restrictive government regulations or negative public opinion would have a
negative effect on our business or financial condition and may delay or impair our development and commercialization of
product candidates or demand for any products we may develop.
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We may not be successful in our efforts to identify, develop, or commercialize potential product candidates.
The success of our business depends primarily upon our ability to identify, develop, and commercialize products
based on our genome editing platform. Other than EDIT-101 to treat LCA10 and EDIT-301 to treat sickle cell disease, all
of our product development programs are still in the preclinical or research stage of development. Our research programs,
including those subject to our collaboration with Juno Therapeutics, may fail to identify potential product candidates for
clinical development for a number of reasons. Our research methodology may be unsuccessful in identifying potential
product candidates, or our potential product candidates may be shown to have harmful side effects or may have other
characteristics that may make the products impractical to manufacture, unmarketable, or unlikely to receive marketing
approval.
If any of these events occur, we may be forced to abandon our development efforts for a program or programs,
which would have a material adverse effect on our business, financial condition, results of operations, and prospects.
Research programs to identify new product candidates require substantial technical, financial, and human resources. We
may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.
The genome editing field is relatively new and is evolving rapidly. We are focusing our research and development efforts
on CRISPR gene editing technology using Cas9 and Cas12a enzymes, but other genome editing technologies may be
discovered that provide significant advantages over CRISPR/Cas9 or CRISPR/Cas12a, which could materially harm
our business.
To date, we have focused our efforts on genome editing technologies using CRISPR and the Cas9 and Cas12a
(also known as Cpf1) enzymes. Other companies have previously undertaken research and development of genome editing
technologies using zinc finger nucleases, engineered meganucleases, and transcription activator-like effector nucleases, but
to date none has obtained marketing approval for a product candidate. There can be no certainty that the CRISPR/Cas9 or
CRISPR/Cas12a technology will lead to the development of genomic medicines, that other genome editing technologies
will not be considered better or more attractive for the development of medicines or that either Cas9 or Cas12a, the two
CRISPR associated proteins that we use, may be useful or successful in developing therapeutics. For example, Cas9 or
Cas12a may be determined to be less attractive than other CRISPR enzymes, including CRISPR enzymes that have yet to
be discovered. Similarly, a new genome editing technology that has not been discovered yet may be determined to be more
attractive than CRISPR. Moreover, if we decide to develop genome technologies other than CRISPR technology using a
Cas9 or Cas12a enzyme, we cannot be certain we will be able to obtain rights to such technologies. Any of these factors
could reduce or eliminate our commercial opportunity, and could have a material adverse effect on our business, financial
condition, results of operations, and prospects.
We depend heavily on the success of EDIT-101. Except for EDIT-101 and EDIT-301, all of our product development
programs are at the preclinical or research stage. Preclinical testing and clinical trials of product candidates may not be
successful. If we are unable to commercialize any product candidates we develop or experience significant delays in
doing so, our business will be materially harmed.
We have invested a significant portion of our efforts and financial resources in the identification and development
of EDIT-101 to treat LCA10. Our ability to generate product revenues, which we do not expect will occur for many years,
if ever, will depend heavily on the successful development and eventual commercialization of EDIT-101 for the treatment
of LCA10 and other product candidates that we may identify in the future. As a result of the termination of our
collaboration with Allergan in August 2020, we are now obligated to fund all of the costs related to developing and
commercializing the LCA10 program in the United States, including the costs of the clinical development of EDIT-101,
and will need to expand our clinical development organization. Previously, we relied on Allergan to conduct the Phase 1/2
clinical trial of EDIT-101 and we do not have significant experience conducting Phase 1/2 clinical trials. The success of
product candidates we identify and develop will depend on many factors, including the following:
● identify product candidates and complete research and preclinical and clinical development of any product
candidates we may identify;
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● seek and obtain regulatory and marketing approvals for any of our product candidates for which we complete
clinical trials;
● launch and commercialize any of our product candidates for which we obtain regulatory and marketing
approval by establishing a sales force, marketing, and distribution infrastructure;
● qualify for adequate coverage and reimbursement by government and third-party payors for any of our
product candidates for which we obtain regulatory and marketing approval;
● develop, maintain, and enhance a sustainable, scalable, reproducible, and transferable manufacturing process
for the product candidates we develop;
● establish and maintain supply and manufacturing relationships with third parties that can provide adequate, in
both amount and quality, products and services to support clinical development and the market demand for
any of our product candidates for which we obtain regulatory and marketing approval;
● obtain market acceptance of any product candidates we develop as viable treatment options;
● address competing technological and market developments;
● implement internal systems and infrastructure, as needed;
● negotiate favorable terms in any collaboration, licensing, or other arrangements into which we may enter and
performing our obligations in such arrangements;
● maintain, protect, and expand our portfolio of intellectual property rights, including patents, trade secrets,
and know-how;
● avoid and defend against third-party interference or infringement claims; and
● attract, hire, and retain qualified personnel.
The foregoing also applies to our collaborators to the extent we have partnered, sold or licensed any of our
research programs to them. If we or our collaborators do not achieve one or more of these factors in a timely manner or at
all, we could experience significant delays or an inability to successfully commercialize any product candidates we
develop, which would materially harm our business.
If serious adverse events, undesirable side effects, or unexpected characteristics are identified during the development of
any product candidates we develop, we may need to abandon or limit our further clinical development of those product
candidates.
Other than in connection with the EDIT-101 Phase 1/2 clinical trial, for which we began dosing patients in 2020
and is in the early stages of assessing safety, we have not evaluated any product candidates in human clinical trials, and our
proposed delivery modes, combined with CRISPR technology, have a limited history, if any, of being tested clinically. It is
impossible to predict when or if any product candidates we develop will ultimately prove safe in humans, including EDIT-
101. In the genomic medicine field, there have been several significant adverse events from gene therapy treatments in the
past, including reported cases of leukemia and death. There can be no assurance that genome editing technologies will not
cause severe or undesirable side effects.
A significant risk in any genome editing product is that the edit will be “off-target” and cause serious adverse
events, undesirable side effects, or unexpected characteristics. For example, off-target cuts could lead to disruption of a
gene or a genetic regulatory sequence at an unintended site in the DNA. We cannot be certain that off-target editing will not
occur in any of our clinical studies. There is also the potential risk of delayed adverse events following exposure to
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genome editing therapy due to the potential for persistent biological activity of the genetic material or other components of
products used to carry the genetic material.
If any product candidates we develop are associated with serious adverse events, or undesirable side effects, or
have characteristics that are unexpected, we may need to abandon their development or limit development to certain uses
or subpopulations in which the serious adverse events, undesirable side effects or other characteristics are less prevalent,
less severe, or more acceptable from a risk-benefit perspective, any of which would have a material adverse effect on our
business, financial condition, results of operations, and prospects.
If any of the product candidates we develop or the delivery modes we rely on cause undesirable side effects, it could
delay or prevent their regulatory approval, limit the commercial potential, or result in significant negative consequences
following any potential marketing approval.
Our product candidates that we are testing or may test in clinical trials, including EDIT-101, or that are developed
may be associated with off-target editing or other serious adverse events, undesirable side effects, or unexpected
characteristics. In addition to serious adverse events or side effects caused by any product candidate we develop and test,
the administration process or related procedures also can cause undesirable side effects. If any such events occur, our
clinical trials could be suspended or terminated. If we are unable to demonstrate that such adverse events were caused by
factors other than our product candidate, the FDA, the EMA or other regulatory authorities could order us to cease further
development of, or deny approval of, any product candidates we are able to develop for any or all targeted indications.
Even if we are able to demonstrate that all future serious adverse events are not product-related, such occurrences could
affect patient recruitment or the ability of enrolled patients to complete the trial. Moreover, if we elect, or are required, to
delay, suspend or terminate any clinical trial of any product candidate we develop, the commercial prospects of such
product candidates may be harmed and our ability to generate product revenues from any of these product candidates may
be delayed or eliminated. Any of these occurrences may harm our ability to identify and develop product candidates, and
may harm our business, financial condition, result of operations, and prospects significantly.
If we successfully develop a product candidate and it receives marketing approval, the FDA could require us to
adopt a Risk Evaluation and Mitigation Strategy (“REMS”) to ensure that the benefits of treatment with such product
candidate outweighs the risks for each potential patient, which may include, among other things, a medication guide
outlining the risks of the product for distribution to patients, a communication plan to health care practitioners, extensive
patient monitoring, or distribution systems and processes that are highly controlled, restrictive, and more costly than what
is typical for the industry. Furthermore, if we or others later identify undesirable side effects caused by any of our product
candidates, several potentially significant negative consequences could result, including:
● regulatory authorities may suspend or withdraw approvals of such product candidate;
● regulatory authorities may require additional warnings on the label;
● we may be required to change the way a product candidate is administered or conduct additional clinical
trials;
● we could be sued and held liable for harm caused to patients; and
● our reputation may suffer.
Any of these events could prevent us from achieving or maintaining market acceptance of any product candidates
we may identify and develop and could have a material adverse effect on our business, financial condition, results of
operations, and prospects.
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We have not extensively tested any of our proposed delivery modes and product candidates in clinical trials.
Our proposed delivery modes, combined with our product candidates, have a limited history of being evaluated in
human clinical trials. Any of our product candidates may fail to show the desired safety and efficacy in later stages of
clinical development despite having successfully advanced through initial clinical trials.
There is a high failure rate for drugs and biologics proceeding through clinical trials. A number of companies in
the pharmaceutical and biotechnology industries have suffered significant setbacks in later stage clinical trials even after
achieving promising results in earlier stage clinical trials. Data obtained from preclinical and clinical activities are subject
to varying interpretations, which may delay, limit, or prevent regulatory approval. In addition, regulatory delays or
rejections may be encountered as a result of many factors, including changes in regulatory policy during the period of
product development.
Any such adverse events may cause us to delay, limit, or terminate planned clinical trials, any of which would
have a material adverse effect on our business, financial condition, results of operations, and prospects.
Because we are developing product candidates for the treatment of diseases in which there is little clinical experience
using new technologies, there is increased risk that the FDA, the EMA, or other regulatory authorities may not consider
the endpoints of our clinical trials to provide clinically meaningful results and that these results may be difficult to
analyze.
During the regulatory review process, we will need to identify success criteria and endpoints such that the FDA,
the EMA, or other regulatory authorities will be able to determine the clinical efficacy and safety profile of our product
candidates. As we are seeking to identify and develop product candidates to treat diseases in which there is little clinical
experience using new technologies, there is heightened risk that the FDA, the EMA, or other regulatory authorities may not
consider the clinical trial endpoints that we propose to provide clinically meaningful results. Even if the FDA does find our
success criteria to be sufficiently validated and clinically meaningful, we may not achieve the pre-specified endpoints to a
degree of statistical significance. This may be a particularly significant risk for many of the genetically defined diseases for
which we plan to develop product candidates because many of these diseases have small patient populations, and designing
and executing a rigorous clinical trial with appropriate statistical power is more difficult than with diseases that have larger
patient populations. The FDA weighs the benefits of a product against its risks, and the FDA may view the efficacy results
in the context of safety as not being supportive of regulatory approval. Any product candidates we develop will be based
on a novel technology that makes it difficult to predict the time and cost of development and of subsequently obtaining
regulatory approval. No genome editing therapeutic product has been approved in the United States or in Europe.
If clinical trials of any product candidates we may identify and develop fail to demonstrate safety and efficacy to the
satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or
experience delays in completing, or ultimately be unable to complete, the development and commercialization of such
product candidates.
Before obtaining marketing approval from regulatory authorities for the sale of any of our product candidates, we
must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy in
humans of any such product candidates. Clinical testing is expensive, difficult to design and implement, can take many
years to complete, and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing.
The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and
interim results of a clinical trial do not necessarily predict final results.
We or our collaborators may experience numerous unforeseen events during, or as a result of, clinical trials that
could delay or prevent our ability to receive marketing approval or commercialize any product candidates we may identify
and develop, including:
● delays in reaching a consensus with regulators on trial design;
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● regulators, institutional review boards (“IRBs”) or independent ethics committees (“IECs”) not authorizing
us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;
● delays in reaching or failing to reach agreement on acceptable clinical trial contracts or clinical trial protocols
with prospective contract research organizations (“CROs”) and clinical trial sites;
● clinical trials of any product candidates we develop producing negative or inconclusive results, and us
deciding, or regulators requiring us, to conduct additional clinical trials or abandon product development or
research programs;
● the number of patients required for clinical trials of any product candidates we develop may be larger than
we anticipate; enrollment of suitable participants in these clinical trials, which may be particularly
challenging for some of the rare genetically defined diseases we are targeting in our most advanced
programs, may be delayed or slower than we anticipate; or patients may drop out of these clinical trials at a
higher rate than we anticipate;
● our third-party contractors failing to comply with regulatory requirements or meet their contractual
obligations to us in a timely manner, or at all;
● regulators, IRBs, or IECs requiring that we or our investigators suspend or terminate clinical research or
clinical trials of any product candidates we develop for various reasons, including noncompliance with
regulatory requirements, a finding of undesirable side effects or other unexpected characteristics, or that the
participants are being exposed to unacceptable health risks or after an inspection of our clinical trial
operations or trial sites;
● the supply or quality of any product candidates we develop or other materials necessary to conduct clinical
trials of any product candidates we develop being insufficient or inadequate, including as a result of delays in
the testing, validation, manufacturing, and delivery of any product candidates we develop to the clinical sites
by us or by third parties with whom we have contracted to perform certain of those functions;
● occurrence of serious adverse events associated with any product candidates we develop that are viewed to
outweigh their potential benefits; and
● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.
If we or our collaborators are required to conduct additional clinical trials or other testing of any product
candidates we develop beyond those that we currently contemplate, if we or our collaborators are unable to successfully
complete clinical trials or other tests of any product candidates we develop, or if the results of these trials or tests are not
positive or only modestly positive, or if there are safety concerns, we or our collaborators may:
● be delayed in obtaining marketing approval for any such product candidates we develop, or not obtain
marketing approval at all;
● obtain approval for indications or patient populations that are not as broad as intended or desired;
● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings,
including boxed warnings;
● be subject to changes in the way the product is administered;
● be required to perform additional clinical trials to support approval or be subject to additional post-marketing
testing requirements;
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● have regulatory authorities withdraw, or suspend, their approval of the product or impose restrictions on its
distribution in the form of a modified risk evaluation and mitigation strategy;
● be sued; or
● experience damage to our reputation.
Product development costs will also increase if we or our collaborators experience delays in testing or marketing
approvals. We do not know whether any clinical trials will begin as planned, will need to be restructured, or will be
completed on schedule, or at all. Significant clinical trial delays also could shorten any periods during which we may have
the exclusive right to commercialize any product candidates we develop, could allow our competitors to bring products to
market before we do, and could impair our ability to successfully commercialize any product candidates we develop, any
of which may harm our business, financial condition, results of operations, and prospects.
If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory
approvals could be delayed or prevented.
We or our collaborators may not be able to initiate or continue clinical trials for any of our product candidates if
we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the
FDA or analogous regulatory authorities outside the United States, or as needed to provide appropriate statistical power for
a given trial. Enrollment may be challenging for the rare genetically defined diseases we are targeting. In addition, if
patients are unwilling to participate in our genome editing trials because of negative publicity from adverse events related
to the biotechnology, gene therapy, or genome editing fields, competitive clinical trials for similar patient populations,
clinical trials in competing products, or for other reasons, the timeline for recruiting patients, conducting studies, and
obtaining regulatory approval of any product candidates we develop may be delayed. Moreover, some of our competitors
may have ongoing clinical trials for product candidates that would treat the same indications as any product candidates we
develop, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our
competitors’ product candidates. For example, ProQR Therapeutics N.V. has already enrolled LCA10 patients in its clinical
trial, which may limit the number of potential patients available to enroll in the ongoing Phase 1/2 clinical trial for EDIT-
101.
Patient enrollment is also affected by other factors, including:
● severity of the disease under investigation;
● size of the patient population and process for identifying patients;
● design of the trial protocol;
● availability and efficacy of approved medications for the disease under investigation;
● availability of genetic testing for potential patients;
● ability to obtain and maintain patient informed consent;
● risk that enrolled patients will drop out before completion of the trial;
● eligibility and exclusion criteria for the trial in question;
● perceived risks and benefits of the product candidate under trial;
● perceived risks and benefits of genome editing as a therapeutic approach;
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● efforts to facilitate timely enrollment in clinical trials;
● patient referral practices of physicians;
● ability to monitor patients adequately during and after treatment;
● the ongoing COVID-19 pandemic; and
● proximity and availability of clinical trial sites for prospective patients.
In particular, EDIT-101 for the treatment of LCA10 has a limited patient pool from which to draw for enrollment
in a clinical trial, as the global incidence of LCA10 is estimated to be two to three per 100,000 live births worldwide. The
eligibility criteria of our clinical trials further limits the pool of available trial participants. Additionally, the process of
finding and diagnosing patients may prove costly. We experienced slowed enrollment in the EDIT-101 clinical trial
resulting from the impact of the COVID-19 pandemic, including international travel restrictions imposed in response to the
pandemic. The ultimate impact of the COVID-19 pandemic on enrollment for our clinical trials, including our trial for
EDIT-301, is highly uncertain and we do not yet know the full extent of the delays or impacts on these clinical trials.
Our ability to successfully initiate, enroll, and complete a clinical trial in any foreign country is subject to
numerous risks unique to conducting business in foreign countries, including:
● difficulty in establishing or managing relationships with CROs and physicians;
● different standards for the conduct of clinical trials;
● different standard-of-care for patients with a particular disease;
● inability to locate qualified local consultants, physicians, and partners; and
● potential burden of complying with a variety of foreign laws, medical standards, and regulatory
requirements, including the regulation of pharmaceutical and biotechnology products and treatment.
Enrollment delays in our clinical trials may result in increased development costs for any of our product
candidates, which would cause the value of our company to decline and limit our ability to obtain additional financing. If
we or our collaborators have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we
may need to delay, limit, or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our
business, financial condition, results of operations, and prospects.
We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on
product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
Because we have limited financial and managerial resources, we focus on research programs and our product
candidates for specific indications among many potential options. As a result, we may forego or delay pursuit of
opportunities with other product candidates or for other indications that later prove to have greater commercial potential.
Our resource allocation decisions may cause us to fail to capitalize on viable commercial medicines or profitable market
opportunities. Our spending on current and future research and development programs and product candidates for specific
indications may not yield any commercially viable medicines. If we do not accurately evaluate the commercial potential or
target market for a particular product candidate, we may relinquish valuable rights to that product candidate through
collaboration, licensing, or other royalty arrangements in cases in which it would have been more advantageous for us to
retain sole development and commercialization rights to such product candidate. Any such event could have a material
adverse effect on our business, financial condition, results of operations, and prospects.
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If we are unable to successfully identify patients who are likely to benefit from therapy with any medicines we develop,
or experience significant delays in doing so, we may not realize the full commercial potential of any medicines we may
develop.
Our success may depend, in part, on our ability to identify patients who are likely to benefit from therapy with any
of our medicines, which may require those potential patients to have their DNA analyzed for the presence or absence of a
particular sequence. If we, or any third parties that we engage to assist us, are unable to successfully identify such patients,
or experience delays in doing so, then:
● our ability to develop any product candidates may be adversely affected if we are unable to appropriately
select patients for enrollment in our clinical trials;
● any product candidates we develop may not receive marketing approval if safe and effective use of such
product candidates depends on an in vitro diagnostic; and
● we may not realize the full commercial potential of any product candidates we develop that receive
marketing approval if, among other reasons, we are unable to appropriately select patients who are likely to
benefit from therapy with our medicines.
As a result, we may be unable to successfully develop and realize the commercial potential of any product
candidates we may identify and develop, and our business, financial condition, results of operations, and prospects would
be materially adversely affected.
Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to
commercialize a product candidate we develop, and any such approval may be for a more narrow indication than we
seek.
We cannot commercialize a product candidate until the appropriate regulatory authorities have reviewed and
approved the product candidate. Even if any product candidates we develop meet their safety and efficacy endpoints in
clinical trials, the regulatory authorities may not complete their review processes in a timely manner, or we may not be able
to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority
recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon
additional government regulation from future legislation or administrative action, or changes in regulatory authority policy
during the period of product development, clinical trials, and the review process.
Regulatory authorities also may approve a product candidate for more limited indications than requested or they
may impose significant limitations in the form of narrow indications, warnings or a REMS. These regulatory authorities
may require precautions or contra-indications with respect to conditions of use, or they may grant approval subject to the
performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims
that are necessary or desirable for the successful commercialization of any product candidates we develop. Any of the
foregoing scenarios could materially harm the commercial prospects for any product candidates we develop and materially
adversely affect our business, financial condition, results of operations, and prospects.
Even if any product candidates we develop receive marketing approval, they may fail to achieve the degree of market
acceptance by physicians, patients, healthcare payors, and others in the medical community necessary for commercial
success.
The commercial success of any of our product candidates will depend upon its degree of market acceptance by
physicians, patients, third-party payors, and others in the medical community. The degree of market acceptance of any of
our product candidates, if approved for commercial sale, will depend on a number of factors, including:
● the efficacy and safety of such product candidates as demonstrated in clinical trials;
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● the potential and perceived advantages compared to alternative treatments;
● the limitation to our targeted patient population and limitations or warnings contained in approved labeling
by the FDA or other regulatory authorities;
● the ability to offer our medicines for sale at competitive prices;
● convenience and ease of administration compared to alternative treatments;
● the clinical indications for which the product candidate is approved by the FDA, the European Commission,
or other regulatory agencies;
● public attitudes regarding genomic medicine generally and genome editing technologies specifically;
● the willingness of the target patient population to try new therapies and of physicians to prescribe these
therapies, as well as their willingness to accept a therapeutic intervention that involves the editing of the
patient’s genome;
● product labeling or product insert requirements of the FDA, the EMA, or other regulatory authorities,
including any limitations or warnings contained in a product’s approved labeling;
● relative convenience and ease of administration;
● the timing of market introduction of competitive products;
● publicity concerning our products or competing products and treatments;
● the strength of marketing and distribution support;
● sufficient third-party coverage or reimbursement; and
● the prevalence and severity of any side effects.
If any of our product candidates do not achieve an adequate level of acceptance, we may not generate significant
product revenues, and we may not become profitable.
If, in the future, we are unable to establish sales and marketing capabilities or enter into agreements with third parties
to sell and market any of our product candidates, we may not be successful in commercializing those product candidates
if and when they are approved.
We do not have a sales or marketing infrastructure and have no experience in the sale, marketing, or distribution
of pharmaceutical products. To achieve commercial success for any approved medicine for which we retain sales and
marketing responsibilities, we must either develop a sales and marketing organization or outsource these functions to third
parties. In the future, we may choose to build a focused sales, marketing, and commercial support infrastructure to sell, or
participate in sales activities with our collaborators for, some of our product candidates if and when they are approved.
There are risks involved with both establishing our own commercial capabilities and entering into arrangements
with third parties to perform these services. For example, recruiting and training a sales force or reimbursement specialists
is expensive and time consuming and could delay any product launch. If the commercial launch of a product candidate for
which we recruit a sales force and establish marketing and other commercialization capabilities is delayed or does not
occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be
costly, and our investment would be lost if we cannot retain or reposition our commercialization
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personnel.
Factors that may inhibit our efforts to commercialize our medicines on our own include:
● our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
● the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to
prescribe any future medicines;
● the lack of complementary medicines to be offered by sales personnel, which may put us at a competitive
disadvantage relative to companies with more extensive product lines; and
● unforeseen costs and expenses associated with creating an independent commercialization organization.
If we enter into arrangements with third parties to perform sales, marketing, commercial support, and distribution
services, our product revenues or the profitability of these product revenues to us may be lower than if we were to market
and sell any medicines we may develop ourselves. In addition, we may not be successful in entering into arrangements
with third parties to commercialize our product candidates or may be unable to do so on terms that are favorable to us. We
may have little control over such third parties, and any of them may fail to devote the necessary resources and attention to
sell and market our medicines effectively. If we do not establish commercialization capabilities successfully, either on our
own or in collaboration with third parties, we will not be successful in commercializing our product candidates.
We face significant competition in an environment of rapid technological change, and our competitors may achieve
regulatory approval before us or develop therapies that are safer or more advanced or effective than ours.
The development and commercialization of new drug products is highly competitive. Moreover, the
biotechnology and pharmaceutical industries, including in the gene therapy, genome editing and cell therapy fields, are
characterized by rapidly advancing technologies, intense competition, and a strong emphasis on intellectual property and
proprietary products. We will face competition with respect to any of our product candidates now and in the future from
major pharmaceutical companies, specialty pharmaceutical companies, and biotechnology companies worldwide. Potential
competitors also include academic institutions, government agencies, and other public and private research organizations
that conduct research, seek patent protection, and establish collaborative arrangements for research, development,
manufacturing, and commercialization.
There are a number of large pharmaceutical and biotechnology companies that currently market and sell products
or are pursuing the development of products for the treatment of the disease indications for which we have research
programs. Some of these competitive products and therapies are based on scientific approaches that are the same as or
similar to our approach, and others are based on entirely different approaches.
Our platform and product focus is the development of therapies using CRISPR technology. Other companies
developing CRISPR technology or therapies using CRISPR technology include Arbor Biotechnologies, Caribou
Biosciences, CRISPR Therapeutics, ERS Genomics, Intellia Therapeutics, Locus Biosciences, ToolGen Inc. (“ToolGen”),
TRACR Hematology and Vertex Pharmaceuticals. In addition, there have been and may continue to be discoveries of new
CRISPR-based gene editing technologies. There are additional companies developing therapies using other genome editing
technologies, including base editing, prime editing, transcription activator-like effector nucleases, meganucleases, Mega-
TALs, and zinc finger nucleases. These companies include Beam Therapeutics, Prime Medicine, bluebird bio, Cellectis,
Poseida Therapeutics, Precision Biosciences and Sangamo Therapeutics. Additional companies developing gene therapy
products include Abeona Therapeutics, Adverum Biotechnologies, AGTC Therapeutics, Audentes Therapeutics,
Homology Medicines, REGENXBIO, Sarepta Therapeutics, Solid Biosciences, Spark Therapeutics, uniQure and Voyager
Therapeutics. In addition to competition from other genome editing therapies, gene therapies or cell medicine therapies,
any products that we may develop may also face competition from other types of therapies, such as small molecule,
antibody, protein, oligonucleotide, or ribonucleic acid therapies. For example, ProQR Therapeutics N.V. is conducting a
clinical trial for its experimental treatment using antisense oligonucleotide technology
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for LCA10.
Many of our competitors may have significantly greater financial resources and expertise in research and
development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing
approved products than we do. Mergers and acquisitions in the pharmaceutical, biotechnology, and gene therapy industries
may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage
companies may also prove to be significant competitors, particularly through collaborative arrangements with large and
established companies. These competitors also compete with us in recruiting and retaining qualified scientific and
management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring
technologies complementary to, or necessary for, our programs. Our commercial opportunity could be reduced or
eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe
side effects, are more convenient, or are less expensive than any products that we may develop or that would render any
products that we may develop obsolete or non-competitive. Our competitors also may obtain FDA or other regulatory
approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors
establishing a strong market position before we are able to enter the market. Additionally, technologies developed by our
competitors may render our potential product candidates uneconomical or obsolete, and we may not be successful in
marketing any product candidates we develop against competitors.
In addition, as a result of the expiration or successful challenge of our patent rights, we could face more litigation
with respect to the validity and/or scope of patents relating to our competitors’ products. The availability of our
competitors’ products could limit the demand, and the price we are able to charge, for any products that we may develop
and commercialize.
If we are able to commercialize any product candidates, such products may become subject to unfavorable pricing
regulations, third-party reimbursement practices, or healthcare reform initiatives, which would harm our business.
The regulations that govern marketing approvals, pricing, and reimbursement for new medicines vary widely from
country to country. In the United States, recently enacted legislation may significantly change the approval requirements in
ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the
sale price of a medicine before it can be marketed. In many countries, the pricing review period begins after marketing or
product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to
continuing governmental control even after initial approval is granted. As a result, we might obtain marketing approval for
a medicine in a particular country, but then be subject to price regulations that delay our commercial launch of the
medicine, possibly for lengthy time periods, and negatively impact the revenues we are able to generate from the sale of the
medicine in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more
product candidates, even if any of our product candidates obtain marketing approval.
Our ability to commercialize any medicines successfully also will depend in part on the extent to which
reimbursement for these medicines and related treatments will be available from government health administration
authorities, private health insurers, and other organizations. Government authorities and third-party payors, such as private
health insurers and health maintenance organizations, decide which medications they will pay for and establish
reimbursement levels. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government
authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement
for particular medications. Increasingly, third-party payors are requiring that drug companies provide them with
predetermined discounts from list prices and are challenging the prices charged for medical products. We cannot be sure
that reimbursement will be available for any medicine that we commercialize and, if reimbursement is available, the level
of reimbursement. Reimbursement may impact the demand for, or the price of, any product candidate for which we obtain
marketing approval. If reimbursement is not available or is available only to limited levels, we may not be able to
successfully commercialize any product candidate for which we obtain marketing approval.
There may be significant delays in obtaining reimbursement for newly approved medicines, and coverage may be
more limited than the purposes for which the medicine is approved by the FDA or similar regulatory authorities outside the
United States. Moreover, eligibility for reimbursement does not imply that any medicine will be paid for in all cases or at a
rate that covers our costs, including research, development, manufacture, sale, and distribution. Interim
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reimbursement levels for new medicines, if applicable, may also not be sufficient to cover our costs and may not be made
permanent. Reimbursement rates may vary according to the use of the medicine and the clinical setting in which it is used,
may be based on reimbursement levels already set for lower cost medicines and may be incorporated into existing
payments for other services. Net prices for medicines may be reduced by mandatory discounts or rebates required by
government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of
medicines from countries where they may be sold at lower prices than in the United States. Third-party payors often rely
upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Our inability to
promptly obtain coverage and profitable payment rates from both government-funded and private payors for any approved
medicines we may develop could have a material adverse effect on our operating results, our ability to raise capital needed
to commercialize medicines, and our overall financial condition.
Due to the novel nature of our technology and the potential for some of our product candidates to offer therapeutic
benefit in a single administration or limited number of administrations, we face uncertainty related to pricing and
reimbursement for these product candidates.
Our initial target patient populations for some of our programs are relatively small, as a result of which the pricing
and reimbursement of any of our product candidates, if approved, must be adequate to support the necessary commercial
infrastructure. If we are unable to obtain adequate levels of reimbursement, our ability to successfully market and sell any
such product candidates will be adversely affected. The manner and level at which reimbursement is provided for services
related to any of our product candidates, e.g., for administration of our product to patients, is also important. Inadequate
reimbursement for such services may lead to physician resistance and adversely affect our ability to market or sell our
products. In addition, it may be necessary for us to develop new reimbursement models in order to realize adequate value.
Payors may not be able or willing to adopt such new models, and patients may be unable to afford that portion of the cost
that such models may require them to bear. If we determine such new models are necessary but we are unsuccessful in
developing them, or if such models are not adopted by payors, our business, financial condition, results of operations, and
prospects could be adversely affected.
We expect the cost of a single administration of genomic medicine products to be substantial, when and if they
achieve regulatory approval. We expect that coverage and reimbursement by government and private payors will be
essential for most patients to be able to afford these treatments. Accordingly, sales of any such product candidates will
depend substantially, both domestically and abroad, on the extent to which the costs of any product candidates we develop
will be paid by health maintenance, managed care, pharmacy benefit, and similar healthcare management organizations, or
will be reimbursed by government authorities, private health coverage insurers, and other third-party payors. Coverage and
reimbursement by a third-party payor may depend upon several factors, including the third-party payor’s determination that
use of a product is:
● a covered benefit under its health plan;
● safe, effective, and medically necessary;
● appropriate for the specific patient;
● cost-effective; and
● neither experimental nor investigational.
Obtaining coverage and reimbursement for a product from third-party payors is a time-consuming and costly
process that could require us to provide to the payor supporting scientific, clinical, and cost-effectiveness data. There is
significant uncertainty related to third-party coverage and reimbursement of newly approved products. We may not be able
to provide data sufficient to gain acceptance with respect to coverage and reimbursement. If coverage and reimbursement
are not available, or are available only at limited levels, we may not be able to successfully commercialize any of our
product candidates. Even if coverage is provided, the approved reimbursement amount may not be adequate to realize a
sufficient return on our investment. If we are unable to obtain adequate levels of reimbursement, our ability to successfully
market and sell any product candidates we develop will be harmed.
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If the market opportunities for any of our product candidates are smaller than we believe they are, our revenues may be
adversely affected, and our business may suffer. Because the target patient populations for some of the product
candidates we develop are small, we must be able to successfully identify patients and achieve a significant market share
to maintain profitability and growth.
Some of our most advanced programs, including EDIT-101, focus on treatments for rare genetically defined
diseases. Our projections of both the number of people who have these diseases, as well as the subset of people with these
diseases who have the potential to benefit from treatment with our product candidates, are based on estimates. These
estimates may prove to be incorrect and new studies may change the estimated incidence or prevalence of these diseases.
The number of patients in the United States, Europe, and elsewhere may turn out to be lower than expected, and patients
may not be amenable to treatment with our products, or may become increasingly difficult to identify or gain access to, all
of which would adversely affect our business, financial condition, results of operations, and prospects.
Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of
any medicines that we may develop.
We face an inherent risk of product liability exposure related to the testing in human clinical trials of any of our
product candidates and will face an even greater risk if we commercially sell any medicines that we may develop. If we
cannot successfully defend ourselves against claims that our product candidates or medicines caused injuries, we could
incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
● decreased demand for any product candidates or medicines that we may develop;
● injury to our reputation and significant negative media attention;
● withdrawal of clinical trial participants;
● significant time and costs to defend the related litigation;
● substantial monetary awards to trial participants or patients;
● loss of revenue; and
● the inability to commercialize any medicines that we may develop.
Although we maintain product liability insurance coverage, it may not be adequate to cover all liabilities that we
may incur. We anticipate that we will need to increase our insurance coverage if we successfully commercialize any
medicine. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a
reasonable cost or in an amount adequate to satisfy any liability that may arise.
If we or any contract manufacturers and suppliers we engage fail to comply with environmental, health, and safety laws
and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect
on the success of our business.
We and any contract manufacturers and suppliers we engage are subject to numerous federal, state, and local
environmental, health, and safety laws, regulations, and permitting requirements, including those governing laboratory
procedures; the generation, handling, use, storage, treatment, and disposal of hazardous and regulated materials and wastes;
the emission and discharge of hazardous materials into the ground, air, and water; and employee health and safety. Our
operations involve the use of hazardous and flammable materials, including chemicals and biological and radioactive
materials. Our operations also produce hazardous waste. We generally contract with third parties for the disposal of these
materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of
contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages,
and any liability could exceed our resources. Under certain environmental laws, we could be held
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responsible for costs relating to any contamination at our current or past facilities and at third-party facilities. We also
could incur significant costs associated with civil or criminal fines and penalties.
Compliance with applicable environmental laws and regulations may be expensive, and current or future
environmental laws and regulations may impair our research and product development efforts. In addition, we cannot
entirely eliminate the risk of accidental injury or contamination from these materials or wastes. Although we maintain
workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees
resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential
liabilities. We do not carry specific biological or hazardous waste insurance coverage, and our commercial general liability
and umbrella liability policies (under which we currently have an aggregate of $12.0 million in coverage) specifically
exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination.
Accordingly, in the event of contamination or injury, we could be held liable for damages or be penalized with fines in an
amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended, which could have a
material adverse effect on our business, financial condition, results of operations, and prospects.
Any third-party contract manufacturers and suppliers we engage will also be subject to these and other
environmental, health, and safety laws and regulations. Liabilities they incur pursuant to these laws and regulations could
result in significant costs or an interruption in operations, which could have a material adverse effect on our business,
financial condition, results of operations, and prospects.
Genomic medicines are novel, and our product candidates may be complex and difficult to manufacture. We could
experience production problems that result in delays in our development or commercialization programs, limit the
supply of our products, or otherwise harm our business.
Our product candidates will likely require processing steps that are more complex than those required for most
chemical pharmaceuticals. Moreover, unlike chemical pharmaceuticals, the physical and chemical properties of a biologic
such as our product candidates generally cannot be fully characterized. As a result, assays of the finished product may not
be sufficient to ensure that the product will perform in the intended manner. Problems with the manufacturing process,
even minor deviations from the normal process, could result in product defects or manufacturing failures that result in lot
failures, product recalls, product liability claims, or insufficient inventory. If we successfully develop product candidates,
we may encounter problems achieving adequate quantities and quality of clinical-grade materials that meet FDA, EMA or
other comparable applicable foreign standards or specifications with consistent and acceptable production yields and costs.
In addition, the FDA, the EMA, and other regulatory authorities may require us to submit samples of any lot of
any approved product together with the protocols showing the results of applicable tests at any time. Under some
circumstances, the FDA, the EMA, or other regulatory authorities may require that we not distribute a lot until the agency
authorizes its release. Slight deviations in the manufacturing process, including those affecting quality attributes and
stability, may result in unacceptable changes in the product that could result in lot failures or product recalls. Lot failures or
product recalls could cause us to delay clinical trials, including the ongoing Phase 1/2 clinical trial for EDIT-101, or
product launches, which could be costly to us and otherwise harm our business, financial condition, results of operations,
and prospects.
We also may encounter problems hiring and retaining the experienced scientific, quality control, and
manufacturing personnel needed to manage our manufacturing process, which could result in delays in our production or
difficulties in maintaining compliance with applicable regulatory requirements.
Given the nature of biologics manufacturing, there is a risk of contamination during manufacturing. Any
contamination could materially harm our ability to produce product candidates on schedule and could harm our results of
operations and cause reputational damage. Some of the raw materials that we anticipate will be required in our
manufacturing process are derived from biologic sources. Such raw materials are difficult to procure and may be subject to
contamination or recall. A material shortage, contamination, recall, or restriction on the use of biologically derived
substances in the manufacture of any product candidates we develop could adversely impact or disrupt the commercial
manufacturing or the production of clinical material, which could materially harm our development timelines and our
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business, financial condition, results of operations, and prospects.
Any problems in our manufacturing process or the facilities with which we contract could make us a less
attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions,
which could limit our access to additional attractive development programs. Problems in third-party manufacturing process
or facilities also could restrict our ability to ensure sufficient clinical material for any clinical trials we may be conducting
or are planning to conduct and meet market demand for any products we commercialize.
Risks Related to Our Dependence on Third Parties
We expect to depend on collaborations with third parties for the research, development, and commercialization of
certain of the product candidates we develop or for development of certain of our research programs. If any such
collaborations are not successful, we may not be able to capitalize on the market potential of those product candidates
or research programs.
We anticipate seeking third-party collaborators for the research, development, and commercialization of certain of
the product candidates we develop or for development of certain of our research programs. Our likely collaborators include
large and mid-size pharmaceutical companies, regional and national pharmaceutical companies, and biotechnology
companies. If we enter into any such arrangements with any third parties, we will likely have limited control over the
amount and timing of resources that our collaborators dedicate to the development or commercialization of any product
candidates we may seek to develop with them and, if applicable, whether they exercise any additional options to
commercialize a product. Our ability to generate revenues from these arrangements will depend on our collaborators’
abilities to successfully perform the functions assigned to them in these arrangements. We cannot predict the success of any
collaboration that we enter into.
Collaborations involving our research programs or any of our product candidates and alliance arrangements we
may enter into under which our research programs or product candidates may be involved pose the following risks to us:
● Collaborators may have significant discretion in determining the efforts and resources that they will apply to
these collaborations.
● Collaborators may not pursue development and commercialization of any product candidates we develop or
may elect not to continue or renew development or commercialization programs based on clinical trial
results, changes in the collaborator’s strategic focus or available funding or external factors such as an
acquisition that diverts resources or creates competing priorities.
● Collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical
trial or abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a
product candidate for clinical testing.
● Collaborators could independently develop, or develop with third parties, products that compete directly or
indirectly with our medicines or product candidates if the collaborators believe that competitive products are
more likely to be successfully developed or can be commercialized under terms that are more economically
attractive than ours.
● Collaborators with marketing and distribution rights to one or more medicines may not commit sufficient
resources to the marketing and distribution of such medicine or medicines.
● Collaborators may not properly obtain, maintain, enforce, or defend our intellectual property or proprietary
rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or
invalidate our proprietary information or expose us to potential litigation.
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● Disputes may arise between the collaborators and us that result in the delay or termination of the research,
development, or commercialization of our medicines or product candidates or that result in costly litigation
or arbitration that diverts management attention and resources.
● We may lose certain valuable rights under circumstances identified in our collaborations, including if we
undergo a change of control.
● Collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue
further development or commercialization of the applicable product candidates.
● Collaboration agreements may not lead to development or commercialization of product candidates in the
most efficient manner or at all. If a present or future collaborator of ours were to be involved in a business
combination, the continued pursuit and emphasis on our product development or commercialization program
under such collaboration could be delayed, diminished, or terminated.
For example, in March 2017, we entered into a strategic alliance with Allergan focused on discovering,
developing, and commercializing new gene editing medicines for a range of ocular disorders, which collaboration was
terminated in August 2020. As a result of the termination of the collaboration and the related co-development and
commercialization agreement, we are now obligated to fund all of the costs related to developing and commercializing the
LCA10 program in the United States, including the costs of the clinical development of EDIT-101, which will increase our
expenses significantly.
If our collaborations do not result in the successful development and commercialization of products, or if one of
our collaborators terminates its agreement with us, we may not receive any milestone or royalty payments under such
collaborations. If we do not receive the funding we expect under these agreements, our development of product candidates
could be delayed, and we may need additional resources to develop product candidates. In addition, if one of our
collaborators terminates its agreement with us, we may find it more difficult to find a suitable replacement collaborator or
attract new collaborators, and our development programs may be delayed or the perception of us in the business and
financial communities could be adversely affected. All of the risks relating to product development, regulatory approval,
and commercialization described in this Annual Report on Form 10-K apply to the activities of our collaborators.
If we are not able to establish collaborations on commercially reasonable terms, we may have to alter our development
and commercialization plans.
Our product development and research programs and the potential commercialization of any of our product
candidates will require substantial additional cash to fund expenses. For some of our product candidates and research
programs, we may decide to collaborate with other pharmaceutical and biotechnology companies for the development and
potential commercialization of those product candidates or programs.
We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for
a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the
terms and conditions of the proposed collaboration, and the proposed collaborator’s evaluation of a number of factors.
Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar
regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and
complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the
existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such
ownership without regard to the merits of the challenge, and industry and market conditions generally. The collaborator
may also consider alternative product candidates or technologies for similar indications that may be available to collaborate
on and whether such a collaboration could be more attractive than the one with us.
We may also be restricted under existing collaboration agreements from entering into future agreements on certain
terms with potential collaborators or allies. For example, under our amended and restated collaboration with Juno
Therapeutics, we may not use directly or indirectly, or license others to use, genome editing technology in connection
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with any research, development, manufacture, commercialization or other exploration of certain T cells, subject to certain
exceptions, as more fully described in “Part I—Business—Our Collaborations and Licensing Strategy” of this Annual
Report on Form 10-K. Collaborations are also complex and time-consuming to negotiate and document. In addition, there
have been a significant number of recent business combinations among large pharmaceutical companies that have resulted
in a reduced number of potential future collaborators.
We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to
do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, reduce or
delay its development program or one or more of our other development programs, delay its potential commercialization or
reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or
commercialization activities at our own expense. If we elect to increase our expenditures to fund development or
commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on
acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop product candidates or
bring them to market and generate product revenue.
We expect to rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing,
and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such
trials, research, or testing.
We currently rely and expect to continue to rely on third parties, such as CROs, clinical data management
organizations, medical institutions, and clinical investigators, to conduct our clinical trials. We currently rely and expect to
continue to rely on third parties to conduct some aspects of our research and preclinical testing. Any of these third parties
may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it would delay our
product development activities. Additionally, the activities performed by these third parties may be delayed or suspended in
light of the ongoing COVID-19 pandemic, which may impact our ability to successfully develop and test our product
candidates and research programs in a timely manner.
Our reliance on these third parties for research and development activities will reduce our control over these
activities but will not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of
our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the
FDA requires us to comply with standards, commonly referred to as Good Clinical Practices, for conducting, recording,
and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the
rights, integrity, and confidentiality of trial participants are protected. We also are required to register ongoing clinical trials
and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain
timeframes. Failure to do so can result in fines, adverse publicity, and civil and criminal sanctions.
Furthermore, these third parties may also have relationships with other entities, some of which may be our
competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or conduct
our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may
be delayed in obtaining, marketing approvals for any product candidates we develop and will not be able to, or may be
delayed in our efforts to, successfully commercialize our medicines.
We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any
performance failure on the part of our distributors could delay clinical development or marketing approval of any product
candidates we develop or commercialization of our medicines, producing additional losses and depriving us of potential
product revenue.
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We contract with third parties for the manufacture of materials for our research programs, preclinical studies and
clinical trials and expect to continue to do so and for commercialization of any product candidates that we develop. This
reliance on third parties increases the risk that we will not have sufficient quantities of such materials, product
candidates, or any medicines that we may develop and commercialize, or that such supply will not be available to us at
an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts.
We have a limited ability to manufacture materials for our research programs and preclinical studies and we do not
operate any significant manufacturing facilities. We primarily rely on third-party contract manufacturing organizations
(“CMOs”) for the manufacture of our materials for preclinical and clinical studies and expect to continue to do so and for
commercial supply of any product candidates that we develop and for which we or our collaborators obtain marketing
approval. Additionally, the activities performed by our CMOs may be delayed or suspended in light of the ongoing
COVID-19 pandemic, which may impact our ability to successfully develop and test our product candidates, including in
clinical trials, and research programs in a timely manner.
Even though we have established supply agreements with third-party manufacturers, reliance on third-party
manufacturers entails additional risks, including:
● the possible breach of the manufacturing agreement by the third party;
● the possible termination or nonrenewal of the agreement by the third party at a time that is costly or
inconvenient for us; and
● reliance on the third party for regulatory compliance, quality assurance, safety, and pharmacovigilance and
related reporting.
Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements
outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations
could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal
of approvals, license revocations, seizures or recalls of product candidates or medicines, operating restrictions, and
criminal prosecutions, any of which could significantly and adversely affect supplies of our medicines and harm our
business, financial condition, results of operations, and prospects. There are a limited number of manufacturers that operate
under cGMP regulations and that might be capable of manufacturing for us.
Our current and anticipated future dependence upon others for the manufacture of any of our product candidates
may adversely affect our future profit margins and our ability to commercialize any product candidates that receive
marketing approval on a timely and competitive basis.
Risks Related to Our Intellectual Property
If we are unable to obtain and maintain patent protection for any products we develop and for our technology, or if the
scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize
products and technology similar or identical to ours, and our ability to successfully commercialize any of our product
candidates, and our technology may be adversely affected.
Our success depends in large part on our ability to obtain and maintain patent protection in the United States and
other countries with respect to our CRISPR platform technology and any proprietary product candidates and technology we
develop. We seek to protect our proprietary position by in-licensing intellectual property relating to our platform
technology and filing patent applications in the United States and abroad related to our technologies and product candidates
that are important to our business. If we or our licensors and/or collaborators are unable to obtain or maintain patent
protection with respect to our CRISPR platform technology and any proprietary products and technology we develop, our
business, financial condition, results of operations, and prospects could be materially harmed.
No consistent policy regarding the scope of claims allowable in the field of genome editing, including CRISPR
technology, has emerged in the United States. The scope of patent protection outside of the United States is also
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uncertain. Changes in either the patent laws or their interpretation in the United States and other countries may diminish
our ability to protect our inventions, obtain, maintain, and enforce our intellectual property rights and, more generally,
could affect the value of our intellectual property or narrow the scope of our owned and licensed patents. With respect to
both in-licensed and owned intellectual property, we cannot predict whether the patent applications we and our licensors
are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will
provide sufficient protection from competitors.
The patent prosecution process is expensive, time-consuming, and complex, and we may not be able to file,
prosecute, maintain, enforce, or license all necessary or desirable patent applications at a reasonable cost or in a timely
manner. It is also possible that we will fail to identify patentable aspects of our research and development output in time to
obtain patent protection. Although we enter into non-disclosure and confidentiality agreements with parties who have
access to confidential or patentable aspects of our research and development output, such as our employees, corporate
collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors, and other third parties,
any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby
jeopardizing our ability to seek patent protection.
Moreover, the coverage claimed in a patent application can be significantly reduced before the patent is issued,
and its scope can be reinterpreted after issuance. Even if patent applications we license or own issue as patents, they may
not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from
competing with us, or otherwise provide us with any competitive advantage. Any patents that we hold or in-license may be
challenged, narrowed, circumvented, or invalidated by third parties. Consequently, we do not know whether any of our
platform advances and product candidates will be protectable or remain protected by valid and enforceable patents. Our
competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies
or products in a non-infringing manner. For example, we are aware that third parties have suggested the use of the CRISPR
technology in conjunction with a protein other than Cas9 or Cas12a. Our owned and in-licensed patents may not cover
CRISPR technology in conjunction with a protein other than Cas9 or Cas12a. If our competitors commercialize the
CRISPR technology in conjunction with a protein other than Cas9 or Cas12a, our business, financial condition, results of
operations, and prospects could be materially adversely affected.
The issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and our patents
may be challenged in the courts or patent offices in the United States and abroad. Our licensors are currently, and we or our
licensors may in the future become, subject to a third party pre-issuance submission of prior art to the United States Patent
and Trademark Office (the “USPTO”) or opposition, derivation, revocation, re-examination, post-grant and inter partes
review, or interference proceedings and other similar proceedings challenging our patent rights or the patent rights of
others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate,
our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without
payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent
rights. Moreover, we, or one of our licensors, may have to participate in interference proceedings declared by the USPTO
to determine priority of invention or in post-grant challenge proceedings, such as oppositions in a foreign patent office, that
challenge priority of invention or other features of patentability. Such challenges may result in loss of patent rights, loss of
exclusivity, or in patent claims being narrowed, invalidated, or held unenforceable, which could limit our ability to stop
others from using or commercializing similar or identical technology and products, or limit the duration of the patent
protection of our technology and product candidates. Such proceedings also may result in substantial cost and require
significant time from our scientists and management, even if the eventual outcome is favorable to us. As discussed below,
some of our in-licensed patents are subject to interference, opposition and ex parte re-examination proceedings and
therefore subject to these risks.
In addition, given the amount of time required for the development, testing, and regulatory review of new product
candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As
a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing
products similar or identical to ours. Moreover, some of our owned and in-licensed patents and patent applications are, and
may in the future be, co-owned with third parties. If we are unable to obtain an exclusive license to any such third party co-
owners’ interest in such patents or patent applications, such co-owners may be able to license their rights to other third
parties, including our competitors, and our competitors could market competing products and
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technology. In addition, we or our licensors may need the cooperation of any such co-owners of our owned and in-licensed
patents in order to enforce such patents against third parties, and such cooperation may not be provided to us or our
licensors. Any of the foregoing could have a material adverse effect on our competitive position, business, financial
conditions, results of operations, and prospects.
Furthermore, our owned and in-licensed patents and patent applications may be subject to a reservation of rights
by one or more third parties. For example, the research resulting in certain of our owned and in-licensed patent rights and
technology was funded in part by the U.S. government. As a result, the U.S. government has certain rights to such patent
rights and technology. These rights may permit the U.S. government to disclose our confidential information to third
parties and to exercise march-in rights to use or allow third parties to use our licensed technology. Any exercise by the
government of any of the foregoing rights could harm our competitive position, business, financial condition, results of
operations, and prospects.
Our rights to develop and commercialize our technology and product candidates are subject, in part, to the terms and
conditions of licenses granted to us by others.
We are heavily reliant upon licenses to certain patent rights and proprietary technology from third parties that are
important or necessary to the development of our genome editing technology, including our CRISPR technology, and
product candidates. These and other licenses may not provide exclusive rights to use such intellectual property and
technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our
technology and products in the future. As a result, we may not be able to prevent competitors from developing and
commercializing competitive products in territories included in all of our licenses. For example, pursuant to our license
agreements with The Broad Institute, Inc. (“Broad”), and Broad and the President and Fellows of Harvard College
(“Harvard”), the licensors may, under certain circumstances, grant a license to the patents that are the subject of such
license agreements to a third party. Such third party would have full rights to the patent rights that are the subject of such
licenses, which could impact our competitive position and enable a third party to commercialize products similar to our
future product candidates and technology. The terms of these license agreements are described more fully under “Part I—
Business—Our Collaborations and Licensing Strategy” in this Annual Report.
In addition, we may not have the right to control the preparation, filing, prosecution, maintenance, enforcement,
and defense of patents and patent applications covering the technology that we license from third parties. For example,
pursuant to each of our intellectual property licenses with Broad and Harvard, our licensors retain control of preparation,
filing, prosecution, and maintenance, and, in certain circumstances, enforcement and defense of their patents and patent
applications. Therefore, we cannot be certain that these patents and patent applications will be prepared, filed, prosecuted,
maintained, enforced, and defended in a manner consistent with the best interests of our business. If our licensors fail to
prosecute, maintain, enforce, and defend such patents, or lose rights to those patents or patent applications, the rights we
have licensed may be reduced or eliminated, and our right to develop and commercialize any of our products that are the
subject of such licensed rights could be adversely affected. Additionally, we are required to reimburse our licensors for all
of their expenses related to the prosecution, maintenance, enforcement and defense of patents and patent applications that
we in-license from them, and we anticipate that our obligation to reimburse our licensors for expenses related to these
matters will continue to be substantial.
Our licensors may have relied on third party consultants or collaborators or on funds from third parties such that
our licensors are not the sole and exclusive owners of the patents and patent applications we in-license. For example,
certain patent applications licensed to us by Broad are co-owned with NIH. Broad does not and does not purport to grant
any rights in NIH’s interest in these patent applications under our agreement. If other third parties have ownership rights to
our in-licensed patents and patent applications, they may be able to license such patents and patent applications to our
competitors, and our competitors could market competing products and technology. This could have a material adverse
effect on our competitive position, business, financial conditions, results of operations, and prospects.
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Some of our in-licensed patents are subject to priority and validity disputes. In addition, our owned and in-licensed
patents, patent applications and other intellectual property may be subject to further priority and validity disputes, and
other similar intellectual property proceedings including inventorship disputes. If we or our licensors are unsuccessful
in any of these proceedings, we may be required to obtain licenses from third parties, which may not be available on
commercially reasonable terms or at all, or to cease the development, manufacture, and commercialization of one or
more of the product candidates we develop, which could have a material adverse impact on our business.
Certain U.S. patents and a U.S. patent application that are co-owned by Broad and the Massachusetts Institute of
Technology (“MIT”), and in some cases Harvard, and in-licensed by us were involved in a first interference with a U.S.
patent application that is co-owned by the University of California, the University of Vienna, and Emmanuelle Charpentier.
An interference is a proceeding before the Patent Trial and Appeal Board of the USPTO (“PTAB”) to determine priority of
invention of the subject matter of patent claims filed by different parties. In this first interference, the PTAB made a
judgment of no interference-in-fact in favor of the Broad, which was upheld on appeal. This decision was final and bars
any further interference between the same parties for claims to the same invention that was considered in the interference.
As a result of this decision, the U.S. patents and application that we in-license from the Broad and others were not modified
or revoked.
On June 24, 2019, the PTAB declared a second interference between certain pending U.S. patent applications that
are co-owned by the University of California, the University of Vienna, and Emmanuelle Charpentier and certain U.S.
patents and a U.S. patent application that are co-owned by Broad and MIT, and in some cases Harvard, and in-licensed by
us. Most of the Broad U.S. patents and the patent application that are involved in the second interference were also part of
the first interference. The invention that was considered in the first interference was related to a method that involves
contacting a target DNA in a eukaryotic cell with certain defined CRISPR/Cas9 components for the purpose of cleaving or
editing a target DNA molecule or modulating transcription of at least one gene encoded thereon. The second interference
is directed to a different invention, namely a eukaryotic cell that comprises a target DNA and certain defined CRISPR/Cas9
components including a single molecule guide RNA that are capable of cleaving or editing the target DNA molecule.
On September 10, 2020, the PTAB granted Broad’s motion for priority benefit while denying the University of
California, the University of Vienna, and Emmanuelle Charpentier priority benefit to their two earliest provisional patent
applications. As a result, Broad entered the priority phase of the interference as “Senior Party” while the University of
California, the University of Vienna, and Emmanuelle Charpentier remained the “Junior Party” for purposes of determining
which entity was the first to invent the inventions at issue. We cannot predict with any certainty how long it will take
before the PTAB issues a decision at the conclusion of the priority phase.
On December 14, 2020, the PTAB, declared a third interference between a pending U.S. patent application that is
owned by ToolGen and certain U.S. patents and U.S. patent applications that are co-owned by Broad and MIT, and in
some cases Harvard, and in-licensed by us. Most of the Broad U.S. patents and patent applications that are involved in the
interference with ToolGen are also part of the second interference with the University of California, the University of
Vienna, and Emmanuelle Charpentier. On the same day, the PTAB also declared a fourth interference between the same
pending U.S. patent application that is owned by ToolGen and the U.S. patent applications that are co-owned by the
University of California, the University of Vienna, and Emmanuelle Charpentier and involved in the second interference
with Broad. These two declarations of interference involving ToolGen’s patent application describe the interfering subject
matter as related to a mammalian cell with a CRISPR/Cas system that comprises a codon optimized nucleic acid encoding
a Cas9 polypeptide with a nuclear localization signal and a single-molecule guide RNA that are together capable of
forming a Cas9/RNA complex that mediates double stranded cleavage of a target nucleic acid sequence.
As a result of these declarations of interference, parallel adversarial proceedings in the USPTO before the PTAB
have been initiated. We cannot predict with any certainty how long each interference proceeding will actually take. It is
also possible that other third parties may seek to become a party to these interferences.
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Our owned and in-licensed patents and patent applications are, or may in the future become, subject to validity
disputes in the USPTO and other foreign patent offices. For example, a request for ex parte re-examination was filed with
the USPTO on February 16, 2016 against a U.S. patent that we have in-licensed from Broad, which is part of the second
and third interferences . The request for ex parte re-examination was granted on May 9, 2016 thereby initiating a re-
examination procedure between the USPTO and Broad, acting on behalf of itself and MIT. The PTAB has suspended the
re-examination noting that it has jurisdiction over any file that involves a patent involved in an interference. It is uncertain
when the PTAB will lift the suspension. If Broad is unsuccessful during the re-examination, the patent in question may be
revoked or narrowed, which could have a material adverse effect on the scope of our rights under such patent.
We or our licensors may also be subject to claims that former employees, collaborators, or other third parties have
an interest in our owned or in-licensed patents or patent applications, or other intellectual property rights as an inventor or
co-inventor. If we are unable to obtain an exclusive license to any such third party co-owners’ interest in such patents,
patent applications or other intellectual property rights, such co-owners may be able to license their rights to other third
parties, including our competitors. In addition, we may need the cooperation of any such co-owners to enforce any patents,
including any patents that issue from patent applications, against third parties, and such cooperation may not be provided to
us. Any of the foregoing could have a material adverse effect on the conduct of our business, financial condition, results of
operations, and prospects.
We or our licensors are subject to and may in the future become a party to similar proceedings or priority disputes
in Europe or other foreign jurisdictions. For example, certain European patents that we have in-licensed from Broad have
been revoked in their entirety by the European Patent Office Opposition Division (the “Opposition Division”). Certain
other European patents that we have in-licensed from Broad were maintained with amended patent claims. Certain of these
decisions have been appealed by both Broad and the opposing party, and it is uncertain when or in what manner the Boards
of Appeal will act on these appeals. The Opposition Division has also initiated opposition proceedings against certain other
European patents that we have in-licensed from Broad. The EPO opposition proceedings may involve issues including, but
not limited to, procedural formalities related to filing the European patent application, priority, and the patentability of the
involved claims. In view of certain arguments made by the third parties against the revoked patents and similar arguments
made by the third parties against other in-licensed European patents under opposition, the opposition proceedings may lead
to the revocation of certain additional in-licensed European patents. The loss of priority for, or the loss of, these European
patents could have a material adverse effect on the conduct of our business. One or more of the third parties that have filed
oppositions against these European patents or other third parties may file future oppositions against other European patents
that we in-license or own. There may be other oppositions against these European patents that have not yet been filed or
that have not yet been made available to the public.
If we or our licensors are unsuccessful in any patent related disputes, including interference proceedings, patent
oppositions, re-examinations, or other priority, inventorship, or validity disputes to which we or they are subject (including
any of the proceedings discussed above), we may lose valuable intellectual property rights through the loss of one or more
patents owned or licensed or our owned or licensed patent claims may be narrowed, invalidated, or held unenforceable. In
addition, if we or our licensors are unsuccessful in any inventorship disputes to which we or they are subject, we may lose
valuable intellectual property rights, such as exclusive ownership of, or the exclusive right to use, our owned or in-licensed
patents and patent applications. If we or our licensors are unsuccessful in any interference proceeding or other priority or
inventorship dispute, we may be required to obtain and maintain licenses from third parties, including parties involved in
any such interference proceedings or other priority or inventorship disputes. Such licenses may not be available on
commercially reasonable terms or at all, or may be non-exclusive. If we are unable to obtain and maintain such licenses,
we may need to cease the development, manufacture, and commercialization of one or more of the product candidates we
develop. The loss of exclusivity or the narrowing of our owned and in-licensed patent claims could limit our ability to stop
others from using or commercializing similar or identical technology and products. Any of the foregoing could result in a
material adverse effect on our business, financial condition, results of operations, or prospects. Even if we are successful in
any interference proceeding or other priority, inventorship, or validity disputes, it could result in substantial costs and be a
distraction to our management and other employees.
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We may not be able to protect our intellectual property and proprietary rights throughout the world.
Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be
prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the
United States. In addition, our intellectual property license agreements may not always include worldwide rights. For
example, certain U.S. patent applications licensed to us by Broad include The University of Tokyo (“Tokyo”) and NIH as
joint applicants. Broad has only granted a license to us with respect to its interests and to Tokyo’s interests in these U.S.
patent applications but not to any foreign equivalents thereof. Consequently, we may not be able to prevent third parties
from practicing our inventions in all countries outside the United States, or from selling or importing products made using
our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions
where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing
products to territories where we have patent protection or licenses but enforcement is not as strong as that in the United
States. These products may compete with our products, and our patents or other intellectual property rights may not be
effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in
foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the
enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology
products, which could make it difficult for us to stop the infringement of our patents and our intellectual property rights or
marketing of competing products in violation of our intellectual property and proprietary rights generally. Proceedings to
enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert
our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted
narrowly, could put our patent applications at risk of not issuing, and could provoke third parties to assert claims against us.
We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be
commercially meaningful. Accordingly, our efforts to enforce our intellectual property and proprietary rights around the
world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or
license.
Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses
to third parties. In addition, many countries limit the enforceability of patents against government agencies or government
contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of
such patent. If we or any of our licensors is forced to grant a license to third parties with respect to any patents relevant to
our business, our competitive position may be impaired, and our business, financial condition, results of operations, and
prospects may be adversely affected.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document
submission, fee payment, and other requirements imposed by government patent agencies, and our patent protection
could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees, and various other government fees on patents and
applications will be due to be paid to the USPTO and various government patent agencies outside of the United States over
the lifetime of our owned or licensed patents and applications. In certain circumstances, we rely on our licensing partners
to pay these fees due to U.S. and non-U.S. patent agencies. The USPTO and various non-U.S. government agencies require
compliance with several procedural, documentary, fee payment, and other similar provisions during the patent application
process. We are also dependent on our licensors to take the necessary action to comply with these requirements with
respect to our licensed intellectual property. In some cases, an inadvertent lapse can be cured by payment of a late fee or by
other means in accordance with the applicable rules. There are situations, however, in which non-compliance can result in
abandonment or lapse of the patent or patent application, resulting in a partial or complete loss of patent rights in the
relevant jurisdiction. In such an event, potential competitors might be able to enter the market with similar or identical
products or technology, which could have a material adverse effect on our business, financial condition, results of
operations, and prospects.
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If we fail to comply with our obligations in the agreements under which we license intellectual property rights from
third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license
rights that are important to our business.
We have entered into license agreements with third parties and may need to obtain additional licenses from our
existing licensors and others to advance our research or allow commercialization of product candidates we develop. It is
possible that we may be unable to obtain any additional licenses at a reasonable cost or on reasonable terms, if at all. In that
event, we may be required to expend significant time and resources to redesign our technology, product candidates, or the
methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a
technical or commercial basis. If we are unable to do so, we may be unable to develop or commercialize the affected
product candidates, which could harm our business, financial condition, results of operations, and prospects significantly.
We cannot provide any assurances that third party patents do not exist which might be enforced against our current
technology, including CRISPR genome editing technology, manufacturing methods, product candidates, or future methods
or products resulting in either an injunction prohibiting our manufacture or sales, or, with respect to our sales, an obligation
on our part to pay royalties and/or other forms of compensation to third parties, which could be significant.
In each of our license agreements, and we expect in our future agreements, we are responsible for bringing any
actions against any third party for infringing on the patents we have licensed. Certain of our license agreements also require
us to meet development thresholds to maintain the license, including establishing a set timeline for developing and
commercializing products. Disputes may arise regarding intellectual property subject to a licensing agreement, including:
● the scope of rights granted under the license agreement and other interpretation-related issues;
● the extent to which our technology and processes infringe on intellectual property of the licensor that is not
subject to the licensing agreement;
● the sublicensing of patent and other rights under our collaborative development relationships;
● our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
● the inventorship and ownership of inventions and know-how resulting from the joint creation or use of
intellectual property by our licensors and us and our partners; and
● the priority of invention of patented technology.
In addition, the agreements under which we currently license intellectual property or technology from third parties
are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of
any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the
relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the
relevant agreement, including the amount, if any, that may become due and payable to our licensors in connection with
sublicense income. If these events were to occur, they could have a material adverse effect on our business, financial
condition, results of operations, and prospects. Moreover, if disputes over intellectual property that we have licensed
prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be
unable to successfully develop and commercialize the affected product candidates, which could have a material adverse
effect on our business, financial conditions, results of operations, and prospects.
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We may not be successful in obtaining necessary rights to any product candidates we develop through acquisitions and
in-licenses.
We currently have rights to intellectual property, through licenses from third parties, to identify and develop
product candidates. Many pharmaceutical companies, biotechnology companies, and academic institutions are competing
with us in the field of genome editing technology and filing patent applications potentially relevant to our business. For
example, we are aware of third party patents and patent applications that may be construed to cover our CRISPR
technology and product candidates. In order to avoid infringing these third party patents, or patents that issue from these
third party patent applications, we may find it necessary or prudent to obtain licenses from such third party intellectual
property holders. We may also require licenses from third parties for certain non-CRISPR technologies including certain
delivery methods that we are evaluating for use with product candidates we develop. In addition, with respect to any
patents we co-own with third parties, we may require licenses to such co-owners’ interest in such patents. However, we
may be unable to secure such licenses or otherwise acquire or in-license any compositions, methods of use, processes, or
other intellectual property rights from third parties that we identify as necessary for our CRISPR technology and product
candidates we develop. For example, certain methods for editing cells, guide RNA modifications and delivery modes,
including certain adeno-associated virus vector technologies, that we are evaluating for us for use are covered by patents
held by third parties. If we are unable to successfully obtain rights to required third party intellectual rights or maintain the
existing intellectual property rights we have, we may have to abandon development of the relevant program or product
candidate, which could have a material adverse effect on our business, financial condition, results of operations, and
prospects.
Issued patents covering our technology and product candidates could be found invalid or unenforceable if challenged in
court or before administrative bodies in the United States or abroad.
If we or one of our licensors or our collaborators were to initiate legal proceedings against a third party to enforce
a patent covering a product candidate we develop or our technology, including CRISPR genome editing technology, the
defendant could counterclaim that such patent is invalid or unenforceable. Third parties have raised challenges to the
validity of certain of our in-licensed patent claims and may in the future raise similar claims before administrative bodies in
the United States or abroad, even outside the context of litigation. These and other proceedings could result in the
revocation or cancellation of, or amendment to our patents in such a way that they no longer cover our technology or
platform, or any product candidates that we develop. The outcome following legal assertions of invalidity and
unenforceability is unpredictable. If a third party were to prevail on a legal assertion of invalidity or unenforceability, we
would lose at least part, and perhaps all, of the patent protection on our technology or platform, or any product candidates
that we develop. Such a loss of patent protection would have a material adverse impact on our business, financial
condition, results of operations, and prospects.
The intellectual property landscape around genome editing technology, including CRISPR, is highly dynamic, and third
parties may initiate legal proceedings alleging that we are infringing, misappropriating, or otherwise violating their
intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the
success of our business.
The field of genome editing, especially in the area of CRISPR technology, is still in its infancy, and no such
products have reached the market. Due to the intense research and development that is taking place by several companies,
including us and our competitors, in this field, the intellectual property landscape is in flux, and it may remain uncertain for
the coming years. There may be significant intellectual property related litigation and proceedings relating to our owned
and in-licensed, and other third party, intellectual property and proprietary rights in the future.
Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture,
market, and sell any product candidates that we develop and use our proprietary technologies without infringing,
misappropriating, or otherwise violating the intellectual property and proprietary rights of third parties. We are subject to
and may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual
property rights with respect to our technology and any product candidates we develop, including interference, re-
examination, post-grant review, inter partes review, and derivation proceedings before the USPTO and similar proceedings
in foreign jurisdictions such as oppositions before the EPO. Third parties may assert infringement claims
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against us based on existing patents or patents that may be granted in the future, regardless of their merit. We are aware of
certain third party patents and patent applications in this landscape that may be asserted to encompass our CRISPR/Cas9
technology. In particular, we are aware of several separate families of U.S. patents and/or U.S. patent applications and
foreign counterparts which relate to CRISPR/Cas9 technology, where the earliest priority dates of each family pre-date the
priority dates of our in-licensed patents and patent applications, including patent families filed by Vilnius University, by the
University of California, the University of Vienna, and Emmanuelle Charpentier, by ToolGen, and by Sigma-Aldrich. Each
of these patent families are owned by a different third party and contain claims that may be construed to cover components
and uses of CRISPR/Cas9 technology. If we are not able to obtain or maintain a license on commercially reasonable terms
to any third-party patents that cover our product candidates or activities, such third parties could potentially assert
infringement claims against us, which could have a material adverse effect on the conduct of our business.
Even if we believe third-party intellectual property claims are without merit, there is no assurance that a court
would find in our favor on questions of infringement, validity, enforceability, or priority. A court of competent jurisdiction
could hold that these third party patents are valid, enforceable, and infringed, which could materially and adversely affect
our ability to commercialize any product candidates we develop and any other product candidates or technologies covered
by the asserted third party patents. If we are found to infringe a third party’s intellectual property rights, and we are
unsuccessful in demonstrating that such patents are invalid or unenforceable, we could be required to obtain a license from
such third party to continue developing, manufacturing, and marketing any product candidates we develop and our
technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even
if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access
to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. We also
could be forced, including by court order, to cease developing, manufacturing, and commercializing the infringing
technology or product candidates. In addition, we could be found liable for significant monetary damages, including treble
damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. Claims
that we have misappropriated the confidential information or trade secrets of third parties could have a similar material
adverse effect on our business, financial condition, results of operations, and prospects.
If we do not obtain patent term extension and data exclusivity for any product candidates we may develop, it could have
a material adverse effect on our business.
Depending upon the timing, duration and specifics of any FDA marketing approval of any product candidates we
may develop, one or more of our U.S. patents may be eligible for limited patent term extension under the Drug Price
Competition and Patent Term Restoration Action of 1984, or the Hatch-Waxman Amendments. The Hatch-Waxman
Amendments permit a patent extension term of up to five years as compensation for patent term lost during the FDA
regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years
from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a
method for using it, or a method for manufacturing it may be extended. However, an extension may not be granted because
of, for example, failure to exercise due diligence during the testing phase or regulatory review process, failure to apply
within applicable deadlines, failure to apply prior to expiration of relevant patents, or otherwise failing to satisfy applicable
requirements. Further, the applicable time period or the scope of patent protection afforded could be less than we request. If
we are unable to obtain patent term extension or if the term of any such extension is less than we request, we will be unable
to rely on our patent position to forestall the marketing of competing products following our patent expiration, and it could
have a materially adverse effect on our business, financial condition, results of operations, and prospects.
We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed alleged
trade secrets of their current or former employers or claims asserting ownership of what we regard as our own
intellectual property.
Many of our employees, consultants, and advisors are currently or were previously employed at universities or
other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to
ensure that our employees, consultants, and advisors do not use the proprietary information or know-how of others in
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their work for us, we may be subject to claims that we or these individuals have used or disclosed intellectual property,
including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation
may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary
damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against
such claims, litigation could result in substantial costs and be a distraction to management.
In addition, while it is our policy to require our employees and contractors who may be involved in the conception
or development of intellectual property to execute agreements assigning such intellectual property to us, we may be
unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that
we regard as our own. The assignment agreements may be breached, and we may be forced to bring claims against third
parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual
property. Such claims could have a material adverse effect on our business, financial condition, results of operations, and
prospects.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be
harmed.
In addition to seeking patents for some of our technology and product candidates, we also rely on trade secrets and
confidentiality agreements to protect our unpatented know-how, technology, and other proprietary information and to
maintain our competitive position. With respect to our technology platform, we consider trade secrets and know-how to be
one of our primary sources of intellectual property. Trade secrets and know-how can be difficult to protect. In particular, we
anticipate that with respect to our technology platform, these trade secrets and know-how will over time be disseminated
within the industry through independent development, the publication of journal articles describing the methodology, and
the movement of personnel from academic to industry scientific positions.
We seek to protect these trade secrets and other proprietary technology, in part, by entering into non-disclosure
and confidentiality agreements with parties who have access to them, such as our employees, collaborators, CROs, contract
manufacturers, consultants, advisors, and other third parties. We also enter into confidentiality and invention or patent
assignment agreements with our employees and consultants. We cannot guarantee that we have entered into such
agreements with each party that may have or have had access to our trade secrets or proprietary technology and processes.
Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including
our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party
illegally disclosed or misappropriated a trade secret is difficult, expensive, and time-consuming, and the outcome is
unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade
secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third
party, we would have no right to prevent them from using that technology or information to compete with us. If any of our
trade secrets were to be disclosed to or independently developed by a competitor or other third party, our competitive
position would be materially and adversely harmed.
If we do not obtain patent term extension and data exclusivity for any product candidates we develop, our business may
be materially harmed.
Depending upon the timing, duration and specifics of any FDA marketing approval of any product candidates we
develop, one or more of our U.S. patents may be eligible for limited patent term extension under the Drug Price
Competition and Patent Term Restoration Action of 1984 (the “Hatch-Waxman Amendments”). The Hatch-Waxman
Amendments permit a patent extension term of up to five years as compensation for patent term lost during the FDA
regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years
from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a
method for using it, or a method for manufacturing it may be extended. However, we may not be granted an extension
because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to
apply within applicable deadlines, failing to apply prior to expiration of relevant patents, or otherwise failing to satisfy
applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than
we request. If we are unable to obtain patent term extension or term of any such extension is less than we request, our
competitors may obtain approval of competing products following our patent
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expiration, and our business, financial condition, results of operations, and prospects could be materially harmed.
Risks Related to Regulatory Approval and Other Legal Compliance Matters
Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive,
time-consuming, and uncertain and may prevent us from obtaining approvals for the commercialization of any of our
product candidates. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we
will not be able to commercialize, or will be delayed in commercializing, our product candidates, and our ability to
generate revenue will be materially impaired.
Any of our product candidates and the activities associated with their development and commercialization,
including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising,
promotion, sale, and distribution, are subject to comprehensive regulation by the FDA and other regulatory authorities in
the United States and by comparable authorities in other countries. Failure to obtain marketing approval for a product
candidate will prevent us from commercializing the product candidate in a given jurisdiction. We have not received
approval to market any product candidates from regulatory authorities in any jurisdiction. We have only limited experience
in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party CROs to
assist us in this process. Securing regulatory approval requires the submission of extensive preclinical and clinical data and
supporting information to the various regulatory authorities for each therapeutic indication to establish the biologic product
candidate’s safety, purity, and potency. Securing regulatory approval also requires the submission of information about the
product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Any of
our product candidates may not be effective, may be only moderately effective, or may prove to have undesirable or
unintended side effects, toxicities, or other characteristics that may preclude our obtaining marketing approval or prevent or
limit commercial use.
The process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take many
years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety
of factors, including the type, complexity, and novelty of the product candidates involved. Changes in marketing approval
policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in
regulatory review for each submitted product application, may cause delays in the approval or rejection of an application.
The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse
to accept any application or may decide that our data is insufficient for approval and require additional preclinical, clinical,
or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay,
limit, or prevent marketing approval of a product candidate. Any marketing approval we ultimately obtain may be limited
or subject to restrictions or post-approval commitments that render the approved medicine not commercially viable.
Finally, disruptions at the FDA and other agencies may prolong the time necessary for new drugs to be reviewed
and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last
several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had
to furlough critical employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly
impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material
adverse effect on our business. The Trump Administration also took several executive actions that could impose
significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight
activities.
If we experience delays in obtaining approval or if we fail to obtain approval of any of our product candidates, the
commercial prospects for those product candidates may be harmed, and our ability to generate revenues will be materially
impaired.
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Fast track and Priority Review designation by the FDA may not actually lead to a faster development or regulatory
review or approval process, and does not assure FDA approval of our product candidates.
If a product candidate is intended for the treatment of a serious or life threatening condition and the product
candidate demonstrates the potential to address unmet medical need for this condition, the sponsor may apply for FDA fast
track designation. Further, if the FDA determines that a product candidate offers major advances in treatment or provides a
treatment where no adequate therapy exists, the FDA may designate the product candidate for priority review. A priority
review designation means that the goal for the FDA to review an application is six months, rather than the standard review
period of ten months. We may request fast track and priority review designations for certain of our product candidates.
The FDA has broad discretion with respect to whether or not to grant fast track and priority review status to a
product candidate, so even if we believe a particular product candidate is eligible for such designation or status, the FDA
may decide not to grant it. Moreover, a fast track or priority review designation does not necessarily mean a faster
regulatory review process or necessarily confer any advantage with respect to approval compared to conventional FDA
procedures. As a result, while we may seek and receive these designations for our product candidates, we may not
experience a faster development process, review or approval compared to conventional FDA procedures. In addition, the
FDA may withdraw these designations if it believes that the designation is no longer supported by data from our clinical
development program.
We may not be able to obtain orphan drug exclusivity for one or more of our product candidates, and even if we do, that
exclusivity may not prevent the FDA or the EMA from approving other competing products.
Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug or biologic
intended to treat a rare disease or condition. A similar regulatory scheme governs approval of orphan products by the EMA
in the European Union. Generally, if a product candidate with an orphan drug designation subsequently receives the first
marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing
exclusivity, which precludes the FDA or the EMA from approving another marketing application for the same product for
the same therapeutic indication for that time period. The applicable period is seven years in the United States and ten years
in the European Union. The exclusivity period in the European Union can be reduced to six years if a product no longer
meets the criteria for orphan drug designation, in particular if the product is sufficiently profitable so that market
exclusivity is no longer justified.
In order for the FDA to grant orphan drug exclusivity to one of our products, the agency must find that the product
is indicated for the treatment of a condition or disease with a patient population of fewer than 200,000 individuals annually
in the United States. The FDA may conclude that the condition or disease for which we seek orphan drug exclusivity does
not meet this standard. Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect
the product from competition because different products can be approved for the same condition. In particular, the concept
of what constitutes the "same drug" for purposes of orphan drug exclusivity remains in flux in the context of gene
therapies, and the FDA has issued recent draft guidance suggesting that it would not consider two gene therapy products to
be different drugs solely based on minor differences in the transgenes or vectors. In addition, even after an orphan drug is
approved, the FDA can subsequently approve the same product for the same condition if the FDA concludes that the later
product is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.
Orphan drug exclusivity may also be lost if the FDA or EMA determines that the request for designation was materially
defective or if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of the patients with
the rare disease or condition.
On August 3, 2017, Congress passed the FDA Reauthorization Act of 2017 (“FDARA”). FDARA, among other
things, codified the FDA’s pre-existing regulatory interpretation, to require that a drug sponsor demonstrate the clinical
superiority of an orphan drug that is otherwise the same as a previously approved drug for the same rare disease in order to
receive orphan drug exclusivity. The new legislation reverses prior precedent holding that the Orphan Drug Act
unambiguously requires that the FDA recognize the orphan exclusivity period regardless of a showing of clinical
superiority. The FDA may further reevaluate the Orphan Drug Act and its regulations and policies. We do not know if,
when, or how the FDA may change the orphan drug regulations and policies in the future, and it is uncertain how any
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changes might affect our business. Depending on what changes the FDA may make to its orphan drug regulations and
policies, our business could be adversely impacted.
Failure to obtain marketing approval in foreign jurisdictions would prevent any of our product candidates from being
marketed in such jurisdictions, which, in turn, would materially impair our ability to generate revenue.
In order to market and sell any of our product candidates in the European Union and many other foreign
jurisdictions, we or our collaborators must obtain separate marketing approvals and comply with numerous and varying
regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time
required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval
process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in
many countries outside the United States, it is required that the product be approved for reimbursement before the product
can be approved for sale in that country. We or these third parties may not obtain approvals from regulatory authorities
outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory
authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not
ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. We may not be able to file for
marketing approvals and may not receive necessary approvals to commercialize our medicines in any jurisdiction, which
would materially impair our ability to generate revenue.
Additionally, we could face heightened risks with respect to seeking marketing approval in the United Kingdom as
a result of the recent withdrawal of the United Kingdom from the European Union, commonly referred to as Brexit.
Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the European Union, the United
Kingdom withdrew from the European Union, effective December 31, 2020. On December 24, 2020, the United Kingdom
and European Union entered into a Trade and Cooperation Agreement. The agreement sets out certain procedures for
approval and recognition of medical products in each jurisdiction. Since the regulatory framework for pharmaceutical
products in the United Kingdom covering the quality, safety, and efficacy of pharmaceutical products, clinical trials,
marketing authorization, commercial sales, and distribution of pharmaceutical products is derived from European Union
directives and regulations, Brexit could materially impact the future regulatory regime that applies to products and the
approval of product candidates in the United Kingdom. Any delay in obtaining, or an inability to obtain, any marketing
approvals, as a result of Brexit or otherwise, would prevent us from commercializing any product candidates in the United
Kingdom and/or the European Union and restrict our ability to generate revenue and achieve and sustain profitability. If
any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the United
Kingdom and/or European Union for any product candidates, which could significantly and materially harm our business.
Even if we, or any collaborators we may have, obtain marketing approvals for any of our product candidates, the terms
of approvals and ongoing regulation of our products could require the substantial expenditure of resources and may
limit how we, or they, manufacture and market our products, which could materially impair our ability to generate
revenue.
Any product candidate for which we obtain marketing approval, along with the manufacturing processes, post-
approval clinical data, labeling, advertising, and promotional activities for such medicine, will be subject to continual
requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety
and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to
quality control, quality assurance and corresponding maintenance of records and documents, and requirements regarding
the distribution of samples to physicians and recordkeeping. Even if marketing approval of a product candidate is granted,
the approval may be subject to limitations on the indicated uses for which the medicine may be marketed or to the
conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or
efficacy of the medicine.
Accordingly, assuming we, or any collaborators we may have, receive marketing approval for one or more of our
product candidates, we, and such collaborators, and our and their contract manufacturers will continue to expend time,
money, and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance, and
quality control. If we and such collaborators are not able to comply with post-approval regulatory requirements, we
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and such collaborators could have the marketing approvals for our products withdrawn by regulatory authorities and our, or
such collaborators’, ability to market any future products could be limited, which could adversely affect our ability to
achieve or sustain profitability. Further, the cost of compliance with post-approval regulations may have a negative effect
on our business, operating results, financial condition, and prospects.
Any product candidate for which we obtain marketing approval could be subject to restrictions or withdrawal from the
market, and we may be subject to substantial penalties if we fail to comply with regulatory requirements or if we
experience unanticipated problems with our medicines, when and if any of them are approved.
The FDA and other regulatory agencies closely regulate the post-approval marketing and promotion of medicines
to ensure that they are marketed only for the approved indications and in accordance with the provisions of the approved
labeling. The FDA and other regulatory agencies impose stringent restrictions on manufacturers’ communications
regarding off-label use, and if we do not market our medicines for their approved indications, we may be subject to
enforcement action for off-label marketing by the FDA and other federal and state enforcement agencies, including the
Department of Justice. Violation of the Federal Food, Product, and Cosmetic Act and other statutes, including the False
Claims Act, relating to the promotion and advertising of prescription products may also lead to investigations or allegations
of violations of federal and state health care fraud and abuse laws and state consumer protection laws.
In addition, later discovery of previously unknown problems with our medicines, manufacturers, or manufacturing
processes, or failure to comply with regulatory requirements, may yield various results, including:
● restrictions on such medicines, manufacturers, or manufacturing processes;
● restrictions on the labeling or marketing of a medicine;
● restrictions on the distribution or use of a medicine;
● requirements to conduct post-marketing clinical trials;
● receipt of warning or untitled letters;
● withdrawal of the medicines from the market;
● refusal to approve pending applications or supplements to approved applications that we submit;
● recall of medicines;
● fines, restitution, or disgorgement of profits or revenue;
● suspension or withdrawal of marketing approvals;
● suspension of any ongoing clinical trials;
● refusal to permit the import or export of our medicines;
● product seizure; and
● injunctions or the imposition of civil or criminal penalties.
Any government investigation of alleged violations of law could require us to expend significant time and
resources in response and could generate negative publicity. The occurrence of any event or penalty described above may
inhibit our ability to commercialize any product candidates we develop and adversely affect our business, financial
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condition, results of operations, and prospects.
Our relationships with healthcare providers, physicians, and third-party payors will be subject to applicable anti-
kickback, fraud and abuse, and other healthcare laws and regulations, which could expose us to criminal sanctions,
civil penalties, contractual damages, reputational harm, and diminished profits and future earnings.
Healthcare providers, physicians, and third-party payors play a primary role in the recommendation and
prescription of any of our product candidates for which we obtain marketing approval. Our future arrangements with third-
party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations
that may constrain the business or financial arrangements and relationships through which we market, sell, and distribute
our medicines for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and
regulations include the following:
● the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and
willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, in cash or in kind, to
induce or reward either the referral of an individual for, or the purchase, order, or recommendation of, any
good or service, for which payment may be made under federal and state healthcare programs such as
Medicare and Medicaid;
● the federal False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam
actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal
government, claims for payment or approval from Medicare, Medicaid, or other government payors that are
false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to
the federal government, with potential liability including mandatory treble damages and significant per-claim
penalties;
● the federal Health Insurance Portability and Accountability Act of 1996, as further amended by the Health
Information Technology for Economic and Clinical Health Act, which imposes certain requirements,
including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of
individually identifiable health information without appropriate authorization by entities subject to the rule,
such as health plans, health care clearinghouses, and health care providers;
● the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing, or
covering up a material fact or making any materially false statement in connection with the delivery of or
payment for healthcare benefits, items, or services;
● the federal transparency requirements under the federal Physician Payment Sunshine Act, which requires
manufacturers of drugs, devices, biologics, and medical supplies to report to the Department of Health and
Human Services information related to payments and other transfers of value to physicians and teaching
hospitals, and ownership and investment interests held by physicians and other healthcare providers and their
immediate family members and applicable group purchasing organizations; and
● analogous state laws and regulations, such as state anti-kickback and false claims laws, which may apply to
sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-
governmental third-party payors, including private insurers, and certain state laws that require
pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines
and the relevant compliance guidance promulgated by the federal government in addition to requiring drug
manufacturers to report information related to payments to physicians and other health care providers or
marketing expenditures.
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it
is possible that some of our business activities could be subject to challenge under one or more of such laws. If our
operations are found to be in violation of any of the laws described above or any other government regulations that apply to
us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation
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in government health care programs, such as Medicare and Medicaid, imprisonment, and the curtailment or restructuring of
our operations, any of which could adversely affect our business, financial condition, results of operations, and prospects.
The provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation,
endorsement, purchase, supply, order, or use of medicinal products is prohibited in the European Union. The provision of
benefits or advantages to physicians is also governed by the national anti-bribery laws of European Union Member States,
such as the UK Bribery Act 2010. Infringement of these laws could result in substantial fines and imprisonment.
Payments made to physicians in certain European Union Member States must be publicly disclosed. Moreover,
agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his or
her competent professional organization, and/or the regulatory authorities of the individual European Union Member
States. These requirements are provided in the national laws, industry codes, or professional codes of conduct applicable in
the European Union Member States. Failure to comply with these requirements could result in reputational risk, public
reprimands, administrative penalties, fines, or imprisonment.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws
and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business
practices may not comply with current or future statutes, regulations, or case law involving applicable fraud and abuse or
other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other
governmental regulations that may apply to us, we may be subject to significant civil, criminal, and administrative
penalties, damages, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and
the curtailment or restructuring of our operations. If any of the physicians or other providers or entities with whom we
expect to do business are found to be not in compliance with applicable laws, they may be subject to criminal, civil, or
administrative sanctions, including exclusions from government funded healthcare programs. Liabilities they incur
pursuant to these laws could result in significant costs or an interruption in operations, which could have a material adverse
effect on our business, financial condition, results of operations, and prospects.
Recently enacted and future legislation may increase the difficulty and cost for us and any future collaborators to
obtain marketing approval of and commercialize our product candidates and affect the prices we, or they, may obtain.
In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory
changes and proposed changes regarding the healthcare system that could, among other things, prevent or delay marketing
approval of our product candidates, restrict or regulate post-approval activities and affect our ability, or the ability of any
future collaborators, to profitably sell any products for which we, or they, obtain marketing approval. We expect that
current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous
coverage criteria and in additional downward pressure on the price that we, or any future collaborators, may receive for any
approved products.
In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the
“Medicare Modernization Act”), changed the way Medicare covers and pays for pharmaceutical products. The legislation
expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology based
on average sales prices for physician administered drugs. In addition, this legislation provided authority for limiting the
number of drugs that will be covered in any therapeutic class. Cost reduction initiatives and other provisions of this
legislation could decrease the coverage and price that we receive for any approved products. While the Medicare
Modernization Act applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage
policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that
results from the Medicare Modernization Act may result in a similar reduction in payments from private payors.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability
Reconciliation Act (the “PPACA”), which became law in 2010, contains provisions of importance to our business,
including, without limitation, our ability to commercialize and the prices we may obtain for any of our product candidates
and that are approved for sale, the following:
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● an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription
drugs and biologic agents;
● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate
Program;
● expansion of federal healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback
Statute, new government investigative powers and enhanced penalties for noncompliance;
● a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50%
point-of-sale discounts off negotiated prices;
● extension of manufacturers’ Medicaid rebate liability;
● expansion of eligibility criteria for Medicaid programs;
● expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing
program new requirements to report financial arrangements with physicians and teaching hospitals;
● a new requirement to annually report drug samples that manufacturers and distributors provide to physicians;
and
● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct
comparative clinical effectiveness research, along with funding for such research.
In addition, other legislative changes have been proposed and adopted since the PPACA was enacted. In August
2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint
Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for
the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to
several government programs. These changes included aggregate reductions to Medicare payments to providers of up to
2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2029 unless additional
Congressional action is taken. The Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, suspended the
2% Medicare sequester from May 1, 2020 through December 31, 2020, and extended the sequester by one year, through
2030. The American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several providers
and increased the statute of limitations period for the government to recover overpayments to providers from three to five
years. These new laws may result in additional reductions in Medicare and other healthcare funding and otherwise affect
the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency
with which any such product candidate is prescribed or used.
Since enactment of the PPACA, there have been, and continue to be, numerous legal challenges and
Congressional actions to repeal and replace provisions of the law. For example, with enactment of the Tax Cuts and Jobs
Act of 2017 (the “TCJA”), Congress repealed the “individual mandate.” The repeal of this provision, which requires most
Americans to carry a minimal level of health insurance, became effective in 2019. Further, on December 14, 2018, a U.S.
District Court judge in the Northern District of Texas ruled that the individual mandate portion of the ACA is an essential
and inseverable feature of the ACA, and therefore because the mandate was repealed as part of the Tax Cuts and Jobs Act,
the remaining provisions of the ACA are invalid as well. On December 18, 2019, the Court of Appeals for the Fifth Circuit
court affirmed the lower court’s ruling that the individual mandate portion of the ACA is unconstitutional and it remanded
the case to the district court for reconsideration of the severability question and additional analysis of the provisions of the
ACA. Thereafter, the U.S. Supreme Court agreed to hear this case. Oral argument in the case took place on November 10,
2020. On February 10, 2021, the Biden Administration withdrew the federal government’s support for overturning the
ACA. A ruling by the Court is expected sometime this year. Litigation and legislation over the ACA are likely to continue,
with unpredictable and uncertain results.
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The Trump Administration also took executive actions to undermine or delay implementation of the ACA,
including directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions
from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states,
individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. On January 28,
2021, however, President Biden issued a new Executive Order which directs federal agencies to reconsider rules and other
policies that limit Americans’ access to health care, and consider actions that will protect and strengthen that access. Under
this Order, federal agencies are directed to re-examine: policies that undermine protections for people with pre-existing
conditions, including complications related to COVID-19; demonstrations and waivers under Medicaid and the ACA that
may reduce coverage or undermine the programs, including work requirements; policies that undermine the Health
Insurance Marketplace or other markets for health insurance; policies that make it more difficult to enroll in Medicaid and
the ACA; and policies that reduce affordability of coverage or financial assistance, including for dependents. This
Executive Order also directs the U.S. Department of Health and Human Services to create a special enrollment period for
the Health Insurance Marketplace in response to the COVID-19 pandemic.
The prices of prescription pharmaceuticals in the United States and foreign jurisdictions is subject to considerable
legislative and executive actions and could impact the prices we obtain for our products, if and when licensed.
The prices of prescription pharmaceuticals have also been the subject of considerable discussion in the United
States. To date, there have been several recent U.S. congressional inquiries, as well as proposed and enacted state and
federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship
between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government
program reimbursement methodologies for products. To those ends, President Trump issued several executive orders
intended to lower the costs of prescription drug products. Certain of these orders are reflected in recently promulgated
regulations, including an interim final rule implementing President Trump’s most favored nation model, but such final rule
is currently subject to a nationwide preliminary injunction. It remains to be seen whether these orders and resulting
regulations will remain in force during the Biden Administration. Further, on September 24, 2020, the Trump
Administration finalized a rulemaking allowing states or certain other non-federal government entities to submit
importation program proposals to the FDA for review and approval. Applicants are required to demonstrate that their
importation plans pose no additional risk to public health and safety and will result in significant cost savings for
consumers. The FDA has issued draft guidance that would allow manufacturers to import their own FDA-approved drugs
that are authorized for sale in other countries (multi-market approved products).
At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations
designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints,
discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some
cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional health care
organizations and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical
products and which suppliers will be included in their prescription drug and other health care programs. These measures
could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing. We expect that
additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts
that federal and state governments will pay for healthcare products and services, which could result in reduced demand for
our product candidates or additional pricing pressures.
Our employees, principal investigators, consultants, and commercial partners may engage in misconduct or other
improper activities, including non-compliance with regulatory standards and requirements and insider trading.
We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants,
and partners. Misconduct by these parties could include intentional failures to comply with FDA regulations or the
regulations applicable in the European Union and other jurisdictions, provide accurate information to the FDA, the
European Commission, and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in
the United States and abroad, report financial information or data accurately, or disclose unauthorized activities to us. In
particular, sales, marketing, and business arrangements in the healthcare industry are subject to extensive laws and
regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and
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regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer
incentive programs, and other business arrangements. Such misconduct also could involve the improper use of information
obtained in the course of clinical trials or interactions with the FDA or other regulatory authorities, which could result in
regulatory sanctions and cause serious harm to our reputation. We have adopted a code of conduct applicable to all of our
employees, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect
and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from
government investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If
any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those
actions could have a significant impact on our business, financial condition, results of operations, and prospects, including
the imposition of significant fines or other sanctions.
Laws and regulations governing any international operations we may have in the future may preclude us from
developing, manufacturing and selling certain product candidates outside of the United States and require us to develop
and implement costly compliance programs.
We are subject to numerous laws and regulations in each jurisdiction outside the United States in which we
operate. The creation, implementation and maintenance of international business practices compliance programs is costly
and such programs are difficult to enforce, particularly where reliance on third parties is required.
The Foreign Corrupt Practices Act (“FCPA”) prohibits any U.S. individual or business from paying, offering,
authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or
candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business
in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to
comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly
reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate
system of internal accounting controls for international operations. The anti-bribery provisions of the FCPA are enforced
primarily by the Department of Justice. The SEC is involved with enforcement of the books and records provisions of the
FCPA.
Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized
problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries,
hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials.
Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments
to government officials and have led to FCPA enforcement actions.
Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States,
or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain
products and technical data relating to those products. Our expansion outside of the United States has required, and will
continue to require, us to dedicate additional resources to comply with these laws, and these laws may preclude us from
developing, manufacturing, or selling certain drugs and drug candidates outside of the United States, which could limit our
growth potential and increase our development costs. The failure to comply with laws governing international business
practices may result in substantial penalties, including suspension or debarment from government contracting. Violation of
the FCPA can result in significant civil and criminal penalties. Indictment alone under the FCPA can lead to suspension of
the right to do business with the U.S. government until the pending claims are resolved. Conviction of a violation of the
FCPA can result in long-term disqualification as a government contractor. The termination of a government contract or
relationship as a result of our failure to satisfy any of our obligations under laws governing international business practices
would have a negative impact on our operations and harm our reputation and ability to procure government contracts. The
SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA’s accounting
provisions.
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Risks Related to Employee Matters, Managing Growth, Public Health and Information Technology
Our future success depends on our ability to attract and retain key executives and to attract, retain, and motivate
qualified personnel.
We are highly dependent on the principal members of our management and scientific teams. Each of these
individuals is employed “at will,” meaning we or the individual may terminate the employment relationship at any time.
We do not maintain “key person” insurance for any of our executives or other employees. The loss of the services of any of
these persons could impede the achievement of our research, development, and commercialization objectives. Additionally,
we are actively trying to recruit a candidate for the role of Chief Scientific Officer. Any inability to fill this position in an
expedient manner may have a material adverse effect on our business.
Recruiting and retaining qualified scientific, clinical, manufacturing, and sales and marketing personnel will also
be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the
competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience
competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we
rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and
development and commercialization strategy. Our consultants and advisors may be employed by employers other than us
and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.
We face risks related to health epidemics, pandemics and other widespread outbreaks of contagious disease, including
the COVID-19 pandemic, which could significantly disrupt our operations, impact our financial results or otherwise
adversely impact our business.
Significant outbreaks of contagious diseases, and other adverse public health developments, could have a material
impact on our business operations and operating results. For example, the spread of COVID-19 has affected segments of
the global economy and could affect our operations. We have taken steps in line with guidance from the U.S. Centers for
Disease Control and Prevention, the Commonwealth of Massachusetts and the State of Colorado, the jurisdictions in which
we primarily operate our business, to protect the health and safety of our employees and the community. In particular, we
have implemented a work from home policy, and restricted on-site activities at our facilities in Massachusetts and Colorado
to certain manufacturing, laboratory and related support activities. Under our return-to-work plans, we have resumed
manufacturing, laboratory, and related support activities at our facilities in Massachusetts and Colorado using shifts and
other capacity-limiting measures to comply with social distancing guidelines. We continue to assess the impact of the
COVID-19 pandemic to best mitigate risk and continue the operations of our business.
As a result of the COVID-19 pandemic or similar public health crises that may arise, we may experience
disruptions that could adversely impact our operations, research and development, including preclinical studies, clinical
trials and manufacturing activities, including:
● delays or disruptions in clinical trials that we may be conducting, including patient screening, patient
enrollment, patient dosing, clinical trial site activation, and study monitoring;
● delays or disruptions in preclinical experiments and IND- and clinical trial application-enabling studies due
to restrictions related to our staff being on site;
● interruption or delays in the operations of the FDA, EMA and comparable foreign regulatory agencies;
● interruption of, or delays in, receiving, supplies of drug substance and drug product from our CMOs or
delays or disruptions in our pre-clinical experiments or clinical trials performed by CROs due to staffing
shortages, production and research slowdowns or stoppages and disruptions in delivery systems or research;
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● limitations imposed on our business operations by local, state, or federal authorities to address such
pandemics or similar public health crises could impact our ability to conduct preclinical or clinical activities,
including conducting IND- and CTA-enabling studies or our ability to select future development candidates;
and
● business disruptions caused by potential workplace, laboratory and office closures and an increased reliance
on employees working from home, disruptions to or delays in ongoing laboratory experiments and
operations, staffing shortages, travel limitations, cyber security and data accessibility, or communication or
mass transit disruptions, any of which could adversely impact our business operations or delay necessary
interactions with local regulators, ethics committees, manufacturing sites, research or clinical trial sites and
other important agencies and contractors.
For example and in light of the ongoing COVID-19 pandemic, we previously delayed the development of our
research program to treat autosomal dominant retinitis pigmentosa 4. We also experienced slowed enrollment in the EDIT-
101 clinical trial as a result of the COVID-19 pandemic and may experience further slowdowns. In addition, the trading
prices for our common stock and other biopharmaceutical companies have been highly volatile as a result of the COVID-
19 pandemic. As a result, we may face difficulties raising additional capital through sales of our common stock or such
sales may be on unfavorable terms.
We cannot presently predict the scope and severity of any potential business shutdowns or disruptions. If we or
any of the third parties with whom we engage, however, were to experience shutdowns or other business disruptions, our
ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively
affected, which could have a material adverse impact on our business and our results of operation and financial condition.
We have expanded and expect to further expand our development, regulatory, clinical, manufacturing and future sales
and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt
our operations.
We expect to experience significant growth in the number of our employees and the scope of our operations,
particularly in the areas of drug development, regulatory affairs, clinical development, manufacturing, and sales and
marketing. To manage our anticipated future growth, we must continue to implement and improve our managerial,
operational, and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel.
Due to our limited financial resources, we may not be able to effectively manage the expected expansion of our operations
or recruit and train additional qualified personnel. Moreover, the expected physical expansion of our operations may lead to
significant costs and may divert our management and business development resources. Any inability to manage growth
could delay the execution of our business plans or disrupt our operations.
Security breaches and other disruptions to our information technology structure could compromise our information,
disrupt our business and expose us to liability, which would cause our business and reputation to suffer.
In the ordinary course of our business, we collect, process and store sensitive data, including intellectual property,
as well as our proprietary business information and that of our suppliers and business partners, employee data, and we may
collect personally identifiable information of clinical trial participants in connection with clinical trials. We also rely to a
large extent on information technology systems to operate our business, including our financial systems. We have
outsourced elements of our confidential information processing and information technology structure, and as a result, we
are managing independent vendor relationships with third parties who may or could have access to our confidential
information. Similarly, our business partners and other third-party providers possess certain elements of our sensitive data.
The secure maintenance of this information is important to our operations and business strategy. Despite our security
measures, our information technology infrastructure (and those of our partners, vendors and third-party providers) may be
vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. We, our partners,
vendors, and other third-party providers could be susceptible to third party attacks on our, and their, information security
systems, which attacks are of ever-increasing levels of sophistication and are made by groups and individuals with a wide
range of motives and expertise, including organized criminal groups, hacktivists,
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nation states and others. We have invested in information technology security measures and the protection of confidential
and sensitive information, but there can be no assurance that our efforts will prevent system failures, accidents or security
breaches. While we believe we have not experienced any such material system failure, accident or security breach to date,
any such event may substantially impair our ability to operate our business and would compromise our, and their, networks
and the information stored could be accessed, publicly disclosed, lost, or stolen. Any such event, or other loss of
information, could result in legal claims or proceedings, liability under laws that protect the privacy of personal
information, disrupt our operations, and damage our reputation, any of which could adversely affect our business.
Although we have general liability and cybersecurity insurance coverage, our insurance may not cover all claims,
continue to be available on reasonable terms or be sufficient in amount to cover one or more large claims; additionally, the
insurer may disclaim coverage as to any claim. The successful assertion of one or more large claims against us that exceed
or are not covered by our insurance coverage or changes in our insurance policies, including premium increases or the
imposition of large deductible or co-insurance requirements, could materially harm our business, financial condition,
results of operations and prospects.
Risks Related to Our Common Stock
An active trading market for our common stock may not be sustained.
Although our common stock is listed on The Nasdaq Global Select Market, an active trading market for our
common stock may not be sustained. If an active market for our common stock does not continue, it may be difficult for
our stockholders to sell their shares. An inactive trading market for our common stock may also impair our ability to raise
capital to continue to fund our operations by selling shares and may impair our ability to acquire other companies or
technologies by using our shares as consideration..
The market price of our common stock may be volatile, which could result in substantial losses for our stockholders.
Our stock price has been, and is likely to remain, volatile. Some of the factors that may cause the market price of
our common stock to fluctuate include:
● the success of existing or new competitive products or technologies;
● the timing and results of clinical trials for EDIT-101 and any preclinical studies and clinical trials of any
other product candidates that we develop;
● commencement or termination of collaborations for our product development and research programs;
● failure or discontinuation of any of our product development and research programs;
● results of preclinical studies, clinical trials, or regulatory approvals of product candidates of our competitors,
or announcements about new research programs or product candidates of our competitors;
● developments or changing views regarding the use of genomic medicines, including those that involve
genome editing;
● regulatory or legal developments in the United States and other countries;
● developments or disputes concerning patent applications, issued patents, or other proprietary rights;
● the recruitment or departure of key personnel;
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● the level of expenses related to any of our research programs, clinical development programs, or product
candidates that we develop;
● the results of our efforts to develop additional product candidates or products;
● actual or anticipated changes in estimates as to financial results, development timelines, or recommendations
by securities analysts;
● announcement or expectation of additional financing efforts;
● sales of our common stock by us, our insiders, or other stockholders;
● variations in our financial results or those of companies that are perceived to be similar to us;
● changes in estimates or recommendations by securities analysts, if any, that cover our stock;
● changes in the structure of healthcare payment systems;
● market conditions in the pharmaceutical and biotechnology sectors;
● general economic, industry, and market conditions, including the impact of the COVID-19 pandemic; and
● the other factors described in this “Risk Factors” section.
In recent years, the stock market in general, and the market for pharmaceutical and biotechnology companies in
particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to
changes in the operating performance of the companies whose stock is experiencing those price and volume fluctuations.
Because of the potential volatility of our stock price, we may become the target of securities litigation in the future.
Securities litigation could result in substantial costs and divert management’s attention and resources from our business.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our
stock, the price of our stock and trading volume could decline.
The trading market for our common stock depends, in part, on the research and reports that industry or financial
analysts publish about us or our business. If one or more of the analysts covering our business downgrade their evaluations
of our stock, the price of our stock could decline. If one or more of these analysts cease to cover our stock or fail to
regularly publish reports on us, we could lose visibility in the market for our stock, which in turn could cause our stock
price to decline.
A portion of our total outstanding shares may be sold into the market in the near future, which could cause the market
price of our common stock to decline significantly, even if our business is doing well.
Sales of a significant number of shares of our common stock in the public market could occur at any time. These
sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares,
could reduce the market price of our common stock.
We have registered substantially all shares of common stock that we may issue under our equity compensation
plans. These shares can be freely sold in the public market upon issuance and once vested, subject to volume limitations
applicable to affiliates. If any of these additional shares are sold, or if it is perceived that they will be sold, in the public
market, the market price of our common stock could decline.
We incur costs as a result of operating as a public company, and our management is required to devote substantial time
to compliance initiatives and corporate governance practices.
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As a public company we have incurred, and will continue to incur, significant legal, accounting, and other
expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform
and Consumer Protection Act, the listing requirements of The Nasdaq Global Select Market, and other applicable securities
rules and regulations impose various requirements on public companies, including establishment and maintenance of
effective disclosure and financial controls and corporate governance practices. We have had to hire additional accounting,
finance, and other personnel in connection with our becoming, and our efforts to comply with the requirements of being, a
public company, and our management and other personnel devote a substantial amount of time towards maintaining
compliance with these requirements. These requirements increase our legal and financial compliance costs and make some
activities more time-consuming and costly.
We have broad discretion in the use of our cash reserves and may not use them effectively.
Our management has broad discretion to use our cash reserves and could use our cash reserves in ways that do not
improve our results of operations or enhance the value of our common stock. The failure by our management to apply these
funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of
our common stock to decline, and delay the development of our product candidates. Pending their use, we may invest our
cash reserves in a manner that does not produce income or that loses value.
We do not expect to pay any dividends for the foreseeable future. Accordingly, stockholders must rely on capital
appreciation, if any, for any return on their investments.
We have never declared or paid cash dividends on our common stock. We currently intend to retain all of our
future earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt
agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be
stockholders’ sole source of gain for the foreseeable future.
Provisions in our restated certificate of incorporation and amended and restated bylaws or Delaware law might
discourage, delay, or prevent a change in control of our company or changes in our management and, therefore,
depress the trading price of our common stock.
Provisions in our restated certificate of incorporation and amended and restated bylaws or Delaware law may
discourage, delay, or prevent a merger, acquisition, or other change in control that stockholders may consider favorable,
including transactions in which you might otherwise receive a premium for your shares of our common stock. These
provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. These
provisions include:
● limitations on the removal of directors;
● a classified board of directors so that not all members of our board of directors are elected at one time;
● advance notice requirements for stockholder proposals and nominations;
● the inability of stockholders to act by written consent or to call special meetings;
● the requirement that at least 75% of the votes cast by all our stockholders approve the amendment or repeal
of certain provisions of our amended and restated bylaws or restated certificate of incorporation;
● the ability of our board of directors to make, alter, or repeal our amended and restated bylaws; and
● the ability of our board of directors to designate the terms of and issue new series of preferred stock without
stockholder approval, which could be used to institute a rights plan, or a poison pill, that would work to
dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been
approved by our board of directors.
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In addition, Section 203 of the General Corporation Law of the State of Delaware prohibits a publicly held
Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which
together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of three
years after the date of the transaction in which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner.
The existence of the foregoing provisions could deter potential acquirers of our company, thereby reducing the
likelihood that our stockholders could receive a premium for their shares of common stock in an acquisition.
Our restated certificate of incorporation designates the state courts in the State of Delaware or, if no state court located
within the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by our stockholders, which could discourage
lawsuits against the company and our directors and officers.
Our restated certificate of incorporation provides that, unless our board of directors otherwise determines, the state
courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court
for the District of Delaware, will be the sole and exclusive forum for any derivative action or proceeding brought on our
behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to our company
or our stockholders, any action asserting a claim against us or any of our directors or officers arising pursuant to any
provision of the General Corporation Law of the State of Delaware or our restated certificate of incorporation or amended
and restated bylaws, or any action asserting a claim against us or any of our directors or officers governed by the internal
affairs doctrine. This exclusive forum provision may limit the ability of our stockholders to bring a claim in a judicial
forum that such stockholders find favorable for disputes with us or our directors or officers, which may discourage such
lawsuits against us and our directors and officers. This exclusive forum provision would not apply to suits brought to
enforce a duty or liability created by the Exchange Act of 1934, which provides for exclusive jurisdiction of the federal
courts. It could apply, however, to a suit that falls within one or more of the categories enumerated in the exclusive forum
provision and asserts claims under the Securities Act of 1933, as amended (the “Securities Act”), inasmuch as Section 22
of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or
liability created by the Securities Act or the rules and regulations thereunder; provided, that with respect to claims under
the Securities Act, our stockholders will not be deemed to have waived our compliance with the federal securities laws and
the rules and regulations thereunder.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Properties.
We lease 59,783 square feet of office and laboratory space in Cambridge, Massachusetts under a lease that expires
in October 2023. We believe that our facilities are sufficient to meet our current needs and that suitable additional space
will be available as and when needed.
Item 3. Legal Proceedings.
From time to time, we may become involved in litigation or other legal proceedings relating to claims arising
from the ordinary course of business. There can be no assurance that any proceedings that result from these third-party
actions will be resolved in our favor. In addition, if they are not resolved in our favor, there can be no assurance that the
result will not have a material adverse effect on our business, financial condition, results of operations, or prospects.
Certain of our intellectual property rights, including ones licensed to us under our licensing agreements, are subject to, and
from time to time may be subject to, priority and validity disputes. For additional information regarding these matters, see
“Item 1A. Risk Factors—Risks Related to Our Intellectual Property.” Regardless of outcome, litigation or other legal
proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management
resources, and other factors.
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Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Market Information
Our common stock trades on the Nasdaq Global Select Market under the symbol “EDIT.” Trading of our common
stock commenced on February 3, 2016 in connection with our initial public offering. Prior to that time, there was no
established public trading market for our common stock.
Holders
As of February 14, 2021, we had approximately 18 holders of record of our common stock. This number does not
include beneficial owners whose shares were held in street name.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We currently intend to retain future
earnings to fund the development and growth of our business. We do not expect to pay any cash dividends in the
foreseeable future. In addition, the terms of any future debt agreements that we may enter into may preclude us from
paying dividends without the lenders’ consent or at all.
Performance Graph
The following performance graph and related information shall not be deemed to be “soliciting material” or to be
“filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or otherwise subject to the liabilities under that Section, nor shall such information be incorporated by reference into any
future filing under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), except to the extent
that we specifically incorporate it by reference into such filing.
The following graph compares the performance of our common stock to The Nasdaq Composite Index and to The
Nasdaq Biotechnology Index from February 3, 2016 (the first date on which shares of our common stock were publicly
traded) through December 31, 2020. The comparison assumes $100 was invested after the market closed on February 3,
2016 in our common stock and in each of the foregoing indices, and it assumes reinvestment of dividends, if any. The stock
price performance included in this graph is not necessarily indicative of future stock price performance.
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Recent Sales of Unregistered Securities
On November 9, 2020, we granted our Chief Medical Officer an option to purchase 120,000 shares of our
common stock and a restricted stock unit award of 20,000 shares as an inducement to employment in accordance with
Nasdaq Listing Rule 5635(c)(4). No underwriters were involved in the foregoing issuance of securities. The securities were
issued pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended, relating to transactions by an issuer not
involving any public offering. The recipient either received adequate information about us or had access, through other
relationships, to such information.
The stock option is scheduled to become exercisable as to 25% of the shares underlying the option on the first
anniversary of the date of grant, and as to an additional 2.0833% of the shares underlying the option at the end of each
successive month following such date, subject to the recipient’s continued service. The option has an exercise price of
$30.41 per share. The restricted stock unit award is scheduled to vest as to one-fourth of the shares on each anniversary of
the date of grant until the fourth anniversary of the date of grant, subject to the recipient’s continued service.
On January 22, 2021, we issued an aggregate of 303,599 shares of common stock to The Broad Institute, Inc.
(“Broad”) in satisfaction of payment obligations in an aggregate amount of $27.5 million to Broad under the Cpf1 License
Agreement and the Sponsored Research Agreement. No underwriters were involved in the foregoing issuance of securities.
The securities were issued pursuant to Section 4(a)(2) under the Securities Act, relating to transactions by an issuer not
involving any public offering. Prior to receiving the shares, Broad represented to us that it was acquiring the shares for its
own account for investment purposes, that it had received from us and our management all of the information that it
considered appropriate to evaluate whether to accept the shares, that it was capable of evaluating and understanding the
risks of the investment, and that it was an accredited investor as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act.
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Purchases of Equity Securities by the Issuer and Affiliates Purchasers
Neither we nor any affiliated purchaser or anyone acting on behalf of us or an affiliated purchaser made any
purchases of shares of our common stock during the fourth quarter of 2020.
Item 6. Selected Consolidated Financial Data.
You should read the following selected consolidated financial data together with our consolidated financial
statements and accompanying notes appearing elsewhere in this Annual Report on Form 10-K and the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” section of this Annual Report on Form 10-K.
The following selected consolidated financial data are derived from our audited consolidated financial statements. Our
historical results for any prior period are not necessarily indicative of the results that may be expected in any future period.
Our consolidated statements of operations are summarized as follows (in thousands, except share and per share amounts):
Consolidated Statements of Operations Data:
Collaboration revenue
Operating expenses:
Research and development
General and administrative
Total operating expenses
Operating loss
Other income (expense), net
Interest income, net
Total other income, net
$
Net loss and comprehensive loss
Reconciliation of net loss to net loss attributable
to common stockholders:
Net loss
Accretion of redeemable convertible preferred
stock to redemption value (1)
Net loss attributable to common stockholders (1) $
Net loss per share attributable to common
stockholders, basic and diluted
Weighted-average common shares outstanding,
basic and diluted (1)
$
$
2020
2019
Year Ended
December 31,
2018
2017
2016
$
90,732 $
20,531 $
31,937 $
13,728 $
6,053
157,996
67,576
225,572
(134,840)
16,259
2,605
18,864
(115,976)$
96,898
64,555
161,453
(140,922)
(137)
7,313
7,176
(133,746)$
90,654
55,010
145,664
(113,727)
328
3,445
3,773
(109,954) $
83,159
50,502
133,661
(119,933)
587
-978
(391)
(120,324)$
56,979
46,262
103,241
(97,188)
(57)
62
5
(97,183)
(115,976)$
(133,746)$
(109,954) $
(120,324)$
(97,183)
—
(115,976)$
—
(133,746)$
—
—
(109,954) $
(120,324)$
(47)
(97,230)
(1.98)$
(2.68)$
(2.33) $
(2.98)$
(3.02)
58,609,389 49,983,329
47,097,735
40,323,631
32,219,717
(1)
See Note 15 to our consolidated financial statements for further details on the calculation of net loss per share,
basic and diluted, attributable to common stockholders and the weighted-average number of shares used in the
computation of the per share amounts.
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Our consolidated balance sheets are summarized as follows (in thousands, except share and per share amounts):
Consolidated Balance Sheet Data:
Cash, cash equivalents, and marketable securities
Working capital
Total assets
Deferred revenue, net of current portion
Construction financing lease obligation, net of
current portion
Total stockholders’ equity
2020
2019
December 31,
2018
2017
2016
$
511,774 $ 457,140 $ 368,955
338,876
403,881
360,879
420,386
508,885
572,602
115,614
163,207
73,984
$ 329,139
295,492
373,260
94,725
$ 185,323
154,100
229,182
26,000
—
393,586
—
262,437
32,417
236,162
33,431
208,080
35,096
134,607
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together
with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.
Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on
Form 10-K contains forward-looking statements that involve substantial risks and uncertainties. The words “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “would” and similar expressions are
intended to identify forward-looking statements, although not all forward-looking statements contain these identifying
words. There are a number of important risks and uncertainties that could cause our actual results to differ materially from
those indicated by forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed
in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual
results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking
statements we make. We have included important factors in the cautionary statements included in this Annual Report on
Form 10-K, particularly in the section entitled “Risk Factors” in Part I, Item 1A that could cause actual results or events
to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the
potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.
You should read this Annual Report on Form 10-K and the documents that we have filed as exhibits to this Annual
Report on Form 10-K completely and with the understanding that our actual future results may be materially different from
what we expect. The forward-looking statements contained in this Annual Report on Form 10-K are made as of the date of
this Annual Report on Form 10-K,and we do not assume any obligation to update any forward-looking statements, whether
as a result of new information, future events or otherwise, except as required by applicable law.
Overview
We are a leading, clinical stage gene editing company dedicated to developing potentially transformative gene-
editing medicines to treat a broad range of serious diseases. We have developed a proprietary gene editing platform based
on CRISPR technology and we continue to expand its capabilities. Our product development strategy is to target diseases
of high unmet need where we aim to make differentiated, transformational medicines using our gene editing platform. We
are advancing both in vivo gene editing medicines, in which the medicine is injected or infused into the patient to edit the
cells inside their body, and ex vivo gene edited cell medicines, in which cells are edited with our technology and then
administered to the patient. While our discovery efforts have ranged across several diseases and therapeutic areas, the two
areas where our programs are more mature are our in vivo medicines to treat ocular diseases and ex vivo gene edited cell
medicines to treat hemoglobinopathies and cancer.
In ocular diseases, our most advanced program is designed to address a specific genetic form of retinal
degeneration called Leber congenital amaurosis 10 (“LCA10”), a disease for which we are not aware of any available
therapies and only one other potential treatment is in clinical trials in the United States and Europe. In mid-2019, we
initiated our Phase 1/2 BRILLIANCE clinical trial for EDIT-101, an experimental gene-editing medicine to treat LCA10.
We plan to enroll approximately 18 patients in the United States and Europe in up to five cohorts. We completed dosing of
the first cohort, the adult low-dose cohort, in 2020. Due to an absence of severe adverse events and dose limited toxicity in
adults treated in the first cohort, the inclusion criteria of the protocol was modified to allow inclusion of subjects with
better than light perception vision only. Although we experienced slowed enrollment in 2020 for subsequent cohorts due to
the ongoing impact of the COVID-19 pandemic, in the first quarter of 2021 we initiated dosing of the second cohort, the
adult mid-dose cohort. We expect to announce initial clinical data in 2021.
In May 2015, we entered into a collaboration with Juno Therapeutics, Inc., a wholly-owned subsidiary of Bristol-
Myers Squibb Company (“Juno Therapeutics”), a leader in the emerging field of immuno-oncology, to develop novel
engineered alpha-beta T cell therapies for cancer and autoimmune diseases, which was amended and restated in each of
May 2018 and November 2019, at which time we also entered into a related license agreement with Juno Therapeutics,
which we collectively refer to as our collaboration with them.
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In March 2017, we entered into a strategic alliance and option agreement with Allergan Pharmaceuticals
International Limited (together with its affiliates, “Allergan”) to discover, develop, and commercialize new gene editing
medicines for a range of ocular disorders. In July 2018, Allergan exercised its option to develop and commercialize EDIT-
101 and paid us $15.0 million in connection with such exercise (the “EDIT-101 Option Exercise Payment”). We and
Allergan subsequently entered into a co-development and commercialization agreement under which we agreed to co-
develop and equally split profits and losses for EDIT-101 in the United States. In December 2018, we also received a $25.0
million payment from Allergan in connection with the acceptance of the IND for EDIT-101 (the “EDIT-101 Milestone
Payment”). In August 2020, we and Allergan terminated the strategic alliance and option agreement and the co-
development and commercialization agreement, and we assumed full rights to EDIT-101 and responsibility for conducting
the clinical trial. In connection with such termination, we and Allergan entered into a termination agreement, pursuant to
which we made a one-time aggregate payment of $20.0 million to Allergan during the second half of 2020.
Since our inception in September 2013, our operations have focused on organizing and staffing our company,
business planning, raising capital, establishing our intellectual property portfolio, assembling our core capabilities in gene
editing, seeking to identify potential product candidates, and undertaking preclinical studies. Except for EDIT-101 and
EDIT-301, all of our research programs are still in the preclinical or research stage of development and the risk of failure of
all of our research programs is high. We have not generated any revenue from product sales. We have primarily financed
our operations through various equity financings and payments received under our research collaboration with Juno
Therapeutics and our strategic alliance with Allergan. From inception through December 31, 2020, we raised an aggregate
of $1,104.2 million to fund our operations.
Since inception, we have incurred significant operating losses. Our net losses were $116.0 million, $133.7 million,
and $110.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, we had
an accumulated deficit of $665.2 million. We expect to continue to incur significant expenses and operating losses for the
foreseeable future. Our net losses may fluctuate significantly from quarter to quarter and from year to year. We anticipate
that our expenses will increase substantially as we continue our current research programs and our preclinical development
activities; progress the clinical development of EDIT-101 and EDIT-301 for the treatment of sickle cell disease; seek to
identify additional research programs and additional product candidates; initiate preclinical testing and clinical trials for
other product candidates we identify and develop; maintain, expand, and protect our intellectual property portfolio,
including reimbursing our licensors for such expenses related to the intellectual property that we in-license from such
licensors; further develop our genome editing platform; hire additional clinical, quality control, and scientific personnel;
and incur additional costs associated with operating as a public company. We do not expect to be profitable for the year
ending December 31, 2021 or the foreseeable future.
Although we did not experience any significant impact on our financial condition, results of operations or
liquidity due to the ongoing COVID-19 pandemic during the year ended December 31, 2020, we did experience slowed
enrollment in the EDIT-101 clinical trial as a result of the COVID-19 pandemic. The ultimate impact of the COVID-19
pandemic is highly uncertain and we do not yet know the full extent of potential delays or impacts on our business, our
ability to continue to raise additional capital, the EDIT-101 or EDIT-301 clinical trials, ongoing preclinical activities, or the
global economy as a whole. In March 2020, we implemented a work from home policy, and restricted on-site activities at
our facilities in Massachusetts and Colorado to certain manufacturing, laboratory and related support activities in light of
the COVID-19 pandemic. Under our return to onsite work plans, we have resumed manufacturing, laboratory and related
support activities at our facilities in Massachusetts and Colorado using shifts and other capacity-limiting measures to
comply with social distancing guidelines. As such, it is uncertain as to the full magnitude that the pandemic will have
directly or indirectly on our financial condition, liquidity and future results of operations.
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Financial Operations Overview
Revenue
To date, we have not generated any revenue from product sales and we do not expect to generate any revenue
from product sales for the foreseeable future. In connection with our collaboration with Juno Therapeutics, we have
received an aggregate of $120.5 million in payments, which have primarily consisted of the initial upfront and amendment
payments, development milestone payments and research funding support. We no longer receive research funding support.
As of December 31, 2020, we recorded $90.7 million of deferred revenue, of which $73.7 million is classified as long-term
on our consolidated balance sheet. During the year ended December 31, 2020, we recognized $5.7 million of previously
deferred revenue related to Juno Therapeutics. Under this collaboration, we will recognize revenue upon delivery of option
packages to Juno Therapeutics. We expect that our revenue will fluctuate from quarter-to-quarter and year-to-year as a
result of the timing of when we deliver such option packages.
In connection with our strategic alliance with Allergan, we received an aggregate of $130.0 million in payments,
which consisted of the initial upfront payment, an option exercise payment and a milestone payment. Prior to the
termination of our agreements with Allergan, certain of these payments were deferred and were being recognized over the
remaining contract term using the proportional performance method. During the third quarter of 2020, as a result of the
termination of our agreements with Allergan, we recognized $63.2 million of previously deferred revenue related to
Allergan.
For additional information about our revenue recognition policy related to the Juno Therapeutics collaboration or
the Allergan strategic alliance, see “—Critical Accounting Policies and Estimates—Revenue Recognition” included in our
Annual Report.
For the foreseeable future we expect substantially all of our revenue will be generated from our collaboration with
Juno Therapeutics, and any other collaborations or agreements we may enter into.
Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research and development
activities, including our drug discovery efforts and preclinical studies under our research programs, which include:
● employee-related expenses including salaries, benefits, and stock-based compensation expense;
● costs of funding research performed by third parties that conduct research and development and preclinical
activities on our behalf;
● costs of purchasing lab supplies and non-capital equipment used in our preclinical activities and in
manufacturing preclinical study materials;
● consultant fees;
● facility costs including rent, depreciation, and maintenance expenses; and
● fees for acquiring and maintaining licenses under our third-party licensing agreements, including any
sublicensing or success payments made to our licensors.
Research and development costs are expensed as incurred. At this time, we cannot reasonably estimate or know
the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of any product
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candidates we may identify and develop. This is due to the numerous risks and uncertainties associated with developing
such product candidates, including the uncertainty of:
● successful completion of preclinical studies, IND-enabling studies and natural history studies;
● successful enrollment in, and completion of, clinical trials;
● receipt of marketing approvals from applicable regulatory authorities;
● establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
● obtaining and maintaining patent and trade secret protection and non-patent exclusivity;
● launching commercial sales of a product, if and when approved, whether alone or in collaboration with
others;
● acceptance of a product, if and when approved, by patients, the medical community, and third-party payors;
● effectively competing with other therapies and treatment options;
● a continued acceptable safety profile following approval;
● enforcing and defending intellectual property and proprietary rights and claims; and
● achieving desirable medicinal properties for the intended indications.
A change in the outcome of any of these variables with respect to the development of any product candidates we
develop would significantly change the costs, timing, and viability associated with the development of that product
candidate.
Research and development activities are central to our business model. We expect research and development costs
to increase significantly for the foreseeable future as our development programs progress, including as we progress the
clinical development of EDIT-101 and EDIT-301 as well as supporting preclinical studies for our other research programs.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based
compensation for personnel in executive, finance, investor relations, business development, legal, corporate affairs,
information technology, facilities and human resource functions. Other significant costs include corporate facility costs not
otherwise included in research and development expenses, legal fees related to intellectual property and corporate matters,
and fees for accounting and consulting services.
We anticipate that our general and administrative expenses will increase in the future to support continued
research and development activities and potential commercialization of any product candidates we identify and develop.
These increases will include increased costs related to the hiring of additional personnel and fees to outside consultants. We
also anticipate increased expenses related to reimbursement of third-party patent-related expenses and expenses associated
with operating as a public company, including costs for audit, legal, regulatory, and tax-related services, director and officer
insurance premiums, and investor relations costs. With respect to reimbursement of third-party intellectual property-related
expenses specifically, given the ongoing nature of the opposition and interference proceedings involving the patents
licensed to us under our license agreement with The Broad Institute, Inc. (“Broad”)
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and the President and Fellows of Harvard College (“Harvard”), we anticipate general and administrative expenses will
continue to be significant.
Other Income (Expense), Net
For the year ended December 31, 2020, other income (expense), net consisted primarily of changes in the fair
value of equity securities, interest income and accretion of discounts associated with other marketable securities.
For the year ended December 31, 2019, other income (expense), net consisted primarily of interest income and
accretion of discounts associated with marketable securities.
For the year ended December 31, 2018, other income (expense), net consisted primarily of interest income,
accretion of discounts associated with marketable securities, and rental income from our former subtenant, partially offset
by interest expense on our construction financing lease obligation.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our
consolidated financial statements, which have been prepared in accordance with United States generally accepted
accounting principles. The preparation of our consolidated financial statements requires us to make judgments and
estimates that affect the reported amounts of assets, liabilities, revenues, and expenses, and the disclosure of contingent
assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends
and events, and various other factors that we believe to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and
estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates, if any,
will be reflected in the consolidated financial statements prospectively from the date of change in estimates.
While our significant accounting policies are described in more detail in the notes to our consolidated financial
statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policy used in
the preparation of our consolidated financial statements requires the most significant judgments and estimates.
Revenue Recognition
We recognize revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”), Topic 606, Revenue Recognition (“ASC 606”). Accordingly, we recognize revenue following the
five step model prescribed under Accounting Standards Updates No. 2014-09, Revenue from Contracts with Customers: (i)
identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction
price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or
as) we satisfy the performance obligation. We only apply the five-step model to contracts when it is probable that we will
collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract
inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised
within each contract and determine those that are performance obligations, and whether each promised good or service is
distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance
obligation when (or as) the performance obligation is satisfied. As part of the accounting for these arrangements, we must
develop assumptions that require judgment to determine the standalone selling price for each performance obligation
identified in the contract. A significant portion of revenue recognized from our strategic alliance with Allergan, prior to
termination, was related to research services performed for each clinical development program whereby revenue was
recognized as the underlying services were performed using a proportional performance model. Prior to the termination of
the arrangement with Allergan, we measured proportional performance based on full time employee hours incurred relative
to projected full time employee hours to complete the research services for each clinical development program. We
evaluated the measure of progress each reporting period and, if necessary, adjusted the measure of performance and related
revenue recognition.
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Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in our
consolidated balance sheets.
Accrued research and development expenses
As part of the process of preparing our financial statements, we are required to estimate our accrued expenses. This
process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that
have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the
service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers
invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our
accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at
that time. Examples of estimated accrued research and development expenses include fees paid to:
● CROs in connection with clinical studies;
● vendors in connection with preclinical development activities; and
● vendors related to development, manufacturing and distribution of clinical trial materials.
We base our expenses related to clinical studies on our estimates of the services received and efforts expended
pursuant to contracts with multiple CROs that conduct and manage clinical studies on our behalf. The financial terms of
these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There
may be instances in which payments made to our vendors will exceed the level of services provided and result in a
prepayment of the clinical expense. Payments under some of these contracts depend on factors such as the successful
enrollment of subjects and the completion of clinical study milestones. In accruing service fees, we estimate the time
period over which services will be performed and the level of effort to be expended in each period and adjust accordingly.
Results of Operations
Comparison of Years ended December 31, 2020 and 2019
The following table summarizes our results of operations for the years ended December 31, 2020 and 2019,
together with the changes in those items in dollars (in thousands) and the respective percentages of change:
Collaboration and other research and development
revenues
Operating expenses:
Research and development
General and administrative
Total operating expenses
Other income, net
Other income (expense), net
Interest income, net
Total other income, net
Net loss
Year Ended
December 31,
2020
2019
Dollar Change Percentage Change
$
90,732
$
20,531
$
70,201
n/m
157,996
67,576
225,572
16,259
2,605
18,864
96,898
64,555
161,453
(137)
7,313
7,176
$ (115,976) $ (133,746) $
61,098
3,021
64,119
16,396
(4,708)
11,688
17,770
63 %
5 %
40 %
n/m
(64) %
n/m
(13) %
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For our results of operations, we have included the respective percentage of changes, unless greater than 100% or
less than (100)%, in which case we have denoted such changes as not meaningful (n/m).
Collaboration and Other Research and Development Revenues
Collaboration and other research and development revenues increased by $70.2 million, to $90.7 million for the
year ended December 31, 2020 from $20.5 million for the year ended December 31, 2019. This increase was primarily
attributable to a $57.1 million increase in the revenue recognized as a result of the termination of our strategic alliance with
Allergan, a $5.1 million increase in revenue recognized pursuant to our collaboration with Juno Therapeutics, and a $8.0
million increase in revenue recognized in connection with other out-license agreements that are individually insignificant.
Research and Development Expenses
Research and development expenses increased by $61.1 million, to $158.0 million for the year ended December
31, 2020 from $96.9 million for the year ended December 31, 2019. The following table summarizes our research and
development expenses for the years ended December 31, 2020 and December 31, 2019, together with the changes in those
items in dollars (in thousands) and the respective percentages of change:
External research and development expenses
Employee related expenses
Facility expenses
Stock-based compensation expenses
Sublicense and license fees
Other expenses
Total research and development expenses
$
$
Year Ended
December 31,
2020
63,807
32,349
13,372
11,580
32,888
4,000
157,996
$
$
2019
33,242
24,249
9,131
13,538
11,731
5,007
96,898
$
Dollar Change
30,565
8,100
4,241
(1,958)
21,157
(1,007)
61,098
$
Percentage Change
92 %
33 %
46 %
(14) %
n/m
(20) %
63 %
The increase in research and development expenses for the year ended December 31, 2020 compared to the year
ended December 31, 2019 was primarily attributable to:
● approximately $30.6 million in increased external research and development expenses due to increased
research activity, mostly relating to external research and development costs that we expect will increase
further as we progress the clinical development of EDIT-101 and EDIT-301 and further advance our current
research programs and our preclinical development activities;
● approximately $27.5 million in increased sublicense and license fees resulting from success payments that
were triggered during the fourth quarter of 2020 in connection to the Cpf1 license agreement and the
sponsored research agreement with Broad;
● approximately $8.1 million in increased employee related expenses due to an increase in the size of our
workforce; and
● approximately $4.2 million in increased facility and other related expenses due to increased office space and
increased professional service expenses.
These increases were partially offset by the following decreases in research and development expenses:
● approximately $6.3 million in decreased sublicense and license expenses resulting from sublicense expense
recorded during the fourth quarter of 2019 in connection with receiving $70.0 million related to our amended
and restated collaboration agreement with Juno Therapeutics compared to sublicense expense
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recorded during 2020 in connection with receiving $13.0 million related to upfront and milestone payments
for our collaboration agreement with Juno and our other individually insignificant out-license agreements;
● approximately $2.0 million in decreased stock-based compensation expenses resulting from forfeitures; and
● approximately $1.0 million in decreased other expenses.
General and Administrative Expenses
General and administrative expenses increased by approximately $3.0 million, to $67.6 million for the year ended
December 31, 2020 from $64.6 million for the year ended December 31, 2019. The following table summarizes our general
and administrative expenses for the years ended December 31, 2020 and December 31, 2019, together with the changes in
those items in dollars (in thousands) and the respective percentages of change:
Intellectual property and patent related fees
Employee related expenses
Professional service expenses
Stock-based compensation expenses
Facility and other expenses
Total general and administrative expenses
Year Ended
December 31,
2020
18,654
15,758
13,666
11,576
7,922
67,576
$
$
$
$
2019
18,103
12,781
14,462
13,705
5,504
64,555
$
Dollar Change
551
2,977
(796)
(2,129)
2,418
3,021
$
Percentage Change
3 %
23 %
(6) %
(16) %
44 %
5 %
The increase in general and administrative expenses for the year ended December 31, 2020 compared to the year
ended December 31, 2019 was primarily attributable to:
● approximately $3.0 million in increased employee related expenses primarily due to an increase in the size of
our workforce and the timing of hiring key executives;
● approximately $2.4 million in increased facility and other expenses resulting from additional office space
leased in 2020; and
● approximately $0.6 million in intellectual property and patent related fees.
These increases were partially offset by approximately $2.1 million in decreased stock-based compensation
expenses resulting from a modification that occurred in 2019 with respect to which there was no similar activity in 2020
and approximately $0.8 million in decreased professional service expenses.
Total Other Income, Net
For the year ended December 31, 2020, total other income, net was $18.9 million, which was primarily
attributable to the realized gains related to the sale of corporate equity securities, interest income and accretion of discounts
associated with marketable securities.
For the year ended December 31, 2019, total other income, net was $7.2 million, which was primarily attributable
to interest income and accretion of discounts associated with marketable securities.
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Comparison of Years Ended December 31, 2019 and 2018
The following table summarizes our results of operations for the years ended December 31, 2019 and 2018,
together with the changes in those items in dollars (in thousands) and the respective percentages of change:
Collaboration revenue
Operating expenses:
Research and development
General and administrative
Total operating expenses
Other expense, net:
Year Ended
December 31,
2019
20,531
$
2018
31,937 $
Dollar Change
(11,406)
$
Percentage Change
(36) %
96,898
64,555
161,453
90,654
55,010
145,664
6,244
9,545
15,789
7 %
17 %
11 %
Total other expense, net
Other expense, net
Interest expense
n/m
(137)
n/m
7,313
90 %
7,176
(133,746)
22 %
For our results of operations, we have included the respective percentage of changes, unless greater than 100% or
328
3,445
3,773
(109,954) $
(465)
3,868
3,403
(23,792)
$
$
Net loss
less than (100)%, in which case we have denoted such changes as not meaningful (n/m).
Collaboration and Other Research and Development Revenues
Collaboration and other research and development revenues decreased by $11.4 million, to $20.5 million for the
year ended December 31, 2019 from $31.9 million for the year ended December 31, 2018. This decrease was primarily
attributable to a $7.9 million decrease in revenue recognized pursuant to our strategic alliance with Allergan, $3.9 million
in revenue recognized during the second quarter of 2018 related to a one time upfront payment in connection with an out-
license arrangement and a $0.2 million decrease in revenue recognized pursuant to our collaboration with Juno
Therapeutics.
Research and Development Expenses
Research and development expenses increased by $6.2 million, to $96.9 million for the year ended December 31,
2019 from $90.7 million for the year ended December 31, 2018. The following table summarizes our research and
development expenses for the years ended December 31, 2019 and December 31, 2018, together with the changes in those
items in dollars (in thousands) and the respective percentages of change:
External research and development expenses
Employee and contractor related expenses
Stock-based compensation expenses
Sublicense and license fees
Facility expenses
Other expenses
Success payment expenses
Total research and development expenses
$
$
Year Ended
December 31,
2019
2018
Dollar Change
Percentage Change
25,466
19,771
14,734
8,707
6,058
3,418
12,500
90,654
$
$
7,776 $
4,478
(1,196)
3,024
3,073
1,589
(12,500)
6,244 $
31 %
23 %
(8) %
35 %
51 %
46 %
n/m
7 %
$
$
33,242
24,249
13,538
11,731
9,131
5,007
—
96,898
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The increase in research and development expenses for the year ended December 31, 2019 compared to the year
ended December 31, 2018 was primarily attributable to:
● approximately $7.8 million in increased external research and development expenses due to increased
research activity, mostly relating to external research and development costs that we expect will increase
further as we continue to progress the clinical development of EDIT-101;
● approximately $4.5 million in increased employee related expenses due to an increase in the size of our
workforce;
● approximately $4.7 million in increased facility and other related expenses due to increased office and
professional service expenses; and
● approximately $3.0 million in increased licensing and sublicensing payment expenses, primarily due to
sublicense expense recorded during the fourth quarter of 2019 in connection with receiving $70.0 million
related to our amended and restated collaboration agreement with Juno Therapeutics, partially offset by
sublicense fees owed to certain of our licensors in 2018 in connection with receiving milestone and other
payments from our licensees.
These increases were partially offset by the following decreases in research and development expenses:
● approximately $12.5 million in decreased success payment expenses resulting from notes payable that were
issued to Broad and settled during the second quarter of 2018 in connection with us entering into a sponsored
research agreement with Broad; and
● approximately $1.2 million in decreased stock-based compensation expenses mostly due to a decrease in
nonemployee stock option expense.
General and Administrative Expenses
General and administrative expenses increased by approximately $9.5 million, to $64.6 million for the year ended
December 31, 2019 from $55.0 million for the year ended December 31, 2018. The following table summarizes our general
and administrative expenses for the years ended December 31, 2019 and December 31, 2018, together with the changes in
those items in dollars (in thousands) and the respective percentages of change:
Intellectual property and patent related fees
Professional service expenses
Stock-based compensation expenses
Employee related expenses
Other expenses
Total general and administrative expenses
Year Ended
December 31,
2019
18,103
14,462
13,705
12,781
5,504
64,555
$
$
$
$
2018
Dollar Change
Percentage Change
20,442
6,875
11,864
11,502
4,327
55,010
$
$
(2,339)
7,587
1,841
1,279
1,177
9,545
(11) %
n/m
16 %
11 %
27 %
17 %
The increase in general and administrative expenses for the year ended December 31, 2019 compared to the
year ended December 31, 2018 was primarily attributable to:
● approximately $7.6 million in increased professional services expenses primarily related to an increase in our
use of consulting services;
● approximately $1.8 million in increased stock-based compensation expenses due to an increase in employee
stock option expense and employee headcount;
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● approximately $1.3 million in increased employee related expenses due to an increase in the size of our
workforce; and
● approximately $1.2 million in increased other expenses including facility-related expenses.
These increases were partially offset by an approximate $2.3 million in decreased intellectual property and patent
related fees, including expenses associated with the prosecution and maintenance of patents and patent applications.
Other Income, Net
For the year ended December 31, 2019, other income, net was $7.2 million, which was primarily attributable to
interest income and accretion of discounts associated with marketable securities.
For the year ended December 31, 2018, other income, net was $3.8 million, which was primarily attributable to
interest income, accretion of discounts associated with marketable securities, and rental income from our former subtenant,
partially offset by interest expense on our construction financing lease obligation.
Liquidity and Capital Resources
Sources of Liquidity
In May 2020, we entered into a sales agreement with Cowen and Company, LLC (“Cowen”) under which we are
able from time to time to issue and sell shares of our common stock through Cowen for aggregate gross sales proceeds of
up to $150.0 million (the “ATM Facility”). We have not sold any shares of our common stock under this ATM Facility as
of the date of this Annual Report on Form 10-K. In June 2020, we completed a public offering in which we sold 6,900,000
shares of our common stock, inclusive of 900,000 shares of common stock sold by us pursuant to the full exercise of an
option granted to the underwriters in connection with the offering and received net proceeds of approximately $203.7
million. As of December 31, 2020, we have raised an aggregate of $648.7 million in net proceeds through the sale of shares
of our common stock in public offerings and at-the-market offerings. We also have funded our business from payments
received under our research collaboration with Juno Therapeutics, our strategic alliance with Allergan, which was
terminated in August 2020, and our license agreement with Beam Therapeutics, from which we received $20.0 million
from the sale of our shares of common stock in October 2020. As of December 31, 2020, we had cash, cash equivalents
and marketable securities of $511.8 million.
In January 2021, we completed a public offering in which we sold 3,500,000 shares of our common stock and
received net proceeds of approximately $216.9 million. In February 2021, the underwriters in the public offering exercised
their option to purchase an additional 525,000 shares, resulting in additional net proceeds to us of approximately $32.6
million.
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In addition to our existing cash, cash equivalents and marketable securities we are eligible to earn milestone and
other payments under our collaboration agreement with Juno Therapeutics. Our ability to earn the milestone payments and
the timing of earning these amounts are dependent upon the timing and outcome of our development, regulatory and
commercial activities and, as such, are uncertain at this time. As of December 31, 2020, our right to contingent payments
under our collaboration agreement with Juno Therapeutics is our only significant committed potential external source of
funds.
Cash Flows
The following table provides information regarding our cash flows for the years ended December 31, 2020, 2019
and 2018, respectively (in thousands):
Year Ended
December 31,
2019
2018
2020
Net cash (used in) provided by:
Operating activities
Investing activities
Financing activities
Net (decrease) increase in cash and cash equivalents
Net Cash Used in Operating Activities
$ (179,843) $ (40,669) $ (45,707)
(53,087)
86,940
$ (11,854)
12,252
131,824
$ (96,243) $ 103,407
(140,522)
224,122
The use of cash in all periods resulted primarily from our net losses adjusted for non-cash charges and changes in
components of working capital.
Net cash used in operating activities was approximately $179.8 million for the year ended December 31, 2020,
which primarily consisted of operating expenses that relate to our on-going preclinical and clinical activities, patent costs
and license fees, and increased costs as a result of staffing needs due to our expanding operations. These expenses were
partially offset by the recognition of deferred revenue relating to the Allergan termination and Celgene milestone payment.
Net cash used in operating activities was approximately $40.7 million for the year ended December 31, 2019.
During the year ended December 31, 2019, we received $70.0 million related to our amended and restated collaboration
agreement with Juno Therapeutics, which was partially recognized in revenue during the fourth quarter of 2019, partially
offset by revenue recognized related to our strategic alliance with Allergan. This amount was offset by operating expenses
that related to our on-going preclinical and clinical activities, sublicense expense, intellectual property costs and increased
employee related expenses due to an increase in the size of our workforce.
Net cash used in operating activities was approximately $45.7 million for the year ended December 31, 2018.
During the year ended December 31, 2018, we received $25.0 million related to the EDIT-101 Milestone Payment which
was partially recognized as revenue during the fourth quarter of 2018 and $15.0 million related to the EDIT-101 Option
Exercise Payment which was fully recognized as revenue during the third quarter of 2018, both related to our strategic
alliance with Allergan. We received $10.0 million related to our amended and restated collaboration agreement with Juno
Therapeutics which was partially recognized during 2018. Additionally, we issued $12.5 million in notes payable to Broad
and settled in shares of common stock during the second quarter of 2018 in connection with our entry into a sponsored
research agreement with Broad. This amount was offset by operating expenses that related to our on-going preclinical
activities, sublicensing and success payments, intellectual property costs and increased employee related expenses due to
an increase in the size of our workforce.
Net Cash (Used in) Provided by Investing Activities
Net cash used in investing activities was approximately $140.5 million for the year ended December 31, 2020,
primarily related to the costs to acquire marketable securities of $458.4 million and costs to acquire property, plant and
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equipment of $7.2 million, partially offset by proceeds from maturities of marketable securities of $305.0 million and
proceeds from the sale of corporate equity securities of $20.0 million.
Net cash provided by investing activities was approximately $12.3 million for the year ended December 31, 2019,
primarily related to proceeds from maturities of marketable securities of $360.5 million, partially offset by costs to acquire
marketable securities of $342.2 million and costs to acquire property plant and equipment of $6.2 million.
Net cash used in investing activities was approximately $53.1 million for the year ended December 31, 2018,
primarily related to costs to acquire marketable securities of $459.4 million and costs to acquire property plant and
equipment of $4.8 million, partially offset by proceeds from maturities of marketable securities of $411.0 million.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was approximately $224.1 million for the year ended December 31,
2020, primarily related to $203.7 million in net proceeds received from offering of common stock, and $19.5 million in
proceeds received from exercises of options for our common stock.
Net cash provided by financing activities was approximately $131.8 million for the year ended December 31,
2019, primarily related to $116.3 million in proceeds received from at-the-market offerings of our common stock, net of
issuance costs that were paid as of December 31, 2019, $14.9 million in proceeds from exercises of options for our
common stock and $0.6 million from issuances of our common stock under equity benefit plans.
Net cash provided by financing activities was approximately $86.9 million for the year ended December 31, 2018,
primarily related to $76.8 million in proceeds received from at-the-market offerings of our common stock, net of issuance
costs that were paid as of December 31, 2018, $10.3 million in proceeds from exercises of options for our common stock
and $0.7 million from issuances of our common stock under equity benefit plans, partially offset by payments on our
construction financing lease obligation of $0.9 million.
Funding Requirements
We expect our expenses to increase in connection with our ongoing activities, particularly as we progress the
clinical development of EDIT-101 and EDIT-301; further advance our current research programs and our preclinical
development activities; seek to identify product candidates and additional research programs; initiate preclinical testing and
clinical trials for other product candidates we identify and develop; maintain, expand, and protect our intellectual property
portfolio, including reimbursing our licensors for expenses related to the intellectual property that we in-license from such
licensors; hire additional clinical, quality control, and scientific personnel; and incur costs associated with operating as a
public company. In addition, if we obtain marketing approval for any product candidate that we identify and develop, we
expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution
to the extent that such sales, marketing, and distribution are not the responsibility of a collaborator. We do not expect to
generate significant recurring revenue unless and until we obtain regulatory approval for and commercialize a product
candidate. Furthermore, since 2016 we have incurred, and in future years we expect to continue to incur, significant costs
associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in
connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would
be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts.
We expect that our existing cash, cash equivalents and marketable securities at December 31, 2020 and
anticipated interest income will enable us to fund our operating expenses and capital expenditure requirements into 2023.
We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources
sooner than we currently expect. Our future capital requirements will depend on many factors, including: the scope,
progress, results, and costs of drug discovery, preclinical development, laboratory testing, and clinical or natural history
study trials for the product candidates we develop;
● the scope, progress, results, and costs of drug discovery, preclinical development, laboratory testing, and
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clinical or natural history study trials for the product candidates we develop;
● the costs of progressing the clinical development of EDIT-101 to treat LCA10;
● the costs of progressing the clinical development of EDIT-301 to treat sickle cell disease;
● the costs of IND-enabling studies for EDIT-301 to treat beta-thalassemia;
● the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual
property and proprietary rights, and defending intellectual property-related claims;
● the costs, timing, and outcome of regulatory review of the product candidates we develop;
● the costs of future activities, including product sales, medical affairs, marketing, manufacturing, and
distribution, for any product candidates for which we receive regulatory approval;
● the success of our collaboration with Juno Therapeutics;
● whether Juno Therapeutics exercises any of its options to extend the research program term and/or to certain
of the research programs under our collaboration;
● our ability to establish and maintain additional collaborations on favorable terms, if at all;
● the extent to which we acquire or in-license other medicines and technologies;
● the costs of reimbursing our licensors for the prosecution and maintenance of the patent rights in-licensed by
us; and
● the costs of operating as a public company.
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Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming,
expensive, and uncertain process that takes many years to complete, and we may never generate the necessary data or
results required to obtain marketing approval and achieve product sales. In addition, any product candidate that we identify
and develop, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from
sales of genomic medicines that we do not expect to be commercially available for many years, if at all. Accordingly, we
will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may
not be available to us on acceptable terms, or at all. Further, our ability to continue to raise additional capital may be
adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the
credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs
through a combination of equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’
ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that
adversely affect the rights of our stockholders. Debt financing, if available, may involve agreements that include covenants
limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or
declaring dividends.
If we raise funds through additional collaborations, strategic alliances, or licensing arrangements with third
parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or
product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds
through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product
development or future commercialization efforts or grant rights to develop and market product candidates that we would
otherwise prefer to develop and market ourselves.
Contractual Obligations
The following table summarizes our significant contractual obligations as of payment due date by period at
December 31, 2020 (in thousands):
Operating lease obligations (1)
Total
$
$
30,206
30,206
$
$
8,778
8,778
Total
Less Than
1 Year
1 to 3 Years
17,149
$
17,149
$
3 to 5 Years
$ 4,169
$ 4,169
$
$
More than
5 Years
110
110
(1)
Represents future minimum lease payments under our non-cancelable operating leases. The minimum lease
payments above exclude our share of the facility operating expenses and other costs that are reimbursable to the
landlord under the leases.
The table above does not include potential milestone and success fees, sublicense fees, royalty fees, licensing
maintenance fees, and reimbursement of patent maintenance costs that we may be required to pay under agreements we
have entered into with certain institutions to license intellectual property. Our agreements to license intellectual property
include potential milestone payments that are dependent upon the development of products using the intellectual property
licensed under the agreements and contingent upon the achievement of development or regulatory approval milestones, as
well as commercial milestones. We have not included such potential obligations in the table above because they are
contingent upon the occurrence of future events and the timing and likelihood of such potential obligations are not known
with certainty. For further information regarding these agreements, please see “Business—Our Collaborations and
Licensing Strategy.”
We enter into contracts in the normal course of business with contract research organizations and other vendors to
assist in the performance of our research and development activities and other services and products for operating
purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts and not
included in the table of contractual obligations and commitments.
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Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements,
as defined under applicable Securities and Exchange Commission rules.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk related to changes in interest rates. As of December 31, 2020, we had cash and cash
equivalents of $139.7 million, primarily held in money market mutual funds consisting of U.S. government-backed
securities, and marketable securities of $372.1 million, primarily consisting of U.S. government-backed securities,
corporate equity securities and corporate debt securities. Our primary exposure to market risk is interest rate sensitivity,
which is affected by changes in the general level of U.S. interest rates, particularly because our investments, including cash
equivalents, are in the form, or may be in the form of, money market funds or marketable securities and are or may be
invested in U.S. Treasury and U.S. government agency obligations. Due to the short-term maturities and low risk profiles
of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair
market value of our investments.
While we contract with certain vendors and institutions internationally, substantially all of our total liabilities as of
December 31, 2020 were denominated in the United States dollar and we believe that we do not have any material
exposure to foreign currency exchange rate risk.
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Item 8. Financial Statement and Other Supplementary Information.
EDITAS MEDICINE, INC.
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Loss
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
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120
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122
123
124
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Editas Medicine, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Editas Medicine, Inc. (the “Company”) as of
December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders’ equity ,
and cash flows for each of the three years in the period ended December 31, 2020 and the related notes (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S.
generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2020, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (2013 framework) and our report dated February 26, 2021 expressed an unqualified opinion
thereon.
Adoption of ASU No. 2016-02
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting
for leases in year ended December 31, 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842).
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts
or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing
separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
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Description of the
Matter
How We Addressed
the Matter in Our
Audit
Accrued Research and Development Expense
The Company’s accrual for research and development expenses totaled $10.2
million at December 31, 2020. As discussed in Note 2 to the consolidated
financial statements, the Company expenses research and development costs as
incurred. The Company’s determination of costs incurred to conduct research
and development on the Company’s product candidates, as well as the related
accrued expenses at each reporting period incorporates judgment and utilizes
various assumptions, including an evaluation of the information provided to the
Company by third parties on actual costs incurred but not yet billed, estimated
project timelines and patient enrollment. Payments for these activities are based
on the terms of the individual arrangements, which often differ from the pattern
of costs incurred.
Auditing the Company’s research and development accruals is especially
complex due to the judgments and estimations of the research and development
expenses. The Company uses judgment and estimation to estimate costs incurred
and not yet billed at each reporting period as a result of the volume of pre-
clinical and clinical trials and the related manufacturing activities, as well as the
extent of third-party vendors utilized. Additionally, due to the timing of
invoices received from third parties, actual amounts incurred are not always
known as of the audit report date.
We obtained an understanding of the Company’s process, evaluated and tested
the design and operating effectiveness of internal controls that address the risks
related to the completeness and valuation of accrued research and development
expenses.
To test the research and development accrual, our audit procedures included,
among others, testing the accuracy and completeness of the underlying data used
in the estimates and evaluating and testing the significant assumptions that are
used by management to estimate the accruals. To test the significant
assumptions, we inspected the contracts and any amendments to the contracts
with third-party service providers, corroborated the progress of pre-clinical and
clinical trials and other research and development projects with the Company’s
research and development personnel that oversee the clinical trials and the
related manufacturing activities, and obtained information received directly from
third parties, which included the third parties’ estimate of costs incurred to date.
We also tested subsequent invoicing received from third parties.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2015.
Boston, Massachusetts
February 26, 2021
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Editas Medicine, Inc.
Consolidated Balance Sheets
(amounts in thousands, except share and per share data)
December 31,
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable
Prepaid expenses and other current assets
Total current assets
Marketable securities
Property and equipment, net
Right-of-use assets
Restricted cash and other non-current assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued expenses
Deferred revenue, current
Operating lease liabilities
Other current liabilities
Total current liabilities
Operating lease liabilities, net of current portion
Deferred revenue, net of current portion
Other non-current liabilities
Total liabilities
Stockholders’ equity
Preferred stock, $0.0001 par value per share: 5,000,000 shares authorized; no shares
issued or outstanding
Common stock, $0.0001 par value per share: 195,000,000 shares authorized; 62,689,457
and 54,533,798 shares issued, and 62,563,457 and 54,355,798 shares outstanding at
December 31, 2020 and December 31, 2019, respectively
Additional paid-in capital
Accumulated other comprehensive (loss) income
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
$
$
$
139,682
262,428
6,048
10,929
419,087
109,664
14,020
25,128
4,703
572,602
6,408
24,046
20,943
6,811
—
58,208
19,324
73,984
27,500
179,016
—
6
1,058,823
(46)
(665,197)
393,586
572,602
$
$
$
$
238,183
218,957
418
6,286
463,844
—
10,887
28,761
5,393
508,885
5,843
22,120
23,514
5,804
2,682
59,963
23,277
163,207
1
246,448
—
5
811,546
107
(549,221)
262,437
508,885
The accompanying notes are an integral part of the consolidated financial statements.
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Editas Medicine, Inc.
Consolidated Statements of Operations
(amounts in thousands, except per share and share data)
Collaboration and other research and development revenues
Operating expenses:
Research and development
General and administrative
Total operating expenses
Operating loss
Other income (expense), net:
Other income (expense), net
Interest income, net
Total other income, net
Net Loss
Reconciliation of net loss to net loss attributable to common
stockholders:
Net loss
Net loss per share, basic and diluted
Weighted-average common shares outstanding, basic and
diluted
2020
90,732
$
Year Ended
December 31,
2019
20,531 $
$
2018
31,937
157,996
67,576
225,572
(134,840)
96,898
64,555
161,453
(140,922)
90,654
55,010
145,664
(113,727)
16,259
2,605
18,864
$ (115,976)
(137)
7,313
7,176
328
3,445
3,773
$ (133,746) $ (109,954)
$ (115,976)
(1.98)
$
$ (133,746) $ (109,954)
(2.33)
$
(2.68) $
58,609,389
49,983,329 47,097,735
The accompanying notes are an integral part of the consolidated financial statements.
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Editas Medicine, Inc.
Consolidated Statements of Comprehensive Loss
(amounts in thousands)
Net loss
Other comprehensive (loss) income:
Unrealized (loss) gain on marketable debt securities
Comprehensive loss
2020
(115,976)
(153)
(116,129)
$
$
$
$
Year Ended
December 31,
2019
(133,746)
2018
(109,954)
$
136
(133,610)
47
(109,907)
The accompanying notes are an integral part of the consolidated financial statements.
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Editas Medicine, Inc.
Consolidated Statements of Stockholders’ Equity
(amounts in thousands except share data)
Accumulated
Balance at December 31, 2017
Cumulative effect adjustment for adoption of new accounting
guidance
Issuance of common stock for repayment of notes payable
Issuance of common stock from at-the-market offering, net of
issuance costs of $0.1 million
Issuance of common stock from at-the-market offering, net of
issuance costs of $0.6 million
Issuance of common stock for asset purchase agreement
Exercise of stock options
Stock-based compensation expense
Purchase of common stock under benefits plans
Vesting of restricted common stock awards
Vesting of employee restricted common stock and common stock
subject to repurchase
Unrealized gain on marketable securities
Net loss
Balance at December 31, 2018
Cumulative effect adjustment for adoption of new accounting
guidance
Issuance of common stock from at-the-market offering, net of
issuance costs of $0.2 million
Exercise of stock options
Stock-based compensation expense
Purchase of common stock under benefits plans
Vesting of restricted common stock and awards
Unrealized gain on marketable securities
Net loss
Balance at December 31, 2019
Exercise of stock options
Vesting of restricted common stock awards
Purchase of common stock under benefit plan
Issuance of common stock from public offering,
net of issuance costs of $0.1 million
Stock-based compensation expense
Unrealized loss on marketable debt securities
Net loss
Balance at December 31, 2020
Common Stock
Shares
44,507,960
Amount
4
$
Additional
Paid-In
Capital
$
514,002
Other
Accumulated Comprehensive Stockholders’
Income (Loss)
(76)
Deficit
(305,850) $
208,080
Equity
Total
$
$
—
636,526
1,429,205
1,107,000
56,099
749,294
0
26,272
72,000
174,595
—
—
48,758,951
—
4,341,428
1,120,186
—
35,314
99,919
—
—
54,355,798
964,412
304,638
38,609
6,900,000
—
—
—
62,563,457
$
$
$
—
—
1
—
—
—
0
—
—
—
—
—
5
—
—
—
—
—
—
—
0
5
—
—
—
1
—
—
—
6
—
22,030
48,493
28,387
1,942
10,328
26,598
680
—
(474)
—
—
—
—
—
0
—
—
4
—
—
652,464
—
—
(109,954)
(416,278) $
$
—
803
116,356
14,863
27,243
620
—
—
—
811,546
19,500
—
896
203,725
23,156
—
—
1,058,823
—
—
—
—
—
—
(133,746) $
(549,221) $
—
—
—
—
—
—
(115,976)
(665,197) $
$
$
$
$
$
—
—
—
—
—
—
0
—
—
47
—
—
(29)
—
$
—
—
—
—
—
136
— $
$
107
—
—
—
—
—
(153)
—
(46)
$
(474)
22,030
48,494
28,387
1,942
10,328
26,598
680
—
4
47
(109,954)
236,162
803
116,356
14,863
27,243
620
—
136
(133,746)
262,437
19,500
—
896
203,726
23,156
(153)
(115,976)
393,586
The accompanying notes are an integral part of the consolidated financial statements.
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Editas Medicine, Inc.
Consolidated Statements of Cash Flows
(amounts in thousands)
Cash flow from operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense
Depreciation
Realized gain on corporate equity securities
Non-cash investment in equity securities
Other non-cash items, net
Changes in operating assets and liabilities:
Accounts receivable
Prepaid expenses and other current assets
Right-of-use assets
Other non-current assets
Accounts payable
Accrued expenses
Deferred revenue
Operating lease liabilities
Other current and non-current liabilities
Non-cash research and development expenses
Net cash used in operating activities
Cash flow from investing activities
Purchases of property and equipment
Proceeds from the sale of equipment
Purchases of marketable securities
Proceeds from maturities of marketable securities
Proceeds from sale of corporate equity securities
Net cash (used in) provided by investing activities
Cash flow from financing activities
Proceeds from offering of common stock, net of issuance costs
Proceeds from exercise of stock options
Payments on construction financing lease obligation
Issuance of common stock under benefit plans
Net cash provided by financing activities
Net increase (decrease) in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash, beginning of period
Cash, cash equivalents, and restricted cash, end of period
Supplemental disclosure of cash and non-cash activities:
Fixed asset additions included in accounts payable and accrued expenses
Cash paid in connection with operating lease liabilities
Offering costs included in accounts payable and accrued expenses
Right-of-use assets obtained in exchange of operating lease obligations
Reclassification of liability for common stock subject to repurchase
Issuance of common stock for repayment of notes payable
Issuance of common stock for asset acquisition
Year Ended
December 31,
2019
2018
2020
$ (115,976) $ (133,746) $ (109,954)
23,156
3,959
(16,366)
104
(5,630)
(4,643)
3,633
(719)
855
1,707
(91,794)
(2,946)
(2,683)
27,500
(179,843)
(7,162)
12
(458,404)
305,000
20,032
(140,522)
27,243
2,830
—
—
(2,928)
(388)
(495)
(9,300)
(15)
274
9,485
55,395
9,324
1,652
—
(40,669)
(6,167)
102
(342,183)
360,500
—
12,252
26,598
3,254
—
(3,667)
(3,268)
649
(3,410)
—
(92)
1,780
4,042
22,889
—
1,030
14,442
(45,707)
(4,754)
37
(459,370)
411,000
—
(53,087)
203,726
19,501
—
895
224,122
(96,243)
239,802
$ 143,559
116,341
14,863
—
620
131,824
103,407
136,395
$ 239,802
76,789
10,328
(857)
680
86,940
(11,854)
148,249
$ 136,395
$
$
656
9,760
—
—
—
—
—
$
728
5,970
15
19,461
—
—
—
659
—
92
—
4
22,030
1,942
The accompanying notes are an integral part of the consolidated financial statements.
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1. Nature of Business
Editas Medicine, Inc.
Notes to Consolidated Financial Statements
Editas Medicine, Inc. (the “Company”) is a leading, clinical stage genome editing company dedicated to
developing potentially transformative genomic medicines to treat a broad range of serious diseases. The Company was
incorporated in the state of Delaware in September 2013. Its principal offices are in Cambridge, Massachusetts.
Since its inception, the Company has devoted substantially all of its efforts to business planning, research and
development, recruiting management and technical staff, and raising capital. The Company has primarily financed its
operations through various equity financings, payments received under a research collaboration with Juno Therapeutics, a
wholly-owned subsidiary of the Bristol-Myers Squibb Company (“Juno Therapeutics”), and payments received under a
strategic alliance and option agreement with Allergan Pharmaceuticals International Limited (together with its affiliates,
“Allergan”).
The Company is subject to risks common to companies in the biotechnology industry, including but not limited to,
risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product
candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its
product candidates, dependence on key personnel, protection of proprietary technology, compliance with government
regulations, development by competitors of technological innovations and ability to transition from pilot-scale
manufacturing to large-scale production of products.
Liquidity
In May 2020, the Company entered into a sales agreement with Cowen and Company, LLC (“Cowen”), under
which the Company from time to time can issue and sell shares of its common stock through Cowen in at-the-market
offerings for aggregate gross sale proceeds of up to $150.0 million ( the “ATM Facility”). As of December 31, 2020, the
Company has not sold any shares of its common stock under the ATM Facility. In June 2020, the Company completed a
public offering whereby the Company sold 6,900,000 shares of its common stock, inclusive of 900,000 shares of common
stock sold by the Company pursuant to the full exercise of an option granted to the underwriters in connection with the
offering and received net proceeds of approximately $203.7 million. As of December 31, 2020, the Company has raised an
aggregate of $648.7 million in net proceeds through the sale of shares of its common stock in public offerings and at-the-
market offerings.
The Company has incurred annual net operating losses in every year since its inception. The Company has an
accumulated deficit of $665.2 million at December 31, 2020. The Company expects that its existing cash, cash equivalents
and marketable securities on December 31, 2020, anticipated interest income, and the proceeds of its subsequent public
offering described in Note 18, will enable it to fund its operating expenses and capital expenditure requirements for at least
36 months following the date of this Annual Report on Form 10-K. The Company will require substantial additional capital
to fund its operations. The Company has never generated any product revenue. There can be no assurance that the
Company will be able to obtain additional debt or equity financing or generate product revenue or revenues from
collaborative partners, on terms acceptable to the Company, on a timely basis or at all. The failure of the Company to
obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business,
results of operations, and financial condition.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Editas Medicine, Inc. and its wholly
owned subsidiary, Editas Securities Corporation, which is a Delaware subsidiary created to buy, sell and hold securities. All
intercompany transactions and balances have been eliminated.
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Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles
generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is
meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting
Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board
(“FASB”).
Reclassification
Certain prior period amounts have been reclassified for consistency with the current period presentation. These
reclassifications had no effect on previously reported results of operations.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying
notes. On an ongoing basis, the Company’s management evaluates its estimates, which include, but are not limited to,
estimates related to revenue recognition, accrued expenses, stock-based compensation expense, research and development
expenses and deferred tax valuation allowances. The Company bases its estimates on historical experience and other
market-specific or relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ
from those estimates or assumptions.
Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy for instruments
measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s
own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset
or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that
reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and
are developed based on the best information available in the circumstances.
ASC 820 identifies fair value as the exchange price representing the amount that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market
participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes
between the following:
● Level 1 – Quoted market prices in active markets for identical assets or liabilities.
● Level 2 – Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted
market prices, interest rates, and yield curves.
● Level 3 – Unobservable inputs developed using estimates of assumptions developed by the Company, which
reflect those that a market participant would use.
To the extent that the valuation is based on models or inputs that are less observable or unobservable in the
market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the
Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within
the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
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The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, restricted cash,
marketable securities, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses,
and other current liabilities approximate their fair values, due to their short-term nature.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments purchased with original maturities of 90 days or less at
acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks and amounts held in money
market funds and U.S. government-backed securities.
The Company has restricted cash of $3.9 million held as collateral for the Company’s corporate headquarters and
credit card program. The restricted funds are maintained in a traditional bank account.
The following table presents cash, cash equivalents, and restricted cash as reported on the consolidated balance
sheets that equal the total amounts on the consolidated statements of cash flows (in thousands):
Cash and cash equivalents
Restricted cash included in "Restricted cash and other non-current assets"
Total cash, cash equivalents, and restricted cash
Marketable Securities
Year Ended
December 31,
2020
511,774
3,877
515,651
$
$
$
$
2019
238,183
1,619
239,802
The Company classifies marketable securities with a remaining maturity when purchased of greater than three
months and less than one year from the balance sheet date as current. Marketable securities are classified as long-term
assets on the consolidated balance sheets if the contractual maturity exceeds one year and the Company does not intend to
utilize the marketable securities to fund current operations. The Company classifies all of its marketable securities as
available-for-sale securities. Available-for-sale debt securities are carried at fair value with the unrealized gains and losses
included in other comprehensive loss as a component of stockholders’ equity until realized. Any premium or discount
arising at purchase is amortized and/or accreted to interest income and/or expense over the life of the of the underlying
security. Realized gains and losses are included in other income (expense). The Company adopted Accounting Standards
Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments (“ASU 2016-13”) as of January 1, 2020, which did not have a significant impact on its consolidated financial
statements. For available-for-sale debt securities in unrealized loss positions, ASU 2016-13 requires the Company to record
an allowance for credit losses using an expected loss model, which replaces the incurred loss model required under the
previous guidance. A credit loss is limited to the amount by which the amortized cost of an investment exceeds its fair
value. A previously recognized credit loss may be decreased in subsequent periods if the Company’s estimate of fair value
for the investment increases. To determine whether to record a credit loss, the Company considers issuer specific credit
ratings and historical losses as well as current economic conditions and its expectations for future economic conditions.
Corporate Equity Securities
The Company classifies investments in equity securities that have a readily determinable fair value as marketable
securities in the Company’s consolidated balance sheets. The Company’s marketable securities are stated at fair value.
Typically, the fair value of these securities is based on a quoted price for an identical equity security. If the equity security
has a restriction that is determined to be an attribute of the security that would transfer to a market participant, the fair value
of the security is measured based on the quoted price for an otherwise identical unrestricted equity security, adjusted for the
effect of the restriction. The adjustment reflects the discount that a market participant would demand for the risk relating to
the inability to dispose of the security for a specified period of time. That adjustment is based on the nature and duration of
the restriction and the limitations imposed by the restriction to a buyer.
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The Company records changes in the fair value of its equity securities in “Other Income (Expense), net” in the Company’s
condensed consolidated statement of operations.
Accounts Receivable
The Company makes judgments as to its ability to collect outstanding receivables and provides an allowance for
receivables when collection becomes doubtful. The Company’s estimates for its allowance for credit losses, which has not
been significant to date, is determined based on existing contractual payment terms, historical payment patterns, current
economic conditions and the Company’s expectation for future economic conditions. The Company's receivables primarily
relate to amounts reimbursed under its collaboration agreements. The Company believes that credit risk associated with its
collaborations partners is not significant. To date, the Company has not had any write-offs of bad debt, and the Company
did not have an allowance for doubtful accounts as of December 31, 2020 and 2019.
Property and Equipment
Property and equipment consists of computers, laboratory equipment, furniture and office equipment, and
leasehold improvements and is stated at cost, less accumulated depreciation. Maintenance and repairs that do not improve
or extend the lives of the respective assets are expensed to operations as incurred, while costs of major additions and
betterments are capitalized. Depreciation is calculated over the estimated useful lives of the assets using the straight-line
method. The Company capitalizes laboratory equipment used for research and development if it has alternative future use
in research and development or otherwise.
Asset:
Lab equipment
Computer equipment and software
Furniture and equipment
Leasehold improvements
Estimated Useful life
5 years
3 years
5 years
Shorter of useful life or remaining lease term
Impairment of Long-lived Assets
The Company evaluates long-lived assets for potential impairment when events or changes in circumstances
indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values
of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are
considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the
assets exceed their fair value. The Company has not recognized any impairment losses from inception through December
31, 2020.
Profit-Sharing Arrangements
The Company considers the nature and contractual terms of the arrangements and assesses whether such
arrangements involve a joint operating activity pursuant to which the Company is an active participant and is exposed to
significant risks and rewards with respect to such arrangement. If the Company is an active participant and is exposed to
significant risks and rewards with respect to such arrangement, the Company accounts for such arrangement as a
collaboration under ASC Topic 808, Collaborative Arrangements (“ASC 808”). ASC 808 describes arrangements within its
scope and considerations surrounding presentation and disclosure, with recognition matters subjected to other authoritative
guidance, in certain cases by analogy.
Payments received from a collaboration partner to which this policy applies are recorded as contra-expense in the
applicable period and may include development costs or patent expense reimbursements. The Company classifies payments
made under the cost sharing provisions of such arrangements as a component of research and development expenses to
reflect the joint risk sharing nature of such profit-sharing arrangements. The Company classifies payments owed or
receivables recorded as other current liabilities or prepaid expenses and other current assets, respectively, in the
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Company’s consolidated balance sheets. At December 31, 2020, the Company no longer had any agreements considered
under ASC 808.
Revenue Recognition
To date, the Company has primarily earned revenue under the collaboration and license agreement with Juno
Therapeutics and the strategic alliance with Allergan, which was terminated on August 5, 2020.
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers
(“ASC 606”). The Company enters into collaboration agreements and certain other agreements that are within the scope of
ASC 606, under which the Company licenses, may license or grants an option to license rights to certain of the Company’s
product candidates and performs research and development services in connection with such arrangements. The terms of
these arrangements typically include payment of one or more of the following: non-refundable, up-front fees;
reimbursement of research and development costs; development, clinical, regulatory and commercial sales milestone
payments; and royalties on net sales of licensed products.
Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in
an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To
determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC
606, the Company performs the following five steps: (i) identification of the promised goods or services in the contract; (ii)
determination of whether the promised goods or services are performance obligations including whether they are distinct in
the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration;
(iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the
Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is
probable that the entity will collect consideration it is entitled to in exchange for the goods or services it transfers to the
customer.
The promised goods or services in the Company’s arrangements typically consist of a license, or option to license,
rights to the Company’s intellectual property or research and development services. The Company provides options to
additional items in such arrangements, which are accounted for as separate contracts when the customer elects to exercise
such options, unless the option provides a material right to the customer. Performance obligations are promised goods or
services in a contract to transfer a distinct good or service to the customer and are considered distinct when (i) the customer
can benefit from the good or service on its own or together with other readily available resources and (ii) the promised
good or service is separately identifiable from other promises in the contract. In assessing whether promised good or
services are distinct, the Company considers factors such as the stage of development of the underlying intellectual
property, the capabilities of the customer to develop the intellectual property on its own or whether the required expertise is
readily available and whether the goods or services are integral or dependent to other goods or services in the contract.
The Company estimates the transaction price based on the amount expected to be received for transferring the
promised goods or services in the contract. The consideration may include fixed consideration or variable consideration. At
the inception of each arrangement that includes variable consideration, the Company evaluates the amount of potential
payment and the likelihood that the payments will be received. The Company utilizes either the most likely amount method
or expected value method to estimate the amount expected to be received based on which method best predicts the amount
expected to be received. The amount of variable consideration that is included in the transaction price may be constrained
and is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of the
cumulative revenue recognized will not occur in a future period.
The Company’s contracts often include development and regulatory milestone payments that are as assessed under
the most likely amount method and constrained if it is probable that a significant revenue reversal would occur. Milestone
payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are not
considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company
re-evaluates the probability of achievement of such development and clinical milestones and any related constraint, and if
necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a
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cumulative catch-up basis, which would affect collaboration and other research and development revenues in the period of
adjustment.
For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and
the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later
of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been
allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting
from any of the Company’s collaboration or strategic alliance arrangements.
The Company allocates the transaction price based on the estimated standalone selling price. The Company must
develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation
identified in the contract. The Company utilizes key assumptions to determine the stand-alone selling price, which may
include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs. Variable
consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable
consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated are consistent with
the amounts the Company would expect to receive for the satisfaction of each performance obligation.
The consideration allocated to each performance obligation is recognized as revenue when control is transferred
for the related goods or services. For performance obligations which consist of licenses and other promises, the Company
utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined
performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring
progress. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of
performance and related revenue recognition.
The Company receives payments from its customers based on billing schedules established in each contract. Up-
front payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its
obligations under these arrangements. Amounts are recorded as accounts receivable when the Company’s right to
consideration is unconditional.
Research and Development Expenses
Research and development expenses are charged to expense as incurred in performing research and development
activities. The costs include employee-related expenses including salaries, benefits, and stock-based compensation expense,
costs of funding research performed by third parties that conduct research and development and preclinical and clinical
activities on the Company’s behalf, the cost of purchasing lab supplies and non-capital equipment used in preclinical and
clinical activities and in manufacturing preclinical and clinical study materials, consultant fees, facility costs including rent,
depreciation, and maintenance expenses, and fees for acquiring and maintaining licenses under third party licensing
agreements, including any sublicensing or success payments made to the Company’s licensors. In accruing service fees, the
Company estimates the time period over which services will be performed and the level of effort to be expended in each
period. If the actual timing of the performance of services or the level of effort varies from the Company’s estimate, the
accrual or prepaid is adjusted accordingly. The Company defers and capitalizes non-refundable advance payments made by
the Company for research and development activities until the related goods are received or the related services are
performed. In circumstances where amounts have been paid in excess of costs incurred, the Company records a prepaid
expense.
In-process Research and Development Assets
In-process research and development assets that are acquired in a transaction that does not qualify as a business
combination under GAAP and that do not have an alternative future use are expensed in the period in which the assets are
acquired.
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Patent Costs
The Company expenses patent and patent application costs and related legal costs for the prosecution and
maintenance of such patents and patent applications, including patents and patent applications the Company in-licenses, as
incurred and classifies such costs as general and administrative expenses in the accompanying consolidated statements of
operations.
Construction Financing Lease Obligation
Beginning in 2016, the Company began recording certain estimated construction costs incurred and reported to the
Company by a landlord as an asset and corresponding construction financing lease obligation on the Company’s
consolidated balance sheets because the Company was deemed to be the owner of the building during the construction
period for accounting purposes. In each reporting period, the landlord estimated and reported to the Company the costs
incurred to date and provided supporting invoices for the Company to review. The Company periodically met with the
landlord and its construction manager to review the estimates and observe construction progress prior to recording such
amounts. Construction was completed in October 2016 and the Company considered the requirements for sale-leaseback
accounting treatment, which included an evaluation of whether all risks of ownership had transferred back to the landlord
as evidenced by a lack of continuing involvement in the lease property. The Company determined that the arrangement did
not qualify for sale lease-back accounting treatment, the building asset will remain on the Company’s consolidated balance
sheet at its historical cost, and such asset would be depreciated over its estimated useful life of thirty years.
Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases
(Topic 842) (“ASC 842”) and derecognized the balances relating to the building, accumulated depreciation and the
corresponding construction financing lease as summarized in the table below (in thousands). In applying the ASC 842
transition guidance, the Company determined that the lease should be classified as an operating lease and recorded a right-
of-use asset and lease liability on the effective date, accordingly.
Property and equipment, net
Other current liabilities
Construction financing lease obligation, net of current portion
Accumulated deficit
Leases
As of
January 1, 2019
32,627
(1,014)
(32,417)
803
$
$
$
$
The Company accounts for leases in accordance with ASC 842. At the inception of an arrangement the Company
determines whether the arrangement contains a lease. If a lease is identified in an arrangement, the Company recognizes a
right-of-use asset and liability on its balance sheet and determines whether the lease should be classified as a finance or
operating lease. The Company does not recognize assets or liabilities for leases with lease terms of less than 12 months.
Lease payments for short-term leases are recorded to operating expense on a straight-line basis over the lease term and
variable lease payments are recorded in the period in which the obligation for those payments is incurred.
A lease qualifies as a finance lease if any of the following criteria are met at the inception of the lease: (i) there is
a transfer of ownership of the leased asset to the Company by the end of the lease term, (ii) the Company holds an option to
purchase the leased asset that it is reasonably certain to exercise, (iii) the lease term is for a major part of the remaining
economic life of the leased asset, (iv) the present value of the sum of lease payments equals or exceeds substantially all of
the fair value of the leased asset, and (v) the nature of the leased asset is specialized to the point that it is expected to
provide the lessor no alternative use at the end of the lease term. All other leases are recorded as operating leases.
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Finance and operating lease assets and liabilities are recognized at the lease commencement date based on the
present value of the lease payments over the lease term using the discount rate implicit in the lease. If the rate is not readily
determinable, the Company utilizes its incremental borrowing rate at the lease commencement date. Operating lease assets
are further adjusted for prepaid or accrued lease payments. Operating lease payments are expensed using the straight-line
method as an operating expense over the lease term. Finance lease assets are amortized to depreciation expense using the
straight-line method over the shorter of the useful life of the related asset or the lease term. Finance lease payments are
bifurcated into (i) a portion that is recorded as imputed interest expense and (ii) a portion that reduces the finance liability
associated with the lease.
The Company does not separate lease and non-lease components when determining which lease payments to
include in the calculation of its lease assets and liabilities. Variable lease payments are expensed as incurred. If a lease
includes an option to extend or terminate the lease, the Company reflects the option in the lease term if it is reasonably
certain it will exercise the option.
Stock-based Compensation Expense
The Company’s stock-based compensation program grant awards which have included stock options, restricted
stock awards (“RSAs”), restricted stock unit awards (“RSUs”), a market-based option award, and shares issued under the
Company’s 2015 employee stock purchase plan (“ESPP”). The Company accounts for stock-based compensation awards in
accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based
payments to employees, directors and non-employees to be recognized as expense in the consolidated statements of
operations based on their grant date fair values. The Company estimates the grant date fair value of each option award
using the Black-Scholes option-pricing model. The fair value of the Company’s RSAs and RSUs is based on market value
of the Company’s common stock on the date of grant. For awards subject to service-based vesting conditions, the Company
recognizes the stock-based compensation expense on a straight-line basis over the requisite service period. If an employee
or non-employee service requirement is concluded to be non-substantive, the stock-based compensation expense would be
expensed immediately. Forfeitures are recorded as they occur.
Prior to 2019, the Company accounted for stock-based payments issued to non-employees in accordance with
ASC Topic 505-50, Equity Based Payments to Non-Employees. Stock-based payments issued to non-employees were
initially recorded at their fair value, and were revalued at each reporting date and as the equity instruments vest and were
recognized as expense over the related service period.
The Company estimates the grant date fair value of each option award using the Black-Scholes option-pricing
model. The Black-Scholes option pricing model requires the input of certain subjective assumptions, including (1) the
expected stock price volatility, (2) the calculation of expected term of the award, (3) the risk-free interest rate, and (4) the
expected dividend yield. Because there had been no public market for the Company’s common stock prior to its initial
public offering, there was a lack of company-specific historical and implied volatility data. Accordingly, the Company
based its estimates of expected volatility on the historical volatility of a group of similar companies that are publicly traded.
The Company calculates historical volatility based on a period of time commensurate with the expected term. The
Company computes expected volatility based on the historical volatility of a representative group of companies with
similar characteristics to the Company, including their stages of product development and focus on the life science industry.
The Company uses the simplified method as prescribed by the Securities and Exchange Commission’s Staff Accounting
Bulletin No. 107, Share-Based Payment, to calculate the expected term for options granted to employees as the Company
does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. For
options granted to non-employees, the Company utilizes the contractual term of the arrangement as the basis for the
expected term. The Company determines the risk-free interest rate based on a treasury instrument whose term is consistent
with the expected term of the stock options. The Company uses an assumed dividend yield of zero as the Company has
never paid dividends and does not have current plans to pay any dividends on its common stock.
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RSAs are subject to repurchase rights. Accordingly, the Company has recorded the proceeds from the issuance of
restricted stock as a liability in the consolidated balance sheets. The restricted stock liability is reclassified into
stockholders’ equity as the restricted stock vests.
For market-based awards, the Company recognizes the fair value of the market-based options over the earlier of
the derived service period, pursuant to a Monte-Carlo simulation model, or when the market-based vesting conditions are
met. The Company estimates an award's derived service period based on the best estimate of the period over which an
award's vesting condition(s) will be achieved. If the market-based vesting conditions are met ahead of the derived service
period, the expense will be accelerated. If the market-based vesting conditions are not met and the market-based award is
cancelled, the expense will not be reversed unless the market-based award is forfeited.
If factors change or different assumptions are used, the Company’s stock-based compensation expense could be
materially different in the future.
Success Payments, Research Funding Payments and Notes Payables
Certain arrangements require the Company to make payments, if and when, the Company’s market capitalization
reaches specified thresholds for a specific period of time or upon a sale of the Company for consideration in excess of those
thresholds or above a specific amount. The payments were historically accounted for under the provisions of ASC Topic
505-50 and as of January 1, 2019, are accounted for under the provisions of ASC 718, whereby the Company recognizes
the expense and liability when it becomes probable that the amounts will become due. The Company records this expense
as a research and development expense in its consolidated statements of operations. The arrangements and payments are
described more fully in Note 8.
The payments are payable in either cash, common stock or promissory notes payable, depending upon the licensor
and the Company’s election. If the Company elects to issue a promissory note relating to contractual obligations, the
promissory note bears interest at 4.8% per annum. Outstanding principal and accrued interest on the promissory notes are
typically payable on the earlier of five months or a specified period of time following a Company sale or change of control
event, subject to certain exceptions.
Income taxes
Income taxes are recorded in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which provides for
deferred taxes using an asset and liability approach. Under this method, deferred tax assets and liabilities are determined
based on the difference between the financial reporting and the tax reporting basis of assets and liabilities and are measured
using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The
Company provides a valuation allowance against net deferred tax assets unless, based upon the weight of available
evidence, it is more likely than not that the deferred tax assets will be realized.
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain
tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely
than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the
technical merits of the tax position as well as consideration of the available facts and circumstances.
Comprehensive Loss
Comprehensive loss is comprised of net loss and other comprehensive income or loss. Comprehensive loss
includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other
than those with stockholders. Comprehensive loss currently consists of net loss and changes in unrealized gains and losses
on marketable securities.
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Concentrations of Credit Risk and Off-Balance Sheet Risk
The Company has no financial instruments with off-balance sheet risk such as foreign exchange contracts, option
contracts, or other foreign hedging arrangements. Financial instruments that potentially subject the Company to a
concentration of credit risk are cash, cash equivalents, marketable securities and receivables owed to the Company from
collaboration partners. The Company’s cash, cash equivalents and marketable securities are held in accounts at a financial
institution that may exceed federally insured limits. The Company has not experienced any credit losses in such accounts
and does not believe it is exposed to any significant credit risk on these funds.
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is
available for evaluation by the chief operating decision maker in deciding how to allocate resources and assess
performance. The Company and the Company’s chief operating decision maker, the Company’s Chief Executive Officer,
view the Company’s operations and manage the Company’s business as a single operating segment, which is the business
of developing and commercializing genome editing technology.
Recent Accounting Pronouncements –Adopted
Financial Instruments- Credit Losses
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (“ASU 2016-13”) which was
clarified and amended by the issuances of ASUs 2018-19, 2019-04, 2019-05 and 2019-11 in November 2018, April 2019,
May 2019 and November 2019, respectively. The new standard requires that expected credit losses relating to financial
assets measured on an amortized cost basis to be measured using an expected-loss model, replacing the current incurred-
loss model, and recorded through an allowance for credit losses which is a valuation account that is deducted from the
amortized cost basis of the financial asset. ASU 2016-13 requires evaluation of credit loss based on historical experience,
current conditions and reasonable and supportable forecasts. The Company’s estimate of expected credit losses includes a
measure of the expected risk of credit loss even if the risk is remote. When assessing financial assets for credit losses, the
Company pools financial assets with similar risk characteristics and performs a collective evaluation. However, the
Company is not required to measure expected credit losses in which historical credit loss information adjusted for current
conditions and reasonable and supportable forecasts results in an expectation that nonpayment of the amortized cost basis is
zero. At each reporting date, the Company will record an allowance for credit losses and reports it as credit loss expense
which is included in “Other income (expense), net” in the Company’s condensed consolidated statement of operations.
However subsequent increases or decreases in the fair value of available-for-sale securities that do not result in recognition
or reversal of an allowance for credit loss or write-down will continue to be recorded in other comprehensive loss. The
Company adopted the new standard and the related amendments on January 1, 2020 using a modified retrospective
approach. The modified retrospective approach requires the Company to record a one-time adjustment to opening
accumulated deficit as of the effective date. At adoption, the Company concluded that there are no indicators of credit loss
with respect to its available-for-sale debt securities which consist of U.S Treasury securities and government-agency bonds.
The Company therefore did not record an allowance for credit losses or doubtful accounts upon adoption or during the first
quarter of 2020. The adoption of ASU 2016-13 had no impact on the Company’s condensed consolidated financial
statements.
Intangibles and Goodwill
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software:
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service
Contract (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a cloud
computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to
develop or obtain internal-use software. ASU 2018-15 was effective on January 1, 2020. The Company adopted ASU 2018-
15 using the prospective transition approach, which allows the Company to change the accounting method without restating
prior periods or recording cumulative adjustments. The adoption of ASU 2018-15 did not have a material impact on the
Company’s condensed consolidated financial statements.
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Fair Value Measurement
In 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes
to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which eliminates, adds, and modifies the
disclosure requirements for fair value measurements. ASU 2018-13 was effective on January 1, 2020. The adoption of ASU
2018-13 results in additional disclosures related to the Company’s assets and liabilities that are valued based on Level 3
inputs and transfers between Level 1 and Level 2 fair value measurements. The adoption of ASU 2018-13 did not have a
material impact on the Company’s financial statement footnote disclosures.
3. Cash Equivalents and Marketable Securities
Cash equivalents and marketable securities consisted of the following at December 31, 2020 (in thousands):
December 31, 2020
Cash equivalents and marketable securities:
Money market funds
U.S. Treasuries
Government agency securities
Commercial paper
Corporate notes/bonds
Total
Amortized
Cost
Allowance
for Credit
Losses
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
$
$
139,682 $
180,376
107,665
41,912
42,185
511,820 $
— $
—
—
—
—
— $
— $
8
—
—
10
18
$
— $ 139,682
180,373
(11)
107,645
(20)
41,904
(8)
42,170
(25)
511,774
(64) $
Cash equivalents and marketable securities consisted of the following at December 31, 2019 (in thousands):
December 31, 2019
Cash equivalents and marketable securities:
Money market funds
U.S. Treasuries
Government agency securities
Equity securities included in other non-current assets:
Corporate equity securities
Total
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
$
$
230,201
71,348
155,484
$ — $
20
87
— $
—
—
230,201
71,368
155,571
3,667
460,700
$
—
107
$
—
— $
3,667
460,807
As of December 31, 2020, the Company did not hold any marketable securities that had been in an unrealized loss
position for more than twelve months. Furthermore, the Company has determined that there were no material changes in
the credit risk of the debt securities. As of December 31, 2020, the Company holds 62 securities with an aggregate fair
value of $109.7 million that had remaining maturities between one and two years.
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4. Fair Value Measurements
Assets measured at fair value on a recurring basis as of December 31, 2020 were as follows (in thousands):
Financial Assets
Cash equivalents:
Money market funds
Marketable securities:
U.S. Treasuries
Government agency securities
Commercial paper
Corporate bonds
Restricted cash and other non-current assets:
Money market funds
Total financial assets
Quoted Prices Significant
in Active
Markets for
Identical Assets
(Level 1)
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
December 31,
2020
$ 139,682
$
139,682
$
— $
180,373
107,645
41,904
42,170
180,373
—
—
—
—
107,645
41,904
42,170
3,877
$ 515,651
$
3,877
323,932
—
$ 191,719
$
—
—
—
—
—
—
—
Assets measured at fair value on a recurring basis as of December 31, 2019 were as follows (in thousands):
Financial Assets
Cash equivalents:
Money market funds
U.S. Treasuries
Marketable securities:
U.S. Treasuries
Government agency securities
Restricted cash and other non-current assets:
Corporate equity securities
Money market funds
Total financial assets
Quoted Prices Significant
in Active
Markets for
Identical Assets
(Level 1)
Other
Significant
Observable Unobservable
Inputs
(Level 2)
Inputs
(Level 3)
December 31,
2019
$ 230,201
7,982
$
230,201
7,982
$
— $
—
63,386
155,571
63,386
155,571
—
—
3,667
1,619
$ 462,426
$
—
1,619
458,759
3,667
—
$ 3,667
$
—
—
—
—
—
—
—
During the year ended December 31, 2020, the Company held an investment in Beam Therapeutics Inc. (“Beam
Therapeutics”) consisting of shares of Beam Therapeutics’ common stock. Prior to Beam Therapeutics’ initial public
offering in February 2020, the Company valued such investment based on the cost of the equity securities adjusted for any
observable market transactions. Following the initial public offering, the equity securities had a readily determinable fair
value, and were included in marketable securities on the consolidated balance sheet. The Company sold this investment in
October 2020, resulting in a realized gain of $16.4 million recorded in other income (expense), net on the consolidated
statements of operations.
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5. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
As of
December 31,
2020
Laboratory equipment
Leasehold improvements
Computer equipment
Construction-in-progress
Furniture and office equipment
Software
Total property and equipment
Less: accumulated depreciation
Property and equipment, net
$
$
18,433
4,967
858
500
239
118
25,115
(11,095)
14,020
$
December 31,
2019
14,571
1,042
858
1,336
166
118
18,091
(7,204)
10,887
$
The Company recorded $4.0 million, $2.8 million, and $3.3 million in depreciation expense during the years
ended December 31, 2020, 2019 and 2018, respectively.
6. Accrued Expenses
Accrued expenses consisted of the following (in thousands):
External research and development expenses
Employee related expenses
Intellectual property and patent related fees
Sublicensing expenses
Professional service expenses
Other expenses
Total accrued expenses
7. Leases
As of
December 31,
2020
2019
$
$
12,820
5,323
4,240
771
533
359
24,046
$
$
735
4,971
3,725
11,416
674
599
22,120
The Company has multiple lease agreements for office, laboratory and manufacturing space with varying
contractual terms set to expire between 2021 and 2025. Typically, base rent payments commence at the beginning of each
lease term and continue through the term of the respective lease. Additionality, base rent is also subject to increases over
the term of the lease. The Company has two significant leases for office and laboratory space located in Cambridge,
Massachusetts that are summarized below. Prior to January 1, 2019, the Company accounted for leases as operating leases
under ASC 840, Leases (“ASC 840”) and recognized straight-line rent expense over the remaining non-cancellable lease
terms. As part of its adoption of ASC 842, the Company elected to apply the package of practical expedients which, among
other things, allowed the Company to carry forward its existing operating lease classification under ASC 840. Additionally,
the Company recorded right-of-use assets and lease liabilities for these operating leases on the effective date.
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The Company’s leases are included on its consolidated balance sheet as follows (in thousands):
Right-of-use assets
Operating lease liabilities, current
Operating lease liabilities, noncurrent
As of
December 31,
2020
January 1,
2019
$
$
$
25,128
(6,811)
(19,324)
$
$
$
19,461
(3,848)
(15,909)
During the years ended December 31, 2020 and 2019, the Company recorded $10.5 million and $5.6 million
related to operating lease costs and $1.1 million and $1.0 million related to variable costs associated with the Company’s
operating leases under ASC 842, respectively. Under ASC 840, the Company incurred rent expense of approximately $1.8
million during the year ended December 31, 2018.
Maturities of the Company’s lease liabilities in accordance with ASC 842 as of December 31, 2020 were as
follows (in thousands):
Maturity of lease liabilities:
2021
2022
2023
2024
2025
Thereafter
Total minimum lease payments
Less: imputed interest
Total operating lease liabilities at December 31, 2020
Year Ended
December 31, 2020
8,778
9,342
7,807
3,695
474
110
30,206
(4,071)
26,135
$
$
$
$
$
$
$
$
$
The weighted-average remaining lease term is 3.4 years and the weighted-average discount rate is 8.8%.
Hurley Street
In 2016, the Company entered into a lease agreement for 59,783 square feet of office and laboratory space located
on Hurley Street in Cambridge, Massachusetts. The term of the lease began on October 1, 2016 and continues until October
2023. In connection with the lease and as a security deposit, the Company deposited with the landlord a letter of credit in
the amount of approximately $1.6 million. Subject to the terms of the lease and certain reduction requirements specified
therein, the $1.6 million security deposit may decrease over time. The letter of credit, which is collateralized by the
Company, is recorded in restricted cash and other non-current assets in the accompanying consolidated balance sheets as of
December 31, 2020 and December 31, 2019.
The Company has the option to extend the lease for an additional five-year term at market-based rates. The base
rent payments commenced in November 2016 and continue through the term of the lease and are subject to increases over
the term of the lease.
One Main Street
In December 2019, the Company entered into a lease agreement for 31,571 square feet of office space located on
One Main Street in Cambridge, Massachusetts. The term of the lease began on January 15, 2020 and continues until
January 2025. In connection with the lease and as a security deposit, the Company issued a letter of credit in the amount of
approximately $0.8 million in January 2020.
The Company has the option to extend the lease for an additional five-year term at market-based rates. The base
rent payments commenced in January 2020 and continue through the term of the lease and are subject to increases over
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the term of the lease.
8. Commitments and Contingencies
The Company is a party to a number of license agreements under which the Company licenses patents, patent
applications and other intellectual property from third parties. As such, the Company is obligated to reimburse licensors for
various costs including upfront licenses fees, annual license fees, certain licensor expense reimbursements, success
payments, research funding payments, and milestones triggerable upon certain development, regulatory, and commercial
events as well as royalties on future products. These contracts are generally cancellable, with notice, at the Company’s
option and do not have significant cancellation penalties.
Broad Sponsored Research Agreement
In June 2018, the Company entered into a sponsored research agreement (the “Sponsored Research Agreement”)
with The Broad Institute, Inc. (“Broad”). The Sponsored Research Agreement provides for Broad to conduct research
useful or relevant to genome editing in the field of genomic medicines for the prevention or treatment of human disease
with funding from the Company. Under the Sponsored Research Agreement, Broad granted to the Company an exclusive
right of first negotiation for licenses from Broad with respect to patentable inventions developed by Broad in the course of
the sponsored research, subject to certain limitations and retained rights (“Sponsored Invention Licenses”).
Under the Sponsored Research Agreement, the Company is obligated to make Market Cap Research Funding
payments in the event the Company’s market capitalization reaches specified thresholds ranging from a mid-nine digit
dollar amount to a low-eleven digit dollar amount or Company Sale Research Funding payments in the event of a Company
sale for consideration ranging from a mid-nine digit dollar amount to a low-eleven digit dollar amount. In connection with
entering into the Sponsored Research Agreement, the Company confirmed that the first two research payments of $5.0
million and $7.5 million, respectively, were due and payable to Broad. In connection with the Initial Research Payments,
the Company issued promissory notes to Broad that it settled in common stock in June 2018. The $12.5 million in research
funding expense was recorded to research and development expenses during the year ended December 31, 2018. The
Company fully settled the outstanding principal and accrued interest on the Initial Research Notes by issuing 330,617
shares of common stock to Broad in June 2018.
The Company triggered a Success Payment under the Broad Sponsored Research Agreement during the fourth
quarter of 2020 when the Company’s average market capitalization (as determined pursuant to the agreement) reached $2.5
billion. The Company accrued $12.5 million related to the Success Payment in the consolidated balance sheet at December
31, 2020. In January 2021, the Company settled this liability through the issuance of shares of its common stock.
Other than the Initial Research Payments, the Company is not required to make additional Research Funding
Payments if the Company, whether directly or through its affiliates or sublicensees, is not researching, developing, or
commercializing products based on or incorporating inventions exclusively licensed to the Company from Broad under
Sponsored Invention Licenses or based on or incorporating CRISPR technology owned, co-owned, or controlled by Broad
and otherwise licensed to the Company, subject to certain exclusions (an “Applicable Product” and such exemption from
payment, the “Funding Exemption”). In the event that the Company, whether directly or through its affiliates or
sublicensees, later resumes research, development, or commercialization of an Applicable Product within a specified period
of time, any Research Funding Payment that was not paid to Broad as a result of the Funding Exemption shall become
payable. Under the Sponsored Research Agreement, the Company is obligated to pay up to $125.0 million to Broad in
Research Funding, inclusive of the Initial Research Payments, and in no event shall the aggregate amount of all Research
Funding Payments exceed such amount.
Unless the Company has undergone a change in control, Market Cap Research Funding is payable by the
Company in cash, common stock, or in the form of promissory notes, which may be settled in shares of common stock at
the election of the Company. Following a change in control of the Company, Company Sale Research Funding is
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required to be made in cash. The Sponsored Research Agreement is terminable by each party upon the occurrence of
specified bankruptcy events of the other party and otherwise will continue in effect until the later of the expenditure of all
Research Funding Payments by Broad and such time as the Company has no further rights of first negotiation for
Sponsored Invention Licenses, unless otherwise mutually agreed between the parties.
Cas9-I License Agreement
In October 2014, the Company entered into an agreement (the “Cas9-I License Agreement”) with Broad and the
President and Fellows of Harvard College (“Harvard”) to license certain patent rights owned or co-owned by, or among,
Broad, the Massachusetts Institute of Technology (“MIT”), and Harvard (collectively, the “Institutions”). Consideration for
the granting of the license included the payment of an upfront license issuance fee of $0.2 million and the issuance of
561,531 shares of the Company’s common stock. The Institutions are collectively entitled to receive clinical and regulatory
milestone payments totaling up to $14.8 million in the aggregate per licensed product approved in the United States,
European Union, and Japan for the treatment of a human disease that afflicts at least a specified number of patients in the
aggregate in the United States. If the Company undergoes a change of control during the term of the license agreement, the
clinical and regulatory milestone payments will be increased by a certain percentage in the mid-double digits. The
Company is also obligated to make additional payments to the Institutions, collectively, of up to an aggregate of
$54.0 million upon the occurrence of certain sales milestones per licensed product for the treatment of a human disease that
afflicts at least a specified number of patients in the aggregate in the United States. The Institutions are collectively entitled
to receive clinical and regulatory milestone payments totaling up to $4.1 million in the aggregate per licensed product
approved in the U.S. and at least one jurisdiction outside the U.S. for the treatment of a human disease based on certain
criteria. The Company is also obligated to make additional payments to the Institutions, collectively, of up to an aggregate
of $36.0 million upon the occurrence of certain sales milestones per licensed product for the treatment of a rare disease
meeting certain criteria. The Institutions are entitled to receive from the Company nominal annual license fees and a mid-
single digit percentage royalties on net sales of products for the prevention or treatment of human disease and ranging from
low single digit to high single digit percentage royalties on net sales of other products and services, made by the Company,
its affiliates, or its sublicensees. The royalty percentage depends on the product and service, and whether such licensed
product or licensed service is covered by a valid claim within the certain patent rights that the Company licenses from the
Institutions.
Cpf1 License Agreement
In December 2016, the Company entered into the Cpf1 License Agreement with Broad, for specified patent rights
(the “Cpf1 Patent Rights”) related primarily to Cas12a (formerly known as Cpf1) compositions of matter and their use for
gene editing. Concurrently with entering into the Cpf1 License Agreement, the Company, Broad, and Harvard amended
and restated the Cas9-I License Agreement as described below and the Company and Broad entered into the Cas9-II
License Agreement for specified patent rights (the “Cas9-II Patent Rights”) related primarily to certain Cas9 compositions
of matter and their use for genome editing. The Company paid an upfront fee in aggregate of $16.5 million under these
agreements which was recorded in research and development expenses during 2016. The upfront fee was fully settled in
2017, partially by issuing 479,270 shares of common stock.
Pursuant to the Cpf1 License Agreement, Broad, on behalf of itself, Harvard, MIT, Wageningen, and the
University of Tokyo (“UTokyo” and, together with Broad, Harvard, Massachusetts Institute of Technology (“MIT”), and
Wageningen University (“Wageningen”), (the “Cpf1 Institutions”) granted the Company an exclusive, worldwide, royalty-
bearing, sublicensable license to the Cpf1 Patent Rights, to make, have made, use, have used, sell, offer for sale, have sold,
export and import products in the field of the prevention or treatment of human disease using gene therapy, editing of
genetic material, or targeting of genetic material, subject to certain limitations and retained rights (collectively, the “Cpf1
Exclusive Field”), as well as a non-exclusive, worldwide, royalty-bearing sublicensable license to the Cpf1 Patent Rights
for all other purposes, subject to certain limitations and retained rights. The Company is obligated to use commercially
reasonable efforts to research, develop, and commercialize products in the Cpf1 Exclusive Field. The Company is also
required to achieve certain development milestones within specified time periods for products covered by the Cpf1 Patent
Rights, with Broad having the right to terminate the Cpf1 License Agreement if the Company fails to achieve these
milestones within the required time periods.
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Broad and Wageningen are collectively entitled to receive clinical and regulatory milestone payments totaling up
to $20.0 million in the aggregate per licensed product approved in the United States, European Union, and Japan for the
prevention or treatment of a human disease that afflicts at least a specified number of patients in the aggregate in the United
States. The Company is also obligated to make additional payments to Broad and Wageningen, collectively, of up to an
aggregate of $54.0 million upon the occurrence of certain sales milestones per licensed product for the prevention or
treatment of a human disease that afflicts at least a specified number of patients in the aggregate in the United States. Broad
and Wageningen are collectively entitled to receive clinical and regulatory milestone payments totaling up to $6.0 million
in the aggregate per licensed product approved in the United States, European Union and Japan for the prevention or
treatment of a human disease that afflicts fewer than a specified number of patients in the aggregate in the United States or
a specified number of patients per year in the United States (an “Ultra-Orphan Disease”). The Company is also obligated to
make additional payments to Broad and Wageningen, collectively, of up to an aggregate of $36.0 million upon the
occurrence of certain sales milestones per licensed product for the prevention or treatment of an Ultra-Orphan Disease.
Broad and Wageningen, collectively, are entitled to receive, on a product-by-product and country-by-country
basis, mid single-digit percentage royalty on net sales of licensed products for the prevention or treatment of human
disease, and royalties on net sales of other licensed products and licensed services, made by the Company, its affiliates, or
its sublicensees. The royalty percentage depends on the product and service, and whether such licensed product or licensed
service is covered by a valid claim within the Cpf1 Patent Rights. If the Company is legally required to pay royalties to a
third party on net sales of the Company’s products because such third party holds patent rights that cover such licensed
product, then the Company can credit up to a specified percentage of the amount paid to such third party against the
royalties due to Broad and Wageningen in the same period. Such credit may not exceed 50% of the applicable royalties
paid by the Company to the applicable third party. The Company’s obligation to pay royalties will expire on a product-by-
product and country-by-country basis upon the later of the expiration of the last to expire valid claim of the Cpf1 Patent
Rights that covers each licensed product or service in each country or the tenth anniversary of the date of the first
commercial sale of the licensed product or licensed service. If the Company sublicenses any of the Cpf1 Patent Rights to a
third party, Broad and Wageningen, collectively, have the right to receive sublicense income, depending on the stage of
development of the products or services in question at the time of the sublicense.
Under the Cpf1 License Agreement, Broad and Wageningen are also entitled, collectively, to receive success
payments in the event the Company’s market capitalization reaches specified thresholds (the “Cpf1 Market Cap Success
Payments”) or a Company sale for consideration in excess of those thresholds (the “Cpf1 Company Sale Success
Payments” and, collectively with the Cpf1 Market Cap Success Payments, the “Cpf1 Success Payments”). The Cpf1
Success Payments payable to Broad and Wageningen are triggered when the Company’s market capitalization reaches
certain amounts ranging from $750.0 million to $10.0 billion for a specified period of time, and collectively the Cpf1
Success Payments will not exceed, in aggregate, $125.0 million, which maximum amount would be payable only if the
Company reaches a market capitalization threshold of $10.0 billion and has at least one product candidate covered by a
claim of a patent right licensed to the Company under either the Cpf1 License Agreement or the Cas9-I License Agreement
that is or was the subject of a clinical trial pursuant to development efforts by the Company or any Company affiliate or
sublicensee. The Cpf1 Market Cap Success Payments are payable by the Company in cash or in the form of promissory
notes. Following a change in control of the Company, Cpf1 Market Cap Success Payments are required to be made in cash.
Cpf1 Company Sale Success Payments are payable solely in cash. The Company triggered the first and second Cpf1
Success Payments during 2017 when the Company’s market capitalization reached $750 million and $1.0 billion,
respectively. The Company issued promissory notes for both Success Payments that were settled in 271,347 shares and
150,606 shares of common stock in August 2017 and January 2018, respectively.
The Company triggered the third Cpf1 Success Payment during the fourth quarter of 2020 when the Company’s
average market capitalization (as determined pursuant to the agreement) reached $2.5 billion. The Company accrued $15.0
million related to the Success Payment in the consolidated balance sheet for the year ended December 31, 2020. In January
2021, the Company settled this liability through the issuance of shares of its common stock.
Unless terminated earlier, the term of the Cpf1 License Agreement will expire on a country-by-country basis, upon
the expiration of the last to expire valid claim of the Cpf1 Patent Rights in such country. The Company has the right to
terminate the Cpf1 License Agreement at will upon four months’ written notice to Broad. Either party may
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terminate the Cpf1 License Agreement upon a specified period of notice in the event of the other party’s uncured material
breach of a material obligation, such notice period varying depending on the nature of the breach. Broad may terminate the
Cpf1 License Agreement immediately if the Company challenges the enforceability, validity, or scope of any Cpf1 Patent
Right or assist a third party to do so, or in the event of the Company’s bankruptcy or insolvency.
Amendment and Restatement of Cas9-I License Agreement
In December 2016, the Company amended and restated the Cas9-I License Agreement (such agreement, as
amended, the “Amended and Restated Cas9-I License Agreement”) to exclude additional fields from the scope of the
exclusive license previously granted to the Company, to make the exclusive license to three targets become non-exclusive,
subject to the limitation that each of Broad and Harvard would only be permitted to grant a license to only one third party at
a time with respect to each such target within the field of the exclusive license, and to revise certain provisions relating to
the rights of Harvard and Broad to grant further licenses under specified circumstances to third parties that wish to develop
and commercialize products that target a particular gene and that otherwise would fall within the scope of the exclusive
license under this agreement, so that Harvard and Broad together would have rights substantially similar to the equivalent
rights possessed by Broad under the Cpf1 License Agreement to designate gene targets for which the designating
institution, whether alone or together with an affiliate or third party, has an interest in researching and developing products
that would otherwise be covered by rights licensed by Harvard and/or Broad to the Company under this agreement, the
Cpf1 License Agreement or the Cas9-II License Agreement. In March 2017, the Company and Harvard and Broad further
amended the Amended and Restated Cas9-I License Agreement to (i) grant an exclusive license from Broad to the
Company with respect to certain patent rights that The Rockefeller University (“Rockefeller”) has or may have rights in
and to and for which Rockefeller has, under a certain inter-institutional agreement that Broad and Rockefeller entered into
in February 2017, appointed Broad as sole and exclusive agent for the purposes of licensing and (ii) provide to Rockefeller
certain rights, including with respect to patent enforcement, indemnification, insurance, confidentiality, reservation of
certain rights, and publicity, that are generally consistent with those granted to Broad, Harvard, MIT and the Howard
Hughes Medical Institute under the Amended and Restated Cas9-I License Agreement.
Cas9-II License Agreement
Pursuant to the Cas9-II License Agreement, Broad, on behalf of itself, MIT, Harvard, and the University of Iowa
Research Foundation, granted the Company an exclusive, worldwide, royalty bearing sublicensable license to certain of the
Cas9-II Patent Rights as well as a non-exclusive, worldwide, royalty-bearing sublicensable license to all of the Cas9-II
Patent Rights, in each case on terms substantially similar to the licenses granted to the Company under the Cpf1 License
Agreement except, among other things, for the following commitment amounts. Under the Cas9-II License Agreement, the
Company will pay an upfront license fee in a low seven digit dollar amount and will have to pay an annual license
maintenance fee. The Company is obligated to pay clinical and regulatory milestone payments per licensed product
approved in the United States, European Union and Japan for the prevention or treatment of a human disease that afflicts at
least a specified number of patients in the aggregate in the United States totaling up to $3.7 million in the aggregate, and
sales milestone payments for any such licensed product totaling up to $13.5 million in the aggregate. In addition, the
Company is obligated to pay clinical and regulatory milestone payments totaling up to $1.1 million in the aggregate per
licensed product approved in the United States and the European Union or Japan for the prevention or treatment of a human
disease that afflicts fewer than a specified number of patients in the United States, plus sales milestone payments of up to
$9.0 million for any such licensed product. Consistent with the Cpf1 License Agreement, the licensors are entitled to
royalties on net sales of products for the prevention or treatment of human disease and other products and services made by
the Company, its affiliates, or its sublicensees. Royalties due under other license agreements are creditable against these
royalties up to a specified amount in the same period. Lastly, Broad is entitled to receive success payments if the
Company’s market capitalization reaches specified thresholds ascending from $1.0 billion to $9.0 billion or upon a sale of
the Company for consideration in excess of those thresholds. The potential success payments range from a low seven digit
dollar amount to a low eight digit dollar amount and will not exceed, in aggregate, $30.0 million, which maximum amount
would be owed only if the Company reaches a market capitalization threshold of $9.0 billion and has at least one product
candidate covered by a claim of a patent right licensed to the Company under either the Cas9-I License Agreement or the
Cas9-II License Agreement that is or was the subject of a clinical trial pursuant to development efforts by the Company or
any Company affiliate or sublicensee. The
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Company triggered the first Success Payment under the Cas9-II License Agreement during the fourth quarter of 2017 when
the Company’s market capitalization reached $1.0 billion, which the Company settled by issuing 75,303 shares of its
common stock in January 2018.
Licensor Expense Reimbursement
The Company is obligated to reimburse to Broad and Harvard for expenses incurred by each of them associated
with the prosecution and maintenance of the patent rights that the Company licenses from them pursuant to the license
agreement by and among the Company, Broad and Harvard, including the interference and opposition proceedings
involving patents licensed to the Company under the license agreement, and other license agreements between the
Company and Broad. As such, the Company anticipates that it has a substantial commitment in connection with these
proceedings until such time as these proceedings have been resolved, but the amount of such commitment is not
determinable. The Company incurred an aggregate of $13.1 million, $13.5 million, and $14.2 million in expense during the
years ended December 31, 2020, 2019 and 2018, respectively, for such reimbursement.
Litigation
The Company is not a party to any litigation and did not have contingency reserves established for any litigation
liabilities as of December 31, 2020 or 2019.
9. Collaboration and Profit-Sharing Agreements
The Company has entered into multiple collaboration and strategic alliances with third parties that typically
involve research and development services in exchange for upfront fees, option payments, milestone payments and royalty
payments to or from the Company.
Collaboration Revenue
As of December 31, 2020, the Company’s contract liabilities were primarily related to the Company’s
collaboration with Juno Therapeutics as well as other out-license agreements that are individually insignificant. The
following table presents changes in the Company’s accounts receivable and contract liabilities for the year ended December
31, 2020 (in thousands):
For the year ended December 31, 2020
Accounts receivable
Contract liabilities:
Deferred revenue
Balance at
December 31, 2019
$
418 $
Additions
Deductions
6,097 $
(467) $
Balance at
December 31, 2020
6,048
$
186,721 $
508 $
(92,302) $
94,927
During the three and twelve months ended December 31, 2020, the Company recognized the following
collaboration revenue (in thousands):
Three Months Ended
Year Ended
Revenue recognized in the period from:
Amounts included in deferred revenue at the beginning of the period
Performance obligations satisfied in previous periods
$
$
December 31, 2020
5,767
$
— $
92,302
60
Juno Therapeutics Collaboration Agreement
In May 2015, the Company entered into a collaboration and license agreement (the “Collaboration Agreement”)
with Juno Therapeutics and in May 2018 the Company and Juno Therapeutics entered into an amended and restated
collaboration and license agreement (the Collaboration Agreement, as amended and restated, the “2018 Amended
Collaboration Agreement”). The collaboration was initially focused on the research and development of engineered T cells
with chimeric antigen receptors and T cell receptors that have been genetically modified to recognize and kill other
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cells. In November 2019 (the “Amendment Date”), the Company amended and restated the 2018 Amended Collaboration
and entered into a license agreement (the 2018 Amended Collaboration Agreement, as amended and restated, and
collectively with the license agreement, the “2019 Amended Collaboration Agreement”) to focus on the research,
development, and commercialization of autologous and allogenic alpha-beta T cell medicines for the treatment of all
diseases, subject to certain exceptions.
2018 Amended Collaboration Agreement
Pursuant to the 2018 Amended Collaboration Agreement, the Company and Juno Therapeutics were pursuing
research in accordance with a mutually agreed upon research plan across four research areas. The 2018 Amended
Collaboration Agreement increased the scope of the research plan from three to four research areas. The Company’s
research and development responsibilities under the research plan were related to generating genome editing reagents that
modify gene targets selected by Juno Therapeutics. Except with respect to the Company’s obligations under the mutually
agreed upon research plan, Juno Therapeutics had sole responsibility, at its own cost, for the worldwide research,
development, manufacturing and commercialization of products within each of the four research areas for the diagnosis,
treatment or prevention of any cancer in humans through the use of engineered T-cells, excluding the diagnosis, treatment
or prevention of medullary cystic kidney disease 1 (the “Exclusive Field”). The initial term of the research program
commenced on May 26, 2015 and continued for five years ending on May 26, 2020 (the “Initial Research Program Term”).
Under the terms of the Collaboration Agreement, the Company granted to Juno Therapeutics during the Initial
Research Program Term a nonexclusive research license solely for the purpose of conducting specific research related
activities as defined by the research plan. Pursuant to the terms of the 2018 Amended Collaboration Agreement, the license
rights granted to Juno Therapeutics were expanded to incorporate the fourth research area (together, the initial research
license granted per the terms of the Collaboration Agreement and the incremental research license granted per the terms of
the 2018 Amended Collaboration Agreement, the “Research License”).
The Company granted to Juno Therapeutics exclusive worldwide development and commercialization licenses in
the Exclusive Field, specifically as it relates to certain targets or products selected by Juno Therapeutics in each of the four
research areas. Furthermore, for two of the original research areas under the terms of the Collaboration Agreement, the
Company granted to Juno Therapeutics a non-exclusive worldwide license to use certain genome editing reagents that were
created under the agreement in all fields outside the Exclusive Field (“the Non-Exclusive Field”) specifically as it relates to
certain targets selected by Juno Therapeutics, if the genome editing reagents were previously incorporated into an
investigational new drug application filed by Juno Therapeutics in the Exclusive Field (together, the license in the
Exclusive Field and the license in the Non-Exclusive Field are referred to as the “Development and Commercialization
License” for each particular research area).
Under the terms of the Collaboration Agreement, the Company received a $25.0 million up-front, non-refundable,
non-creditable cash payment. In connection with the entry into the 2018 Amended Collaboration Agreement, the Company
received an additional $5.0 million up-front, non-refundable, non-creditable cash payment. In addition, Juno Therapeutics
was obligated to pay to the Company research and development funding over the Initial Research Program Term across the
four research areas consisting primarily of funding for up to a specified maximum number of full-time equivalents
personnel each year. Consistent with the terms of the Collaboration Agreement, under the terms of the 2018 Amended
Collaboration Agreement, there was no incremental compensation due to the Company with respect to the Development
and Commercialization License granted to Juno Therapeutics associated with the first target or product, as applicable,
designated by Juno Therapeutics within each of the four research areas. However, for two of the research areas
Juno Therapeutics had the option to purchase up to three additional Development and Commercialization Licenses
associated with other gene targets for an additional fee of $2.5 million per target. In addition, Juno Therapeutics would
have been required to make certain milestone payments to the Company upon the achievement of specified development,
regulatory and commercial events. Royalties would have been paid on a licensed product-by-product and country-by-
country basis from the date of the first commercial sale of each product in a country until the expiration date.
The Company achieved two $2.5 million development milestones under the Collaboration Agreement resulting
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from technical progress in a research program in each of May 2016 and July 2017. The Company also achieved two
additional $2.5 million development milestones under the 2018 Amended Collaboration Agreement resulting from
technical progress in a research program in May 2018.
The Company evaluated the 2018 Amended Collaboration Agreement in accordance with the provisions of ASC
606. The Company accounted for the amendment resulting from the 2018 Amended Collaboration Agreement as a
modification to the original contract and not as a separate contract. The Company identified the following performance
obligations under the modified arrangement: (i) Research License and the related research and development services during
the Initial Research Program Term (the “Research License and Related Services”), (ii) four material rights related to the
first Development and Commercialization Licenses related to each of the four research areas (each, a “First Development
and Commercialization License Material Right”) and (iii) six material rights related to the option to purchase up to three
additional Development and Commercialization Licenses for two of the research areas (each, an “Additional Development
and Commercialization License Material Right”). The rights to be conveyed to Juno Therapeutics pursuant to each of the
Development and Commercialization Licenses extend exclusively to an individual target or product, as applicable;
therefore, control is deemed to be transferred upon the designation by Juno Therapeutics of the specific target or product, as
applicable, whereupon the license becomes effective upon Juno Therapeutics exercising their option.
Through the date of the 2018 Amended Collaboration Agreement, the Company had recognized approximately
$12.3 million of revenue associated with the Research License and Related Services which was excluded from the
modification date transaction price. The total transaction price associated with the remaining consideration based on the
2018 Amended Collaboration Agreement was determined to be $40.7 million, consisting of: (i) $30.0 million in upfront
payments (ii) $2.9 million of remaining research and development funding and (iii) $7.7 million of milestones payments
received by the Company that were not yet recognized as revenue. The Company utilized the most likely amount method to
determine the amount of research and development funding to be received. The outstanding milestones payments were
fully constrained.
The transaction price was allocated to the performance obligations based on the relative estimated standalone
selling prices of each performance obligation or, in the case of certain variable consideration, to one or more performance
obligations. The transaction price allocated to the Research License and Related Services was $10.7 million. The Company
recognized revenue related to amounts allocated to the Research License and Related Services as the underlying services
were performed using a proportional performance model. The Company measured proportional performance based on full
time employee hours relative to projected full time employee hours to complete the research services which best reflects
the progress towards satisfaction of the performance obligation. The remaining transaction price of $30.0 million was
allocated to the material rights. Revenue related to each of the material rights would have been recognized upon the earlier
of when the respective options were exercised or when the respective options lapse. None of the options associated with the
material rights had been exercised or had lapsed prior to the execution of the 2019 Amended Collaboration Agreement.
2019 Amended Collaboration Agreement
The 2019 Amended Collaboration Agreement replaced the 2018 Amended Collaboration Agreement and, at the
Company’s discretion, it may develop non-alpha-beta T-cell therapies, while expanding Juno Therapeutics’ permitted uses
of gene edited alpha-beta T-cells beyond oncology. Pursuant to the 2019 Amended Collaboration Agreement, the Company
may develop genome editing tools that, following the exercise of its option and the Company’s grant of a license, Juno
Therapeutics may use in its development of gene edited alpha-beta T-cell therapies and certain other T-cells derived from
pluripotent stem cells or any other precursor cells for the treatment of all diseases, subject to certain exceptions (the “Juno
Field”). The initial term of the 2019 Amended Collaboration Agreement is five years, which is subject to two one-year
extension periods. During the term, including the extension periods, the Company may not alone, or with a third party,
research, develop, manufacture, or commercialize a product in the Juno Field.
At the Company’s discretion it can develop genome editing tools specific to a gene target and enzyme
combination (or a “Program”). The Company may then present a Program to Juno Therapeutics for Juno Therapeutics to
evaluate against predefined criteria. To assess the Programs prior to opt-in, the Company granted Juno Therapeutics a
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non-exclusive perpetual research license in the Juno Field. Juno Therapeutics has the option to obtain an exclusive,
worldwide, development and commercialization license to each of the Programs in the Juno Field for a nominal option
exercise fee. If Juno Therapeutics fails to exercise its option during the contractually defined option period, the Company
will retain all rights to such Program. Upon exercising an option, Juno Therapeutics has sole responsibility, at its own cost,
for the worldwide research, development, manufacturing and commercialization of its products. Juno Therapeutics has the
right to terminate the 2019 Amended Collaboration Agreement at any time upon no less than six months prior written
notice.
The development and commercialization licenses granted to Juno Therapeutics are subject to the terms and
conditions of a license agreement that was entered into on the same day as the 2019 Amended Collaboration Agreement.
Pursuant to the license agreement, Juno Therapeutics must use commercially reasonable efforts and meet certain regulatory
and commercial diligence requirements. The license agreement provided that the Company would manufacture clinical
grade materials through a Phase 1 clinical trial if requested by Juno Therapeutics at an incremental cost to be negotiated by
the parties. Per the termination provisions of the license agreement, Juno Therapeutics has the right to terminate the
agreement either on a licensed product-by-product basis or in its entirety for any reason at any time upon ninety days prior
written notice. If Juno Therapeutics terminates the license agreement without cause, the exclusive licenses granted to Juno
Therapeutics automatically revert back to the Company.
On a product-by-product basis, the Company is eligible to receive up to $27.5 million in development milestones
and $107.5 million in regulatory milestones. The Company is also eligible to receive up to an aggregate of $60.0 million
for the first two licensed products to reach certain sales milestones. The Company is entitled to a high-single digit to low
double-digit percentage of royalties on net sales of licensed products, subject to reductions in certain circumstances,
through the later of the expiration of the patent(s) related to the licensed products or six years post-first commercial sale of
such licensed products.
The Company received a $70.0 million up-front, non-refundable, non-creditable cash payment in connection with
the execution of the 2019 Amended Collaboration Agreement. The Company also received an additional $0.5 million for
the first development and commercialization license (the “First 2019 Development and Commercialization License”) which
was delivered to Juno Therapeutics at the onset of the arrangement.
The Company evaluated the 2019 Amended Collaboration Agreement and concluded that the collaboration
agreement and licensing agreement qualify as a contract with a customer under ASC 606 as one combined arrangement.
The contract modification was accounted for on a prospective basis as if it were a termination of the existing contract and
the creation of a new contract since the promised goods and services were distinct from the goods and services that were
transferred on or before the effective date of the amendment.
The Company identified the following performance obligations under the 2019 Amended Collaboration
Agreement: (i) First 2019 Development and Commercialization License and (ii) seventeen material rights for additional
development and commercialization licenses for other Programs. The Company also evaluated the (i) the research license,
(ii) contract term extensions, (iii) clinical supply arrangement, (iv) participation by employees on the oversight committee,
alliance and technology transfer teams and (v) certain intellectual property rights and concluded that none of these met the
definition of a performance obligation as a result of the promise being quantitively and qualitatively immaterial in the
context of the arrangement or the promise did not convey a material right to Juno Therapeutics. The Company also
concluded that there was not an implicit promise to perform research and development services.
As of Amendment Date and December 31, 2019, the total transaction price was approximately $102.5 million
comprised of the following: (i) $70.0 million amendment fee, (ii) $0.5 million related to the exercise fee for the First 2019
Development and Commercialization License and (iii) $32.0 million in remaining deferred revenue balance that was not
recognized pursuant to the 2018 Amended Collaboration Agreement. The Company utilizes the most likely amount method
to estimate any development and regulatory milestone payments to be received as well as extension term fees. As of
December 31, 2019, there were no milestones or extension term fees included in the transaction price. The Company
considers the stage of development and the risks associated with the remaining development required to achieve the
milestone, as well as whether the achievement of the milestone is outside the control of the Company or Juno Therapeutics.
The outstanding milestone payments and extension term fees were fully constrained as of December 31,
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2019, as a result of the uncertainty of whether any of the milestones will be achieved or the term would be extended. The
Company has determined that any commercial milestones and sales-based royalties will be recognized when the related
sales occurs. The Company reevaluates the transaction price at the end of each reporting period and as uncertain events are
resolved or other changes in circumstances occur.
The Company concluded that rights and attributes of each of the development and commercialization licenses are
identical for both the license granted at inception and the licenses that may be issued in the future upon exercise of the
associated option. Each development and commercialization license is differentiated only by the Program to which it
relates. The Company has considered the early stage of the science and the uncertainty of success and concluded that the
probability of scientific success and opt-in is equal amongst all Programs. In addition, each Program is multi-functional,
and a combination of Programs can be utilized in the development of a product candidate. As such, the Company
concluded that the standalone selling price of each material right is the same. The Company will recognize the transaction
price allocated to each material right when the material right is exercised, lapsed or expired.
During the year ended December 31, 2020 and 2019, the Company recognized $11.3 million and $6.2 million of
revenue related to Juno Therapeutics. As of December 31, 2020, the Company recorded $90.7 million of deferred revenue,
of which $73.7 million is classified as long-term on our condensed consolidated balance sheet. As of December 31, 2019,
the $96.3 million was classified as long-term in the accompanying consolidated balance sheets.
During the year ended December 31, 2020, 2019 and 2018, the Company incurred $0.8 million, $11.3 million and
$1.7 million in sublicense fees owed to certain of the Company’s licensors in connection with certain exercise and
milestone payments triggered in 2020, and the 2019 Amended Collaboration Agreement, respectively, which the Company
recorded as research and development expenses during such periods. The sublicense fee owed in connection with the
milestone payment is fully accrued in the consolidated balance sheet as of December 31, 2020.
Allergan Pharmaceuticals Strategic Alliance and Profit-Sharing Agreement
In March 2017, the Company entered into a Strategic Alliance and Option Agreement with Allergan to discover,
develop, and commercialize new gene editing medicines for a range of ocular disorders (the “Allergan Agreement”).
Pursuant to the Allergan Agreement, the Company granted Allergan an exclusive option (each, an “Option”) to exclusively
license from the Company up to five collaboration development programs for the treatment of ocular disorders (each, a
“CDP”), including the Company’s Leber congenital amaurosis 10 (“LCA10”) program and the related experimental
therapeutic EDIT-101 to treat LCA10 (the “LCA10 Program”).
In July 2018, Allergan exercised its Option with respect to the LCA10 Program. In connection with such exercise,
Allergan paid the Company $15.0 million. Following such exercise, the Company exercised its profit-share election with
respect to the LCA10 Program, following which the Company and an affiliate of Allergan entered into a separate Profit-
Sharing Agreement with respect to the LCA10 Program in February 2019. On August 5, 2020, the Company and Allergan
terminated the Allergan Agreement and the Profit-Sharing Agreement.
Under the terms of the Allergan Agreement, the Company received a $90.0 million up-front, non-refundable, non-
creditable cash payment related to the Company’s research and development costs for option packages for at least five
CDPs and for reimbursement of the Company’s past out-of-pocket costs with respect to the prosecution and defense of
patents that it owns and in-licenses.
Following the exercise by Allergan of its Option with respect to the LCA10 Program, Allergan was required to
make certain milestone payments to the Company upon the achievement of specified development, product approval and
launch and commercial events. In December 2018, the Company received a $25.0 million payment from Allergan in
connection with the acceptance of the IND for the LCA10 Program, the Company’s experimental therapeutic generated
under the LCA10 Program (the “LCA-10 Program Milestone Payment”).
Following the exercise by Allergan of its Option with respect to the LCA10 Program, the Company elected to
participate in a profit-sharing arrangement with Allergan in the United States, under which the Company and Allergan
agreed to share equally in net profits and losses, in lieu of Allergan paying royalties on net sales of any gene editing
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therapy products that results from the LCA10 Program in the United States, and Allergan’s applicable milestone payment
obligations were reduced (the “Profit-Sharing Agreement”). Pursuant to the Profit-Sharing Agreement, the Company was
obligated to reimburse Allergan for half of the United States development costs incurred by Allergan with respect to the
LCA10 Program, and Allergan retained control of all development and commercialization activities.
Termination Agreements
Allergan was acquired by AbbVie Inc. in May 2020. On August 5, 2020, the Company and Allergan agreed to
terminate the strategic alliance and option agreement (the “Collaboration Agreement”) that was entered into in May 2017
and the profit-sharing arrangement (together with the Collaboration Agreement, the “Initial Agreements”) to equally split
U.S. profit and losses of EDIT-101, an experimental medicine for Leber congenital amaurosis 10 (“LCA10”) that was
originally licensed to Allergan under the Collaboration Agreement (the “Termination Agreement”). In addition, in
connection with the termination, the Company entered into a transition services agreement with Allergan (together with the
Termination Agreement, the “Termination Agreements”), primarily to facilitate the transfer of EDIT-101 back to the
Company.
Pursuant to the Termination Agreements, the Company regained full global rights to research, develop,
manufacture, and commercialize its ocular medicines, including EDIT-101. Allergan has no further obligations pursuant to
the Initial Agreements, all unexercised options and contingent payments contemplated under the Initial Agreements have
terminated, which includes Allergan’s worldwide developmental and commercialization rights to EDIT-101. Under the
Termination Agreements, Allergan granted the Company a non-exclusive license to certain know-how that is necessary to
develop, manufacture and commercialize EDIT-101 and will transfer to the Company certain materials produced under the
Collaboration Agreement. The Company will use commercially reasonable efforts to develop and commercialize products
directed at four collaboration targets, one of which is LCA10.
In connection with the Termination Agreements, the Company agreed to make a $20.0 million payment to
Allergan, $17.5 million of which was paid as of December 31, 2020. In addition, the Company will make certain payments
on achievements of clinical and regulatory milestones up to $20.0 million for each target program and aggregated sales
milestones for all products covered by the Termination Agreement up to $90.0 million. Allergan is also entitled to royalties
in a low-single digit percentage, subject to reduction under specified circumstances, on net sales of specified products. The
Company’s obligation to pay royalties will expire on a country-by-country and product-by-product basis upon the later of
the expiration of regulatory-based exclusivity with respect to such product in such country and the tenth anniversary of the
first commercial sale of such product. Lastly, the Company is obligated to pay for a portion of the transition services.
Accounting Assessment
The Company evaluated the Termination Agreements in accordance with the provisions of Accounting Standards
Codification (“ASC”) 606 and concluded that they resulted in a modification followed by a termination of the Initial
Agreements. Upon execution of the Termination Agreements, the Company is no longer obligated to transfer control of any
goods or services to Allergan, and therefore there are no remaining performance obligations. As part of this assessment, the
Company considered that Allergan relinquished its right to the remaining exclusive license options under the Collaboration
Agreement and the Company reacquired the development and commercialization rights to EDIT-101. Allergan no longer
has any involvement in the development activities of the collaboration targets. Since there are no remaining performance
obligations, the Company accounted for the modification as part of the existing contract with a cumulative catch-up
adjustment. The Company applied the vendor consideration to a customer guidance pursuant to ASC 606 in accounting for
the $20 million payment due to Allergan and concluded that the worldwide rights to EDIT-101 represent a distinct good or
service. The Company therefore recorded the fair value of the rights to EDIT-101 of $5 million as in-process Research and
Development expense as of December 31, 2020 as the rights had no alternative future use. The remainder of the $20
million was recorded as a reduction to the contract liability that was recognized as revenue upon termination. The
contingent payments associated with the collaboration targets not previously licensed by Allergan under the Collaboration
Agreement did not impact the amount of deferred revenue recognized upon termination because it is not probable that a
significant reversal of revenue will occur. The contingent milestone and royalty payments associated with EDIT-101
qualify for scope exceptions from derivative accounting, and therefore there is no accounting
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for the contingent payments upon termination.
On the termination date, the Company recognized $62.1 million of previously deferred revenue related to the
Collaboration Agreement. This amount consisted of $77.1 million of revenues that were previously deferred related to the
collaboration agreement, partially offset by $15.0 million of the fee paid to Allergan that was determined to exceed the fair
value of the re-acquired rights to EDIT-101.
During the year ended December 31, 2020, the Company recognized revenue of $70.6 million related to the
Allergan arrangement. During the years ended December 31, 2019 and 2018, the Company recognized revenue of $13.6
million and $21.5 million, respectively, under the Allergan Agreement. At December 31, 2020 there was no remaining
contract liability related to the Allergan arrangement.
Beam Therapeutics License Agreement
In May 2018, the Company entered into a license agreement with Beam Therapeutics Inc. (“Beam,” and such
agreement, the “Beam License Agreement”). Beam is a biotechnology company focused on developing precision genetic
medicines using technology that converts a single nucleobase into a different nucleobase (“Base Editing”). Pursuant to the
Beam License Agreement, the Company granted to Beam licenses and options to acquire licenses to certain intellectual
property rights owned or controlled by the Company, for specified uses. More specifically, the Company granted to Beam a
worldwide, exclusive (subject to certain exceptions), sublicensable (subject to certain conditions), license under certain
intellectual property controlled by the Company for the use of Base Editing therapies for the treatment of any field of
human diseases and conditions, subject to certain exceptions (the “Beam Field,” and the licenses granted or to be granted
under the Beam License Agreement, the “Beam Development and Commercialization License”). Additionally, the
Company granted to Beam a royalty-free, non-exclusive license under certain intellectual property owned or controlled by
the Company to perform research activities in the Beam Field (the “Beam Research License”). The Company provided
Beam with an exclusive option to obtain a Beam Development and Commercialization License to three additional groups
of intellectual property owned or controlled by the Company, on a group by group basis, during the specified option period,
subject to certain exceptions. Pursuant to the Beam License Agreement, Beam will use commercially reasonable efforts to
develop a product that includes the rights licensed to Beam within a specified period of time and to commercialize any such
product that have received regulatory approval in certain specified countries.
As consideration for the license and option rights granted to Beam, the Company received a nominal one-time,
non-refundable, non-creditable upfront cash payment. The Company also received non-cash consideration, consisting of a
low to mid-single digit million number of shares of Beam Series A-1 and A-2 preferred stock, having an aggregate fair
value of approximately $3.6 million. The Company is eligible to receive additional consideration if Beam elects to exercise
its option to obtain a Beam Development and Commercialization License to the three categories of intellectual property
underlying the Research License, for a fee ranging from a mid-teen million dollar amount to a low to mid-eight digit dollar
amount per group, depending on the timing of the option exercise. Additionally, Beam is required to reimburse the
Company for certain payments the Company may be obligated to make under the Company’s existing license agreements
related to the intellectual property being licensed to Beam, including (i) development, regulatory and commercial milestone
payments and certain sublicense income payments due as a result of the Beam License Agreement and (ii) a percentage of
the annual maintenance fees and patent fees due to certain of the Company’s licensors. In addition, to the extent any
products are commercialized under a Beam Development and Commercialization License, the Company would be entitled
to receive royalty payments equivalent to the royalties that would be due from the Company to any applicable licensors of
the Company related to the sales of such licensed products, plus an additional low single-digit percentage royalty.
Additionally, if Beam exercises its right to obtain a Beam Development and Commercialization License to one of the
categories of optioned intellectual property comprising Company-owned intellectual property and any related licensed
products that are commercialized, the Company would be entitled to tiered low single-digit royalty payments related to
sales of such licensed products.
The license rights and option rights granted to Beam are subject to the terms and conditions of the underlying
license agreements that the Company is a party to and under which the Company licensed rights or option rights to Beam
and the termination of such in-licenses, as applicable. Unless earlier terminated by either party pursuant to the terms of
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the agreement, the Beam License Agreement will continue in full force and effect and will expire on a licensed product-by-
licensed product and country-by-country basis upon the expiration of the royalty term with respect to such licensed product
in such country. Beam has the right, at its sole discretion, at any time to terminate the Beam License Agreement in its
entirety or on a group-by-group of intellectual property basis, upon ninety days written notice to the Company. Upon
termination of the Beam License Agreement, all rights and licenses granted by the Company to Beam (including the rights
to exercise options and obtain such licenses) will immediately terminate and patents within a group of patents will no
longer be deemed licensed patents. Expiration or termination of the Beam License Agreement for any reason does not
release either party of any obligation or liability which had accrued or which is attributable to a period prior to such
expiration or termination.
The Company has identified the following performance obligations (i) the Beam Development and
Commercialization License and (ii) the Beam Research License. In addition, the Company has concluded the option to
obtain additional Beam Development and Commercialization Licenses to up to three additional groups of patents in the
future is considered a marketing offer as the options did not provide any discounts or other rights that would be considered
a material right in the arrangement.
As of December 31, 2019, the total transaction price at the inception of the arrangement was determined to be
approximately $3.8 million, consisting of the upfront cash payment and non-cash consideration related to the shares of
Beam preferred stock. The Company determined the fair value based on the price paid by other unrelated investors for such
shares. The consideration associated with the exercise of the option(s) will be accounted for if and when Beam elects to
purchase the additional licenses. The other forms of consideration, including the development and regulatory milestone
reimbursement, the sublicense income reimbursement, the maintenance fee reimbursement and the patent costs
reimbursement were estimated based on the most-likely amount and were excluded from the initial transaction price as the
most-likely amount was estimated to be zero or the amount was otherwise fully constrained due to the significant
uncertainties surrounding such payments. The commercial-based milestone reimbursement and the sales-based royalty
payments will be recognized when the related sales occur as they were determined to relate predominantly to the licenses
granted and therefore have also been excluded from the transaction price.
The total transaction price at the inception of the arrangement was allocated to the performance obligations in the
aggregate, as the Beam Development and Commercialization License and the Beam Research License were delivered
simultaneously with one another, at inception of the arrangement, when the licenses were made available for Beam’s use
and benefit. Accordingly, the satisfaction of each performance obligation occurs at inception of the arrangement and the
transaction price at the inception of the arrangement is recognized in its entirety at such time.
Following the initial public offering of Beam Therapeutics in 2020, the Company held equity securities that had a
readily determinable fair value, and were included in marketable securities on the condensed consolidated balance sheet.
The Company sold this investment in October 2020, resulting in a realized gain of $16.4 million recorded in other income
(expense), net on the consolidated statements of operations.
During the year ended December 31, 2020 and 2019, the Company recognized revenue under the Beam License
Agreement of approximately $0.2 million and $0.2 million, respectively.
10. Preferred Stock
The Company’s amended and restated certificate of incorporation authorized 5,000,000 shares of undesignated
preferred stock that may be issued from time to time by the Company’s board of directors in one or more series. As of
December 31, 2020, the Company had no shares of preferred stock issued or outstanding.
11. Common Stock
The voting, dividend, and liquidation rights of the holders of the common stock are subject to and qualified by the
rights, powers, and preferences of holders of the preferred stock that may be issued from time to time. The common stock
had the following characteristics as of December 31, 2020:
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Voting
The holders of shares of common stock are entitled to one vote for each share of common stock held at any
meeting of stockholders and at the time of any written action in lieu of a meeting.
Dividends
The holders of shares of common stock are entitled to receive dividends, if and when declared by the Company’s
board of directors. Cash dividends may not be declared or paid to holders of shares of common stock until all unpaid
dividends on the redeemable convertible preferred stock have been paid in accordance with their terms. No dividends have
been declared or paid by the Company since its inception.
2013 Stock Incentive Plan
In September 2013, the board of directors adopted the 2013 Stock Incentive Plan, which was subsequently
amended (as amended, the “2013 Plan”), which provides for the grant of incentive stock options and nonqualified stock
options or other awards including restricted stock awards, unrestricted stock awards, and restricted stock units to the
Company’s employees, officers, directors, advisors, and consultants for the purchase of up to 1,057,692 shares of the
Company’s common stock, which has been amended several times, and as of July 2015, a total of 6,317,769 shares were
reserved.
The terms of stock awards agreements, including vesting requirements, are determined by the board of directors
and are subject to the provisions of the 2013 Plan. The stock options granted to employees generally vest over a four-year
period and expire ten years from the date of grant. Certain awards contain performance based vesting criteria. There has
only been one such award to date. Certain options provide for accelerated vesting in the event of a change in control, as
defined in the applicable options. Awards granted to non-employee consultants generally vest monthly over a period of one
to four years. In connection with the Company’s initial public offering (“IPO”), the Company’s board of directors
determined to grant no further awards under the 2013 Plan.
2015 Stock Incentive Plan
The Company’s board of directors adopted and the Company’s stockholders approved the 2015 stock incentive
plan (the “2015 Plan”). The 2015 Plan provides for the grant of incentive stock options, nonstatutory stock options,
restricted stock awards, restricted stock units, stock appreciation rights and other stock-based awards. The Company’s
employees, officers, directors and consultants and advisors are eligible to receive awards under the 2015 Plan.
The number of shares reserved for issuance under the 2015 Plan is subject to further increases for (a) any
additional shares of the Company’s common stock subject to outstanding awards under the 2013 Plan that expire,
terminate, or are otherwise surrendered, cancelled, forfeited, or repurchased by the Company at their original issuance price
pursuant to a contractual repurchase right and (b) annual increases, to be added as of the first day of each fiscal year, from
January 1, 2017 until, and including, January 1, 2026, equal to the lowest of 2,923,076 shares of common stock, 4% of the
number of shares of common stock outstanding on such first day of the fiscal year in question and an amount determined
by the Company’s board of directors. In January 2021, the shares under the 2015 Plan were increased by 2,507,552 shares
pursuant to the annual increase described in the prior sentence.
2015 Employee Stock Purchase Plan
The Company’s board of directors adopted and the Company’s stockholders approved the 2015 employee stock
purchase plan (the “2015 ESPP”). The number of shares reserved for issuance under the 2015 ESPP is subject to annual
increases, to be added as of the first day of each fiscal year, from January 1, 2017 until, and including, January 1, 2026, in
an amount equal to the least of (a) 769,230 shares of common stock, (b) 1% of the total number of shares of common stock
outstanding on the first day of the applicable year, and (c) an amount determined by the board of directors. The first
offering under the 2015 ESPP opened on December 1, 2017. In January 2021, the shares under the 2015 ESPP Plan were
increased by 626,888 shares pursuant to the annual increase described in the prior sentence.
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Inducement Awards
From time to time the Company’s board of directors approves inducement awards to certain employees outside of
the existing equity compensation plans in connection with such employees commencing employment with the Company.
Inducement awards are typically a service-based option or a restricted stock unit and are subject to the Company’s typical
vesting terms and the employee’s continued service relationship with the Company through the applicable vesting dates. In
November 2020, the Company’s board of directors approved an inducement grant to the Company’s recently hired Chief
Medical Officer, including an option to purchase up to 120,000 shares of the Company’s common stock and an award of
20,000 restricted stock units.
Shares Reserved for Future Issuance
Shares reserved for outstanding stock option awards under the
2013 Stock Incentive Plan, as amended
Shares reserved for outstanding stock option awards and
restricted stock units under the 2015 Stock Incentive Plan
Shares reserved for outstanding inducement stock option award
Remaining shares reserved, but unissued, for future awards
under the 2015 Stock Incentive Plan
Remaining shares reserved, but unissued, for future awards
under the 2015 Employee Stock Purchase Plan
As of December 31,
2020
2019
174,362
3,839,345
280,000
5,599,450
2,137,127
12,030,284
312,342
4,254,357
175,000
4,061,357
1,630,199
10,433,255
12. Stock-Based Compensation
Total compensation cost recognized for all stock-based compensation awards in the consolidated statements of
operations was as follows (in thousands):
Research and development
General and administrative
Total stock-based compensation expense
152
Year Ended
December 31,
2020
2019
$
$
11,580
11,576
23,156
$
$
13,538
13,705
27,243
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Restricted Stock and Restricted Stock Unit Awards
The following table summarizes restricted stock and restricted stock unit awards activity for the instruments
discussed above as of December 31, 2019 and 2020 is as follows:
Unvested restricted stock and restricted stock unit awards as of December 31, 2019
Issued
Vested
Forfeited
Unvested restricted stock and restricted stock unit awards as of December 31, 2020
Weighted
Average
Grant Date
Fair Value
Per Share
24.03
29.57
23.37
24.72
27.35
Shares
$
581,408
364,549
$
(304,638) $
(133,869) $
$
507,450
The expense related to restricted stock and restricted stock unit awards granted to employees and non-employees
was $2.8 million and $1.6 million, respectively, for the year ended December 31, 2020. The expense related to restricted
stock and restricted stock unit awards granted to employees and non-employees was $4.7 million and $1.6 million,
respectively, for the year ended December 31, 2019. The expense related to restricted stock and restricted stock unit awards
granted to employees and non-employees was $0 million and $2.4 million, respectively, for the year ended December 31,
2018.
As of December 31, 2020, total unrecognized compensation expense related to unvested restricted stock and
restricted stock unit awards was $11.9 million, which the Company expects to recognize over a remaining weighted-
average period of 2.7 years.
Stock Options
The following is a summary of stock option activity for the year ended December 31, 2020:
Outstanding at December 31, 2019
Granted
Exercised
Cancelled
Outstanding at December 31, 2020
Exercisable at December 31, 2020
Shares
4,358,291
1,721,748
(964,412)
(1,203,370)
3,912,257
1,463,668
Weighted Average
Exercise Price
25.40
30.44
20.22
30.72
27.26
24.05
$
$
$
$
$
$
Remaining
Contractual Life (years)
7.4
Aggregate Intrinsic
Value (in thousands)
26,060
$
7.9
6.8
$
$
167,640
67,413
The total intrinsic value of options exercised for the years ended December 31, 2020, 2019 and 2018 was $15.6
million, $14.6 million, and $15.9 million, respectively.
Using the Black-Scholes option pricing model, the weighted average fair value of options containing service-
based vesting granted to employees and directors during the years ended December 31, 2020, 2019, and 2018 was $16.60,
$15.67, and $24.91, respectively. The expense related to options containing service-based vesting granted to employees and
directors was $16.1 million, $18.1 million, and $19.9 million for the years ended December 31, 2020, 2019, and 2018,
respectively.
The fair value of each service-based vesting option issued to employees and directors was estimated at the date of
grant using the Black-Scholes option pricing model with the following weighted-average assumptions:
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Expected volatility
Expected option term (in years)
Risk free interest rate
Expected dividend yield
2020
60.0 %
6.25
1.5 %
—
Year Ended
December 31,
2019
73.8 %
6.25
2.0 %
—
2018
77.5 %
6.25
2.9 %
—
As of December 31, 2020, total unrecognized compensation expense related to stock options was $40.4 million,
which the Company expects to recognize over a remaining weighted-average period of 2.7 years.
13. 401(k) Savings Plan
The Company has a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code of 1986,
as amended (the “401(k) Plan”). The 401(k) Plan covers all employees who meet defined minimum age and service
requirements, and allows participants to defer a portion of their annual compensation on a pretax basis. Effective in 2017,
the Company will provide a 200% match of employee contributions up to a limit on the Company’s contributions of the
lesser of $6,000 and 3% of the employee’s salary. The Company made $1.1 million, $0.8 million, and $0.7 million in
contributions to the 401(k) Plan for the years ended December 31, 2020, 2019 and 2018, respectively.
14. Income Taxes
The Company had no income tax expense due to operating losses incurred for the years ended December 31,
2020, 2019 and 2018.
A reconciliation of the income tax expense computed using the federal statutory income tax rate to the Company’s
effective income tax rate is as follows:
Income tax computed at federal statutory tax rate
State taxes, net of federal benefit
General business credit carryovers
Stock Options
Non-deductible expenses
Change in valuation allowance
Year Ended
December 31,
2019
2020
21 %
5.20 %
4.80 %
(1.8)%
(0.1)%
(29.10)%
— %
21 %
5.20 %
2.80 %
(2.2)%
(0.1)%
(26.70)%
— %
2018
21 %
6.4 %
4.4 %
0.7 %
(0.1)%
(32.4)%
— %
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The principal components of the Company’s deferred tax assets and liabilities consist of the following at December 31,
2020 and 2019 (in thousands):
Deferred tax assets:
Net operating loss carryforwards
Tax credit carryforwards
Accrued expenses
Capitalized patent costs
Lease Liabilities
Deferred revenue
Construction financing lease obligation
Other
Total deferred tax assets
Less valuation allowance
Net deferred tax assets
Deferred tax liabilities
Depreciation and amortization
Right-of-use assets
Net deferred taxes
Year Ended
December 31,
2020
2019
$
$
70,751
19,353
11,372
46,197
7,083
25,724
—
5,204
185,684
(178,307)
7,377
(7,377)
(567)
(6,810)
$
— $
50,511
13,767
2,219
39,070
7,879
31,880
—
7,865
153,191
(144,540)
8,651
(8,651)
(859)
(7,792)
—
The Company has incurred net operating losses (“NOL”) since inception. At December 31, 2020 and 2019, the
Company had federal net operating loss carryforwards of $261.9 million and $185.4 million, respectively. Of the amount as
of December 31, 2020, $186.4 million will carryforward indefinitely while $75.5 million will expire beginning in 2033 and
will continue to expire through 2037. As of December 31, 2020, and 2019, the Company also had state net operating loss
carryforwards of approximately $258.4 million and $183.3 million, respectively, which may be available to offset future
income tax liabilities and will expire beginning in 2035 and will continue to expire through 2039. Loss generated in 2020
expires in 2040.
Under the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), the NOL and tax credit
carryforward are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL
and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the
ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and
383 of the Code, respectively, as well as other similar state provisions. The Company conducted an analysis under Section
382 to determine if historical changes in ownership through December 31, 2019 would limit or otherwise restrict its ability
to utilize its NOL and research and development credit carryforwards. As a result of this analysis, the Company does not
believe there are any significant limitations on its ability to utilize these carryforwards. However, future changes in
ownership occurring after December 31, 2019 could affect the limitation in future years, and any limitation may result in
expiration of a portion of the NOL or research and development credit carryforwards before utilization.
Management has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax
assets, which principally comprise of NOL carryforwards, research and development credit carryforwards and capitalized
license and patent costs. The Company’s management has determined that it is more likely than not that the Company will
not recognize the benefits of its federal and state deferred tax assets, and as a result, a valuation allowance of $178.3
million and $144.5 million has been established at December 31, 2020 and 2019, respectively. The increase in the valuation
allowance of $33.8 million for the year ended December 31, 2020 was primarily due to current period pre-tax losses
incurred and research tax credits generated.
The Company applies ASC 740 related to accounting for uncertainty in income taxes. The Company’s reserves
related to income taxes are based on a determination of whether, and how much of, a tax benefit taken by the Company in
its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies
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Table of Contents
present related to the tax benefit. At December 31, 2020 and 2019, the Company had no unrecognized tax benefits. Interest
and penalty charges, if any, related to unrecognized tax benefits would be classified as income tax expense in the
accompanying statements of operations.
The Company has not as yet conducted a study of its research and development credit carry forwards. This study
may result in an adjustment to the Company’s research and development credit carryforwards; however, until a study is
completed and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation
allowance has been provided against the Company’s research and development credits, and if an adjustment is required,
this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the
consolidated balance sheets or statements of operations if an adjustment were required.
The Company files income tax returns in the U.S. federal tax jurisdiction, the Massachusetts state jurisdiction, the
California state jurisdiction and the Colorado state jurisdiction. Since the Company is in a loss carryforward position, the
Company is generally subject to examination by the U.S. federal, state and local income tax authorities for all tax years in
which a loss carryforward is available. The Company did not have any international operations as of December 31, 2020.
There is a 2018 IRS audit in process.
15. Net Loss per Share
Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the
weighted average number of shares of common stock outstanding during the period, without consideration for potentially
dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by
the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period
determined using the treasury stock and if converted methods. Contingently issuable shares are included in the calculation
of basic loss per share as of the beginning of the period in which all the necessary conditions have been satisfied.
Contingently issuable shares are included in diluted loss per share based on the number of shares, if any, that would be
issuable under the terms of the arrangement if the end of the reporting period was the end of the contingency period, if the
results are dilutive.
For purposes of the diluted net loss per share calculation, stock options are considered to be common stock
equivalents, but they were excluded from the Company’s calculation of diluted net loss per share allocable to common
stockholders because their inclusion would have been anti-dilutive. Therefore, basic and diluted net loss per share
applicable to common stockholders was the same for all periods presented.
The following common stock equivalents were excluded from the calculation of diluted net loss per share
allocable to common stockholders because their inclusion would have been anti-dilutive:
Unvested restricted stock and restricted stock unit awards
Outstanding stock options
Estimated number of shares issuable for convertible notes (1)
Total
As of December 31,
2020
507,450
3,912,257
392,240
4,811,947
2019
581,408
4,358,291
—
4,939,699
(1) Represents the number of shares that would have been issued if the Company had elected to pay the December
Success Payment Notes, as discussed in Note 8, in shares of the Company’s common stock, based on the closing
price of the common stock on December 31, 2020. The number of shares issued, for purposes of this presentation,
is calculated by dividing the principal of the notes payable, including accrued interest, by the stock price per share
The table above reflects restricted stock issued upon exercise of unvested stock options as exercised on the dates
that the shares are no longer subject to repurchase.
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16. Related-Party Transactions
The Company received $0.4 million in rent and facility-related fees from a related party during the year ended
December 31, 2018 in connection with subleasing a portion of its headquarters and no rent or facility-related payments
were received from this related party during the years ended December 31, 2020 and 2019. During the year ended
December 31, 2018, the Company paid a related party $0.8 million in connection with certain research and development
expenses. The Company did not make any payments to this related party during the years ended December 31, 2020 and
2019.
17. Selected Quarterly Financial Data (unaudited) –
The following table contains selected quarterly financial information from 2020 and 2019. The Company believes
that the following information reflects all normal recurring adjustments necessary for a fair statement of the information for
the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.
March 31, 2020
June 30, 2020
September 30, 2020
(in thousands, except per share data)
December 31, 2020
Three months ended
Total collaboration and other research
and development revenues
Total operating expenses
Total other income (expense), net
Net (loss) income
Net (loss) income applicable to
common stockholders
Net (loss) income per share
attributable to common shareholders:
Basic
Diluted
$
$
$
$
$
5,723
52,339
8,892
(37,724)
(37,724)
(0.69)
(0.69)
March 31, 2019
Total collaboration and other research
and development revenues
Total operating expenses
Total other income (expense), net
Net loss
Net loss applicable to common
stockholders
Net loss per share applicable to
common stockholders — basic and
diluted
$
$
$
$
2,069
33,331
2,013
(29,249)
(29,249)
(0.60)
$
$
$
$
$
$
$
$
$
10,749
42,088
7,767
(23,572)
(23,572)
(0.43)
(0.43)
$
$
$
$
$
62,841
53,852
(1,170)
7,819
7,819
0.13
0.12
Three months ended
June 30, 2019
September 30, 2019
(in thousands, except per share data)
3,848
38,436
1,647
(32,941)
(32,941)
2,330
37,979
1,863
(33,786)
(33,786)
(0.69)
$
$
$
$
$
$
$
$
$
$
$
$
11,419
77,293
3,375
(62,499)
(62,499)
(1.00)
(1.00)
December 31, 2019
12,284
51,707
1,653
(37,770)
(37,770)
(0.66)
$
(0.74)
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18. Subsequent Events
In January 2021, the Company issued an aggregate of 303,599 shares of its common stock to Broad in connection
with settling the third Cpfl Success Payment and the third research payment under the Sponsored Research Agreement (see
Note 8).
In January 2021, the Company triggered the second Success Payment under the Cas9-II License Agreement when
the Company’s market capitalization reached $3.0 billion, which the Company settled in cash for a mid-seven digit dollar
amount (see Note 8). Upon achieving a market capitalization of $3.0 billion, the Company also triggered a mid-seven digit
dollar amount success payment under another license agreement, which remains due and payable.
In January 2021, the Company completed a public offering whereby the Company sold 3,500,000 shares of its
common stock and received net proceeds of approximately $216.9 million. In February 2021, the underwriters in the public
offering exercised their option to purchase an additional 525,000 shares, resulting in additional net proceeds to the
Company of approximately $32.6 million.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer,
evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020. The term “disclosure
controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the
“Exchange Act”) means controls and other procedures of a company that are designed to ensure that information required
to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and
communicated to the company’s management, including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management
recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of
December 31, 2020, our principal executive officer and principal financial officer concluded that, as of such date, our
disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting
as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with general accepted accounting principles. Because of its
inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our principal executive officer and
principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial
158
Table of Contents
reporting based on the 2013 framework in Internal Control–Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our evaluation under that framework, our management concluded
that our internal control over financial reporting was effective as of December 31, 2020.
The effectiveness of our internal control over financial reporting as of December 31, 2020, has been audited by
Ernst & Young LLP, an independent registered public accounting firm, and has issued an attestation report on such audit,
which is included herein.
159
Table of Contents
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) occurred during our fiscal quarter ended December 31, 2020 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Editas Medicine, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Editas Medicine Inc.’s internal control over financial reporting as of December 31, 2020, based
on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Editas Medicine Inc. (the “Company”)
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on
the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets of Editas Medicine Inc. as of December 31, 2020 and 2019, the
related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three
years in the period ended December 31, 2020, and the related notes and our report dated February 26, 2021 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission of the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
160
Table of Contents
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 26, 2021
Item 9B. Other Information.
None.
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
Except to the extent provided below, the information required by this Item 10 will be included in the section
captioned “Corporate Governance” and the subsections thereof, “Nominees for Election as Class I Directors,” “Directors
Continuing in Office,” “Executive Officers Who Are Not Directors,” and “Delinquent Section 16(a) Reports,” if applicable,
in our definitive proxy statement to be filed with the Securities and Exchange Commission (“SEC”) with respect to our
2021 Annual Meeting of Stockholders, which information is incorporated herein by reference.
We have adopted a written code of business conduct and ethics that applies to our directors, officers, and
employees, including our principal executive officer, principal financial officer, principal accounting officer or controller,
or persons performing similar functions. A copy of the code is posted on the Corporate Governance section of our website,
which is located at www.editasmedicine.com. If we make any substantive amendments to, or grant any waivers from, the
code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on
our website or in a current report on Form 8-K. We will provide any person, without charge, a copy of such Code of
Business Conduct and Ethics upon written request, which may be mailed to 11 Hurley Street, Cambridge, MA 02141, Attn:
Corporate Secretary.
Item 11. Executive Compensation.
The information required by this Item 11 will be included in the section captioned “Executive and Director
Compensation” in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of
Stockholders, which information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this Item 12 will be included in the sections captioned “Principal Stockholders” and
“Securities Authorized for Issuance under Equity Compensation Plans” in our definitive proxy statement to be filed
161
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with the SEC with respect to our 2021 Annual Meeting of Stockholders, which information is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item 13 will be included in the sections captioned “Transactions with Related
Persons” and “Director Independence” in our definitive proxy statement to be filed with the SEC with respect to our 2021
Annual Meeting of Stockholders, which information is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
The information required by this Item 14 will be included in the sections captioned “Audit Fees” and “Audit
Committee Pre-Approval Policies and Procedures” in our definitive proxy statement to be filed with the SEC with respect
to our 2021 Annual Meeting of Stockholders, which information is incorporated herein by reference.
Item 15. Exhibits and Financial Statement Schedules.
(1)
Financial Statements
PART IV
Our consolidated financial statements are set forth in Part II, Item 8 of this Annual Report on Form 10-K and are
incorporated herein by reference.
(2)
Financial Statement Schedules
Schedules have been omitted since they are either not required or not applicable or the information is otherwise
included herein.
(3)
Exhibits
The exhibits filed as part of this Annual Report on Form 10-K are listed in the following Exhibit Index.
EXHIBIT INDEX
Exhibit
Number
Description of Exhibit
Form
Incorporated by Reference
Date of
Filing
File No.
Exhibit
Number
Filed
Herewith
3.1 Restated Certificate of Incorporation of the
Registrant
3.2 Amended and Restated By-laws of the Registrant
4.1 Specimen Stock Certificate evidencing the shares
of common stock
4.2 Description of Registrant’s Securities Registered
Pursuant to Section 12 of the Securities Exchange
Act of 1934
10.1+ 2013 Stock Incentive Plan, as amended
10.2+ Form of Incentive Stock Option Agreement under
2013 Stock Incentive Plan, as amended
10.3+ Form of Nonstatutory Stock Option Agreement
under 2013 Stock Incentive Plan, as amended
8-K
8-K
S-1
001-37687
2/8/2016
001-37687
333-208856
2/8/2016
1/4/2016
10-K
001-37687
2/26/2020
S-1
S-1
S-1
333-208856
333-208856
1/4/2016
1/4/2016
333-208856
1/4/2016
3.1
3.2
4.1
4.2
10.5
10.6
10.7
162
Table of Contents
Exhibit
Number
Description of Exhibit
Form
Incorporated by Reference
Date of
Filing
File No.
Exhibit
Number
Filed
Herewith
10.4+ Form of Early Exercise Nonstatutory Stock Option
S-1
333-208856
1/4/2016
10.8
Agreement under 2013 Stock Incentive Plan, as
amended
10.5+ Form of Restricted Stock Agreement under 2013
Stock Incentive Plan, as amended
10.6+ 2015 Stock Incentive Plan
10.7+ Form of Incentive Stock Option Agreement under
2015 Stock Incentive Plan
10.8+ Form of Nonstatutory Stock Option Agreement
under 2015 Stock Incentive Plan
S-1
S-1
S-1
S-1
333-208856
1/4/2016
10.9
333-208856
333-208856
1/4/2016
1/4/2016
10.10
10.11
333-208856
1/4/2016
10.12
10.9+ Form of Restricted Stock Agreement under 2015
10-Q
001-37687
11/8/2017
10.1
Stock Incentive Plan
10.10+ Form of Restricted Stock Unit Award Agreement
8-K
001-37687
1/22/2019
10.1
under the 2015 Stock Incentive Plan
10.11+ Amended and Restated Offer of Employment,
dated July 24, 2016, between the Registrant and
Charles Albright, Ph.D.
10-K
001-37687
3/3/2017
10.11
10.12+ Employment Offer Letter, dated August 6, 2019,
10-Q
001-37687
11/12/2019
10.1
between the Registrant and Cynthia Collins
10.13+ Letter Agreement, dated February 15, 2021, by and
between the Registrant and Cynthia Collins
10.14+ Employment Offer Letter, dated February 14, 2021,
between the Registrant and James C. Mullen
10.15+ Employment Offer Letter, dated December 27,
10-K
001-37687
2/26/2020
10.14
2019, between the Registrant and Michelle
Robertson
10.16+ Form of Inducement Stock Option Agreement for
10-K
001-37687
2/26/2020
10.15
the Registrant’s executive officers
10.17+ Form of Inducement Restricted Stock Unit Award
Agreement for the Registrant’s executive officers
10.18+ Employment Offer Letter, dated September 25,
2020, between the Registrant and Lisa A. Michaels,
M.D.
10-K
001-37687
2/26/2020
10.16
10.19† Amended and Restated Cas9-I License Agreement,
8-K
001-37687
1/23/2017
99.2
X
X
X
dated December 16, 2016, among the Registrant,
the President and Fellows of Harvard College
(“Harvard”), and the Broad Institute, Inc. (the
“Broad”)
10.20 Amendment No.1 to Amended and Restated Cas9-I
License Agreement, by and among Editas
Medicine, Inc., Harvard, and Broad, dated March 3,
2017
8-K
001-37687
3/7/2017
99.1
10.21* Second Amended and Restated License and
10-K
001-37687
2/26/2020
10.20
Collaboration Agreement, dated November 11,
2019, between the Registrant and Juno
Therapeutics, Inc. (“Juno”)
10.22* License and Agreement, dated November 11, 2019,
10-K
001-37687
2/26/2020
10.21
between the Registrant and Juno
10.23† Sponsored Research Agreement, dated June 7,
10-Q/A 001-37687
10/23/2018
10.2
2018, between the Registrant and Broad
163
Table of Contents
Exhibit
Number
Description of Exhibit
Form
Incorporated by Reference
Date of
Filing
File No.
Exhibit
Number
Filed
Herewith
10.24* First Amendment to Sponsored Research
Agreement, dated January 11, 2021, between the
Registrant and Broad
10.25+ Summary of Director Compensation Program
10.26+ 2015 Employee Stock Purchase Plan
10.27+ Amended Severance Benefits Plan
10.28 Form of Indemnification Agreement between the
Registrant and each of its directors and executive
officers
10.29 Lease Agreement, dated February 12, 2016,
between Registrant and ARE-MA Region No. 55
Exchange Holding LLC
S-1
10-K
S-1
333-208856
001-37687
333-208856
1/4/2016
2/26/2020
1/4/2016
10.25
10.25
10.28
8-K
001-37687
2/19/2016
99.1
10.30† Cpf1 License Agreement, dated as of December 16,
8-K
001-37687
1/23/2017
99.1
2016, by and between the Registrant and Broad
10.31† Cas9-II License Agreement, dated as of
8-K
001-37687
1/23/2017
99.3
December 16, 2016, by and between the Registrant
and Broad
10.32* Omnibus Amendment, dated as of January 11,
2021, by and between the Registrant and Broad
10.33* Letter Agreement, dated as of November 18, 2019,
by and among, the Registrant, Broad and Harvard
10.34* Letter Agreement, dated as of December 16, 2019,
by and among, the Registrant, Broad and Harvard
10.35 Common Stock Sales Agreement, dated as of May
15, 2020, by and between the Company and Cowen
and Company, LLC
10-K
001-37687
2/26/2020
10.30
10-K
001-37687
2/26/2020
10.31
8-K
001-37687
5/15/2020
1.1
10.36* Termination Agreement, dated August 5, 2020, by
10-Q
001-37687
11/6/2020
10.1
and between the Registrant and Allergan Sales,
LLC
21.1 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young
31.1 Rule 13a-14(a) Certification of Principal Executive
Officer
31.2 Rule 13a-14(a) Certification of Principal Financial
Officer
32.1 Certification of Principal Executive Officer and
Principal Financial Officer pursuant to 18 U.S.C.
§1350
10-K
001-37687
3/30/2016
21.1
X
X
X
X
X
X
X
101 The following financial statements from the Company’s Annual Report on Form 10-K for the year ended
December 31, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated
Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive
Loss, (iv) Consolidated Statement of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and
(vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed
tags.
104 The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2020,
formatted in Inline XBRL.
† Confidential treatment has been granted as to certain portions, which portions have been omitted and filed
separately with the Securities and Exchange Commission.
164
Table of Contents
*
Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. Certain portions of
this exhibit have been omitted because they are not material and would likely cause competitive harm to the
Registrant if disclosed.
+ Management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary.
None.
165
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Dated: February 26, 2021
EDITAS MEDICINE, INC.
By:
/s/ James C. Mullen
James C. Mullen
Principal Executive Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ James C. Mullen
James C. Mullen
President and Chief Executive Officer, Chairman
of the Board (principal executive officer)
February 26, 2021
/s/ Michelle Robertson
Michelle Robertson
/s/ Meeta Chatterjee
Meeta Chatterjee, Ph.D.
/s/ Andrew Hirsch
Andrew Hirsch
/s/ Jessica Hopfield
Jessica Hopfield, Ph.D.
/s/ David Scadden
David Scadden, M.D.
/s/ Akshay K. Vaishnaw
Akshay K. Vaishnaw, M.D., Ph.D.
Chief Financial Officer (principal financial and
accounting officer)
February 26, 2021
Director
February 26, 2021
Director
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
Director
Director
Director
166
Exhibit 10.13
11 Hurley Street
Cambridge, MA 02141
P 617-401-9000
F 617-494-0985
VIA ELECTRONIC MAIL
February 4, 2021 (revised)
Cynthia Collins
Dear Cindy:
As we discussed, your employment with Editas Medicine, Inc. (the “Company”) will end
effective February 15, 2021 (the “Separation Date”). As we also discussed, you will be eligible to
receive the severance benefits described in paragraph 1 below if you sign and return this letter
agreement to me by February 26, 2021 (but no earlier than the Separation Date) and do not
revoke your agreement (as described below). By signing and returning this letter agreement and
not revoking your acceptance, you will be entering into a binding agreement with the Company
and will be agreeing to the terms and conditions set forth in the numbered paragraphs below,
including the release of claims set forth in paragraph 2. Therefore, you are advised to consult with
an attorney before signing this letter agreement and you have been given at least twenty-one (21)
days to do so. If you sign this letter agreement, you may change your mind and revoke your
agreement during the seven (7) business day period after you have signed it (the “Revocation
Period”) by notifying me in writing. If you do not so revoke, this letter agreement will become a
binding agreement between you and the Company upon the expiration of the Revocation Period.
Although your receipt of the severance benefits is expressly conditioned on your entering
into this letter agreement, the following will apply regardless of whether or not you timely enter into
this letter agreement:
● As of the Separation Date, all salary payments from the Company will cease and
any benefits you had as of the Separation Date under Company-provided benefit
plans, programs, or practices will terminate, except as required by federal or state
law.
● You will receive on the Separation Date payment for your final wages and any
unused vacation time accrued through the Separation Date.
● You may, if eligible and at your own cost, elect to continue receiving group medical
insurance pursuant to the “COBRA” law. Please consult the COBRA materials to
be provided under separate cover for details regarding these benefits.
● You are obligated to keep confidential and not to use or disclose any and all non-
public information concerning the Company that you acquired during the course of
your employment with the Company, including any non-public information
concerning the Company’s business affairs, business prospects, and financial
condition, except as otherwise permitted by paragraph 9 below. Further, you
remain subject to your continuing confidentiality, non-competition, and non-
solicitation obligations to the Company as set forth in the Invention and Non-
Disclosure Agreement and the Non-Competition and Non-Solicitation Agreement
1
(the “Restrictive Covenant Agreements”) you previously executed in connection
with your commencement of employment with the Company, which obligations
remain in full force and effect.
● You must return to the Company on the Separation Date (or within ten (10)
business days thereafter) all Company property.
● You will have three (3) months following the Separation Date to exercise any stock
options under the Company’s 2015 Stock Incentive Plan that were vested as of the
Separation Date. After that three (3) month period, your stock options will expire
and you will no longer have any rights with respect thereto. Any Company-
imposed blackout restrictions arising because of your service for the Company,
whether as an employee, officer, and/or director, will terminate on the Separation
Date. In accordance with Section 9(b) of your Employment Agreement dated
August 6, 2019, the Time-Vesting Option and RSU Award (each as defined in your
Employment Agreement) shall become fully vested and exercisable as of the
Separation Date. Your stock options and restricted stock units which are or will
become vested as of the Separation Date are summarized on the attached
Schedule II.
If you elect to timely sign and return this letter agreement and do not revoke your
acceptance within the Revocation Period, the following terms and conditions will also apply:
1.
benefits (the “severance benefits”) pursuant to the Company’s Severance Benefits Plan:
Severance Benefits –The Company will provide you with the following severance
a. Severance Pay. The Company will pay to you an amount equivalent to
twelve (12) months of your current base salary, less all applicable taxes and
withholdings. This separation pay will be paid in installments in accordance
with the Company’s regular payroll practices, but in no event shall
payments begin earlier than the Company’s first payroll date following
expiration of the Revocation Period.
b. COBRA Benefits. Should you timely elect and be eligible to continue
receiving group health insurance pursuant to the “COBRA” law, the
Company will, until the earlier of (x) the date that is twelve (12) months
following the Separation Date, and (y) the date on which you are eligible to
obtain alternative coverage with a subsequent employer (as applicable, the
“COBRA Contribution Period”), continue to pay the share of the premiums
for such coverage to the same extent it was paying such premiums on your
behalf immediately prior to the Separation Date. The remaining balance of
any premium costs during the COBRA Contribution Period, and all premium
costs thereafter, shall be paid by you on a monthly basis for as long as, and
to the extent that, you remain eligible for COBRA continuation. You agree
that, should you become eligible to obtain alternative medical and/or dental
insurance coverage with a subsequent employer prior to the date that is
twelve (12) months following the Separation Date, you will so inform the
Company in writing within five (5) business days of obtaining such
coverage.
- 2 -
c. 2020 Annual Bonus. You will be eligible to receive a bonus for 2020 equal
to your target bonus times the percentage achievement of the Company’s
2020 goals as assessed by the Board of Directors of the Company in
connection with the determination of bonuses for the executive team, with
any such bonus paid less applicable taxes and withholdings and at the
same time as annual bonuses are paid to other executives of the Company
or, if later, immediately upon the expiration of the Revocation Period.
You will not be eligible for, nor shall you have a right to receive, any payments or
benefits from the Company following the Separation Date other than as set forth in this
paragraph.
Release of Claims – In consideration of the severance benefits, which you
2.
acknowledge you would not otherwise be entitled to receive, you hereby fully, forever,
irrevocably and unconditionally release, remise and discharge the Company, its affiliates,
subsidiaries, parent companies, predecessors, and successors, and all of their respective
past and present officers, directors, stockholders, partners, members, employees, agents,
representatives, plan administrators, attorneys, insurers and fiduciaries (each in their
individual and corporate capacities) (collectively, the “Released Parties”) from any and all
claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums
of money, costs, accounts, reckonings, covenants, contracts, agreements, promises,
doings, omissions, damages, executions, obligations, liabilities, and expenses (including
attorneys’ fees and costs), of every kind and nature that you ever had or now have against
any or all of the Released Parties, whether known or unknown, including, but not limited to,
any and all claims arising out of or relating to your employment with and/or separation from
the Company, including, but not limited to, all claims under Title VII of the Civil Rights Act
of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C.
§ 12101 et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the
Genetic Information Nondiscrimination Act of 2008, 42 U.S.C. § 2000ff et seq., the Family
and Medical Leave Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and Retraining
Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., the Rehabilitation Act of 1973, 29
U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit
Reporting Act, 15 U.S.C. § 1681 et seq., and the Employee Retirement Income Security
Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., all as amended; all claims arising out of
the Massachusetts Fair Employment Practices Act, Mass. Gen. Laws ch. 151B, § 1 et
seq., the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, § 148 et seq.
(Massachusetts law regarding payment of wages and overtime), the Massachusetts Civil
Rights Act, Mass. Gen. Laws ch. 12, §§ 11H and 11I, the Massachusetts Equal Rights Act,
Mass. Gen. Laws. ch. 93, § 102, Mass. Gen. Laws ch. 214, § 1C (Massachusetts right to
be free from sexual harassment law), the Massachusetts Labor and Industries Act, Mass.
Gen. Laws ch. 149, § 1 et seq., Mass. Gen. Laws ch. 214, § 1B (Massachusetts right of
privacy law), the Massachusetts Maternity Leave Act, Mass. Gen. Laws ch. 149, § 105D,
and the Massachusetts Small Necessities Leave Act, Mass. Gen. Laws ch. 149, § 52D, all
as amended; all claims arising out of the South Carolina Human Affairs Law, S.C. Code
Ann. § 1-13-10 et seq., S.C. Code Ann. § 1-13-10 (bone marrow donation leave law), S.C.
Code Ann. § 25-1-2310 et seq. (South Carolina military leave law), S.C. Code Ann. § 41-1-
10 et seq. (South Carolina wage payment law), and S.C. Code Ann. § 41-15-510 et seq.
(South Carolina whistleblower protection law), all as amended; all claims arising out of the
Florida Civil Rights Act of 1992, Fla. Stat. § 760.01 et seq., Fla. Stat.
- 3 -
§§ 448.07 and 725.07 (Florida equal pay laws), Fla. Stat. § 741.313 (Florida domestic
violence or sexual violence leave law), Fla. Stat. § 250.481 (Florida military leave law), Fla.
Stat. § 760.50 (Florida AIDS discrimination law), Fla. Stat. § 448.075 et seq. (Florida sickle
cell trait discrimination law), Fla. Stat. § 760.40 (Florida genetic testing law), and Fla. Stat.
§ 448.101 et seq. (Florida anti-retaliation law), all as amended; all common law claims
including, but not limited to, actions in defamation, intentional infliction of emotional
distress, misrepresentation, fraud, wrongful discharge, and breach of contract; all claims to
any non-vested ownership interest in the Company, contractual or otherwise; all state and
federal whistleblower claims to the maximum extent permitted by law; and any claim or
damage arising out of your employment with and/or separation from the Company
(including a claim for retaliation) under any common law theory or any federal, state or
local statute or ordinance not expressly referenced above; provided, however, that this
release of claims does not prevent you from filing a charge with, cooperating with, or
participating in any investigation or proceeding before, the Equal Employment Opportunity
Commission or a state fair employment practices agency (except that you acknowledge
that you may not recover any monetary benefits in connection with any such charge,
investigation, or proceeding, and you further waive any rights or claims to any payment,
benefit, attorneys’ fees or other remedial relief in connection with any such charge,
investigation or proceeding).
Continuing Obligations – You acknowledge and reaffirm your confidentiality and
3.
non-disclosure obligations discussed on the first page of this letter agreement, as well as
the obligations set forth in the Restrictive Covenant Agreements, which obligations survive
your separation from employment with the Company. In addition, as an express condition
of your receipt of the severance benefits, you agree that, for a period of one (1) year
following the Separation Date, you will not, in the Applicable Territory (as defined in your
existing Non-Competition and Non-Solicitation Agreement), directly or indirectly, whether
as an owner, partner, officer, director, employee, consultant, investor, lender or otherwise,
except as the passive holder of not more than 1% of the outstanding stock of a publicly-
held company, engage or assist others in engaging in any Competitive Company (as
defined below), if you would be performing job duties or services that are of a similar type
that you performed for the Company as President and Chief Executive Officer. Without
limiting the foregoing, you acknowledge and agree that undertaking an executive
leadership role in a Competitive Company would constitute performing job duties or
services of a similar type that you performed for the Company. If any restriction set forth in
this paragraph is found by any court of competent jurisdiction to be unenforceable because
it extends for too long a period of time or over too great a range of activities or in too broad
a geographic area, it shall be interpreted to extend only over the maximum period of time,
range or activities or geographic area as to which it may be enforceable. If you violate the
non-competition provisions set forth in this paragraph, you shall continue to be bound by
such restrictions until a period of one (1) year has expired without any violation of such
provisions. You acknowledge that the Company has given you seven (7) business days to
revoke your acceptance of this letter agreement, including the non-competition restrictions
set forth in this paragraph 3. For purposes herein, Competitive Company shall mean any
business or enterprise that is (i) engaged in the discovery and/or development of gene-
editing or gene therapies for the treatment of indications covered by any of the Company’s
ocular (including LCA10 and USH2A), sickle cell and Beta thalassemia programs, and
oncology programs involving ex vivo gene edited cells for administration as a therapeutic,
in each case as such programs exist as of the Separation Date (collectively, the “Field”), or
that develops, manufactures, markets, licenses, sells or provides, or plans to develop,
- 4 -
manufacture, market, license, sell or provide any product or service in the Field; or (ii) set
forth on Schedule I hereto. Nothing in this agreement or in any other agreement with the
Company prohibits or restricts your service as a member of the board of directors of
companies and organizations, including but not limited to DermTech, Triumvira
Immunologics, Biocare Medical, and the Alliance for Regenerative Medicine (but excluding
those companies listed on Schedule I hereto), as long as you continue to adhere to your
non-solicitation and confidentiality obligations to the Company.
Non-Disparagement – You understand and agree that, to the extent permitted by
4.
law and except as otherwise permitted by paragraph 9 below, you will not, in public or
private, make any false, disparaging, derogatory or defamatory statements, online
(including, without limitation, on any social media, networking, or employer review site) or
otherwise, to any person or entity, including, but not limited to, any media outlet, industry
group, financial institution or current or former employee, board member, consultant, client
or customer of the Company, regarding the Company or any of the other Released Parties,
or regarding the Company’s business affairs, business prospects, or financial condition. In
return, the Company will instruct its directors and officers not to make any false,
disparaging, derogatory or defamatory statements, online or otherwise, to any third party
regarding you.
Company Affiliation – You agree that, following the Separation Date, you will not
5.
hold yourself out as an officer, employee, or otherwise as a representative of the
Company, and you agree to update any directory information that indicates you are
currently affiliated with the Company. Without limiting the foregoing, you confirm that,
within five (5) days following the Separation Date, you will update any and all social media
accounts (including, without limitation, LinkedIn, Facebook, Twitter and Four Square) to
reflect that you are no longer employed by or associated with the Company.
Return of Company Property – You confirm that you have returned (or will return,
6.
within 10 business days of the Separation Date) to the Company all keys, files, records
(and copies thereof), equipment (including, but not limited to, computer hardware,
software, printers, flash drives and other storage devices, wireless handheld devices,
cellular phones, tablets, etc.), Company identification, and any other Company owned
property in your possession or control, and that you have left intact all, and have otherwise
not destroyed, deleted, or made inaccessible to the Company any, electronic Company
documents, including, but not limited to, those that you developed or helped to develop
during your employment, and that you have not (a) retained any copies in any form or
media; (b) maintained access to any copies in any form, media, or location; (c) stored any
copies in any physical or electronic locations that are not readily accessible or not known
to the Company or that remain accessible to you; or (d) sent, given, or made accessible
any copies to any persons or entities that the Company has not authorized to receive such
electronic or hard copies. You further confirm that you have cancelled all accounts for your
benefit, if any, in the Company’s name, including but not limited to, credit cards, telephone
charge cards, cellular phone accounts, and computer accounts.
Business Expenses and Final Compensation – You acknowledge that you have
7.
been reimbursed by the Company for all business expenses incurred in conjunction with
the performance of your employment and that no other reimbursements are owed to you.
You further acknowledge that you have received payment in full for all services rendered in
conjunction with your employment by the Company, including
- 5 -
payment for all wages, bonuses, commissions, and accrued, unused vacation time, and
that no other compensation is owed to you except as provided herein.
Confidentiality – You understand and agree that, to the extent permitted by law
8.
and except as otherwise permitted by paragraph 9 below, the contents of the negotiations
and discussions resulting in this letter agreement, shall be maintained as confidential by
you and your agents and representatives and shall not be disclosed except as otherwise
agreed to in writing by the Company.
9.
Scope of Disclosure Restrictions – Nothing in this letter agreement prohibits you
from communicating with government agencies about possible violations of federal, state,
or local laws or otherwise providing information to government agencies, filing a complaint
with government agencies, or participating in government agency investigations or
proceedings. You are not required to notify the Company of any such communications;
provided, however, that nothing herein authorizes the disclosure of information you
obtained through a communication that was subject to the attorney-client privilege.
Further, notwithstanding your confidentiality and nondisclosure obligations, you are hereby
advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be
held criminally or civilly liable under any Federal or State trade secret law for the
disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local
government official, either directly or indirectly, or to an attorney; and (ii) solely for the
purpose of reporting or investigating a suspected violation of law; or (B) is made in a
complaint or other document filed in a lawsuit or other proceeding, if such filing is made
under seal. An individual who files a lawsuit for retaliation by an employer for reporting a
suspected violation of law may disclose the trade secret to the attorney of the individual
and use the trade secret information in the court proceeding, if the individual (A) files any
document containing the trade secret under seal; and (B) does not disclose the trade
secret, except pursuant to court order.”
Cooperation – You agree that, to the extent permitted by law, you shall cooperate
10.
fully with the Company in the investigation, defense or prosecution of any claims or actions
which already have been brought, are currently pending, or which may be brought in the
future against the Company by a third party or by or on behalf of the Company against any
third party, whether before a state or federal court, any state or federal government
agency, or a mediator or arbitrator related to events about which you have relevant
knowledge. Your full cooperation in connection with such claims or actions shall include,
but not be limited to, being available to meet with the Company’s counsel, at reasonable
times and locations designated by the Company, to investigate or prepare the Company’s
claims or defenses, to prepare for trial or discovery or an administrative hearing,
mediation, arbitration or other proceeding and to act as a witness when requested by the
Company. You further agree that, to the extent permitted by law, you will notify the
Company promptly in the event that you are served with a subpoena (other than a
subpoena issued by a government agency), or in the event that you are asked to provide a
third party (other than a government agency) with information concerning any actual or
potential complaint or claim against the Company. The Company agrees to pay you for
any travel expenses you incur in connection with your cooperation. The Company also
agrees to pay you a reasonable rate for your time if it requests that you spend more than
de minimis time cooperating pursuant to this provision; provided, however, that Company
will not at any time pay you any fee for time spent providing testimony.
- 6 -
Amendment and Waiver – This letter agreement shall be binding upon the parties
11.
and may not be modified in any manner, except by an instrument in writing of concurrent
or subsequent date signed by duly authorized representatives of the parties hereto. This
letter agreement is binding upon and shall inure to the benefit of the parties and their
respective agents, assigns, heirs, executors, successors and administrators. No delay or
omission by the Company in exercising any right under this letter agreement shall operate
as a waiver of that or any other right. A waiver or consent given by the Company on any
one occasion shall be effective only in that instance and shall not be construed as a bar to
or waiver of any right on any other occasion.
Validity – Should any provision of this letter agreement be declared or be
12.
determined by any court of competent jurisdiction to be illegal or invalid, the validity of the
remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid
part, term or provision shall be deemed not to be a part of this letter agreement.
Nature of Agreement – You understand and agree that this letter agreement is a
13.
severance agreement and does not constitute an admission of liability or wrongdoing on
the part of the Company.
Acknowledgments – You acknowledge that you have been given at least twenty-
14.
one (21) days to consider this letter agreement, and that the Company is hereby advising
you to consult with an attorney of your own choosing prior to signing this letter agreement.
You understand that you may revoke this letter agreement for a period of seven (7)
business days after you sign this letter agreement by notifying me in writing, and the letter
agreement shall not be effective or enforceable until the expiration of this seven (7)
business day revocation period. You understand and agree that by entering into this letter
agreement, you are waiving any and all rights or claims you might have under the Age
Discrimination in Employment Act, as amended by the Older Workers Benefit Protection
Act, and that you have received consideration beyond that to which you were previously
entitled.
15.
Voluntary Assent – You affirm that no other promises or agreements of any kind
have been made to or with you by any person or entity whatsoever to cause you to sign
this letter agreement, and that you fully understand the meaning and intent of this letter
agreement. You further state and represent that you have carefully read this letter
agreement, understand the contents herein, freely and voluntarily assent to all of the terms
and conditions hereof, and sign your name of your own free act.
Applicable Law – This letter agreement shall be interpreted and construed by the
16.
laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions.
You hereby irrevocably submit to and acknowledge and recognize the jurisdiction of the
courts of the Commonwealth of Massachusetts, or if appropriate, a federal court located in
the Commonwealth of Massachusetts (which courts, for purposes of this letter agreement,
are the only courts of competent jurisdiction), over any suit, action or other proceeding
arising out of, under or in connection with this letter agreement or the subject matter
hereof.
Entire Agreement – This letter agreement contains and constitutes the entire
17.
understanding and agreement between the parties hereto with respect to your severance
benefits and the settlement of claims against the Company and cancels all
- 7 -
previous oral and written negotiations, agreements, and commitments in connection
therewith.
Tax Acknowledgement – In connection with the severance benefits provided to
18.
you pursuant to this letter agreement, the Company shall withhold and remit to the tax
authorities the amounts required under applicable law, and you shall be responsible for all
applicable taxes with respect to such severance benefits under applicable law. You
acknowledge that you are not relying upon the advice or representation of the Company
with respect to the tax treatment of any of the severance benefits set forth in paragraph 1
of this letter agreement.
[signature page follows]
- 8 -
Very truly yours,
By:
/s/ Akshay Vaishnaw
Akshay Vaishnaw
Chairman of the Organization,
Leadership and Compensation
Committee
I hereby agree to the terms and conditions set forth above. I have been given at least twenty-one
(21) days to consider this letter agreement, and I have chosen to execute this on the date below. I
intend that this letter agreement will become a binding agreement between me and the Company
if I do not revoke my acceptance in seven (7) days.
/s/ Cynthia Collins
Cynthia Collins
February 15, 2021
Date
To be returned in a timely manner as set forth on the first page of this letter agreement.
- 9 -
SCHEDULE I
CERTAIN COMPETITIVE COMPANIES
- 10 -
SCHEDULE II
Equity Awards
- 11 -
Exhibit 10.14
11 Hurley Street
Cambridge, MA 02141
617-401-9000
617-494-0985
February 13, 2021
By Electronic Mail
James C. Mullen
Dear Jim:
On behalf of Editas Medicine, Inc., a Delaware corporation (the “Company”), I am pleased to
offer you employment with the Company. The purpose of this letter is to summarize the terms of your
employment with the Company, should you accept our offer:
1.
You will be employed to serve as President and Chief Executive Officer (“CEO”),
effective February 15, 2021 (the “Effective Date”). As CEO, you will be responsible for such duties
as are consistent with such position. You shall report to the Company’s Board of Directors (the
“Board”). During your employment as CEO, you will remain a member of the Board. Upon the
ending of your employment as CEO, if so requested in writing by the Company, you shall immediately
resign from the Board as well as from your position as CEO and any other position(s) with the
Company to which you were elected or appointed in connection with your employment or Board
membership.
2.
Your base salary will be at the rate of $26,041.67 per semi-monthly pay period
(equivalent to an annualized base salary of $625,000), subject to tax and other withholdings as
required by law. Beginning in 2022, such base salary may be increased from time to time in
accordance with normal business practice and in the sole discretion of the Company. In addition, the
Company will provide you with a benefits allowance of $2,750 per month, less applicable taxes and
withholdings, payable in accordance with the Company’s normal payroll cycle. Such benefits
allowance may be modified from time to time in the sole discretion of the Company.
3.
Following the end of each fiscal year and subject to the approval of the Board (or a
duly authorized committee thereof), you will be eligible for a retention and performance bonus,
targeted at 60% of your annualized base salary (and payable from between 0% and 150% in
accordance with bonus plan), based solely on the Company’s performance during the applicable fiscal
year, as determined by the Board (or such committee) in its sole discretion in accordance with certain
corporate goals determined by the Board (or such committee) in its sole discretion each year;
provided, however, that, for 2021, any bonus will be pro-rated based on the number of days employed
in 2021 divided by 365. Provided that you are still employed on December 31 of any calendar year,
your bonus will be payable by the Company for that calendar year even if you are no longer CEO at
the time of payment. The Company will award and pay any bonus for the prior calendar year before
March 15th of the next succeeding calendar year. Notwithstanding the foregoing, if you die or become
disabled (as defined under the Company’s long-term disability plan) prior to the date of payment of the
bonus, you will be entitled to receive a pro-rata portion of the bonus to which you would otherwise
have been
1
entitled (based on the number of days in the year to which the bonus relates prior to your death or
disability divided by 365). You will also be eligible to participate in the Company’s long-term
incentive plan which provides for annual equity awards, as determined in the sole discretion of the
Board (or a duly authorized committee thereof) after consideration of individual employee
performance and Company performance benchmarked against the Company’s peer group, and such
other factors as the Board (or a duly authorized committee thereof) determines to be relevant in its
discretion; provided, however, that you will not be eligible for long-term incentive awards in 2021 or
2022.
4.
You may participate in any and all benefit programs that the Company establishes and
makes available to its employees from time to time, provided you are eligible under (and subject to all
provisions of) the plan documents governing those programs. The benefit programs made available by
the Company, and the rules, terms and conditions for participation in such benefit plans, may be
changed by the Company at any time without advance notice.
5.
You will be eligible for paid vacation and holidays in accordance with Company policy.
6.
The Company shall reimburse you for all reasonable and necessary documented out of
pocket expenses incurred or paid by you in connection with, or related to, the performance of your
services to the Company, including without limitation all travel (first or business class) and hotel and
ancillary expenses. You shall abide by the Company’s expense reimbursement policy, except as
otherwise set forth herein or with the prior written approval of the Chairman of the Board.
7.
Subject to approval of the Company’s Board of Directors, the Company will grant to
you:
(a)
an option to acquire that number of shares of Company common stock having
an aggregate Black-Scholes value of $10,000,000 (the “New Hire Option”) as of the date of grant as
determined by the Organization, Leadership and Compensation Committee (the “OLC Committee”),
which will have an exercise price equal to the fair market value of the Company’s common stock on
the date of grant and will vest upon the achievement of specified organizational milestones to be
determined by the OLC Committee at the time of grant;
(b)
an option to purchase that number of shares of the Company’s common stock
having an aggregate Black-Scholes value, inclusive of a performance premium, of $5,000,000 (the
“Performance-Vesting Option”) as of the date of grant as determined by the OLC Committee, which
will have an exercise price equal to the fair market value of the Company’s common stock on the date
of grant and will vest as to 1/3 of the shares underlying the option as of the date on which the closing
price of the Company’s common stock, as reported on Nasdaq, has for 15 consecutive trading days (in
the five-year period following grant) equaled or exceeded $80.00, $100.00, and $120.00, respectively;
and
8.
a performance-based restricted stock unit award for Company common stock having a
value of $5,000,000 (the “PRSU Award” and, collectively with the New Hire Option and the
Performance-Vesting Option, the “Equity Awards”) based on the fair market value of the Company’s
common stock on the date of grant, which PRSU Award will vest in thirds based on research and
2
development milestones to be determined by the OLC Committee at the time of grant. The Equity
Awards will be granted under and subject to the terms of the Company’s 2015 Stock Incentive Plan
and evidenced in writing by, and subject to the terms of a stock option agreement (pursuant to which,
unless your employment is terminated for Cause (as defined below) by the Company, the New Hire
Option and the Performance-Vesting Option will remain exercisable until the expiration date of the
option) and a restricted stock unit agreement, as applicable, thereunder. As set forth in and subject to
the terms of the Severance Benefits Plan, the vesting of the Equity Awards shall accelerate upon a
Change in Control Termination (as defined in the Severance Benefits Plan).
9.
You may be eligible to receive such future equity awards as the Board of Directors of
the Company shall deem appropriate.
10.
You will be eligible to participate in the Company’s Severance Benefits Plan at the
Chief Executive Officer level. Your eligibility under the Severance Benefits Plan is subject to the
terms and conditions thereof. In addition, in accordance with and subject to the terms of the Severance
Benefits Plan, you will receive twelve months’ Severance Pay (as defined in the Severance Benefits
Plan) from the Company upon a Covered Termination.
11.
You will work out of the Company’s office in Cambridge, Massachusetts, with the
understanding that you may be required to travel to other locations in connection with the performance
of your duties, at the expense of the Company. The Company further acknowledges and agrees that
you may work remotely as you deem reasonable, subject to your fulfillment of the functions of your
position.
12.
The Company shall also reimburse you for your attorneys’ fees incurred in connection
with the negotiation of this offer letter.
13.
You will be required to execute an Amended and Restated Employee Non-Competition,
Non-Solicitation, Confidentiality and Assignment Agreement in the forms attached as Exhibit A, as a
condition of employment. You acknowledge that your receipt of the grants of equity set forth in
Paragraph 7 of this offer letter is contingent upon your agreement to the non-competition provisions
set forth in the Amended and Restated Employee Non-Competition, Non-Solicitation, Confidentiality
and Assignment Agreement. You further acknowledge that such consideration was mutually agreed
upon by you and the Company is fair and reasonable in exchange for your compliance with such non-
competition obligations. The Company (i) is aware that you have existing commitments, including as a
member of the board of several companies and industry organizations, all of which have been
disclosed to the Board of Directors of the Company, and nothing in this letter agreement or any other
agreement with the Company or Company policy is intended to prohibit or prevent your continued
service with those roles and, subject to your compliance with applicable Company policies for
approval by the Board (or a committee thereof), similar board and consulting assignments in the future
entered into during the period of your employment and (ii) acknowledges that matters, transactions or
interests that are presented to, or acquired, created or developed by you in the conduct of such existing
commitments or future assignments shall not be deemed to relate to the Company unless such matter,
transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into
your possession in your capacity as an employee and director of the Company.
3
14.
You agree to provide to the Company, within three days of your hire date,
documentation of your eligibility to work in the United States, as required by the Immigration Reform
and Control Act of 1986. You may need to obtain a work visa in order to be eligible to work in the
United States. If that is the case, your employment with the Company will be conditioned upon your
obtaining a work visa in a timely manner as determined by the Company.
15.
This letter shall not be construed as an agreement, either express or implied, to employ
you for any stated term, and shall in no way alter the Company’s policy of employment at will, under
which both you and the Company remain free to terminate the employment relationship, with or
without cause, at any time, with or without notice. Although your job duties, title, compensation and
benefits, as well as the Company’s personnel policies and procedures, may change from time to time,
the “at-will” nature of your employment may only be changed by a written agreement signed by you
and the Chairman of the Board, which expressly states the intention to modify the at-will nature of
your employment.
16.
As an employee of the Company, you will be required to comply with all Company
policies and procedures. Violations of the Company’s policies may lead to immediate termination of
your employment. Further, the Company’s premises, including all workspaces, furniture, documents,
and other tangible materials, and all information technology resources of the Company (including
computers, data and other electronic files, and all internet and email) are subject to oversight and
inspection by the Company at any time. Company employees should have no expectation of privacy
with regard to any Company premises, materials, resources, or information.
17.
For the duration of your employment, the Company agrees to maintain directors and
officers liability insurance at its expense, and agrees to indemnify you to the fullest extent permitted
by law, the Company’s Bylaws, or any other applicable statute, rule of law, contract, or insurance
policy.
18.
This offer letter is your formal offer of employment and supersedes any and all prior or
contemporaneous agreements, discussions and understandings, whether written or oral, relating to the
subject matter of this letter or your employment with the Company. The resolution of any disputes
under this letter will be governed by the laws of the Commonwealth of Massachusetts.
4
If you agree with the provisions of this letter, please sign the enclosed duplicate of this letter in
the space provided below and return it to the undersigned, by February 15, 2021. If you do not accept
this offer by February 15, 2021, this offer will be revoked.
Very Truly Yours,
EDITAS MEDICINE, INC.
By: /s/ Akshay Vaishnaw
Name: Akshay Vaishnaw
Title: Chairman of the Organization, Leadership
and Compensation Committee
The foregoing correctly sets forth the terms of my employment by Editas Medicine, Inc. I am not
relying on any other representation, except as set forth in this letter.
Date: 2/14/2021
/s/ James Mullen
James C. Mullen
5
EXHIBIT A
AMENDED AND RESTATED EMPLOYEE NON-COMPETITION, NON-SOLICITATION,
CONFIDENTIALITY AND ASSIGNMENT AGREEMENT
1
Exhibit 10.18
11 Hurley Street
Cambridge, MA 02141
P 617-401-9000
F 617-494-0985
September 25, 2020
Lisa A. Michaels, MD
Re: Offer of Employment
Dear Lisa,
On behalf of Editas Medicine, Inc. (the “Company”), I am pleased to offer you employment with the
Company. The purpose of this letter (the “Offer Letter”) is to set forth the terms of your employment
with the Company, should you accept our offer.
I am pleased to offer you the position of Executive Vice President, Chief Medical Officer at the
Company, reporting to the Chief Executive Officer. Your base salary will be at the rate of $18,076.92
per biweekly pay period (equivalent to an annualized base salary of $470,000.00), subject to tax and
other withholdings as required by law. Such base salary may be adjusted from time to time in
accordance with normal business practice and in the sole discretion of the Company. You will be
employed on a full-time basis. Your effective date of hire as an employee (the “Start Date”) will be
November 9th, 2020. You shall work out of the Company’s office at One Main Street, 8th Floor,
Cambridge, MA 02142 and shall travel as required by your job duties.
Following the end of each fiscal year and subject to the approval of the Company’s Board of Directors
(the “Board”), or a duly authorized committee thereof, you will be eligible for a retention and
performance bonus, targeted at 45% of your annualized base salary, based on your and the Company’s
performance during the applicable fiscal year as determined by the Board (or such committee) and in
accordance with certain corporate goals determined by the Board (or such committee), in each case, in
its sole discretion. Such bonus shall be pro-rated for any partial year and shall not be payable if your
Start Date is within the last quarter of the fiscal year. You shall not be entitled to any bonus if you
voluntarily terminate your employment with the Company, other than for Good Reason, as such term
is defined in the Company’s Severance Benefits Plan (as amended and/or restated from time to time,
the “Severance Benefits Plan”), prior to the date such bonus is distributed, as it also serves as an
incentive to remain employed by the Company, provided, that the Company will award and pay any
bonus for the prior calendar year no later than March 15th of the next succeeding fiscal year.
Confidential
You will receive a one-time sign on bonus of $150,000.00, less applicable taxes and withholdings (the
“Signing Bonus”), which will be paid to you in the first regular payroll following your Start Date. If,
within one (1) year after your Start Date, either (i) you voluntarily terminate your employment with
the Company for any reason other than for Good Reason or (ii) if the Company terminates your
employment because it has determined in its sole discretion that you have (a) engaged in fraud,
misappropriation, or embezzlement, (b) materially breached any Company policy or any agreement by
and between you and the Company; (c) committed one or more acts constituting either a felony or any
crime involving dishonesty or moral turpitude; or (d) failed to perform your duties and/or
responsibilities to the Company’s satisfaction, you agree to repay the Company within thirty (30) days
of your separation from employment with the Company, the entire Signing Bonus paid by the
Company. You further acknowledge and agree that the Company may deduct from any amounts due to
you from the Company (including without limitation any salary, bonuses, severance or separation pay,
and expense reimbursements) up to the full amount of the Signing Bonus owed to the Company,
subject to applicable law. If such deduction does not fully satisfy the amount of reimbursement due, or
if the Company elects not to take such deduction, you agree to repay the remaining unpaid balance to
the Company within thirty (30) days of your separation from employment with the Company. By
signing and returning this Offer Letter, you agree to repayment of the Signing Bonus as provided for in
this paragraph, and you further agree to execute any documents that may be requested by the Company
to memorialize any deductions that you have authorized herein.
You will be eligible for six (6) months of temporary living costs at a rate of $7,000.00 per month less
applicable taxes and withholdings (the “Housing Allowance”).
In addition, you will also be eligible to receive up to $125,000.00 less applicable taxes and
withholdings (the “Relocation Amount”) to support you in your relocation to the Cambridge, MA
area You must submit an expense summary and adequate supporting documentation for all qualified
expenses no later than the end of the month following the month in which the expense was incurred, to
include by way of example:
Packing and shipping your household goods and personal effects to Massachusetts;
•
• Travel, excluding meals, to your new home in Massachusetts;
• Disconnecting and connecting utilities; and
• Up to 30 days of storage and insurance expenses for household goods and personal effects.
The applicable portion of the Relocation Amount will be paid to you no later than the end of the
month following your provision of supporting documentation.
All reimbursements and in-kind benefits provided hereunder shall be made or provided in accordance
with the requirements of Section 409A to the extent that such reimbursements or in- kind benefits are
subject to Section 409A, including, where applicable, the requirements that (i) any reimbursement is
for expenses incurred during your lifetime (or during a shorter period of time specified herein), (ii) the
amount of expenses eligible for reimbursement during a calendar year may not affect the expenses
eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense
will be made on or before the last day of the calendar year.
If, within twelve (12) months after the Company’s final payment of the Relocation Amount, either (a)
you voluntarily terminate your employment with the Company for any reason, other than for Good
Reason, or (b) if the Company terminates your employment for Cause, you agree to repay the
Company within thirty (30) days of your separation from employment with the Company, the entire
Housing Allowance and Relocation Amount paid by the Company. If, after twelve (12) months but
before twenty- four (24) months after the Company’s final payment of the Relocation Amount, you
voluntarily terminate your employment with the Company for any reason, other than for Good Reason,
or if the Company terminates your employment for Cause, you agree to repay the Company within
thirty (30) days of your separation from employment with the Company, an amount prorated starting at
fifty percent (50%) of the Housing Allowance and Relocation Amount paid by the Company. You
further acknowledge and agree that the Company may deduct from any amounts due to you from the
Company (including without limitation any salary, bonuses, severance or separation pay, and expense
reimbursements) up to the full amount of the Housing Allowance and Relocation Amount owed to the
Company, subject to applicable law. If such deduction does not fully satisfy the amount of
reimbursement due, or if the Company elects not to take such deduction, you agree to repay the
remaining unpaid balance to the Company within thirty (30) days of your separation from employment
with the Company. By signing and returning this Offer Letter, you agree to repayment of the Housing
Allowance and Relocation Amount as provided for in this paragraph, and you further agree to execute
any documents that may be requested by the Company to memorialize any deductions that you have
authorized herein. For purposes of this Offer Letter, “Cause” shall have the respective definitions
presently set forth in the Company’s Severance Benefits Plan (as amended and/or restated from time to
time, the “Severance Benefits Plan”).
Subject to approval of the Board or a duly authorized committee thereof, you shall be granted (i) a
stock option to purchase 120,000 shares of the Company’s common stock (the “Option”) at an
exercise or purchase price equal to the fair market value of the Company's common stock on the date
of grant and (ii) restricted stock units (“RSU,” together with the Option, the “Equity Awards”) in the
amount of 20,000 units. The Option will vest over four (4) years at the rate of 25% on the first
anniversary of the Start Date, and an additional 2.0833% of the original number of shares at the end of
each successive month following the first anniversary of the Start Date until the fourth anniversary of
such date, provided you remain employed by the Company on the vesting dates. The RSU will vest
over four (4) years at the rate of 25% of the original number of RSUs on the first anniversary of the
Start Date, and an additional 25% of the original number of RSUs will vest at the end of each
successive anniversary date of your Start Date until the fourth anniversary of such date, provided you
remain employed with the Company on the vesting dates. The Equity Awards are being granted
pursuant to Nasdaq Listing Rule 5635(c)(4) as an inducement for you to enter into employment with
the Company. The Equity Awards will be brought to the Board of Directors (or a duly authorized
committee thereof) for approval on or after the date you begin employment with the Company. The
Equity Awards will be evidenced in writing by, and subject to the terms of an inducement stock option
agreement and an inducement restricted stock unit agreement, as applicable.
You may participate in any benefit programs that the Company establishes and makes available to its
employees from time to time, provided you are eligible under (and subject to all provisions of) the
plan documents governing those programs. Additionally, you will be eligible for paid vacation
and holidays in accordance with Company policy. Please see the enclosed “2020 Benefits Overview”
for detailed information on our benefits and related policies, which currently include 13 paid holidays
and a flexible time-off program. The benefit programs made available by the Company, and the rules,
terms and conditions for participation in such benefit plans, may be changed by the Company at any
time without advance notice. For clarification purposes, under the “Severance Benefits Plan”, as an
Executive Vice President, you are eligible to receive benefits as defined for the role of “Other C Level
Officer”.
You will be required to execute a Non-Solicitation, Non-Competition, Confidentiality and Assignment
Agreement in the form attached hereto as Exhibit A (the “Agreement”) and, prior to your Start Date, a
Durable Automatic Sale Instruction Letter in the form attached hereto as Exhibit B. You acknowledge
that your eligibility for the Housing Allowance and Relocation Amount Equity Awards referenced
herein are contingent upon your agreement to the non- competition provisions set forth in the
Agreement. You further acknowledge that such consideration was mutually agreed upon by you and
the Company, is fair and reasonable, and is in exchange for your compliance with such non-
competition obligations.
In making this offer, the Company understands, based on representations made by you, that you are
not under any obligation to any former employer or any person or entity which would prevent, limit,
or impair in any way your acceptance of this offer or employment or the performance by you of your
duties as an employee of the Company. In accepting this offer you represent and warrant the foregoing
to be true and correct (i) that in connection with providing services to the Company you will not use
any confidential and/or proprietary information of any third party, including, without limitation, any
former employer, or bring any biological or other materials to the Company and (ii) the Agreement
was provided to you by the earlier of (A) the date we sent you this Offer Letter or (B) ten (10) business
days before your Start Date.
You agree to provide to the Company, within three days of your hire date, documentation of your
eligibility to work in the United States, as required by the Immigration Reform and Control Act of
1986. You may need to obtain a work visa in order to be eligible to work in the United States.
If that is the case, your employment with the Company will be conditioned upon your obtaining a
work visa in a timely manner as determined by the Company.
It is understood that you are an “at-will” employee. You are not being offered employment for a
definite period of time or pursuant to an employment contract, and either you or the Company may
terminate the employment relationship at any time and for any reason, with or without cause, or prior
notice and without additional compensation to you, except as provided in the
You will be eligible to participate in the Company’s Severance Benefits Plan, as amended, a copy of
which is attached hereto as Exhibit C (the “Severance Benefits Plan”), at the applicable level
referenced in such plan. Your eligibility under the Severance Benefits Plan is subject to the terms and
conditions thereof.
This Offer Letter and the Agreement referenced above constitute the complete agreement between you
and the Company, contain all of the terms of your employment with the Company and supersede any
prior agreements, representations or understandings (formal or informal, whether written, oral or
implied) between you and the Company. This Offer Letter may not be amended or modified except by
an express written agreement signed by both you and a duly authorized officer of the Company,
although your job duties, title, reporting relationship, compensation and benefits may change from
time to time in the Company's sole discretion and provided that the "at-will" nature of your
employment may only be changed by a written agreement signed by you and the Company’s Chief
Executive Officer, which expressly states the intention to modify the at-will nature of your
employment. Nothing in this Offer Letter shall be construed as an agreement, either express or
implied, to pay you any compensation or grant you any benefit beyond the end of your employment
with the Company, except to the extent you are eligible for post-employment benefits under the
Severance Benefits Plan.
As an employee of the Company, you will be required to familiarize yourself and comply with all
Company policies and procedures. Violations of the Company's policies may lead to immediate
termination of your employment. Further, the Company's premises, including all workspaces,
furniture, documents and other tangible materials, together with all information technology resources
of the Company (including computers, portable devices, data and other electronic files (whether in
hard copy or electronic form), and all internet and email communications) are subject to oversight and
inspection by the Company at any time. Company employees shall have no expectation of privacy
with regard to any Company premises, materials, resources or information.
The Company’s offer of at-will employment is contingent upon your authorization and successful
completion of background and reference checks as may be requested by the Company. If requested by
the Company, you will be required to execute authorizations for the Company to obtain consumer
reports and/or investigative consumer reports and use them in conducting background checks as a
condition to your employment. The Company may obtain background reports both pre-employment
and from time to time during your employment with the Company, as necessary.
Please indicate your acceptance of this offer by signing the enclosed copy of this Offer Letter and the
Agreement via the electronic signature tool, no later than October 1, 2020.
Please know that we are truly excited at the prospect of your becoming part of the Editas team and
your leadership in helping to build what we hope will be an exceptional organization, one that is both a
scientific pioneer and that delivers transformative medicines to many patients. We believe that you
will be a fundamental part of turning that aspiration into reality.
Very truly yours,
Editas Medicine, Inc.
/s/ Clare Carmichael
Signature: Clare Carmichael
Chief Human Resources Officer
The foregoing correctly sets forth the terms of my employment by the Company. I am not relying on
any other representation, except as set forth in this Offer Letter.
/s/ Lisa A. Michaels
Signature: Lisa Michaels
Chief Human Resources Officer
Exhibit 10.24
Certain identified information has been excluded from this exhibit because it is both (i) not material
and (ii) would likely cause competitive harm to the Company, if publicly disclosed. Double asterisks
denote omissions.
FIRST AMENDMENT TO SPONSORED RESEARCH AGREEMENT
This Amendment (the “SRA Amendment”) is entered into as of January 11, 2021 (the “SRA
Amendment Effective Date”), by and between THE BROAD INSTITUTE, INC., a non-profit
Massachusetts corporation, with a principal office at 415 Maine Street, Cambridge, MA 02142
(“Broad”) and EDITAS MEDICINE, INC., a Delaware corporation, located at 11 Hurley Street,
Cambridge, MA 02141 (“Editas”), and amends that certain Sponsored Research Agreement, dated as
of June 7, 2018 (the “Sponsored Research Agreement”). Broad and Editas may be referred to herein
individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, Broad and Editas are party to the Sponsored Research Agreement; and
WHEREAS, the Parties wish to amend the Sponsored Research Agreement as follows;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1. Section 3.5.1 of the Sponsored Research Agreement is amended by adding the following to
the end of such section:
“Notwithstanding the foregoing, in the event that the Company qualifies as a Well-Known
Seasoned Issuer as defined in the Securities Act, then the Company may, upon notice to
Broad, issue such number of shares of Common Stock that are Public Securities as
calculated in accordance with the immediately preceding sentence (which shares, for the
avoidance of doubt, shall not be registered under the Securities Act at issuance) no later
than [**] after the applicable Trigger Date in full or partial satisfaction of a Research
Payment, so long as the Company uses its commercially reasonable efforts to file a
prospectus supplement that constitutes a Resale Registration Statement on the Trading Day
on which such shares are issued and such prospectus supplement is filed no later than [**]
following such issuance. Any shares issued pursuant to the prior sentence shall be deemed
Note Shares for purposes of this Agreement.”
2. Effect of Amendment. Except as specifically amended herein, the Sponsored Research
Agreement is hereby ratified and confirmed and shall remain in full force and effect. Upon
the effectiveness of this SRA Amendment, on and after the date hereof, each reference in
the Sponsored Research Agreement to “this Agreement,” “hereunder,” “hereof,” “herein”
or words of like import, and each reference in the other documents entered into in
connection with each such agreement, shall mean and be a reference to such agreement, as
amended hereby.
3. Governing Law. This SRA Amendment shall be construed in accordance with, the
substantive laws of the Commonwealth of Massachusetts, without giving effect to any
choice or conflict of law provision.
4. Counterparts. This SRA Amendment may be executed and delivered by electronic
signature and in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Parties hereto have caused this SRA AMENDMENT to be executed and
entered into by their duly authorized representatives as of the SRA Amendment Effective Date.
THE BROAD INSTITUTE, INC.
EDITAS MEDICINE, INC.
By:
/s/ Issi Rozen
Name: Issi Rozen
By:
/s/ Cynthia Collins
Name: Cynthia Collins
Title: Chief Business Officer
Title: President and Chief Executive Officer
Signature Page to SRA Amendment
SUMMARY OF NON-EMPLOYEE DIRECTOR COMPENSATION PROGRAM
Effective: February 16, 2021
Exhibit 10.25
The board of directors (the “Board”) of Editas Medicine, Inc. (the “Company”) has approved a non-employee director
compensation program. Under this non-employee director compensation program, the Company pays its non-employee directors
retainers in cash. Each non-employee director receives a cash retainer for service on the Board and for service on each committee of
which the director is a member. The chairmen of the Board and of each committee receives higher retainers for such service. The
amounts of the fees paid to each non-employee director for service on the board of directors and for service on each committee of the
board of directors on which the director is a member are as follows:
Board of Directors
Audit Committee
Organization, Leadership and Compensation Committee
Nominating and Corporate Governance Committee
Science and Technology Committee
Member
Annual Fee
35,000
7,500
5,000
4,000
5,000
$
$
$
$
$
Chairman
Annual Fee
75,000
15,000
10,000
8,000
10,000
$
$
$
$
$
Any non-employee director serving as the Board-appointed lead independent director also receives an annual fee of $25,000, in
addition to any fees such director receives for his or her service on the Board or any committees thereof.
These fees are payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of
such payment shall be prorated for any portion of such quarter during which the director was not serving. The Company also reimburses
its non-employee directors for reasonable travel and other expenses incurred in connection with attending Board and committee
meetings. Additionally, the Board may establish other committees from time to time that include fees for both members and chairpersons,
as well as per meeting fees.
Under the Company’s non-employee director compensation program, each non-employee director receives, under the Company’s
2015 Stock Incentive Plan, upon his or her initial election to the Board, an option to purchase 23,076 shares of the Company’s common
stock. Each of these options vests as to one-third of the shares of the Company’s common stock underlying such option on each
anniversary of the grant date until the third anniversary of the grant date, subject to the non-employee director's continued service as a
director. Further, on the date of the first Board meeting held after each annual meeting of stockholders, each non-employee director that
has served on the Board for at least four months receives, under the 2015 Stock Incentive Plan, an option to purchase 11,538 shares of
the Company’s common stock; these options vest in full on the one-year anniversary of the grant date unless otherwise provided at the
time of grant, subject to the non-employee director's continued service as a director. All options issued to the Company’s non-employee
directors under the non-employee director compensation program are issued at exercise prices equal to the fair market value of the
Company’s common stock on the date of grant and become exercisable in full upon a change in control of the Company.
Exhibit 10.32
Certain identified information has been excluded from this exhibit because it is both (i) not material
and (ii) would likely cause competitive harm to the Company, if publicly disclosed. Double asterisks
denote omissions.
OMNIBUS AMENDMENT
This Omnibus Amendment (the “Amendment”) is entered into as of January 11, 2021 (the
“Amendment Effective Date”), by and between THE BROAD INSTITUTE, INC., a non-profit
Massachusetts corporation, with a principal office at 415 Maine Street, Cambridge, MA 02142
(“Broad”) and EDITAS MEDICINE, INC., a Delaware corporation, located at 11 Hurley Street,
Cambridge, MA 02141 (“Editas”), and amends (i) that certain Cpf1 License Agreement, dated as of
December 16, 2016 (the “Cpf1 Agreement”) and (ii) that certain Cas9-II License Agreement, dated as
of December 16, 2016 (the “Cas9-II Agreement” and together with the Cpf1 Agreement, the
“Agreements”). Broad and Editas may be referred to herein individually as a “Party” and collectively
as the “Parties.”
RECITALS
WHEREAS, Broad and Editas are party to the Agreements; and
WHEREAS, the Parties wish to amend the Agreements as follows;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1. Each of Section 4.7.4.1 of the Cpf1 Agreement and Section 4.8.3.1 of the Cas9-II
Agreement are amended by adding the following to the end of such section:
“Notwithstanding the foregoing, in the event that the Company qualifies as a Well-Known
Seasoned Issuer as defined in the Securities Act, then the Company may, upon notice to
Broad, issue such number of shares of Common Stock that are Public Securities as
calculated in accordance with the immediately preceding sentence (which shares, for the
avoidance of doubt, shall not be registered under the Securities Act at issuance) no later
than [**] after the applicable Trigger Date in full or partial satisfaction of a Success
Payment, so long as the Company uses its commercially reasonable efforts to file a
prospectus supplement that constitutes a Resale Registration Statement on the Trading Day
on which such shares are issued and such prospectus supplement is filed no later than [**]
following such issuance. Any shares issued pursuant to the prior sentence shall be deemed
Note Shares for purposes of this Agreement.”
2. Effect of Amendment. Except as specifically amended herein, the Agreements are hereby
ratified and confirmed and shall remain in full force and effect. Upon the effectiveness of
this Amendment, on and after the date hereof, each reference in each of the Cpf1
Agreement and the Cas9-II Agreement to “this Agreement,” “hereunder,” “hereof,”
“herein” or words of like import, and each reference in the other documents entered into in
connection with each such agreement, shall mean and be a reference to such agreement, as
amended hereby.
3. Governing Law. This Amendment shall be construed in accordance with, the substantive
laws of the Commonwealth of Massachusetts, without giving effect to any choice or
conflict of law provision.
4. Counterparts. This Amendment may be executed and delivered by electronic signature
and in two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Parties hereto have caused this OMNIBUS AMENDMENT to be executed
and entered into by their duly authorized representatives as of the Amendment Effective Date.
THE BROAD INSTITUTE, INC.
EDITAS MEDICINE, INC.
By:
/s/ Issi Rozen
Name: Issi Rozen
By:
/s/ Cynthia Collins
Name: Cynthia Collins
Title: Chief Business Officer
Title: President and Chief Executive Officer
Signature Page to Omnibus Amendment
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statements (Form S-3 No. 333-216528, 333-222266, 333-223596, and 333-239389) of
Editas Medicine Inc.,
(2) Registration Statement (Form S-8 No. 333-209351) pertaining to the Editas Medicine Inc. 2013 Stock
Incentive Plan, 2015 Stock Incentive Plan and 2015 Employee Stock Purchase Plan of Editas Medicine
Inc., and
(3) Registration Statements (Form S-8 Nos. 333-216445, 333-223529, 333-230266, and 333-236662)
pertaining to the 2015 Stock Incentive Plan and 2015 Employee Stock Purchase Plan of Editas Medicine,
Inc.;
of our reports dated February 26, 2021, with respect to the consolidated financial statements of Editas Medicine, Inc.
and the effectiveness of internal control over financial reporting of Editas Medicine, Inc., included in this Annual
Report (Form 10-K) of Editas Medicine, Inc. for the year ended December 31, 2020.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 26, 2021
CERTIFICATIONS
Exhibit 31.1
I, James C. Mullen, certify that:
1. I have reviewed this Annual Report on Form 10-K of Editas Medicine, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: February 26, 2021
By:
/s/ James C. Mullen
James C. Mullen
Chief Executive Officer
Principal Executive Officer
I, Michelle Robertson, certify that:
CERTIFICATIONS
1. I have reviewed this Annual Report on Form 10-K of Editas Medicine, Inc.;
Exhibit 31.2
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 26, 2021
By:
/s/ Michelle Robertson
Michelle Robertson
Chief Financial Officer
(Principal Financial Officer)
Exhibit 32.1
CERTIFICATIONS OF CEO AND CFO PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Annual Report on Form 10-K of Editas Medicine, Inc. (the “Company”) for the year ended
December 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of
the undersigned officers of the Company hereby certifies, pursuant to 18 U.S.C. (section) 1350, as adopted pursuant to
(section) 906 of the Sarbanes-Oxley Act of 2002, that to the best of her or his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
Dated: February 26, 2021
By:
/s/ James C. Mullen
James C. Mullen
President and Chief Executive Officer
By:
/s/ Michelle Robertson
Michelle Robertson
Chief Financial Officer