SS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2019
OR
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number: 001-37923
CRISPR THERAPEUTICS AG
(Exact name of Registrant as specified in its charter)
|
Switzerland |
Not Applicable |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
|
|
|
Baarerstrasse 14 6300 Zug, Switzerland |
Not Applicable |
|
(Address of principal executive offices) |
(zip code) |
+41 (0)41 561 32 77
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
|
Common Shares, CHF 0.03 par value |
CRSP |
NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large Accelerated filer |
☒ |
Accelerated filer |
☐ |
|
|
|
|
|
|
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
|
|
|
|
|
|
|
|
Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
As of July 25, 2019, there were 54,662,539 shares of registrant’s common shares outstanding.
Index
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
CRISPR Therapeutics AG
Condensed Consolidated Balance Sheets
(unaudited, in thousands, except share and per share data)
|
|
|
As of |
|
||||||
|
|
|
June 30, |
|
|
December 31, |
|
|||
|
|
|
2019 |
|
|
2018 |
|
|||
|
Assets |
|
||||||||
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
427,885 |
|
|
$ |
456,649 |
|
|
|
Accounts receivable, including related party amounts of $321 and $88 as of June 30, 2019 and December 31, 2018, respectively |
|
|
321 |
|
|
|
88 |
|
|
|
Prepaid expenses and other current assets, including related party amounts of $3,318 and $3,417 as of June 30, 2019 and December 31, 2018, respectively |
|
|
10,267 |
|
|
|
9,658 |
|
|
|
Total current assets |
|
|
438,473 |
|
|
|
466,395 |
|
|
|
Property and equipment, net |
|
|
20,156 |
|
|
|
18,500 |
|
|
|
Intangible assets, net |
|
|
262 |
|
|
|
289 |
|
|
|
Restricted cash |
|
|
3,915 |
|
|
|
3,163 |
|
|
|
Operating lease assets |
|
|
30,770 |
|
|
|
— |
|
|
|
Other non-current assets |
|
|
669 |
|
|
|
669 |
|
|
|
Total assets |
|
$ |
494,245 |
|
|
$ |
489,016 |
|
|
|
Liabilities and shareholders’ equity |
|
||||||||
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
7,143 |
|
|
$ |
5,069 |
|
|
|
Accrued expenses, including related party amounts of $3,312 and $1,700 as of June 30, 2019 and December 31, 2018, respectively |
|
|
18,628 |
|
|
|
20,852 |
|
|
|
Accrued tax liabilities |
|
|
542 |
|
|
|
402 |
|
|
|
Deferred rent |
|
|
— |
|
|
|
1,202 |
|
|
|
Operating lease liabilities |
|
|
4,880 |
|
|
|
— |
|
|
|
Other current liabilities |
|
|
219 |
|
|
|
221 |
|
|
|
Total current liabilities |
|
|
31,412 |
|
|
|
27,746 |
|
|
|
Deferred revenue non-current, including related party amounts of $57,730 and $57,780 as of June 30, 2019 and December 31, 2018, respectively |
|
|
57,730 |
|
|
|
57,780 |
|
|
|
Deferred rent non-current |
|
|
— |
|
|
|
11,052 |
|
|
|
Operating lease liabilities, net of current portion |
|
|
37,200 |
|
|
|
— |
|
|
|
Other non-current liabilities |
|
|
220 |
|
|
|
243 |
|
|
|
Total liabilities |
|
|
126,562 |
|
|
|
96,821 |
|
|
|
Commitments and contingencies, see Note 4 |
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
Common shares, CHF 0.03 par value, 55,445,241 and 52,183,139 shares authorized at June 30, 2019 and December 31, 2018, respectively, 53,756,046 and 52,160,798 shares issued at June 30, 2019 and December 31, 2018, respectively, 53,499,057 and 51,852,862 shares outstanding at June 30, 2019 and December 31, 2018, respectively, 23,948,128 and 20,498,996 shares in conditional capital at June 30, 2019 and December 31, 2018, respectively. |
|
|
1,630 |
|
|
|
1,584 |
|
|
|
Treasury shares, at cost, 256,989 and 307,936 shares at June 30, 2019 and December 31, 2018, respectively |
|
|
(57 |
) |
|
|
(57 |
) |
|
|
Additional paid-in capital |
|
|
759,796 |
|
|
|
682,245 |
|
|
|
Accumulated deficit |
|
|
(393,676 |
) |
|
|
(291,569 |
) |
|
|
Accumulated other comprehensive loss |
|
|
(10 |
) |
|
|
(8 |
) |
|
|
Total shareholders' equity |
|
|
367,683 |
|
|
|
392,195 |
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
494,245 |
|
|
$ |
489,016 |
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
CRISPR Therapeutics AG
Condensed Consolidated Statements of Operations and Comprehensive Loss
(unaudited, in thousands, except share and per share data)
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
|
Collaboration revenue (1) |
|
$ |
318 |
|
|
$ |
1,088 |
|
|
$ |
646 |
|
|
$ |
2,446 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development (2) |
|
|
39,533 |
|
|
|
25,633 |
|
|
|
73,355 |
|
|
|
45,152 |
|
|
General and administrative |
|
|
15,768 |
|
|
|
12,741 |
|
|
|
30,697 |
|
|
|
21,577 |
|
|
Total operating expenses |
|
|
55,301 |
|
|
|
38,374 |
|
|
|
104,052 |
|
|
|
66,729 |
|
|
Loss from operations |
|
|
(54,983 |
) |
|
|
(37,286 |
) |
|
|
(103,406 |
) |
|
|
(64,283 |
) |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from equity method investment |
|
|
(1,012 |
) |
|
|
(1,153 |
) |
|
|
(2,037 |
) |
|
|
(2,244 |
) |
|
Other income (expense), net |
|
|
2,381 |
|
|
|
155 |
|
|
|
3,506 |
|
|
|
29 |
|
|
Total other income (expense), net |
|
|
1,369 |
|
|
|
(998 |
) |
|
|
1,469 |
|
|
|
(2,215 |
) |
|
Net loss before income taxes |
|
|
(53,614 |
) |
|
|
(38,284 |
) |
|
|
(101,937 |
) |
|
|
(66,498 |
) |
|
Provision for income taxes |
|
|
(85 |
) |
|
|
(96 |
) |
|
|
(170 |
) |
|
|
(182 |
) |
|
Net loss |
|
|
(53,699 |
) |
|
|
(38,380 |
) |
|
|
(102,107 |
) |
|
|
(66,680 |
) |
|
Foreign currency translation adjustment |
|
|
(10 |
) |
|
|
(21 |
) |
|
|
(2 |
) |
|
|
(9 |
) |
|
Comprehensive loss |
|
$ |
(53,709 |
) |
|
$ |
(38,401 |
) |
|
$ |
(102,109 |
) |
|
$ |
(66,689 |
) |
|
Reconciliation of net loss to net loss attributable to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(53,699 |
) |
|
$ |
(38,380 |
) |
|
$ |
(102,107 |
) |
|
$ |
(66,680 |
) |
|
Net loss per share attributable to common shareholders—basic and diluted |
|
$ |
(1.01 |
) |
|
$ |
(0.82 |
) |
|
$ |
(1.94 |
) |
|
$ |
(1.44 |
) |
|
Weighted-average common shares outstanding used in net loss per share attributable to common shareholders—basic and diluted |
|
|
53,188,041 |
|
|
|
46,842,316 |
|
|
|
52,643,649 |
|
|
|
46,362,538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Including the following revenue from a related party, see Notes 6 & 11: |
|
$ |
318 |
|
|
$ |
881 |
|
|
$ |
646 |
|
|
$ |
1,963 |
|
|
(2) Including the following research and development expense with a related party, see Notes 6 & 11: |
|
$ |
6,870 |
|
|
$ |
1,246 |
|
|
$ |
14,459 |
|
|
$ |
2,352 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
CRISPR Therapeutics AG
Consolidated Statements of Shareholders’ Equity
(In thousands, except share and per share data)
|
|
Common Shares |
|
Treasury Shares |
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|||||||||
|
|
Shares |
|
CHF 0.03 Par Value |
|
Shares |
|
Amount, at cost |
|
Additional Paid-in Capital |
|
Accumulated Deficit |
|
Other Comprehensive Income (Loss) |
|
Total Shareholders’ Equity |
|
||||||||
|
Balance at December 31, 2017 |
|
40,592,248 |
|
|
1,240 |
|
|
444,873 |
|
|
— |
|
|
312,018 |
|
|
(125,440 |
) |
|
14 |
|
|
187,832 |
|
|
Cumulative effect of ASC 606 adoption |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,148 |
) |
|
— |
|
|
(1,148 |
) |
|
Issuance of common shares, net of issuance costs of $8.2 million |
|
5,750,000 |
|
|
174 |
|
|
— |
|
|
— |
|
|
122,423 |
|
|
— |
|
|
— |
|
|
122,597 |
|
|
Vesting of restricted shares |
|
10,042 |
|
|
— |
|
|
— |
|
|
— |
|
|
13 |
|
|
— |
|
|
— |
|
|
13 |
|
|
Exercise of vested options |
|
328,525 |
|
|
9 |
|
|
(6,253 |
) |
|
— |
|
|
2,647 |
|
|
— |
|
|
— |
|
|
2,656 |
|
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6,673 |
|
|
— |
|
|
— |
|
|
6,673 |
|
|
Other comprehensive loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
12 |
|
|
12 |
|
|
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(28,300 |
) |
|
— |
|
|
(28,300 |
) |
|
Balance at March 31, 2018 |
|
46,680,815 |
|
$ |
1,423 |
|
|
438,620 |
|
$ |
— |
|
$ |
443,774 |
|
$ |
(154,888 |
) |
$ |
26 |
|
$ |
290,335 |
|
|
Issuance of common shares, net of issuance costs of $0.0M |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
- |
|
|
Vesting of restricted shares |
|
10,043 |
|
|
1 |
|
|
— |
|
|
— |
|
|
13 |
|
|
— |
|
|
— |
|
|
14 |
|
|
Exercise of vested options |
|
380,977 |
|
|
11 |
|
|
(29,259 |
) |
|
(50 |
) |
|
3,768 |
|
|
— |
|
|
— |
|
|
3,729 |
|
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9,477 |
|
|
— |
|
|
— |
|
|
9,477 |
|
|
Other Comprehensive loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(21 |
) |
|
(21 |
) |
|
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(38,380 |
) |
|
— |
|
|
(38,380 |
) |
|
Balance at June 30, 2018 |
|
47,071,835 |
|
$ |
1,435 |
|
|
409,361 |
|
$ |
(50 |
) |
$ |
457,032 |
|
$ |
(193,268 |
) |
$ |
5 |
|
$ |
265,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018 |
|
51,852,862 |
|
|
1,584 |
|
|
307,936 |
|
|
(57 |
) |
|
682,245 |
|
|
(291,569 |
) |
|
(8 |
) |
|
392,195 |
|
|
Issuance of common shares, net of issuance costs of $1.2 million |
|
631,580 |
|
|
— |
|
|
— |
|
|
— |
|
|
23,472 |
|
|
— |
|
|
— |
|
|
23,472 |
|
|
Vesting of restricted shares |
|
9,288 |
|
|
— |
|
|
— |
|
|
— |
|
|
15 |
|
|
— |
|
|
— |
|
|
15 |
|
|
Exercise of vested options |
|
141,915 |
|
|
5 |
|
|
— |
|
|
— |
|
|
1,827 |
|
|
— |
|
|
— |
|
|
1,832 |
|
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
10,696 |
|
|
— |
|
|
— |
|
|
10,696 |
|
|
Other comprehensive loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
8 |
|
|
8 |
|
|
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(48,408 |
) |
|
— |
|
|
(48,408 |
) |
|
Balance at March 31, 2019 |
|
52,635,645 |
|
|
1,589 |
|
|
307,936 |
|
|
(57 |
) |
|
718,255 |
|
|
(339,977 |
) |
|
— |
|
|
379,810 |
|
|
Issuance of common shares, net of issuance costs of $1.3 million |
|
732,108 |
|
|
40 |
|
|
(47,297 |
) |
|
— |
|
|
28,074 |
|
|
— |
|
|
— |
|
|
28,114 |
|
|
Vesting of restricted shares |
|
12,317 |
|
|
1 |
|
|
— |
|
|
— |
|
|
15 |
|
|
— |
|
|
— |
|
|
16 |
|
|
Exercise of vested options |
|
118,987 |
|
|
— |
|
|
(3,650 |
) |
|
— |
|
|
1,254 |
|
|
— |
|
|
— |
|
|
1,254 |
|
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
12,198 |
|
|
— |
|
|
— |
|
|
12,198 |
|
|
Other comprehensive loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
(10 |
) |
|
(10 |
) |
|
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
(53,699 |
) |
|
— |
|
|
(53,699 |
) |
|
Balance at June 30, 2019 |
|
53,499,057 |
|
|
1,630 |
|
|
256,989 |
|
|
(57 |
) |
|
759,796 |
|
|
(393,676 |
) |
|
(10 |
) |
|
367,683 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
CRISPR Therapeutics AG
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
|
|
|
Six Months Ended June 30, |
|
|||||
|
|
|
2019 |
|
|
2018 |
|
||
|
Operating activities: |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(102,107 |
) |
|
$ |
(66,680 |
) |
|
Reconciliation of net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,010 |
|
|
|
1,691 |
|
|
Equity-based compensation |
|
|
20,857 |
|
|
|
13,906 |
|
|
Loss from equity method investment |
|
|
2,037 |
|
|
|
2,244 |
|
|
Other income, non-cash |
|
|
— |
|
|
|
(169 |
) |
|
Changes in: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(233 |
) |
|
|
1,682 |
|
|
Prepaid expenses and other assets |
|
|
(1,399 |
) |
|
|
(3,804 |
) |
|
Accounts payable and accrued expenses |
|
|
(849 |
) |
|
|
3,764 |
|
|
Deferred revenue |
|
|
(50 |
) |
|
|
(244 |
) |
|
Deferred rent |
|
|
— |
|
|
|
(381 |
) |
|
Operating lease assets and liabilities |
|
|
(391 |
) |
|
|
— |
|
|
Other liabilities, net |
|
|
6 |
|
|
|
88 |
|
|
Net cash used in operating activities |
|
|
(80,119 |
) |
|
|
(47,903 |
) |
|
Investing activities: |
|
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(3,271 |
) |
|
|
(1,078 |
) |
|
Net cash used in investing activities |
|
|
(3,271 |
) |
|
|
(1,078 |
) |
|
Financing activities: |
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common shares, net of issuance costs |
|
|
52,294 |
|
|
|
122,597 |
|
|
Proceeds from exercise of options |
|
|
3,086 |
|
|
|
6,433 |
|
|
Repurchase of treasury shares |
|
|
— |
|
|
|
(50 |
) |
|
Net cash provided by financing activities |
|
|
55,380 |
|
|
|
128,980 |
|
|
Effect of exchange rate changes on cash |
|
|
(2 |
) |
|
|
(9 |
) |
|
(Decrease) increase in cash |
|
|
(28,012 |
) |
|
|
79,990 |
|
|
Cash, cash equivalents and restricted cash, beginning of period |
|
|
459,812 |
|
|
|
242,912 |
|
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
431,800 |
|
|
$ |
322,902 |
|
|
Supplemental disclosure of non-cash investing and financing activities |
|
|
|
|
|
|
|
|
|
Property and equipment purchases in accounts payable and accrued expenses |
|
$ |
702 |
|
|
$ |
125 |
|
|
Equity issuance costs in accounts payable and accrued expenses |
|
$ |
477 |
|
|
$ |
— |
|
|
|
|
As of June 30, |
|
|||||
|
Reconciliation to amounts within the condensed consolidated balance sheets |
|
2019 |
|
|
2018 |
|
||
|
Cash and cash equivalents |
|
$ |
427,885 |
|
|
$ |
319,737 |
|
|
Restricted cash |
|
|
3,915 |
|
|
|
3,165 |
|
|
Cash, cash equivalents and restricted cash at end of period |
|
|
431,800 |
|
|
|
322,902 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
CRISPR Therapeutics AG
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited and have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company views its operations and manages its business in one operating segment, which is the business of discovering, developing and commercializing therapies derived from or incorporating genome-editing technology. Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position and results of operations for the three and six month interim periods ended June 30, 2019 and 2018.
The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2018, which are contained in the 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2019.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates in these consolidated financial statements have been made in connection with the calculation of revenues, research and development expenses and equity-based compensation expense. The Company bases its estimates on historical experience and various other assumptions, including, in certain circumstances, future projections that management believes to be reasonable. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.
Significant Accounting Policies
The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and six months ended June 30, 2019 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s 2018 Annual Report on Form 10-K filed with the SEC on February 25, 2019, except with respect to the Company’s lease accounting policy noted within the “Recently adopted accounting standards” section below.
Recently Adopted Accounting Standards
The Company adopted ASC 842, Leases (“ASC 842”), using the required modified retrospective approach, effective January 1, 2019. The Company chose to apply the transition provisions as of the period of adoption. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed the Company to carry forward the historical lease classification. In addition, the Company elected the practical expedient not to apply the recognition requirements in the lease standard to short-term leases (a lease that at commencement date has a lease term of 12 months or less and does not contain a purchase option that it is reasonably certain to exercise) and the practical expedient that permits lessees to make an accounting policy election (by class of underlying asset) to account for each separate lease component of a contract and its associated non-lease components as a single lease component. The adoption of the new standard resulted in the recording net lease assets and lease liabilities of $26.1 million and $37.6 million, respectively, as of January 1, 2019. The difference between the additional lease assets and lease liabilities is primarily due to the change in classification of lease incentives from liabilities to a reduction in our net lease assets. The standard had no impact on our net loss or cash flows.
6
Impact of Adopting ASC 842 on the Financial Statements
|
|
|
January 1, 2019 Prior to ASC 842 Adoption |
|
|
ASC 842 Adjustment |
|
|
January 1, 2019 As Adjusted |
|
|||
|
Consolidated Balance Sheet Data (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets(1) |
|
$ |
9,658 |
|
|
$ |
(553 |
) |
|
$ |
9,105 |
|
|
Operating lease assets(2) |
|
$ |
— |
|
|
$ |
26,087 |
|
|
$ |
26,087 |
|
|
Deferred rent(3)(4) |
|
$ |
1,026 |
|
|
$ |
(1,026 |
) |
|
$ |
— |
|
|
Deferred rent non-current(3) |
|
$ |
11,052 |
|
|
$ |
(11,052 |
) |
|
$ |
— |
|
|
Operating lease liabilities(5) |
|
$ |
— |
|
|
$ |
4,930 |
|
|
$ |
4,930 |
|
|
Non-current operating lease liabilities(5) |
|
$ |
— |
|
|
$ |
32,682 |
|
|
$ |
32,682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents reclassification of prepaid rent to operating lease assets. |
|
|||||||||||
|
(2) Represents capitalization of operating lease assets and reclassification of equipment licenses from prepaid expenses to operating lease assets, offset by reclassification of deferred rent to operating lease assets. |
|
|||||||||||
|
(3) Represents reclassification of deferred rent and tenant incentives to operating lease assets. |
|
|||||||||||
|
(4) As of December 31, 2018, the deferred rent balance was $1,202, which included $176 of sublease income received prior to year-end but not due until January 1, 2019. |
|
|||||||||||
|
(5) Represents recognition of operating lease liabilities. |
|
|||||||||||
2. Property and Equipment, net
Property and equipment, net, consists of the following (in thousands):
|
|
|
As of |
|
|||||
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2019 |
|
|
2018 |
|
||
|
Computer equipment |
|
$ |
585 |
|
|
$ |
443 |
|
|
Furniture, fixtures and other |
|
|
2,555 |
|
|
|
2,453 |
|
|
Laboratory equipment |
|
|
10,157 |
|
|
|
8,964 |
|
|
Leasehold improvements |
|
|
14,937 |
|
|
|
13,776 |
|
|
Construction work in process |
|
|
1,280 |
|
|
|
239 |
|
|
Total property and equipment, gross |
|
|
29,514 |
|
|
|
25,875 |
|
|
Accumulated depreciation |
|
|
(9,358 |
) |
|
|
(7,375 |
) |
|
Total property and equipment, net |
|
$ |
20,156 |
|
|
$ |
18,500 |
|
Depreciation expense for the three and six months ended June 30, 2019 was $1.0 million and $2.0 million, respectively. Depreciation expense for the three and six months ended June 30, 2018 was $0.9 million and $1.7 million, respectively.
3. Accrued Expenses
Accrued expenses consist of the following (in thousands):
|
|
|
As of |
|
|||||
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2019 |
|
|
2018 |
|
||
|
Payroll and employee-related costs |
|
$ |
5,604 |
|
|
$ |
7,321 |
|
|
Research costs |
|
|
9,266 |
|
|
|
7,973 |
|
|
Licensing fees |
|
|
— |
|
|
|
625 |
|
|
Professional fees |
|
|
2,096 |
|
|
|
1,848 |
|
|
Intellectual property costs |
|
|
1,164 |
|
|
|
2,193 |
|
|
Accrued property and equipment |
|
|
387 |
|
|
|
294 |
|
|
Other |
|
|
111 |
|
|
|
598 |
|
|
Total |
|
$ |
18,628 |
|
|
$ |
20,852 |
|
7
4. Commitments and Contingencies
Litigation
In the ordinary course of business, the Company is from time to time involved in lawsuits, claims, investigations, proceedings, and threats of litigation relating to intellectual property, commercial arrangements, employment and other matters. While the outcome of those proceedings and claims cannot be predicted with certainty, the Company is not party to any legal or arbitration proceedings that may have significant effects on its financial position. It is not a party to any material proceedings in which any director, member of executive management or affiliate of the Company is either a party adverse to it or its subsidiaries or has a material interest adverse to it or its subsidiaries.
As disclosed in its Current Report on Form 8-K filed with the SEC on June 26, 2019, on June 25, 2019, the Company received notification that the United States Patent and Trademark Office initiated an interference proceeding at the Patent Trial and Appeal Board (the “PTAB”) between certain pending U.S. patent applications co-owned by the University of California, the University of Vienna and Dr. Emmanuelle Charpentier (collectively, the “CVC Group”) and certain patents and a patent application currently owned by the Broad Institute and Massachusetts Institute of Technology and, in some instances, the President and Fellows of Harvard College (individually and collectively, the “Broad”), all of which are related to the single guide format of CRISPR/Cas9 genome editing technology in eukaryotic cells. The Company has an exclusive worldwide license in the field of human therapeutics to Dr. Charpentier’s rights as a co-owner of the CVC Group portfolio. Specifically, the PTAB has declared Patent Interference No. 106,115 between the CVC Group’s pending U.S. Patent Application Nos. 15/947,680; 15/947,700; 15/947,718; 15/981,807; 15/981,808; 15/981,809; 16/136,159; 16/136,165; 16/136,168; and 16/136,175, and the Broad’s U.S. Patent Nos. 8,697,359; 8,771,945; 8,795,965; 8,865,406; 8,871,445; 8,889,356; 8,895,308; 8,906,616; 8,932,814; 8,945,839; 8,993,233; 8,999,641; 9,840,713, and U.S. Patent Application No. 14/704,551.
Letters of Credit
As of June 30, 2019, the Company had restricted cash of $3.9 million representing letters of credit securing the Company’s obligations under certain leased facilities in Cambridge, Massachusetts, as well as certain credit card arrangements. The letters of credit are secured by cash held in a restricted depository account. The cash deposit is recorded in restricted cash in the accompanying consolidated balance sheet as of June 30, 2019.
Research Agreements
The Company has engaged several research institutions and companies to identify new delivery strategies and applications of its gene-editing technology. The Company is also a party to a number of research license agreements which require significant upfront payments, future royalty payments and potential milestone payments from time to time, as well as intellectual property agreements, which require maintenance and milestone payments from time to time. In association with these agreements, the Company has committed to making payments of $1.7 million and $2.1 million in 2019 and 2020, respectively. For the three and six months ended June 30, 2019, the Company paid $0.5 million and $2.2 million, respectively, related to these research agreements.
The Company is also a party to a number of manufacturing agreements that require upfront payments for the future performance of services. In connection with these agreements, the Company paid $2.8 million in upfront payments, which were recorded as prepaid expenses as of June 30, 2019. The Company will amortize the prepaid balance as services are performed.
5. Leases
In June 2015, the Company entered into a lease agreement for the lease of approximately 19,817 square feet of research facility space with a commencement date of November 15, 2015 (the “2015 Lease”). The lease expires in February 2022. The 2015 Lease contains escalating rent clauses which require higher rent payments in future years. With the adoption of ASC 842, the Company has recorded a right-of-use asset and corresponding lease liability.
In May 2016, the Company entered into a sublease agreement for its primary office and research facility in Cambridge, Massachusetts, with a commencement date of December 23, 2016 (the “2016 Sublease”). The sublease expires in December 2026, and the Company has an option to extend the term of sublease for an additional five-year period if, at the time of expiration of the initial term, the sublessor does not intend to utilize the space for itself or its affiliates. The 2016 Sublease contains escalating rent clauses which require higher rent payments in future years. With the adoption of ASC 842, the Company has recorded a right-of-use asset and corresponding lease liability. The right-of-use asset and corresponding lease liability does not include the additional five-year period under the option.
8
In May 2019, the Company entered into a lease agreement for the lease of approximately 15,877 square feet of office facility space with a commencement date of June 1, 2019 (the “2019 Lease”). The lease expires in November 2026, and the Company has an option to extend the term of the lease for an additional five-year period based on certain conditions within the Company’s control. The 2019 Lease contains escalating rent clauses which require higher rent payments in future years. At lease commencement, the Company recorded a right-of-use asset and corresponding lease liability. The right-of-use asset and corresponding lease liability does not include the additional five-year period under the option.
In addition, the Company rents certain office space in Zug, Switzerland, on a short-term basis for which a right-of-use asset and liability are not recorded, in accordance with the practical expedient elected.
The Company has embedded leases in certain research and license agreements for which the Company has recorded a right of use asset and liability. These arrangements are not significant in comparison to the Company’s total operating lease assets and liabilities. In addition, the Company has identified certain short-term leases embedded within its manufacturing contracts which are not recorded on the Company’s balance sheet in accordance with the practical expedient elected.
The Company identified and assessed the following estimates in recognizing the right-of-use asset and corresponding liability:
|
|
• |
Expected lease term: The expected lease term for those leases commencing prior to January 1, 2019 did not change with the adoption of ASC 842. The expected lease term for leases commencing after the adoption of ASC 842 includes noncancelable lease periods and, when applicable, periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, as well as periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. |
|
|
• |
Incremental borrowing rate: As the discount rates in the Company’s lease are not implicit, the Company estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. |
The following table summarizes the lease assets and liabilities as of June 30, 2019 (in thousands):
|
|
|
As of June 30, 2019 |
|
|
|
Assets |
|
|
|
|
|
Operating lease assets |
|
$ |
30,770 |
|
|
Total lease assets |
|
|
30,770 |
|
|
Liabilities |
|
|
|
|
|
Current |
|
|
|
|
|
Operating lease liabilities |
|
|
4,880 |
|
|
Non-current |
|
|
|
|
|
Operating lease liabilities, net of current portion |
|
|
37,200 |
|
|
Total lease liabilities |
|
$ |
42,080 |
|
The following table summarizes operating lease costs included in research and development and general and administrative expense, as well as sublease income for the three and six months ended June 30, 2019 (in thousands):
|
|
|
Three months ended June 30, 2019 |
|
|
Six months ended June 30, 2019 |
|
||
|
Operating lease costs |
|
$ |
1,904 |
|
|
$ |
3,726 |
|
|
Short-term lease costs |
|
|
1,123 |
|
|
|
2,261 |
|
|
Variable lease costs |
|
|
683 |
|
|
|
1,413 |
|
|
Sublease income |
|
|
— |
|
|
|
(525 |
) |
|
Net lease cost |
|
$ |
3,710 |
|
|
$ |
6,875 |
|
9
The following table summarizes the maturity of undiscounted payments due under lease liabilities and the present value of those liabilities as of June 30, 2019 (in thousands):
|
|
|
Total |
|
|
|
2019 |
|
$ |
4,419 |
|
|
2020 |
|
|
8,566 |
|
|
2021 |
|
|
8,507 |
|
|
2022 |
|
|
7,345 |
|
|
2023 |
|
|
7,362 |
|
|
Thereafter |
|
|
23,254 |
|
|
Total |
|
$ |
59,453 |
|
|
Present value adjustment |
|
|
(17,373 |
) |
|
Present value of lease liabilities |
|
$ |
42,080 |
|
The following table summarizes the lease term and discount rate as of June 30, 2019:
|
|
|
As of June 30, 2019 |
|
|
|
Weighted-average remaining lease term (years) |
|
|
|
|
|
Operating leases |
|
|
7.0 |
|
|
Weighted-average discount rate |
|
|
|
|
|
Operating leases |
|
|
9.8 |
% |
The following table summarizes the cash paid for amounts included in the measurement of lease liabilities for the six months ended June 30, 2019 (in thousands):
|
|
|
Six months ended June 30, |
|
|
|
|
|
2019 |
|
|
|
Cash paid for amounts included in the measurement of lease liabilities |
|
$ |
3,940 |
|
|
Operating cash flows from operating leases |
|
$ |
3,940 |
|
6. Significant Contracts
Collaboration Agreement with and Joint Development Agreement with Vertex Pharmaceuticals Incorporated and certain of its subsidiaries
Summary of Agreement
On October 26, 2015, the Company entered into a strategic collaboration, option and license agreement (the “2015 Collaboration Agreement”) with Vertex Pharmaceuticals Incorporated and certain of its subsidiaries (“Vertex”). The 2015 Collaboration Agreement is focused on the use of the Company’s CRISPR/Cas9 gene editing technology to discover and develop potential new treatments aimed at the underlying genetic causes of human disease. On December 12, 2017, the Company and Vertex entered into Amendment No. 1 to the 2015 Collaboration Agreement (“Amendment No. 1”) and the Joint Development Agreement (the “JDA”). Amendment No. 1, among other things, modified certain definitions and provisions of the 2015 Collaboration Agreement to make them consistent with the JDA and clarified how many options are exercised (or deemed exercised) in connection with certain targets specified under the 2015 Collaboration Agreement. Amendment No. 1 also amended other provisions of the 2015 Collaboration Agreement, including the expiration terms.
In connection with the 2015 Collaboration Agreement, Vertex made a nonrefundable upfront payment of $75.0 million. Under the 2015 Collaboration Agreement, Vertex will fund the discovery activities conducted pursuant to the agreement while retaining options to co-exclusive and exclusive licenses. In December 2017, upon execution of the JDA and Amendment No. 1, Vertex exercised its option to obtain a co-exclusive license to develop and commercialize hemoglobinopathy and beta-globin targets. As such, for potential hemoglobinopathy treatments, including treatments for sickle cell disease, the Company and Vertex will share equally all research and development costs and worldwide revenues. For other targets that Vertex elects to license, Vertex will lead development and global commercialization activities. For each of up to four remaining targets that Vertex elects to license, the Company has the potential to receive up to $420.0 million in development, regulatory and commercial milestones and royalties on net product sales.
10
In connection with the JDA, the Company received a $7.0 million up-front payment from Vertex and is eligible for a one-time low seven-digit milestone payment upon the dosing of the second patient in a clinical trial with the initial product candidate. The net profits and net losses, as applicable, incurred under the JDA will be shared equally between the Company and Vertex.
Accounting for the 2015 Collaboration Agreement, Amendment No. 1 and JDA
The arrangements include components of a customer-vendor relationship and collaborative arrangements as defined under ASC 808, Collaborative Arrangements. The Company applies the guidance of ASC 606, Revenue from Contracts with Customers (“ASC 606”) by analogy to the vendor-customer performance obligations of the 2015 Collaboration Agreement and the performance obligations of the JDA subject to ASC 606 as outlined below. The Company applies the guidance of ASC 808 to those elements in which there is a collaboration relationship in which both parties share equally in the risks and rewards of the research and development as outlined below.
Accounting Analysis Under ASC 606
As the overall arrangement was modified in December 2017, the Company elected a practical expedient within ASC 606 that allowed entities to reflect the aggregate effect of all contract modifications when identifying the satisfied and unsatisfied performance obligations for contracts that were modified prior to the adoption of ASC 606. As of the December 2017 contract modification date, the Company concluded the arrangement contained the following performance obligations: (i) the non-exclusive research license; (ii) four material rights representing the option for up to four exclusive licenses to develop and commercialize the collaboration targets; (iii) a combined performance obligation representing the co-exclusive research license, and a development and commercialization license to develop and commercialize hemoglobinopathies and beta-globin targets; and (iv) the performance of research and development (“R&D Services”).
The selling price of each performance obligation was determined based on the Company’s estimated standalone selling price (the “ESSP”). The Company developed the ESSP for all the performance obligations included in the 2015 Collaboration Agreement and JDA with the objective of determining the price at which it would sell such an item if it were to be sold regularly on a standalone basis. The ESSP for material rights was determined based on the incremental discount given to Vertex based on the ESSP of the four remaining exclusive licenses and the exercise price paid at the time of exercise.
As the Company has a right to consideration from Vertex in an amount that corresponds directly with the value of the Company’s performance completed to date for the R&D Services, the Company recognizes revenue related to the R&D Services as invoiced, in line with the practical expedient in ASC 606-10-55-18.
The transaction price was comprised of: (i) original upfront payment of $75.0 million, (ii) an upfront payment of $7.0 million under the JDA and (iii) $19.3 million of variable consideration associated with the R&D Services. The R&D Services revenue is recognized as invoiced and specifically allocated to the R&D Services performance obligation. The remaining transaction price of $82.0 million was allocated among the performance obligations using the relative selling price method as follows: (i) a non-exclusive research license: $0.5 million; (ii) a material right to discounts for exclusive licenses for up to four Collaboration Targets: $22.2 million, $18.7 million, $8.4 million and $8.4 million for a total of $57.7 million; and (iii) co-exclusive development and commercialization licenses for hemoglobinopathy and beta-globin targets identified in the JDA and co-exclusive research license for the follow-on products: $23.8 million.
The Company recognized $0.1 million and $0.2 million of revenue related to the collaboration with Vertex for the three and six months ended June 30, 2019, respectively. The Company recognized $0.2 million and $0.4 million of revenue related to the collaboration with Vertex for the three and six months ended June 30, 2018. As of June 30, 2019, there was $57.7 million of non-current deferred revenue related to the collaboration with Vertex compared to $57.8 as of December 31, 2018. The transaction price allocated to the remaining performance obligations is $57.8 million. The remaining performance obligations will be recognized as follows: four material rights to obtain an exclusive commercialization and development license at a point in time, upon exercise; and the non-exclusive research license ratably over/within the remaining research term. As of June 30, 2019, the remaining amount to be recognized for the non-exclusive research license is not significant. R&D Services are recognized as invoiced under the practical expedient and, as such, are not disclosed within the remaining performance obligation balance.
Milestones under the 2015 Collaboration Agreement
The Company evaluated the milestones that may be received in connection with the 2015 Collaboration Agreement and JDA. The first potential milestone the Company will be entitled to receive is the milestone in the JDA to receive a one-time low seven-digit milestone payment upon the dosing of a second patient in a clinical trial with the initial shared product and was fully constrained as of
11
June 30, 2019. The remaining milestones are predominately related to the development and commercialization of a product resulting from the arrangement and are payable with respect to each selected exclusive license which have yet to be exercised and are not currently included in the determination of the transaction price. Each milestone is payable only once per collaboration target, regardless of the number of products directed to such collaboration target that achieve the relevant milestone event. There are nine remaining clinical development and regulatory approval milestones which may trigger proceeds of up to $90.0 million and $235.0 million, respectively, for each selected exclusive license, and two commercial milestones which may trigger proceeds of up to $75.0 million for each selected exclusive license (which, when combined with the $10.0 million due upon exercise of the exclusive option and the $10.0 million development milestone associated with an Investigational New Drug- enabling application, total $420.0 million for each selected Exclusive License), as follows:
Developmental Milestone Events
|
|
1. |
Initiation of the first Clinical Trial of a Product; |
|
|
2. |
Establishment of Proof of Concept for a Product; |
|
|
3. |
Initiation of the first Phase 3 Clinical Trial of a Product; |
|
|
4. |
Acceptance of Approval Application by the U.S. Food and Drug Administration for a Product; |
|
|
5. |
Acceptance of Approval Application by the European Medicines Agency for a Product; |
|
|
6. |
Acceptance of Approval Application by a Regulatory Authority in Japan for a Product; |
|
|
7. |
Marketing Approval in the U.S. for a Product; |
|
|
8. |
Marketing Approval in the EU for a Product; and |
|
|
9. |
Marketing Approval in Japan for a Product. |
Commercial Milestone Events
|
|
1. |
Annual Net Sales for Products with respect to a Collaboration Target exceed $500 million; and |
|
|
2. |
Annual Net Sales for Products with respect to a Collaboration Target exceed $1.0 billion. |
There is uncertainty that the events to obtain the developmental milestones will be achieved given the nature of clinical development and the stage of the CRISPR/Cas9 technology. Upon exercise of the exclusive license options, developmental milestones will be constrained until the Company is sure that a significant revenue reversal will not occur. Commercial milestones and royalties relate predominantly to a license of intellectual property and are determined by sales or usage-based thresholds. The commercial milestones and royalties are accounted for under the royalty recognition constraint and will be accounted for as constrained variable consideration. The Company applies the royalty recognition constraint for each commercial milestone and will not recognize revenue for each until the subsequent sale of a licensed product (achievement of each) occurs.
Accounting Analysis under ASC 808
The Company identified the following collaborative elements which are accounted for under ASC 808: (i) development and commercialization services for shared products; (ii) R&D Services for follow-on products; and (iii) committee participation. The related impact of the cost sharing associated with research and development is included in research and development expense. Expenses related to services performed by the Company are classified as research and development expense. Payments received from Vertex for partial reimbursement of expenses are recorded as a reduction of research and development expense.
The Company recognized $6.6 million and $13.7 million of research and development expense related to the collaboration with Vertex for the three and six months ended June 30, 2019, respectively. The Company recognized $0.2 million and $0.4 million of research and development expense related to the collaboration with Vertex for the three and six months ended June 30, 2018, respectively. Research and development expense for the three and six months ended June 30, 2019 was net of $3.3 million and $7.8 million of reimbursements from Vertex, respectively. Research and development expense for the three and six months ended June 30, 2018 was net of $3.7 million and $6.9 million of reimbursements from Vertex, respectively.
12
Joint Venture with Bayer Healthcare LLC
On December 19, 2015, the Company entered into an agreement with Bayer Healthcare LLC and its subsidiaries (“Bayer”), to establish a joint venture to focus on the research the development of new therapeutics to cure blood disorders, blindness and congenital heart disease. On February 12, 2016, the Company and Bayer completed the formation of the joint venture entity, Casebia Therapeutics LLP (“Casebia”). Bayer and the Company each received a 50% equity interest in the entity in exchange for their respective contributions to the entity. The Company contributed $0.1 million in cash and licensed its proprietary CRISPR/Cas9 gene editing technology and intellectual property for selected disease indications. Bayer contributed its protein engineering expertise and relevant disease know-how. Under the agreement, Casebia paid the Company $35.0 million in exchange for a worldwide, exclusive license to commercialize the Company’s gene-editing technology specifically for the indications covered by the license. There are no milestone, royalties or other payments due to the Company under this aspect of the agreement. The Company also entered into a separate services agreement with Casebia, under which the Company agreed to provide compensated research and development services.
During 2016, the Company recorded an equity method investment of $36.5 million equal to the fair value of the Company’s interest in Casebia and subsequently recorded unrealized equity method losses for the same amount. The Company has no further contractual obligations to provide cash financing to Casebia and accordingly, no additional losses have been recorded beyond the initial equity amount. Casebia’s net losses were $18.1 million and $32.3 million for the three and six months ended June 30, 2019, respectively. Casebia’s net losses were $13.5 million and $25.8 million for the three and six months ended June 30, 2018, respectively. Unrecognized equity method losses in excess of the Company’s equity investment in Casebia were $60.5 million and $45.3 million as of June 30, 2019 and December 31, 2018, respectively.
The remaining performance obligations include research and development services, which are recorded as revenue under ASC 606 and cost sharing activities with Casebia related to shared research and technology licenses are accounted for as a cost/profit sharing arrangement under ASC 808, with the related impact of the cost sharing included as research and development expense. During the three and six months ended June 30, 2019, the Company recognized $0.2 million and $0.4 million of revenue, respectively, related to the collaboration with Casebia. During the three and six months ended June 30, 2018, the Company recognized $0.9 million and $2.0 million of revenue, respectively, related to the collaboration with Casebia. During the three and six months ended June 30, 2019, the Company recognized $0.2 million and $0.7 million, respectively, of research and development expense related to the collaboration with Casebia. During the three and six months ended June 30, 2018, the Company recognized $1.2 million and $2.4 million, respectively, of research and development expense related to the collaboration with Casebia. During the three and six months ended June 30, 2019, the Company recognized a loss from equity method investment of $1.0 million and $2.0 million, respectively, related to stock-based compensation expense for Casebia employees. During the three and six months ended June 30, 2018, the Company recognized a loss from equity method investment of $1.2 million and $2.2 million, respectively, related to stock-based compensation expense for Casebia employees.
7. Share Capital
The Company had 55,445,241 authorized common shares as of June 30, 2019, with a par value of CHF 0.03 per share. Included in the authorized common shares as of June 30, 2019 are 5,586 shares of unvested restricted stock awards, 256,989 treasury shares which are legally outstanding but not considered outstanding for accounting purposes and 1,683,609 shares registered and reserved for future issuance. The Company had conditional capital reserved for future issuance of 19,028,428 common shares for employee benefit plans and 4,919,700 common shares for debt instruments as of June 30, 2019. Under Swiss law, authorized share capital consisted of 25,134,003 common shares as of June 30, 2019.
At-the-Market Offering
In August 2018, the Company entered into an Open Market Sale AgreementSM with Jefferies LLC (“Jefferies”), under which Jefferies may offer and sell, from time to time, common shares having aggregate gross proceeds of up to $125.0 million. In the first quarter of 2019, the Company began to issue and sell securities under this sales agreement. During the three and six months ended June 30, 2019, the Company sold 732,108 and 1,363,688 common shares, respectively, for net cash proceeds of $28.5 million and $52.5 million, respectively, after deducting commission fees of $0.8 million and $1.6 million, respectively. In addition, the Company paid approximately $0.2 million in stamp taxes related to the securities issued and sold during the three- and six-month period ended June 30, 2019 and accrued an additional $0.5 million for stamp taxes as of June 30, 2019. The Company sold an additional 1,124,952 common shares under this agreement subsequent to June 30, 2019 through July 29, 2019, resulting in net cash proceeds of approximately $52.8 million, after deducting commission fees of approximately $1.2 million.
13
8. Stock-based Compensation
During the three and six months ended June 30, 2019 and 2018, the Company recognized the following stock-based compensation expense (in thousands):
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
|
Research and development |
|
$ |
5,913 |
|
|
$ |
5,167 |
|
|
$ |
10,875 |
|
|
$ |
8,083 |
|
|
General and administrative |
|
|
5,273 |
|
|
|
3,157 |
|
|
|
9,982 |
|
|
|
5,823 |
|
|
Loss from equity method investment |
|
|
1,012 |
|
|
|
1,153 |
|
|
|
2,037 |
|
|
|
2,244 |
|
|
Total |
|
$ |
12,198 |
|
|
$ |
9,477 |
|
|
$ |
22,894 |
|
|
$ |
16,150 |
|
Stock option activity
The following table summarizes stock option activity for the six months ended June 30, 2019 (intrinsic value in thousands):
|
|
|
Stock Options |
|
|
Weighted-Average Exercise Price |
|
|
Weighted-Average Remaining Contractual Term (years) |
|
|
Aggregate Intrinsic Value |
|
||||
|
Outstanding at December 31, 2018 |
|
|
6,689,311 |
|
|
$ |
25.42 |
|
|
|
8.3 |
|
|
$ |
68,572 |
|
|
Granted |
|
|
1,948,773 |
|
|
$ |
36.05 |
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(263,700 |
) |
|
$ |
12.23 |
|
|
|
|
|
|
|
|
|
|
Cancelled or forfeited |
|
|
(178,518 |
) |
|
$ |
33.48 |
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2019 |
|
|
8,195,866 |
|
|
$ |
28.19 |
|
|
|
8.3 |
|
|
$ |
167,076 |
|
|
Exercisable at June 30, 2019 |
|
|
3,198,255 |
|
|
$ |
19.51 |
|
|
|
7.5 |
|
|
$ |
91,777 |
|
|
Vested and expected to vest at June 30, 2019 |
|
|
8,195,866 |
|
|
$ |
28.19 |
|
|
|
8.3 |
|
|
$ |
167,076 |
|
The Company estimated the fair value of each stock option award using the Black-Scholes option-pricing model based on the following assumptions:
|
|
|
Six Months Ended June 30, |
|
|||||
|
|
|
2019 |
|
|
2018 |
|
||
|
Assumptions |
|
|
|
|
|
|
|
|
|
Weighted-average expected volatility |
|
|
69.3 |
% |
|
|
72.2 |
% |
|
Expected term (in years) |
|
|
6.0 |
|
|
|
6.0 |
|
|
Risk-free interest rate |
|
|
2.5 |
% |
|
|
2.7 |
% |
|
Expected dividend yield |
|
|
0.0 |
% |
|
|
0.0 |
% |
As of June 30, 2019, total unrecognized compensation expense related to stock options was $104.3 million which the Company expects to recognize over a remaining weighted-average period of 2.9 years.
In May 2018, the Company modified the terms of certain options held by a departing employee. The modification resulted in $2.2 million in stock-based compensation expense recorded during the period.
14
Restricted stock activity
The following table summarizes restricted stock activity for the six months ended June 30, 2019:
|
|
|
Restricted Stock |
|
|
Weighted- Average Grant Date Fair Value |
|
||
|
Unvested balance as of December 31, 2018 |
|
|
327,342 |
|
|
$ |
36.72 |
|
|
Granted |
|
|
49,000 |
|
|
|
33.30 |
|
|
Vested |
|
|
(24,339 |
) |
|
|
14.96 |
|
|
Cancelled or forfeited |
|
|
(14,000 |
) |
|
|
38.33 |
|
|
Unvested balance as of June 30, 2019 |
|
|
338,003 |
|
|
$ |
37.72 |
|
As of June 30, 2019, total unrecognized compensation expense related to unvested restricted common shares was $8.0 million which the Company expects to recognize over a remaining weighted-average vesting period of 1.35 years.
9. Net Loss Per Share Attributable to Common Shareholders
Basic net loss per share is calculated by dividing net loss attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is calculated by dividing the net income attributable to common shareholders by the weighted-average number of common share equivalents outstanding for the period, including any dilutive effect from outstanding stock options and warrants using the treasury stock method.
The following common share equivalents, presented on an as-converted basis, were excluded from the calculation of net loss per share for the periods presented due to their anti-dilutive effect (in common share equivalent shares):
|
|
As of |
|
|||||
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
||
|
Outstanding options |
|
8,195,866 |
|
|
|
6,617,181 |
|
|
Unvested restricted common shares |
|
338,003 |
|
|
|
169,930 |
|
|
Total |
|
8,533,869 |
|
|
|
6,787,111 |
|
10. Income Taxes
During the three and six months ended June 30, 2019, the Company recorded an income tax provision of $0.1 million and $0.2 million, respectively, representing an effective tax rate of -0.2% and -0.2%, respectively. During the three and six months ended June 30, 2018, the Company recorded an income tax provision of $0.1 million and $0.2 million, respectively, representing an effective tax rate of -0.3% and -0.3%, respectively. The income tax provision is primarily attributable to the year-to-date pre-tax income earned by the Company’s U.S. subsidiary. The difference in the statutory tax rate and effective tax rate is primarily a result of the jurisdictional mix of earnings and losses that are not benefited. The Company maintains a valuation allowance against certain deferred tax assets that are not more-likely-than-not realizable. As a result, the Company has not recognized a tax benefit related to losses generated in Switzerland in the current periods.
11. Related Party Transactions
In the fourth quarter of 2018, upon becoming an owner of record of more than 10% of the voting interest of the Company, Vertex became a related party under ASC 850, Related party disclosures. Refer to Note 6, “Collaboration Agreement with and Joint Development Agreement with Vertex Pharmaceuticals Incorporated and certain of its subsidiaries” and “Joint Venture with Bayer Healthcare LLC” for discussion of transactions with Casebia and Vertex, related parties.
12. Subsequent Events
In June 2019, the Company and Vertex entered into a series of agreements, which closed on July 23, 2019. The Company entered into a strategic collaboration and license agreement (the “2019 Collaboration Agreement”) with Vertex for the development and commercialization of products for the treatment of Duchenne Muscular Dystrophy (“DMD”) and Myotonic Dystrophy Type 1 (“DM1”). Under the terms of the 2019 Collaboration Agreement, the Company received an upfront, nonrefundable payment of $175 million. In addition, the Company is eligible to receive potential future payments of up to $825 million based upon the successful
15
achievement of specified research, development, regulatory and commercial milestones for the DMD and DM1 programs. The Company is also eligible to receive tiered royalties on future net sales on any products that may result from this collaboration. For the DMD program, Vertex is responsible for all research, development, manufacturing and commercialization activities and all related costs. For the DM1 program, the Company and Vertex will share research costs for specified guide RNA research to be conducted by the Company, and Vertex is responsible for all other research, development, manufacturing and commercialization costs. Upon Investigational New Drug application filing, the Company has the option to forego the DM1 milestones and royalties to co-develop and co-commercialize all DM1 products globally.
In connection with the execution of the 2019 Collaboration Agreement, the Company and Vertex entered into a second amendment to the 2015 Collaboration Agreement (“Amendment No. 2”). Among other things, Amendment No. 2 modified certain definitions and provisions of the 2015 Collaboration Agreement to make them consistent with the 2019 Collaboration Agreement and set forth the final number and identity of the collaboration targets under the 2015 Collaboration Agreement. The Company and Vertex agreed that one of the four remaining options under the 2015 Collaboration Agreement, as amended, would not be exercised; instead, the Company will conduct research and development activities for a specified target. Vertex will have the option to co-develop and co-commercialize the specified target and if Vertex does not exercise its option to do so within a specified time period, Vertex is eligible to receive potential specified research, development, regulatory and commercial milestones and tiered single-digit royalties on future net sales.
16
Item 2. 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 in conjunction with (i) our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) our audited consolidated financial statements and related notes and management’s discussion and analysis of financial condition and results of operations included in our annual report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (“SEC”) on February 25, 2019. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations. These forward-looking statements, include, but are not limited to, statements about:
|
|
• |
the safety, efficacy and clinical progress of our various clinical programs including CTX001® and CTX110TM; |
|
|
• |
the status of clinical trials, development timelines and discussions with regulatory authorities related to product candidates under development by us and our collaborators; |
|
|
• |
our intellectual property coverage and positions, including those of our licensors and third parties as well as the status and potential outcome of proceedings involving any such intellectual property; |
|
|
• |
the sufficiency of our cash resources; and |
|
|
• |
the therapeutic value, development, and commercial potential of CRISPR/Cas9 gene editing technologies and therapies. |
Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q, if any, and in other SEC filings. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Investors and others should note that we announce material information to our investors using our investor relations website (https://crisprtx.gcs-web.com/), SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media to communicate with the public about our company, our business, our product candidates and other matters. It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels listed on our investor relations website.
Overview
We are a leading gene editing company focused on the development of CRISPR/Cas9-based therapeutics. CRISPR/Cas9 is a revolutionary gene editing technology that allows for precise, directed changes to genomic DNA. The application of CRISPR/Cas9 for gene editing was co-invented by one of our scientific founders, Dr. Emmanuelle Charpentier, who, along with her collaborators, published work elucidating how CRISPR/Cas9, a naturally occurring viral defense mechanism found in bacteria, can be adapted for use in gene editing. We are applying this technology to potentially treat a broad set of rare and common diseases by disrupting, correcting or regulating the genes related to such diseases. We believe that our scientific expertise, together with our approach, may enable an entirely new class of highly active and potentially curative therapies for patients for whom current biopharmaceutical approaches have had limited success.
Since our inception in October 2013, we have devoted substantially all of our resources to our research and development efforts, identifying potential product candidates, undertaking drug discovery and preclinical development activities, building and protecting our intellectual property estate, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations. To date, we have primarily financed our operations through private placements of our preferred shares, common share issuances, convertible loans and collaboration agreements with strategic partners.
We have established a portfolio of therapeutic programs across a broad range of disease areas including hemoglobinopathies, oncology, regenerative medicine and rare diseases. We have begun clinical trials in the United States and Europe for CTX001, which is an investigational, autologous, gene-edited hematopoietic stem cell therapy for the treatment of transfusion-dependent beta thalassemia (“TDT”) and severe sickle cell disease. Additionally, we are developing our own portfolio of CAR-T cell product candidates based on our gene-editing technology. Earlier this year, the U.S. Food and Drug Administration (the “FDA”) approved our Investigational New Drug (“IND”) application for CTX110, our wholly-owned allogeneic CAR-T cell therapy targeting CD19+
17
malignancies. Additionally, we have clinical trial applications approved in various countries to conduct a Phase 1/2 trial of CTX110 and are currently enrolling patients.
All of our revenue to date has been collaboration revenue. We have incurred significant net operating losses in every year since our inception and expect to continue to incur net operating losses for the foreseeable future. As of June 30, 2019, we had $427.9 million in cash and cash equivalents and an accumulated deficit of $393.7 million. We expect to continue to incur significant expenses and increasing operating losses for the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase significantly as we continue our current research programs and development activities; seek to identify additional research programs and additional product candidates; conduct initial drug application supporting preclinical studies and initiate clinical trials for our product candidates; initiate preclinical testing and clinical trials for any other product candidates we identify and develop; maintain, expand and protect our intellectual property estate; further develop our gene editing platform; hire additional research, clinical and scientific personnel; and incur additional costs associated with operating as a public company.
Collaboration Agreement, Joint Development and Commercialization Agreement- Vertex (CTX001)
In October 2015, we entered into a strategic research collaboration agreement (the “2015 Collaboration Agreement”) with Vertex Pharmaceuticals Incorporated and certain of its subsidiaries (“Vertex”) focused on the development of CRISPR/Cas9-based therapies. Under the terms of the 2015 Collaboration Agreement, we received an upfront, nonrefundable payment of $75.0 million and $30.0 million in convertible loan proceeds.
In December 2017, we entered into the Joint Development Agreement (“JDA”) with Vertex for the development and commercialization of CTX001. The initial focus of the JDA centers on developing CTX001 for transfusion-dependent beta thalassemia (“TDT”) and severe sickle cell disease (“SCD”). CTX001 is an investigational autologous gene-edited hematopoietic stem cell therapy for patients suffering from severe hemoglobinopathies. The net profits and net losses, as applicable, incurred under the JDA will be shared equally between us and Vertex.
In December 2017, we and Vertex entered into an amendment to the 2015 Collaboration Agreement (“Amendment No. 1”). Amendment No. 1, among other things, modified certain definitions and provisions of the 2015 Collaboration Agreement to make them consistent with the JDA and clarified how many options are exercised (or deemed exercised) in connection with certain targets specified under the 2015 Collaboration Agreement. Amendment No. 1 also amended other provisions of the 2015 Collaboration Agreement, including the expiration terms of the 2015 Collaboration Agreement.
In June 2019, we and Vertex entered into a second amendment to the 2015 Collaboration Agreement (“Amendment No. 2”). Among other things, Amendment No. 2 modified certain definitions and provisions of the 2015 Collaboration Agreement to make them consistent with the strategic collaboration and license agreement (the “2019 Collaboration Agreement”) and set forth the final number and identity of the collaboration targets under the 2015 Collaboration Agreement. We and Vertex agreed that one of the four remaining options under the 2015 Collaboration Agreement, as amended, would not be exercised; instead, we will conduct research and development activities for a specified target. Vertex will have the option to co-develop and co-commercialize the specified target and if Vertex does not exercise its option to do so within a specified time period, Vertex is eligible to receive potential specified research, development, regulatory and commercial milestones and tiered single-digit royalties on future net sales. Amendment No. 2 was not effective until after regulatory review, which occurred in July 2019.
We and Vertex are planning to conduct clinical trials for CTX001 in multiple countries for both beta thalassemia and severe sickle cell disease and we and Vertex continue to work closely with various global regulatory authorities in these and other countries.
We and Vertex are investigating CTX001 in a Phase 1/2 open-label clinical trial designed to assess the safety and efficacy of a single dose of CTX001 in patients ages 18 to 35 with TDT, non-beta zero/beta zero subtypes. The first two patients in the trial will be treated sequentially and, pending data from these initial two patients, the trial will open for broader concurrent enrollment. The first patient has been treated with CTX001 in this trial. The trial is currently being conducted at multiple clinical trial sites in Canada and Europe. In addition, we and Vertex expanded the IND for CTX001 to include TDT. CTX001 was granted Fast Track Designation by the FDA for the treatment of TDT in April 2019. On July 29, 2019, we announced that the first patient treated with CTX001 in a Phase 1/2 clinical study of patients with TDT remains transfusion independent, greater than four months following engraftment.
We and Vertex are also investigating CTX001 in a Phase 1/2 open-label clinical trial designed to assess the safety and efficacy of a single dose of CTX001 in patients ages 18 to 35 with severe SCD. Similar to the trial in TDT, the first two patients in the trial will be treated sequentially and, pending data from these initial two patients, the trial will open for broader concurrent enrollment. The first patient has been treated with CTX001 in this trial. The trial is currently being conducted at clinical trial sites in the United States.
18
CTX001 was granted Fast Track Designation by the FDA for the treatment of SCD. In addition, we and Vertex have obtained approvals of Clinical Trial Applications for CTX001 for severe SCD in Canada and additional countries in Europe.
Strategic Collaboration and License Agreement – Vertex (DMD and DM1)
In June 2019, we entered into the 2019 Collaboration Agreement with Vertex for the development and commercialization of products for the treatment of Duchenne Muscular Dystrophy (“DMD”) and Myotonic Dystrophy Type 1 (“DM1”). Under the terms of the 2019 Collaboration Agreement, we received an upfront, nonrefundable payment of $175.0 million. Additionally, under the terms of the 2019 Collaboration Agreement, we have an option, exercisable during a specified exercise period, to co-develop and co-commercialize products for the treatment of DM1. The 2019 Collaboration Agreement was not effective until after regulatory review, which occurred in July 2019.
Joint Venture Agreement- Casebia
In December 2015, we entered into an agreement (the “JV Agreement”) with Bayer HealthCare LLC (“Bayer”) and its subsidiaries to create a joint venture, Casebia Therapeutics LLP (“Casebia” or the “JV”) to discover, develop and commercialize CRISPR/Cas9 gene-editing therapeutics to treat the genetic causes of bleeding disorders, autoimmune disease, blindness, hearing loss and heart disease. We and Bayer each have a 50% interest in the JV. Under the JV Agreement, Bayer is making available its protein engineering expertise and relevant disease know-how and we are contributing our proprietary CRISPR/Cas9 gene editing technology and intellectual property. Bayer will also provide up to $300.0 million in research and development investments to the JV over the first five years, subject to specified conditions.
In connection with the JV Agreement, the JV was required to pay us an aggregate amount of $35.0 million technology access fee, consisting of an upfront payment of $20.0 million, which was paid at the closing of the JV Agreement in March 2016, and another payment of $15.0 million for specified intellectual property rights relating to our CRISPR/Cas9 technology outside of the United States, which was paid in December 2016. In January 2016, we also issued the Bayer Convertible Loan to Bayer BV for gross proceeds of $35.0 million which was immediately converted to Series B Preferred Shares at a conversion price of $13.43 per share. Concurrent with our initial public offering in October 2016, we issued and sold 2,500,000 common shares to Bayer BV, at the public offering price of $14.00 per share resulting in aggregate net proceeds of $35.0 million.
Financial Overview
Revenue
We have not generated any revenue to date from product sales and do not expect to do so in the near future. During the three and six months ended June 30, 2019, we recognized $0.3 million and $0.6 million of revenue related to our collaboration arrangements with Vertex and Casebia, respectively. During the three and six months ended June 30, 2018, we recognized $1.1 million and $2.4 million, respectively, of revenue related to our collaboration agreements with Vertex and Casebia. As of June 30, 2019, we had not received any milestone or royalty payments under any of the Vertex collaboration agreements. For additional information about our revenue recognition policy, see Note 2 “Summary of Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 25, 2019.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our product discovery efforts and the development of our product candidates, which include:
|
|
• |
employee-related expenses, including salaries, benefits and equity-based compensation expense; |
|
|
• |
costs of services 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 and other payments related to acquiring and maintaining licenses under our third-party licensing agreements. |
19
Research and development costs are expensed as incurred. Nonrefundable advance payments for research and development goods or services to be received in the future are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed. At this time, we cannot reasonably estimate or know the nature, timing or estimated costs of the efforts that will be necessary to complete the development of any product 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 and IND-enabling 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 the product, if and when approved, whether alone or in collaboration with others; |
|
|
• |
acceptance of the 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 or the subsequent commercialization of any product candidates we may successfully develop could significantly change the costs, timing and viability associated with the development of that product candidate.
Except for activities we perform in connection with our collaborations with Vertex and Casebia, we do not track research and development costs on a program-by-program basis.
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 current development programs progress and new programs are added.
General and Administrative Expenses
General and administrative expenses consist primarily of employee related expenses, including salaries, benefits, and equity-based compensation, for personnel in executive, finance, accounting, business development and human resources functions. Other significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to patent 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, potential commercialization of our product candidates and increased costs of operating as a public company. We anticipate increased costs associated with being a public company, including expenses related to services associated with maintaining compliance with exchange listing and SEC requirements, insurance costs and investor relations costs, the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses. We also anticipate increased expenses related to the reimbursements of third-party patent related expenses in connection with certain of our in-licensed intellectual property.
20
Results of Operations
Comparison of three months ended June 30, 2019 and 2018 (in thousands):
|
|
|
Three Months Ended June 30, |
|
|
Period to Period |
|
||||||
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
|||
|
Collaboration revenue |
|
$ |
318 |
|
|
$ |
1,088 |
|
|
$ |
(770 |
) |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
39,533 |
|
|
|
25,633 |
|
|
|
13,900 |
|
|
General and administrative |
|
|
15,768 |
|
|
|
12,741 |
|
|
|
3,027 |
|
|
Total operating expenses |
|
|
55,301 |
|
|
|
38,374 |
|
|
|
16,927 |
|
|
Loss from operations |
|
|
(54,983 |
) |
|
|
(37,286 |
) |
|
|
(17,697 |
) |
|
Other income (expense), net |
|
|
1,369 |
|
|
|
(998 |
) |
|
|
2,367 |
|
|
Net loss before income taxes |
|
|
(53,614 |
) |
|
|
(38,284 |
) |
|
|
(15,330 |
) |
|
Provision for income taxes |
|
|
(85 |
) |
|
|
(96 |
) |
|
|
11 |
|
|
Net loss |
|
$ |
(53,699 |
) |
|
$ |
(38,380 |
) |
|
$ |
(15,319 |
) |
Collaboration Revenue
Collaboration revenue for the three months ended June 30, 2019 was $0.3 million, compared to $1.1 million for the three months ended June 30, 2018. The decrease of approximately $0.8 million was primarily attributable to a decrease in research conducted under the JV Agreement with Casebia. Please refer to Note 6 in the accompanying financial statements for further information.
Research and Development Expenses
Research and development expenses were $39.5 million for the three months ended June 30, 2019, compared to $25.6 million for the three months ended June 30, 2018. The increase of approximately $13.9 million was primarily attributable to the following:
|
|
• |
$4.4 million of increased employee compensation, benefit and other headcount related expenses, of which $0.7 million is increased stock-based compensation expense, primarily due to an increase in headcount to support overall growth; |
|
|
• |
$5.3 million of increased variable research and development costs and license fees; and |
|
|
• |
$3.0 million of increased facility-related expenses. |
General and Administrative Expenses
General and administrative expenses were $15.8 million for the three months ended June 30, 2019, compared to $12.7 million for the three months ended June 30, 2018. The increase of approximately $3.0 million was primarily attributable to $2.7 million of increased employee compensation, benefit and other headcount related expenses, of which $2.2 million is stock-based compensation expense, primarily due to an increase in headcount to support overall growth.
Other Income (Expense), Net
Other income was $1.4 million for the three months ended June 30, 2019, compared to $1.0 million of expense for the three months ended June 30, 2018. The change was primarily due to interest income earned on cash and cash equivalents for the three months ended June 30, 2019.
21
Comparison of six months ended June 30, 2019 and 2018 (in thousands):
|
|
|
Six Months Ended June 30, |
|
|
Period to Period |
|
||||||
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
|||
|
|
|
(in thousands) |
|
|||||||||
|
Collaboration revenue |
|
$ |
646 |
|
|
$ |
2,446 |
|
|
$ |
(1,800 |
) |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
73,355 |
|
|
|
45,152 |
|
|
|
28,203 |
|
|
General and administrative |
|
|
30,697 |
|
|
|
21,577 |
|
|
|
9,120 |
|
|
Total operating expenses |
|
|
104,052 |
|
|
|
66,729 |
|
|
|
37,323 |
|
|
Loss from operations |
|
|
(103,406 |
) |
|
|
(64,283 |
) |
|
|
(39,123 |
) |
|
Other (expense) income, net |
|
|
1,469 |
|
|
|
(2,215 |
) |
|
|
3,684 |
|
|
Net loss before income taxes |
|
|
(101,937 |
) |
|
|
(66,498 |
) |
|
|
(35,439 |
) |
|
Provision for income taxes |
|
|
(170 |
) |
|
|
(182 |
) |
|
|
12 |
|
|
Net loss |
|
$ |
(102,107 |
) |
|
$ |
(66,680 |
) |
|
$ |
(35,427 |
) |
Collaboration Revenue
Collaboration revenue for the six months ended June 30, 2019 was $0.6 million, compared to $2.4 million for the six months ended June 30, 2018. The decrease of approximately $1.8 million was primarily attributable to a decrease in research conducted under the JV Agreement with Casebia. Please refer to Note 6 in the accompanying financial statements for further information.
Research and Development Expenses
Research and development expenses were $73.4 million for the six months ended June 30, 2019, compared to $45.2 million for the six months ended June 30, 2018. The increase of approximately $28.2 million was primarily attributable to the following:
|
|
• |
$10.2 million of increased employee compensation, benefit, and other headcount related expenses, of which $2.8 million is increased stock-based compensation expense, primarily due to an increase in headcount to support overall growth; |
|
|
• |
$10.2 million of increased variable research and development costs and license fees; |
|
|
• |
$1.9 million of increased professional and consulting fees; and |
|
|
• |
$4.9 million of increased facility-related expenses. |
General and Administrative Expenses
General and administrative expenses were $30.7 million for the six months ended June 30, 2019, compared to $21.6 million for the six months ended June 30, 2018. The increase of approximately $9.1 million was primarily attributable to the following:
|
|
• |
$5.6 million of increased employee compensation, benefit, and other headcount related expenses, of which $4.2 million is stock-based compensation expense, primarily due to an increase in headcount to support overall growth; and, |
|
|
• |
$3.0 million of increased legal, professional and consulting fees. |
Other Income (Expense), Net
Other income was $1.5 million for the six months ended June 30, 2019, compared to $2.2 million of expense for the six months ended June 30, 2018. The change was primarily due to interest income earned on cash and cash equivalents for the six months ended June 30, 2019.
Liquidity and Capital Resources
As of June 30, 2019, we had cash and cash equivalents of approximately $427.9 million of which approximately $421.6 million was held outside of the United States. In August 2018, we entered into an Open Market Sale AgreementSM with Jefferies LLC (“Jefferies”), under which Jefferies may offer and sell, from time to time, common shares having aggregate gross proceeds of up to $125.0 million. In the first quarter of 2019, we began to issue and sell securities under this sales agreement. During the three and six months ended June 30, 2019, we sold 732,108 and 1,363,688 common shares, respectively, for net cash proceeds of $28.5 million and
22
$52.5 million, respectively, after deducting commission fees of $0.8 million and $1.6 million, respectively. In addition, we paid approximately $0.2 million in stamp taxes related to the securities issued and sold during the six months ended June 30, 2019 and accrued an additional $0.5 million for stamp taxes as of June 30, 2019. We sold an additional 1,124,952 common shares under this agreement subsequent to June 30, 2019 through July 29, 2019, resulting in net cash proceeds of approximately $52.8 million, after deducting commission fees of $1.2 million.
Funding Requirements
Our primary uses of capital are, and we expect will continue to be, research and development activities, compensation and related expenses, laboratory and related supplies, legal and other regulatory expenses, patent prosecution filing and maintenance costs for our licensed intellectual property and general overhead costs. We expect our expenses to increase compared to prior periods in connection with our ongoing activities, particularly as we continue research and development and preclinical activities and initiate preclinical studies to support initial drug applications. In addition, we expect to incur additional costs associated with operating as a public company.
Because our research programs are still in early stages of development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of any current or future product candidates, if approved, or whether, or when, we may achieve profitability. Until such time as we can generate substantial product revenues, if ever, we expect to finance our cash needs through a combination of equity, debt financings and payments received in connection with our collaboration agreements. We are entitled to research payments under our collaboration with Vertex. Additionally, we are eligible to earn payments, in each case, on a per-product basis under the JV Agreement with Bayer for Casebia and our collaboration with Vertex. Except for these sources of funding, we do not have any committed external source of liquidity. We intend to consider opportunities to raise additional funds through the sale of equity or debt securities when market conditions are favorable to us to do so. To the extent that we raise additional capital through the future sale of equity or debt securities, the ownership interests of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing shareholders. If we raise additional funds through collaboration arrangements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or 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.
Outlook
Based on our research and development plans and our timing expectations related to the progress of our programs, we expect our existing cash will enable us to fund our operating expenses and capital expenditures for at least the next 24 months without giving effect to any additional proceeds we may receive under our 2015 Collaboration Agreement and JDA with Vertex and the agreements related to Casebia and any other capital raising transactions we may complete. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Given our need for additional financing to support the long-term clinical development of our programs, we intend to consider additional financing opportunities when market terms are favorable to us.
Our ability to generate revenue and achieve profitability depends significantly on our success in many areas, including: developing our delivery technologies and our gene-editing technology platform; selecting appropriate product candidates to develop; completing research and preclinical and clinical development of selected product candidates; obtaining regulatory approvals and marketing authorizations for product candidates for which we complete clinical trials; developing a sustainable and scalable manufacturing process for product candidates; launching and commercializing product candidates for which we obtain regulatory approvals and marketing authorizations, either directly or with a collaborator or distributor; obtaining market acceptance of our product candidates, if approved; addressing any competing technological and market developments; negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; maintaining good relationships with our collaborators and licensors; maintaining, protecting and expanding our estate of intellectual property rights, including patents, trade secrets and know-how; and attracting, hiring and retaining qualified personnel.
23
Cash Flows
The following table provides information regarding our cash flows for each of the periods below (in thousands):
|
|
|
Six Months Ended June 30, |
|
|
Period to Period |
|
||||||
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
|||
|
Net cash used in operating activities |
|
$ |
(80,119 |
) |
|
$ |
(47,903 |
) |
|
$ |
(32,216 |
) |
|
Net cash used in investing activities |
|
|
(3,271 |
) |
|
|
(1,078 |
) |
|
|
(2,193 |
) |
|
Net cash provided by financing activities |
|
|
55,380 |
|
|
|
128,980 |
|
|
|
(73,600 |
) |
|
Effect of exchange rate changes on cash |
|
|
(2 |
) |
|
|
(9 |
) |
|
|
7 |
|
|
Net (decrease) increase in cash |
|
$ |
(28,012 |
) |
|
$ |
79,990 |
|
|
$ |
(108,002 |
) |
Net Cash Used in Operating Activities
Net cash used in operating activities was $80.1 million for the six months ended June 30, 2019, compared to $47.9 million for the six months ended June 30, 2018. The $32.2 million increase in cash used in operating activities was due to the increase in net loss during this period of $35.4 million, which was driven by increased spending on our clinical and pre-clinical stage programs and increased payroll and payroll-related expenses to support overall growth.
Net Cash Used in Investing Activities
Net cash used in investing activities for the six months ended June 30, 2019 was $3.3 million, compared to $1.1 million for the six months ended June 30, 2018. The net cash used in investing activities for the six months ended June 30, 2019 consisted primarily of purchases of property and equipment.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2019 was $55.4 million, compared with $129.0 million for the six months ended June 30, 2018. The net cash provided by financing activities for the six months ended June 30, 2019 consisted of proceeds from the issuance of common shares in connection with the Open Market Sale AgreementSM, which resulted in $52.3 million of net cash proceeds, after deducting $1.6 million in commissions and $0.2 million in stamp taxes, as well as the exercise of stock options.
Contractual Obligations
The disclosure of our contractual obligations and commitments was reported in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 25, 2019. There have been no material changes from the contractual commitments and obligations previously disclosed in our Annual Report on Form 10-K other than the changes described in Note 5 and Note 12 to the accompanying financial statements.
Off-Balance Sheet Arrangements
As of June 30, 2019, we do not have any off-balance sheet arrangements as defined under applicable SEC rules.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. GAAP. We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as critical because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate, and different estimates—which also would have been reasonable—could have been used. On an ongoing basis, we evaluate our estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
24
We believe that our most critical accounting policies are those relating to revenue recognition, variable interest entities and equity-based compensation, and there have been no changes to our accounting policies discussed in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 25, 2019.
Recent Accounting Pronouncements
Refer to Note 1, “Basis of Presentation and Significant Accounting Policies,” in the accompanying notes to the consolidated financial statements for a discussion of recent accounting pronouncements.
Item 3. Qualitative and Quantitative Disclosures about Market Risk
Foreign Exchange Market Risk
As a result of our foreign operations, we face exposure to movements in foreign currency exchange rates, primarily the Swiss Franc and British Pound, against the U.S. dollar. The current exposures arise primarily from cash, accounts payable, and intercompany receivables and payables. Changes in foreign exchange rates affect our consolidated statement of operations and distort comparisons between periods. To date, foreign currency transaction gains and losses have not been material to our financial statements, and we have not engaged in any foreign currency hedging transactions.
Item 4. Controls and Procedures.
Management’s Evaluation of our Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities and Exchange Act of 1934 is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
As of June 30, 2019, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934). 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 management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of June 30, 2019, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2019, there were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Securities Exchange Act of 1934, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
In the ordinary course of business, we are from time to time involved in lawsuits, claims, investigations, proceedings, and threats of litigation relating to intellectual property, commercial arrangements, employment and other matters. While the outcome of these proceedings and claims cannot be predicted with certainty, we are not party to any legal or arbitration proceedings that may have significant effects on our financial position. We are not a party to any material proceedings in which any director, member of executive management or affiliate of ours is either a party adverse to us or our subsidiaries or has a material interest adverse to us or our subsidiaries.
As disclosed in our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 26, 2019, on June 25, 2019, we received notification that the United States Patent and Trademark Office initiated an interference proceeding at the Patent Trial and Appeal Board (the “PTAB”) between certain pending U.S. patent applications co-owned by the University of California, the University of Vienna and Dr. Emmanuelle Charpentier (collectively, the “CVC Group”) and certain patents and a patent application currently owned by the Broad Institute and Massachusetts Institute of Technology and, in some instances, the President and Fellows of Harvard College (individually and collectively, the “Broad”), all of which are related to the single guide format of CRISPR/Cas9 genome editing technology in eukaryotic cells. CRISPR Therapeutics has an exclusive worldwide license in the field of human
25
therapeutics to Dr. Charpentier’s rights as a co-owner of the CVC Group portfolio. Specifically, the PTAB has declared Patent Interference No. 106,115 between the CVC Group’s pending U.S. Patent Application Nos. 15/947,680; 15/947,700; 15/947,718; 15/981,807; 15/981,808; 15/981,809; 16/136,159; 16/136,165; 16/136,168; and 16/136,175, and the Broad’s U.S. Patent Nos. 8,697,359; 8,771,945; 8,795,965; 8,865,406; 8,871,445; 8,889,356; 8,895,308; 8,906,616; 8,932,814; 8,945,839; 8,993,233; 8,999,641; 9,840,713, and U.S. Patent Application No. 14/704,551.
Item 6. Exhibits
The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth in the Exhibit Index below.
|
Exhibit Number |
|
Description of Document |
|
|
|
|
|
10.1† |
|
|
|
|
|
|
|
10.2† |
|
|
|
|
|
|
|
31.1 |
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
31.2 |
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
32.1* |
|
|
|
|
|
|
|
101.INS |
|
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
|
101.SCH |
|
XBRL Taxonomy Extension Schema Document. |
|
|
|
|
|
101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase Document. |
|
|
|
|
|
101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase Document. |
|
|
|
|
|
101.LAB |
|
XBRL Taxonomy Extension Label Linkbase Document. |
|
|
|
|
|
101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase Document. |
|
|
|
|
|
* |
The certification attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of CRISPR Therapeutics AG under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing. |
|
† |
Confidential portions of this exhibit have been omitted. |
26
SIGNATURES
Pursuant to the requirements 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.
|
|
CRISPR Therapeutics AG |
|
|
|
|
|
|
Dated: July 29, 2019 |
By: |
/s/ Samarth Kulkarni |
|
|
|
Samarth Kulkarni |
|
|
|
Chief Executive Officer |
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Dated: July 29, 2019 |
By: |
/s/ Michael Tomsicek |
|
|
|
Michael Tomsicek |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Financial Officer) |
27
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
EXHIBIT 10.1
AMENDMENT NO. 2
TO THE
STRATEGIC COLLABORATION, OPTION AND LICENSE AGREEMENT
This AMENDMENT NO. 2 TO THE STRATEGIC COLLABORATION, OPTION AND LICENSE AGREEMENT (this “Amendment”) is entered into as of June 6, 2019 (the “Amendment Execution Date”) by and between, on the one hand, Vertex Pharmaceuticals Incorporated, a corporation organized and existing under the laws of The Commonwealth of Massachusetts (“Vertex Parent”), and Vertex Pharmaceuticals (Europe) Limited, a private limited liability company organized under the laws of England and Wales (“Vertex UK” and, together with Vertex Parent, “Vertex”) and, on the other hand, Crispr Therapeutics AG, a corporation organized under the laws of Switzerland (“CRISPR AG”), Crispr Therapeutics, Inc., a corporation organized under the laws of the state of Delaware (“CRISPR Inc.”), Crispr Therapeutics Limited, a corporation organized under the laws of England and Wales (“CRISPR UK”) and Tracr Hematology Ltd, a UK limited company (“Tracr” and together with CRISPR AG, CRISPR Inc. and CRISPR UK “CRISPR”). Vertex and CRISPR each may be referred to herein individually as a “Party” or collectively as the “Parties.” This Amendment amends the Strategic Collaboration, Option and License Agreement, entered into as of October 26, 2015, between Vertex and CRISPR, as amended (the “Agreement”). Capitalized terms used but not defined in this Amendment shall have the meanings ascribed to such terms in the Agreement.
RECITALS
WHEREAS, Vertex and CRISPR desire to amend Article 1, Section 2.3.3, Section 2.9, Section 11.4.1(a), Section 12.1, Section 12.2 and Section 13.2 of the Agreement;
NOW, THEREFORE, in consideration of the respective covenants and agreements set forth herein, the Parties hereto agree as follows:
ARTICLE 1.
AMENDMENTS
|
|
1.1. |
Amendment Date. This Amendment will be effective as of the Effective Date (as defined in the Collaboration Agreement) of the Collaboration Agreement (the “Amendment Date”); provided, however, that this Section 1.1 and Section 1.2 will be effective as of the Amendment Execution Date. For clarity, if the Collaboration Agreement is terminated pursuant to Section 10.2.1 thereof, then the Amendment Date will not occur and this Amendment, including this Section 1.1 and Section 1.2, will be of no further force or effect. |
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1.2. |
[***]. |
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1.3. |
Other Agreements. Article 1 of the Agreement is hereby amended to include the following defined terms: |
“Collaboration Agreement” means that certain Strategic Collaboration and License Agreement entered into as of the Amendment Execution Date by and between Vertex Parent and CRISPR AG.
“[***] Agreement” means that certain [***] Agreement entered into as of the Amendment Execution Date by and between Vertex Parent and CRISPR AG.
1
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
“Other CRISPR-Vertex Agreement” means the Collaboration Agreement, the [***] Agreement, the Joint Development & Commercialization Agreement, and any other agreement entered into pursuant thereto or hereto between Vertex Parent or any of its Affiliates, on the one hand, and CRISPR AG or any of its Affiliates, on the other hand.
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1.4. |
Collaboration Target Selection. Section 2.3.3 of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following text: |
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1.5. |
Subcontractors. Section 2.9 of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following text: |
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1.6. |
Other Matters Pertaining to Prosecution and Maintenance of Patents. Section 8.2.5 of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following text: |
2
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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(a) |
Each Party will keep the other Party informed through their respective Patent Coordinators as to material developments with respect to the Prosecution and Maintenance of the CRISPR Platform Technology Patents, CRISPR Background Patents, CRISPR Program Patents, [***] Patents and Joint Program Patents for which such Party has responsibility for Prosecution and Maintenance pursuant to this Section 8.2. Without limiting the foregoing, solely with respect to CRISPR Program Patents, [***] Patents and Joint Program Patents for which a Party has responsibility for Prosecution and Maintenance pursuant to this Section 8.2, such Party will (i) provide the other Party with copies of any office actions or office action responses or other correspondence that such Party provides to or receives from any patent office, including notice of all interferences, reissues, re-examinations, or oppositions, and all patent-related filings, and (ii) provide the other Party the timely opportunity to have reasonable input into the strategic aspects of such Prosecution and Maintenance activities. |
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(b) |
If, during the Agreement Term, Vertex intends to abandon patent applications for any Patent that Vertex is responsible for Prosecuting and Maintaining under Section 8.2.3 (excluding Vertex Background Patents and Vertex Program Patents that Cover technology other than Licensed Agents and Products, but including, for the avoidance of doubt, [***] Patents) in a particular country, then Vertex will so notify CRISPR of such intention at least [***] days before such Patent will become abandoned, and CRISPR will have the right, but not the obligation, to assume responsibility for the Prosecution and Maintenance thereof at its own expense with counsel of its own choice. |
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(c) |
If, during the Agreement Term, CRISPR intends to abandon any CRISPR Program Patent, [***] Patent, [***] Joint Program Patent or Other Joint Program Patent Covering a Licensed Agent or Product that CRISPR is responsible for Prosecuting and Maintaining in a particular country, then, if Vertex’s right to obtain an Exclusive License to such Patent or have such Patent assigned pursuant to Section 8.1.3, as applicable, has not expired or terminated, CRISPR will notify Vertex of such intention at least [***] days before such Patent will become abandoned, and Vertex will have the right, but not the obligation, to assume responsibility for the Prosecution and Maintenance thereof at its own expense with counsel of its own choice. |
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1.7. |
Patent Coordinators. Section 8.3 of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following text: |
3
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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Joint Program Patents. The Patent Coordinators (or their designees) will meet in person or by means of telephone or video conference at least once each Calendar Quarter during the Agreement Term. Each Party may replace its Patent Coordinator at any time by providing notice in writing to the other Party. The Patent Coordinators as of the Amendment Date (as defined in Amendment No. 2 to this Agreement entered into as of June 6, 2019) will be: |
For Vertex: [***]
For CRISPR: [***]
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1.8. |
CRISPR Covenants. Section 9.3.1, Section 9.3.3, Section 9.3.4 and Section 9.3.5 of the Agreement are hereby amended by deleting them in their entirety and replacing them with the following text: |
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9.3.1 |
CRISPR will maintain, and will not materially breach, any CRISPR In-License Agreements that provide a grant of rights from such Third Party to CRISPR that are Controlled by CRISPR and are licensed or may become subject to a license from CRISPR to Vertex for a Licensed Agent or Product under this Agreement; |
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9.3.3 |
it will not amend, modify or terminate any CRISPR In-License Agreement or [***] in a manner that would have a material adverse effect on Vertex’s rights hereunder without first obtaining Vertex’s written consent, which consent may be withheld in Vertex’s sole discretion; |
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9.3.4 |
it will not enter into any new agreement or other obligation with any Third Party, or amend an existing agreement with a Third Party, in each case that materially and adversely restricts, limits or encumbers the rights granted to Vertex under this Agreement or the additional rights or licenses Vertex would acquire upon Option Exercise; |
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1.9. |
Consequences of Expiration or Termination of the Agreement. Section 11.4.1(a) of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following text: |
4
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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Confidential Information (i) is subject to a license or similar grant of rights that survives such termination, (ii) is necessary or useful to conduct activities for a surviving Collaboration Program or Product or country, or (iii) is Confidential Information under an Other CRISPR-Vertex Agreement and such Other CRISPR-Vertex Agreement has not been terminated at the time of termination of this Agreement. Notwithstanding the foregoing, the Parties will be permitted to retain one copy of such data, files, records, and other materials for archival and legal compliance purposes. |
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1.10. |
Confidentiality. Section 12.1, Section 12.2 and Section 12.3 of the Agreement are hereby amended by deleting them in their entirety and replacing them with the following text: |
5
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
If a Party deems it reasonably necessary to disclose Confidential Information belonging to the other Party pursuant to this Section 12.2, the Disclosing Party will to the extent possible give reasonable advance written notice of such disclosure to the other Party and take reasonable measures to ensure confidential treatment of such information. In addition to the foregoing and except as otherwise prohibited or limited by clause (b) of the following sentence, [***] may disclose [***] Confidential Information to Third Parties as reasonably required to facilitate the actual or potential Research, Development, Manufacture or Commercialization of Products; provided that such disclosure is covered by terms of confidentiality and non-use similar to those set forth herein.
Notwithstanding anything to the contrary contained herein, (a) in no event may [***] disclose [***] Confidential Information to any Third Party (including any of [***] investors, collaborators or licensees) [***] as its primary business, and (b) in no event may [***] disclose [***] Confidential Information, other than the terms and conditions of this Agreement, to any Third Party (including any of [***] investors, collaborators or licensees) that [***] as its primary business.
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12.3 |
SEC Filings and Other Disclosures. Either Party may disclose the terms of this Agreement (i) to the extent required to comply with Applicable Law, including the rules and regulations promulgated by the United States Securities and Exchange Commission or any equivalent governmental agency in any country in the Territory; provided, that such Party will reasonably consider the comments of the other Party regarding confidential treatment sought for such disclosure and (ii) to its advisors (including financial advisors, attorneys and accountants), actual or potential acquisition partners, strategic partners, collaborators or services providers, actual or potential financing sources or investors and actual or potential underwriters on a need to know basis; provided that such disclosure is covered by terms of confidentiality similar to those set forth herein (which may include professional ethical obligations). |
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1.11. |
Public Announcements; Publications. Section 12.5.2 and Section 12.5.3 of the Agreement are hereby amended by deleting them in their entirety and replacing them with the following text: |
6
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
7
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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1.12. |
Product Disclosures. The following text is hereby inserted immediately following Section 12.5.3 of the Agreement: |
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1.13. |
Entire Agreement. Section 13.2 of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following text: |
8
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
MISCELLANEOUS
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2.1. |
Effect of Amendment. This Amendment shall not be deemed to be an amendment to any other terms and conditions of the Agreement. Except as expressly amended by this Amendment, the Agreement remains unchanged and in full force and effect. |
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2.2. |
Counterparts. This Amendment may be executed in one or more counterparts, each of which will be an original and all of which will constitute together the same document. Counterparts may be signed and delivered by facsimile or digital transmission (.pdf), each of which will be binding when received by the applicable Party. |
9
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their representatives thereunto duly authorized as of the Amendment Execution Date.
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VERTEX PHARMACEUTICALS INCORPORATED
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CriSpr Therapeutics AG |
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By:_/s/ Jeffrey Leiden ___________________ |
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By:_ /s/ Rodger Novak __________________ |
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Name:Jeffrey Leiden Title: Chairman, President and Chief Executive Officer |
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Name:Rodger Novak Title: President |
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VERTEX PHARMACEUTICALS (EUROPE) LIMITED
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CRISPR THERAPEUTICS LIMITED |
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By:_/s/ Klas Holmlund _____________________ |
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By:_ /s/ Rodger Novak __________________ |
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Name: Klas Holmlund |
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Name: Rodger Novak |
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Title: Director |
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Title: President |
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CRISPR THERAPEUTICS, INC.
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By:_/s/ Rodger Novak ___________________ |
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Name: Rodger Novak |
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Title: President |
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TRACR HEMATOLOGY LTD
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By:_/s/ Rodger Novak ___________________ |
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Name: Rodger Novak |
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Title: President |
[Signature Page to Amendment No. 2 to the Strategic Collaboration, Option and License Agreement]
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
Collaboration Targets as of Amendment Execution Date
[***]
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
eXHIBIT 10.2
STRATEGIC COLLABORATION AND LICENSE AGREEMENT
BETWEEN
VERTEX PHARMACEUTICALS INCORPORATED
AND
CRISPR THERAPEUTICS AG
June 6, 2019
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
STRATEGIC COLLABORATION AND LICENSE AGREEMENT
This STRATEGIC COLLABORATION AND LICENSE AGREEMENT (this “Agreement”) is entered into as of June 6, 2019 (the “Execution Date”) by and between Vertex Pharmaceuticals Incorporated (“Vertex”) and CRISPR Therapeutics AG (“CRISPR”). Vertex and CRISPR each may be referred to herein individually as a “Party” or collectively as the “Parties.”
RECITALS
WHEREAS, CRISPR possesses certain Patents, Know-How, technology and expertise with respect to the CRISPR/Cas System (as defined below);
WHEREAS, Vertex possesses expertise in developing and commercializing human therapeutics;
WHEREAS, Vertex and CRISPR desire to enter into a strategic collaboration and license agreement to enable Vertex to research, develop, manufacture and commercialize products for the treatment of DMD and DM1 (each as defined below) using gene editing [***], including the CRISPR/Cas System (as defined below);
WHEREAS, pursuant to this Agreement, CRISPR will perform certain DM1 guide research activities related to initial guide work for DM1 in cells; and
WHEREAS, CRISPR will have the option to enter into a Co-Commercialization Agreement (as defined below) with Vertex for all DM1 Products.
NOW, THEREFORE, in consideration of the respective covenants, representations, warranties and agreements set forth herein, the Parties hereto agree as follows:
DEFINITIONS
For purposes of this Agreement, the following capitalized terms will have the following meanings:
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1.1. |
“Acquisition Transaction” has the meaning set forth in Section 4.4.2. |
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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governing board, but is restricted from electing such majority by contract or otherwise, until such time as such restrictions are no longer in effect, or (b) possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of an such Person (whether through ownership of securities or other ownership interests, by contract or otherwise). |
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1.4. |
“Agreement” has the meaning set forth in the Preamble. |
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1.5. |
“Agreement Term” means the period commencing on the Effective Date and ending on the expiration of this Agreement pursuant to Section 10.1, unless terminated earlier as provided herein. |
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1.6. |
“Alliance Manager” has the meaning set forth in Section 3.3.1. |
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1.7. |
“Alternative Product” means any Product, other than a CRISPR Product, that is Researched, Developed, Manufactured or Commercialized by Vertex or its Affiliates or Sublicensees. |
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1.8. |
“Applicable Law” means all applicable laws, statutes, rules, regulations and other pronouncements having the effect of law of any federal, national, multinational, state, provincial, county, city or other political subdivision, agency or other body, domestic or foreign, including any applicable rules, regulations, guidelines, or other requirements of the Regulatory Authorities that may be in effect from time to time. |
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1.10. |
“Audited Party” has the meaning set forth in Section 6.9. |
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1.11. |
“Auditing Party” has the meaning set forth in Section 6.9. |
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1.12. |
“Available” has the meaning set forth in Section 1.33. |
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1.13. |
“[***] Arbitration” means the arbitration process set forth in Schedule A. |
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1.14. |
“[***] Expert” has the meaning set forth in Schedule A. |
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1.15. |
“BLA” means a Biological License Application that is submitted to the FDA for marketing approval for a Product pursuant to 21 C.F.R. § 601.2. |
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1.16. |
“[***]” means, [***]. |
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1.17. |
“[***]” means [***]. |
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1.18. |
“Breaching Party” means the Party that is believed by the other Party to be in material breach of this Agreement. |
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1.19. |
“Business Day” means a Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in Boston, Massachusetts are authorized or obligated to close. |
3
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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1.21. |
“Calendar Year” means any calendar year ending on December 31, or the applicable part thereof during the first or last year of the Agreement Term. |
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1.24. |
“Clinical Trial” means a study in humans that is conducted in accordance with GCP and is designed to generate data in support of an Approval Application. |
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1.25. |
“Co-Commercialization Agreement” has the meaning set forth in Section 5.1.6(a). |
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1.27. |
“Combination Product” has the meaning set forth in Section 1.122. |
4
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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1.30. |
“Competitive Infringement” has the meaning set forth in Section 7.7.1. |
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1.34. |
“[***]” has the meaning set forth in Section 4.6.1(b). |
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1.36. |
“Cost Report” has the meaning set forth in Section 6.3.2. |
5
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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1.38. |
“CREATE Act” means the Cooperative Research and Technology Enhancement Act of 2004, 35 U.S.C. § 103(c)(2)-(c)(3). |
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1.40. |
“CRISPR Agreement Breach” has the meaning set forth in Section 10.2.3(a). |
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1.41. |
“CRISPR Background Know-How” means any Know-How, other than Joint Program Know-How and CRISPR Program Know-How, that (a) [***] and (b) [***]. |
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1.42. |
“CRISPR Background Patents” means any Patent, other than a Joint Program Patent, CRISPR Program Patent or CRISPR Platform Technology Patent that (a) [***] and (b) [***]. |
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1.43. |
“CRISPR Breach Event” has the meaning set forth in Section 10.2.3(a). |
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1.44. |
“CRISPR Indemnified Party” has the meaning set forth in Section 9.1. |
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1.48. |
“[***] Patent” has the meaning set forth in Section 7.2. |
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1.49. |
“CRISPR Program Breach” has the meaning set forth in Section 10.2.3(a). |
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1.50. |
“CRISPR Program Know-How” has the meaning set forth in Section 7.1.2(a). |
6
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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1.51. |
“CRISPR Program Patents” has the meaning set forth in Section 7.1.2(a). |
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1.52. |
“CRISPR Program Technology” has the meaning set forth in Section 7.1.2(a). |
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1.53. |
“CRISPR/Cas System” means a clustered regularly interspaced short palindromic repeats (CRISPR)/CRISPR-associated (Cas) protein system that comprises (a) [***] and (b) [***]. |
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1.55. |
“Disclosing Party” has the meaning set forth in Section 11.1. |
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1.56. |
“Distracting Product” has the meaning set forth in Section 4.4.1. |
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1.61. |
“DM1 Guide Research Plan” means the research plan setting forth the design, optimization and research activities for the DM1 Guide Research. |
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1.62. |
“DM1 Guide Research Plan Budget” has the meaning set forth in Section 2.1.1. |
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1.63. |
“DM1 Guide Research Term” means the period of time beginning on the Effective Date and ending upon the [***] anniversary thereof; provided that [***] may, in its sole discretion, elect to terminate such DM1 Guide Research Term after the [***] anniversary of the Effective Date on [***] days’ prior written notice to [***]; and provided further, that, if [***] does not elect to terminate the DM1 Guide Research Term before such [***] anniversary and any DM1 Guide Research activities under the DM1 Guide Research Plan are incomplete on such [***] anniversary, [***] will, at [***] election, complete such activities, and the DM1 Guide Research Term will be extended for up to [***] additional months to complete such activities or such longer period as may be agreed upon by both Parties. |
7
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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1.66. |
“DM1 Program Data Package” means, with respect to the DM1 Program, a data package containing [***]. |
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1.71. |
“DOJ” has the meaning set forth in Section 4.7.1. |
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1.73. |
“EMA” means the European Medicines Agency and any successor entity thereto. |
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1.74. |
“European Commission” means the European Commission or any successor entity that is responsible for granting Marketing Approvals authorizing the sale of pharmaceuticals in the European Union. |
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1.76. |
“Exclusive License” has the meaning set forth in Section 4.1.1. |
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1.77. |
“Execution Date” has the meaning set forth in the preamble hereto. |
8
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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1.78. |
“Executive Officer Resolution Period” has the meaning set forth in Section 3.1.3. |
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1.79. |
“Executive Officers” means the Chief Executive Officer of CRISPR, initially Samarth Kulkarni, and the Chief Executive Officer of Vertex, initially Jeffrey Leiden. |
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1.80. |
“Existing CRISPR Agreement” has the meaning set forth in Section 1.45. |
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1.81. |
“Exon” means, [***] |
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1.82. |
“FDA” means the United States Food and Drug Administration and any successor entity thereto. |
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1.83. |
“FD&C Act” means the United States Federal Food, Drug, and Cosmetic Act, as amended, and the rules and regulations promulgated thereunder. |
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1.85. |
“First Commercial Sale” means with respect to a Product, the first sale of such Product by Vertex, its Affiliate or its Sublicensee to a Third Party resulting in Net Sales in a particular country after any required Marketing Approval for the Product has been obtained in such country. |
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1.87. |
“FTC” has the meaning set forth in Section 4.7.1. |
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1.89. |
“GAAP” means United States generally accepted accounting principles, consistently applied. |
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1.91. |
“[***] Joint Program Know-How” has the meaning set forth in Section 7.1.2(d). |
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1.92. |
“[***] Joint Program Patents” has the meaning set forth in Section 7.1.2(d). |
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1.93. |
“[***] Joint Program Technology” has the meaning set forth in Section 7.1.2(d). |
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1.94. |
“[***]” means [***]. |
9
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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1.97. |
“Governmental Authority” means any court, agency, department, authority or other instrumentality of any national, state, county, city or other political subdivision. |
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1.98. |
“HSR” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. |
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1.102. |
“Indemnifying Party” has the meaning set forth in Section 9.3. |
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1.103. |
“Initiation” or “Initiate” means, with respect to any Clinical Trial, dosing of the first human subject in such Clinical Trial. |
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1.104. |
“Insolvency Event” has the meaning set forth in Section 10.2.5. |
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1.105. |
“Joint Advisory Committee” or “JAC” has the meaning set forth in Section 3.1.1. |
10
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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1.107. |
“Joint Program Know-How” means [***] Joint Program Know-How, [***] Joint Program Know-How and Other Joint Program Know-How. |
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1.108. |
“Joint Program Patents” means [***] Joint Program Patents, [***] Joint Program Patents and Other Joint Program Patents. |
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1.109. |
“Joint Program Technology” means [***] Joint Program Technology, [***] Joint Program Technology and Other Joint Program Technology. |
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1.112. |
“Liability” has the meaning set forth in Section 9.1. |
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1.113. |
“Licensed Know-How” means [***]. |
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1.114. |
“Licensed Patents” means [***]. |
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1.115. |
“Licensed Technology” means, subject to Section 4.1.3 and Section 4.6.2, any and all Licensed Patents and Licensed Know-How. |
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1.116. |
“Major Market Country” means any one of the following countries: [***]. |
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1.121. |
“NDA” means a new drug application that is submitted to the FDA for marketing approval for a Product, pursuant to 21 C.F.R. § 314.3. |
11
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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(a) |
[***]; |
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(b) |
[***]; |
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(c) |
[***]; |
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(d) |
[***]; and |
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(e) |
[***]. |
Generally, only items that are deducted from the Selling Party’s gross invoiced sales price of Product(s), as included in the Selling Party’s published financial statements and that are in accordance with GAAP, applied on a consistent basis, will be deducted from such gross invoiced sales price for purposes of the calculation of Net Sales. However, compulsory payments required by federal or state governments based upon sales volume or market share of Product(s) (but for clarity excluding taxes on the Selling Party’s net income), to the extent borne by the Selling Party, will be deducted from “Net Sales” regardless of its classification in the Selling Party’s published financial statements; provided that any such deduction will be limited to that share of such compulsory payment proportional to the share of the total sales volume or market share of the Selling Party used to compute the compulsory payment represented by applicable Net Sales of Product(s).
A qualifying amount may be deducted only once regardless of the number of the preceding categories that describe such amount. If a Selling Party makes any adjustment to such deductions after the associated Net Sales have been reported pursuant to this Agreement, the adjustments and payment of any royalties due will be reported with the next quarterly report. Sales between or among Vertex, its Affiliates and Sublicensees will be excluded from the computation of Net Sales if such sales are not intended for end use, but Net Sales will include the subsequent final sales to Third Parties by Vertex or any such Affiliates or Sublicensees. A Product will not be deemed to be sold if the Product is provided free of charge to a Third Party in reasonable quantities as a sample consistent with industry standard promotional and sample practices. [***].
If a sale, transfer or other disposition with respect to a Product involves consideration other than cash or is not at arm’s length, then the Net Sales from such sale, transfer or other disposition will be calculated on the [***].
Solely for purposes of calculating Net Sales, if Vertex or its Affiliates or any permitted Sublicensee sells a combination product containing both a Product and one or more other therapeutically or prophylactically active ingredients or delivery devices (whether combined in a single formulation or package, as applicable, or formulated separately but packaged under a single label approved by a Regulatory Authority and sold together for a single price) (a “Combination Product”), Net Sales of such Combination Product for the purpose of determining the payments due to CRISPR pursuant to this Agreement will be calculated by multiplying actual Net Sales of such Combination Product as determined in the first
12
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
paragraph of the definition of “Net Sales” by the fraction A/(A+B) where [***]. The weighted average invoice prices referenced above will be calculated with reference to the prevailing prices during the applicable Calendar Quarter in those top selling countries that equate to [***]% of Net Sales of the applicable Product in the Territory, with the prices weighted in the calculation to reflect the actual relative sales value of the Product in each of the countries to which the calculation relates. If it is not possible to determine the fraction A/(A+B) based on the criteria specified in the preceding sentence (e.g., if a Product component is not sold separately), the Parties shall determine Net Sales for the Product in such Combination Product in good faith by mutual agreement [***].
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1.124. |
“Non-Breaching Party” means the Party that believes the other Party is in material breach of this Agreement. |
|
|
1.125. |
“[***]” has the meaning set forth in Section 4.6.1(d). |
|
|
1.126. |
“Non-Disclosing Party” has the meaning set forth in Section 11.5.3. |
|
|
1.127. |
“[***] Agreement” means that certain [***] Agreement entered into as of the Execution Date by and between the Parties. |
|
|
1.129. |
“Other Joint Program Know-How” has the meaning set forth in Section 7.1.2(e). |
|
|
1.130. |
“Other Joint Program Patents” has the meaning set forth in Section 7.1.2(e). |
|
|
1.131. |
“Other Joint Program Technology” has the meaning set forth in Section 7.1.2(e). |
|
|
1.132. |
“Out-of-Pocket Costs” means, with respect to a Party, costs and expenses paid by such Party to Third Parties (or payable to Third Parties and accrued in accordance with GAAP), other than Affiliates or employees of such Party. |
|
|
1.133. |
“Outside Date” means (i) with respect to the DMD Program, the [***] anniversary of the Execution Date and (ii) with respect to the DM1 Program, the [***] anniversary of the Execution Date. |
|
|
1.134. |
“Party” or “Parties” has the meaning set forth in the Preamble. |
|
|
1.135. |
“Patent Coordinator” has the meaning set forth in Section 7.4. |
|
|
1.136. |
“Patent Costs” means the reasonable fees and expenses paid to outside legal counsel, and filing, maintenance, disbursement and other reasonable Out-of-Pocket Costs paid to Third Parties, in connection with the Prosecution and Maintenance of Patents. |
13
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
1.139. |
“Phase 1 Clinical Trial” means any Clinical Trial as described in 21 C.F.R. §312.21(a), or, with respect to a jurisdiction other than the United States, a similar Clinical Trial. |
|
|
1.144. |
“[***] Joint Program Know-How” has the meaning set forth in Section 7.1.2(c). |
|
|
1.145. |
“[***] Joint Program Patents” has the meaning set forth in Section 7.1.2(c). |
|
|
1.146. |
“[***] Joint Program Technology” has the meaning set forth in Section 7.1.2(c). |
|
|
1.149. |
“Receiving Party” has the meaning set forth in Section 11.1. |
14
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
1.154. |
“Research Costs” means the costs and expenses that are actually incurred by or on behalf of a Party and specifically identifiable or specifically allocable to the Research activities conducted by such Party, including: (a) a Party’s and its Affiliates fully absorbed internal costs with respect to such activities; and (b) all Out-of-Pocket Costs incurred by a Party or its Affiliates, including payments made to Third Parties with respect to such Research activities (except to the extent that such costs have been included in internal costs). [***]. All other costs will be determined from the books and records of the applicable Party and its Affiliates maintained in accordance with GAAP. |
15
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
1.157. |
“Schedule Revision Date” means the earlier of (a) the fifth day following the HSR Clearance Date and (b) the day on or after the HSR Clearance Date on which CRISPR provides to Vertex either (i) CRISPR’s supplemental or additional schedules (if any) pursuant to the proviso in the first sentence of Section 8.2, and a notice that no further supplemental, additional or updated schedules will be provided, or (ii) instead of providing any such supplemental, additional or updated schedules, a notice that no further supplemental, additional or updated schedules will be provided. |
|
|
1.158. |
“Selling Party” has the meaning set forth in Section 1.122. |
|
|
1.159. |
“Setoff Amount” has the meaning set forth in Section 10.3.2. |
|
|
1.160. |
“[***]” has the meaning set forth in Section 10.3.3(a). |
|
|
1.161. |
“Specified Agreement No. 1” means [***]. |
|
|
1.162. |
“Specified Agreement No. 2” means [***]. |
|
|
1.163. |
“Specified Endonuclease Agreement” means [***]. |
|
|
1.165. |
“Specified Third Party Intellectual Property” means[***]. |
|
|
1.166. |
“Subcontractor” means, with respect to a Party, a consultant, subcontractor or other vendor engaged by such Party or its Affiliates to perform activities under this Agreement. |
16
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
1.169. |
“Target” means [***] of which is associated with a human disease and which is to be edited, [***] in order to treat, ameliorate or prevent such disease. |
|
|
1.170. |
“Targeting” means [***] a Target or [***] thereof; provided, that with respect to [***], Targeting means [***]. |
|
|
1.174. |
“United States” or “U.S.” means the fifty states of the United States of America and all of its territories and possessions and the District of Columbia. |
|
|
1.176. |
“Vertex” has the meaning set forth in the Preamble. |
|
|
1.177. |
“Vertex Background Know-How” means any Know-How, other than Joint Program Know-How and Vertex Program Know-How, that [***]. |
|
|
1.178. |
“Vertex Background Patents” means any Patent, other than a Joint Program Patent or Vertex Program Patent that [***]. |
|
|
1.179. |
“Vertex Indemnified Party” has the meaning set forth in Section 9.2. |
|
|
1.181. |
“Vertex Program Patents” has the meaning set forth in Section 7.1.2(b). |
|
|
1.182. |
“Vertex Program Technology” has the meaning set forth in Section 7.1.2(b). |
|
|
1.183. |
“Vertex Technology” means (a) the Vertex Background Know-How, (b) the Vertex Background Patents, (c) the Vertex Program Technology and (d) Vertex’s interest in any Joint Program Technology. |
17
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
18
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
2.1.5. |
Research Costs. Vertex will reimburse CRISPR for a portion of Research Costs for DM1 Guide Research incurred by CRISPR in accordance with Section 6.3. |
|
|
2.1.6. |
End of DM1 Guide Research Term. Following the conclusion of the DM1 Guide Research Term, [***] will have no further obligation to perform any additional Research activities under this Agreement. |
GOVERNANCE
|
|
(a) |
review and discuss any amendments to the DM1 Guide Research Plan and the corresponding DM1 Guide Research Plan Budget; |
|
|
(b) |
provide comments and recommendations to each Party with respect to the conduct of activities under the DMD Program, the DM1 Program and the DM1 Guide Research; |
|
|
(c) |
provide a forum for the Parties to discuss the objectives and progress under the DMD Program, the DM1 Program and the DM1 Guide Research, and to exchange and review scientific information and data relating to the activities being conducted thereunder; |
|
|
(d) |
provide a forum for the Parties to discuss any material Licensed Know-How disclosed by CRISPR as described in Section 4.2.2; |
|
|
(f) |
perform such other duties as are specifically assigned to the JAC under this Agreement. |
19
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
3.1.4. |
Discontinuation of the JAC. The JAC will continue to exist until the first to occur of [***]. |
|
|
3.3.2. |
Specific Responsibilities. The Alliance Managers may be, but will not be required to be, members of the JAC. The Alliance Managers will serve as the primary contact point between the Parties for the purpose of providing each Party with information regarding the other Parties’ activities pursuant to this Agreement and will have the following responsibilities: |
|
|
(a) |
schedule meetings of the JAC and circulate draft written minutes from each meeting within [***] days after each such meeting; |
20
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
(b) |
facilitate the flow of information and otherwise promote communication, coordination and collaboration between the Parties; |
|
|
(c) |
coordinate the various functional representatives of each Party, as appropriate, in developing and executing strategies and plans for Products; |
|
|
(d) |
provide a single point of communication for seeking consensus both internally within the respective Party’s organization and between the Parties regarding key strategy and planning issues; |
|
|
(e) |
coordinate and facilitate budget, finance and billing activities as overseen by the JAC; and |
ARTICLE 4.
LICENSE GRANTS; TECHNOLOGY TRANSFER
21
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
22
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
4.2.3. |
[***]. |
|
|
4.2.4. |
Rights of Reference. |
|
|
(a) |
[***]; |
|
|
(b) |
[***] |
23
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
(c) |
[***]. |
[***].
|
|
(c) |
If [***] is contemplating [***], then (1) [***] may request that [***] use, in which case [***] shall use, Commercially Reasonable Efforts to [***], and such request must be made to [***] in writing within [***] Business Days after the disclosure described in Section 4.6.2(c)(i) is made to [***]; (2) [***] shall be responsible for payment of [***] percent ([***]%) of any obligation due in connection with [***]; and (3) all Know-How and Patents [***]. Notwithstanding the foregoing, if [***] is unsuccessful in [***], [***] shall provide [***] with prompt written notice thereof, and the provisions of Section 4.6.1(b) will apply, provided that, notwithstanding clause (ii) of Section 4.6.1(b), [***] will only have [***] Business Days after receipt of such written notice to elect to [***]. |
|
|
4.6.2. |
[***]. Notwithstanding Section 4.6.1, Vertex [***] with respect to one or more [***] and, thereafter, [***]. |
24
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
4.7.3. |
Other than the provisions of this Section 4.7, Section 8.1, Section 8.2, Sections 8.3.1 through 8.3.6, ARTICLE 11, Section 10.2.1, Section 12.5, and Section 12.11, and all definitions necessary to give effect to the foregoing provisions, each of which shall each become effective on the Execution Date, the rights and obligations of the Parties under this Agreement shall not become effective until the Effective Date. |
25
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
ARTICLE 5.
RESEARCH, DEVELOPMENT, MANUFACTURING AND COMMERCIALIZATION OF PRODUCTS
|
|
5.1.1. |
Responsibility. Except as otherwise provided in this Agreement, Vertex will be solely responsible for, and will have sole and exclusive control over, the Research and Development of Products. |
26
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
27
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
not be obligated to change any plans with respect to any Phase 1 Clinical Trial of a DM1 Product that are in effect at the time of CRISPR’s DM1 Program Option exercise, as a result of such DM1 Program Option exercise. Upon execution of the Co-Commercialization Agreement by the Parties, DM1 Products will no longer be Products under this Agreement. |
28
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
5.2.2. |
Ownership. Ownership of all right, title and interest in and to any and all Regulatory Filings, Regulatory Approvals and Price Approvals directed to any Product in each country of the Territory will be held in the name of Vertex, its Affiliate, designee or Sublicensee. |
|
|
5.3. |
Commercialization. |
|
|
5.3.3. |
Branding. Vertex or its designated Affiliates or Sublicensees will select and own all trademarks used in connection with the Commercialization of any and all Products. CRISPR will not use nor seek to register, anywhere in the world, any trademark that is confusingly similar to any trademark used by or on behalf of Vertex, its Affiliates or Sublicensees in connection with any Product. |
|
|
5.5. |
Applicable Laws. Each Party will, and will require its Affiliates, Sublicensees and Subcontractors to, comply with all Applicable Law in its and their Research, Development, Manufacture and Commercialization of Products, including where appropriate, cGMP, GCP and GLP (or similar standards). |
29
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
ARTICLE 6.
FINANCIAL PROVISIONS
|
Milestone Event |
[***] |
[***] |
|||
|
[***] |
[***] |
[***] |
|||
|
1 |
[***] |
|
|
|
[***] |
|
2 |
[***] |
|
|
|
[***] |
|
3 |
[***] |
[***] |
[***] |
[***] |
[***] |
|
4 |
[***] |
[***] |
[***] |
[***] |
[***] |
|
5 |
[***] |
[***] |
[***] |
[***] |
[***] |
|
6 |
[***] |
[***] |
[***] |
[***] |
[***] |
|
7 |
[***] |
[***] |
[***] |
[***] |
[***] |
[***].
|
Milestone Event |
[***] |
[***] |
||
|
[***] |
[***] |
[***] |
||
|
[***] |
[***] |
[***] |
[***] |
[***] |
|
[***] |
[***] |
[***] |
[***] |
[***] |
30
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
31
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
32
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
6.7.2. |
If any amounts that are relevant to the determination of amounts to be paid under this Agreement or any calculations to be performed under this Agreement are denoted in a currency other than U.S. Dollars, then such amounts will be converted to their U.S. Dollar equivalent using Vertex’s then-current standard procedures and methodology, including its then-current standard exchange rate methodology for the translation of foreign currency expenses into U.S. Dollars or, in the case of Sublicensees, such similar methodology, consistently applied. |
33
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
34
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
ARTICLE 7.
INTELLECTUAL PROPERTY
35
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
36
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
7.3. |
Prosecution and Maintenance of Patents. The Parties hereby agree as follows with respect to the Prosecution and Maintenance of certain Patents, subject, in each case, to Third Party Obligations: |
|
|
7.3.4. |
Other Joint Program Patents. The Parties will discuss and agree upon an allocation of responsibility for the Prosecution and Maintenance of the Other Joint Program Patents. |
37
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
For Vertex: [***]
For CRISPR: [***]
38
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
39
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
(a) |
the amount of such recovery will first [***]; then |
|
|
(b) |
except to the extent otherwise set forth in a Co-Commercialization Agreement entered into pursuant to this Agreement, any remaining proceeds constituting direct or actual damages will be paid to, or retained by, [***]; and |
|
|
(c) |
except to the extent otherwise set forth in a Co-Commercialization Agreement entered into pursuant to this Agreement, any remaining proceeds constituting punitive or treble damages will be allocated between the Parties as follows: [***]. |
|
|
7.8.2. |
Patents Solely Owned by CRISPR. CRISPR will retain all rights to pursue an infringement of any Patent solely owned by CRISPR that is not a Competitive Infringement and CRISPR will retain all recoveries with respect thereto. |
|
|
7.8.3. |
Patents Solely Owned by Vertex. Vertex will retain all rights to pursue an infringement of any Patent solely owned by Vertex and Vertex will retain all recoveries with respect thereto. |
40
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
or any similar statutory or regulatory requirement in any non-U.S. country or other regulatory jurisdiction; provided that Vertex shall not be permitted to provide any such information with respect to CRISPR Platform Technology Patents without CRISPR’s prior written consent. |
ARTICLE 8.
REPRESENTATIONS AND WARRANTIES
|
|
8.1. |
Representations and Warranties of Vertex. Vertex hereby represents and warrants to CRISPR, as of the Effective Date and the Execution Date, that: |
|
|
8.1.1. |
Vertex is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof; |
41
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
8.2.1. |
CRISPR is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof; |
|
|
8.2.2. |
CRISPR (a) has the requisite power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder and (b) has taken all requisite action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; |
|
|
8.2.3. |
to CRISPR’s Knowledge, CRISPR has the requisite resources and expertise to perform its obligations hereunder; |
|
|
8.2.4. |
this Agreement has been duly executed and delivered on behalf of CRISPR, and constitutes a legal, valid and binding obligation, enforceable against it in accordance with the terms hereof; |
|
|
8.2.6. |
except with respect to any required HSR approvals, CRISPR has obtained all necessary consents, approvals and authorizations of all Governmental Authorities and other Persons or entities required to be obtained by CRISPR in connection with the execution and delivery of this Agreement; |
42
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
8.2.7. |
the Licensed Technology constitutes all of the Patents and Know-How Controlled by CRISPR that are necessary to Research, Develop, Manufacture or Commercialize Products in the Field; |
|
|
8.2.10. |
CRISPR has independently developed all Licensed Technology or otherwise has a valid right to use, and to permit Vertex, Vertex’s Affiliates and Vertex’s Sublicensees to use, the Licensed Technology for all permitted purposes under this Agreement; |
|
|
8.2.11. |
the CRISPR Background Know-How is free and clear of liens, charges or encumbrances other than licenses granted to Third Parties that are not inconsistent with the rights and licenses granted to Vertex hereunder; |
43
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
8.2.18. |
no Licensed Technology is subject to any funding agreement with any government or governmental agency; |
|
|
8.2.20. |
there are no judgments or settlements against or owed by [***], pending or threatened claims or litigation, in either case relating to the Licensed Technology; |
|
|
8.3. |
CRISPR Covenants. CRISPR hereby covenants to Vertex that, except as expressly permitted under this Agreement: |
44
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
8.3.7. |
it will use Commercially Reasonable Efforts to obtain and maintain the requisite resources and expertise to perform its obligations hereunder; |
|
|
8.3.9. |
it will not engage, in any capacity in connection with this Agreement any Person who either has been debarred by the FDA, is the subject of a conviction described in Section 306 of the FD&C Act or is subject to any such similar sanction; and |
|
|
8.4. |
Vertex Covenants. Vertex hereby covenants to CRISPR that, except as expressly permitted under this Agreement: |
|
|
8.4.1. |
it will use Commercially Reasonable Efforts to obtain and maintain the requisite resources and expertise to perform its obligations hereunder; |
|
|
8.4.2. |
Vertex will not engage, in any capacity in connection with this Agreement, any Person who either has been debarred by the FDA, is the subject of a conviction described in Section 306 of the FD&C Act or is subject to any such similar sanction; and |
45
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
8.5. |
Disclaimer. Except as otherwise expressly set forth in this Agreement, neither Party nor its Affiliates makes any representation or extends any warranty of any kind, either express or implied, including any warranty of merchantability or fitness for a particular purpose. Vertex and CRISPR understand that each Product is the subject of ongoing Research and Development and that neither Party can assure the safety, usefulness or commercial or technical viability of any Product. |
ARTICLE 9.
INDEMNIFICATION; INSURANCE
46
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
47
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
10.2. |
Termination of the Agreement. |
48
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
relates solely to the DMD Program or the DM1 Program, with respect to the Program affected by such breach, or (ii) if such breach relates to both the DMD Program and the DM1 Program or this Agreement as a whole, in its entirety, by providing written notice to Vertex. |
49
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
50
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
(i) |
the right of access to any intellectual property rights (including all embodiments thereof) of CRISPR, or any Third Party with whom CRISPR contracts to perform an obligation of CRISPR under this Agreement, and, in the case of any such Third Party, which is necessary for the Manufacture, use, sale, import or export of Products; and |
|
|
(ii) |
the right to contract directly with any Third Party to complete the contracted work. |
51
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
(i) |
Whether the [***] by Vertex pursuant to Section 10.3.2 exceeds the mediator’s objective good faith estimate of [***]; and |
|
|
(c) |
Mediator Resolution. |
|
|
(i) |
If the mediator determines that [***] by Vertex pursuant to Section 10.3.2 [***], the Parties will promptly cause [***] as provided for in Section 6.10. [***]. |
|
|
(ii) |
If the mediator determines [***], Vertex may [***]. |
52
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
53
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
10.4.5. |
Effective upon (a) a termination of this Agreement with respect to a Program, Vertex will, and hereby does, assign to CRISPR, or one or more of its designated Affiliates, Vertex’s ownership interest in any (i) [***] Patents and (ii) Know-How assigned to Vertex under Section 7.2, in each case ((i) and (ii)), pertaining solely to Products under the terminated Program, and (b) a termination of this Agreement in its entirety, Vertex will, and hereby does, assign to CRISPR, or one or more of its designated Affiliates, Vertex’s ownership interest in all [***] Patents and all Know-How assigned to Vertex under Section 7.2. |
54
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
If a Party deems it reasonably necessary to disclose Confidential Information belonging to the other Party pursuant to this Section 11.2, the Disclosing Party will to the extent possible give reasonable advance written notice of such disclosure to the other Party and take reasonable measures to ensure confidential treatment of such information. In addition to the foregoing and except as otherwise prohibited or limited by clause (b) of the following sentence, [***] may disclose [***] Confidential Information to Third Parties as reasonably required to facilitate the actual or potential Research, Development, Manufacture or Commercialization of Products; provided that such disclosure is covered by terms of confidentiality and non-use similar to those set forth herein.
Notwithstanding anything to the contrary contained herein, (a) in no event may [***] disclose [***] Confidential Information to any Third Party (including any of [***] investors, collaborators or licensees) engaged in [***], and (b) in no event may [***] disclose [***] Confidential Information, other than the terms and conditions of this Agreement, to any Third Party (including any of [***] investors, collaborators or licensees) that [***] as its primary business.
55
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
56
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
57
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
|
12.2.2. |
Effects of Change of Control of CRISPR. If, during the Agreement Term, CRISPR undergoes a Change of Control to a Competitor, then upon the effective date of such Change of Control [***]. |
If to Vertex:
Vertex Pharmaceuticals Incorporated
Attn: Business Development
50 Northern Avenue
Boston, Massachusetts 02110
E-mail: [***]
with a copy to:
Vertex Pharmaceuticals Incorporated
Attn: Corporate Legal
50 Northern Avenue
Boston, Massachusetts 02110
E-mail: [***]
and:
Ropes & Gray LLP
Attn: [***]
Prudential Tower
800 Boylston Street
Boston, Massachusetts 02199-3600
E-mail: [***]
58
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
If to CRISPR:
CRISPR Therapeutics AG
Attn: Chief Executive Officer
Baarerstrasse 14
6300 Zug
Switzerland
E-mail: [***]
with a copy to:
CRISPR Therapeutics AG
Attn: General Counsel
Baarerstrasse 14
6300 Zug
Switzerland
E-mail: [***]
and:
Goodwin Procter LLP
Attn: [***]
100 Northern Avenue
Boston, Massachusetts 02210
E-mail: [***]
or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. In addition, each Party will deliver a courtesy copy to the other Party’s Alliance Manager concurrently with such notice. Any such notice will be deemed to have been given: (a) when delivered if personally delivered on a Business Day (or, if delivered or sent on a non-Business Day, then on the next Business Day); (b) on receipt if sent by overnight courier; or (c) when confirmation of receipt is sent, if sent by electronic mail.
59
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
60
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
[SIGNATURE PAGE FOLLOWS]
* - * - * - *
61
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their representatives thereunto duly authorized as of the Execution Date.
|
VERTEX PHARMACEUTICALS INCORPORATED |
CRISPR THERAPEUTICS AG |
|
By: /s/ Jeffrey Leiden _____________________ |
By: /s/ Rodger Novak___________________ |
|
Name: Jeffrey Leiden Title: Chairman, President and Chief Executive Officer |
Name: Rodger Novak Title: President |
[Signature Page to Strategic Collaboration and License Agreement]
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
Schedule A
[***] Arbitration Procedures
[***]
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
Schedule B
CRISPR In-License Agreements
[***]
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
Schedule C
DM1 Guide Milestone Criteria
[***]
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
Schedule D-1
Initial DM1 Guide Research Plan
[***]
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
Schedule D-2
DM1 Guide Research Plan Budget
[***]
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
Schedule E
Subcontractors
[***]
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
Schedule F
CRISPR Background Know-How
(as of the Execution Date)
[***]
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
Schedule G
[***] Patents
[***]
[***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
Schedule H
CRISPR Disclosures
[***]
Exhibit 31.1
Certifications
I, Samarth Kulkarni, certify that:
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of CRISPR Therapeutics AG; |
|
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(s) 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(s) 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: July 29, 2019 |
By: |
/s/ Samarth Kulkarni |
|
|
|
Samarth Kulkarni Chief Executive Officer |
|
|
|
(Principal Executive Officer) |
Exhibit 31.2
Certifications
I, Michael Tomsicek, certify that:
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of CRISPR Therapeutics AG; |
|
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(s) 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(s) 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: July 29, 2019 |
By: |
/s/ Michael Tomsicek |
|
|
|
Michael Tomsicek Chief Financial Officer |
|
|
|
(Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of CRISPR Therapeutics AG (the “Company”) for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), the undersigned officers of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his or her 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 as of, and for, the periods presented in the Report. |
|
|
|
/s/ Samarth Kulkarni |
|
Samarth Kulkarni |
|
Chief Executive Officer |
|
(Principal Executive Officer) |
|
|
|
July 29, 2019 |
|
|
|
/s/ Michael Tomsicek |
|
Michael Tomsicek |
|
Chief Financial Officer |
|
(Principal Financial and Accounting Officer) |
|
|
|
July 29, 2019 |