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Financial report summary
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Adicet Bio • Bristol-Myers Squibb • Astrazeneca • Sangamo Therapeutics • Novartis • Oncternal Therapeutics • ImmunityBio • Precigen • Precision Biosciences • Fortress BiotechRisks
- We have incurred significant operating losses since our inception and anticipate that we will incur continued operating losses for the foreseeable future and we may not be able to achieve or sustain profitability.
- We will need substantial additional financing to develop our product candidates and implement our operating plans. If we fail to obtain additional financing, we may be delayed or unable to complete the development and commercialization of our product candidates.
- Raising additional capital may cause dilution to our stockholders, restrict our operations, and/or require us to relinquish rights to our technologies or product candidates.
- We have a limited operating history, which may make it difficult to evaluate our technologies and product candidate development capabilities or to predict our future performance.
- We are early in our development efforts and it will be many years before we commercialize a product candidate, if ever. If we are unable to advance our product candidates through clinical trials, obtain regulatory approval, and ultimately commercialize our product candidates, or we experience significant delays in doing so, our business will be materially harmed.
- Our product candidates are cell therapies generated by our novel CRISPR chRDNA genome-editing technologies, which make it difficult to predict the time and cost of developing these product candidates and obtaining regulatory approval. To date, no other products that use these chRDNA genome-editing technologies have advanced into clinical trials or received marketing approval in the United States.
- Our business is highly dependent on the success of our product candidates, which will require significant additional preclinical studies and and/or human clinical trials before we can seek regulatory approval and potentially commercialize our product candidates. If we are unable to advance our preclinical studies and clinical trials and obtain regulatory approval for, and successfully commercialize, our product candidates for the treatment of patients in approved indications, or if we are substantially delayed in doing so, our business will be significantly harmed.
- We may not be successful in our efforts to identify and successfully research and develop additional product candidates and may expend our limited resources to pursue particular product candidates or indications while failing to capitalize on other product candidates or indications that may be more profitable, or for which there is a greater likelihood of commercial success.
- If we experience delays or difficulties enrolling patients in the clinical trials for our product candidates, including our CB-010, CB-011, and CB-012 product candidates, our ability to advance our product candidates through clinical development and the regulatory process could be delayed or prevented.
- Clinical trials are expensive, time-consuming, and subject to uncertainty. We cannot guarantee that any of our clinical trials will be conducted as planned or completed on schedule, if at all. Issues may arise that could suspend or terminate our clinical trials. A failure of one or more of our clinical trials may occur at any stage of testing, and our future clinical trials may not be successful.
- Our clinical trials may fail to adequately demonstrate the safety and efficacy of any of our product candidates and, if this happens, the development of our product candidates may be delayed or unsuccessful, which could prevent or delay regulatory approval and commercialization.
- If our product candidates cause serious adverse events or undesirable side effects, including injury and death, or have other properties that could delay or prevent regulatory approval, they would have limited or no commercial potential.
- The FDA or other regulatory agencies may disagree with our regulatory plans and we may fail to obtain regulatory approval of our cell therapy product candidates.
- The regulatory landscape that will govern our product candidates is uncertain; regulations relating to more established gene therapy and cell therapy products are still developing, and changes in regulatory requirements could result in delays or discontinuation of development of our product candidates or unexpected costs in obtaining regulatory approval.
- We may not receive additional priority review, such as RMAT designation, breakthrough therapy designation, or fast track designation, by the FDA for our allogeneic CAR-T and CAR-NK cell therapies.
- We may continue to seek orphan drug designation for our allogeneic CAR-T and CAR-NK cell therapy product candidates across various indications, but we may not be able to obtain such designations or to maintain the benefits
- associated with orphan drug designation, including market exclusivity, which may cause our revenue, if any, to be reduced.
- Our allogeneic CAR-T and CAR-NK cell therapy product candidates will be regulated as biological products, or biologics, and therefore may be subject to uncertainty regarding regulatory exclusivity or maintaining regulatory approval.
- We may never obtain approval to commercialize our product candidates outside the United States, which could limit our ability to recognize the full market potential of our product candidates and could materially impair our ability to generate revenues.
- Negative public opinion and increased regulatory scrutiny of genetic research and therapies involving genome editing may damage public perception of our product candidates generated through genome editing or adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates.
- We currently have no marketing and sales organization and as a company have no experience in marketing products. If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell our product candidates, we may not be able to generate product revenue.
- Our products may not gain market acceptance among physicians, patients, hospitals, cancer treatment centers, and others in the medical community, which could significantly harm our business, financial condition, results of operations, and prospects.
- The market opportunities for our product candidates may be smaller than we currently believe and limited to those patients who are ineligible for or have failed prior treatment, which may adversely affect our business. Because the
- target patient populations of our product candidates are small, we must be able to successfully identify patients and capture a significant market share to achieve profitability and growth.
- Even if we are able to commercialize our product candidates, such products may be subject to unfavorable pricing regulations, third-party reimbursement practices, or healthcare reform initiatives, which could harm our business.
- Enacted and future healthcare legislation may increase the difficulty and cost for us to obtain approval of and commercialize our product candidates and could adversely affect our business.
- We face significant competition from other biotechnology and pharmaceutical companies, which may result in other companies developing or commercializing products before, or more successfully than, we do, thus rendering our product candidates non-competitive or reducing the size of the market for our product candidates. Our operating results will suffer if we fail to compete effectively.
- Our business operations and current and future relationships with clinical site investigators, healthcare professionals, consultants, third-party payors, patient organizations, and customers will be subject to applicable healthcare regulatory laws, which could expose us to penalties.
- Our business activities will be subject to U.S. export control licensing requirements, as well as other U.S. and foreign trade regulations, sanctions laws, anti-corruption laws, and anti-money laundering laws and regulations including the Foreign Corrupt Practices Act, which could expose us to penalties.
- We face potential liability related to the privacy of health information we may obtain from the patients in our clinical trials if we fail to comply with privacy laws.
- Compliance with global privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and the failure to comply with such requirements could subject us to significant fines and penalties, which could have a material adverse effect on our business, financial condition, results of operations, or prospects.
- If we do not possess the necessary intellectual property rights covering our CRISPR chRDNA genome-editing technologies, our product candidates, and other proprietary technologies, we may not be able to block competitors or to compete effectively in the market.
- Third-party claims of intellectual property infringement may prevent or delay our ability to commercialize our product candidates.
- We may not be able to protect our intellectual property rights throughout the world.
- We may be subject to claims challenging the inventorship of our patents and other intellectual property.
- The terms of our patents may not be sufficient to effectively protect our products and business, and the expiration of our patents may subject us to increased competition.
- We may not obtain patent term extension for any product candidates we develop.
- Changes to the patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our genome-editing technologies and product candidates.
- We may be involved in lawsuits or other proceedings to enforce or protect our patents, the patents of our licensors, or our other intellectual property rights, which could be expensive, time-consuming, and unsuccessful.
- Our product candidates are biologics, and as such, we may enter into a settlement agreement with a biosimilar manufacturer seeking to market a product highly similar to our product; such a settlement agreement may be reviewed by the Federal Trade Commission and such review could result in a fine or penalty and substantial expense.
- Our rights to develop and commercialize our product candidates are subject to the terms and conditions of our licenses and assignments with third parties. If we fail to comply with our obligations under these agreements, we could lose intellectual property rights and be subject to litigation from our licensors or assignors.
- We may not be successful in obtaining or maintaining necessary rights to any future product candidates that we acquire through acquisitions or in-licenses.
- Our ability to continue to receive licensing revenue and to enter into new licensing arrangements related to the foundational CRISPR-Cas9 intellectual property will be substantially impaired if such intellectual property is limited by administrative patent proceedings or other patent challenges.
- If we are unable to protect the confidentiality of our trade secrets, our business and competitive position will be harmed.
- Intellectual property rights do not necessarily address all potential competitive threats and may not adequately protect our business or permit us to maintain our competitive advantage.
- If our trademarks are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
- We rely on third parties to supply the materials for, and the manufacturing of, our clinical product candidates, and, if such product candidates receive regulatory approval, we may continue our reliance on third parties for manufacturing of our commercial products. Our continued success is subject to the performance of these third parties.
- For our allogeneic CAR-T product candidates, we rely on receiving healthy donor material to manufacture our product candidates. Variation in quality of donor T cells, and potential challenges in procuring appropriate donor material, could result in insufficient product supply or may result in us being unable to initiate or continue clinical trials on the timelines we expect.
- We rely and will continue to rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or do not meet deadlines, we may not be able to obtain regulatory approval of, or commercialize, our product candidates.
- We may form or seek collaborations or strategic alliances in the future for the development and commercialization of one or more of our product candidates or for new product candidates. We may not be successful in those efforts and, even if we do enter into any collaborations, they may not be successful.
- We may not realize the benefits of acquired assets or other strategic transactions.
- We may be subject to claims that our employees, consultants, or third parties performing services for us have wrongfully used or disclosed confidential information of third parties.
- Our future success depends on our ability to retain our executive officers and to attract, retain, and motivate qualified personnel.
- We must continue developing and expanding our company, and we may encounter difficulties in managing this development and expansion, which could disrupt our operations.
- Our employees, clinical trial principal investigators, and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.
- If we fail to comply with environmental, health, and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business; additionally, our business could be shut down until we are in compliance with those laws and regulations.
- Our insurance policies are expensive and only protect us from some business risks, which may leave us exposed to certain uninsured liabilities.
- Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any product candidates that we may develop.
- As a public company, we are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our common stock.
- Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of amounts accrued on our financial statements.
- Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
- Pandemics or other public health crises, such as the prior COVID-19 pandemic, may adversely impact our business, financial condition, and results of operations, including our preclinical studies and clinical trials, and may cause substantial disruption in the financial markets and adversely impact economies worldwide.
- Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
- Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations.
- We maintain our cash at financial institutions, often in balances that exceed federally insured limits.
- Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations.
- The market price of our common stock has been, and may continue to be, volatile, and our investors may suffer substantial losses if the price of our common stock drops significantly.
- We are subject to securities class action litigation, which may result in substantial costs and a diversion of management's attention and resources, which could harm our business.
- If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline.
- If a significant amount of our shares of common stock are sold, or it is perceived that they will be sold, in the public market, the market price of our common stock could decline.
- We are an “emerging growth company” under the JOBS ACT and a “smaller reporting company” and the reduced disclosure requirements and exemptions from certain governance requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors.
- We have incurred, and will continue to incur, increased costs as a result of operating as a public company, and our management will continue to devote substantial time to compliance initiatives and corporate governance practices.
- We do not expect to pay any dividends for the foreseeable future. Investors may never obtain a return on their investment.
- Provisions in our amended and restated certificate of incorporation, our amended and restated bylaws, and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders. These provisions may prevent attempts by our stockholders to replace or remove our current management.
- Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock.
- In the future, we may be subject to board of director diversity requirements under California law and, if we are unable to comply with such requirements, we may be exposed to financial penalties and our reputation may be adversely affected.
- Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, executive officers, or employees.
Management Discussion
- Licensing and collaboration revenue increased by $20.6 million to $34.5 million for the year ended December 31, 2023 from $13.9 million for the year ended December 31, 2022. This increase primarily relates to a $16.8 million increase in revenue recognized under the now-terminated Collaboration and License Agreement (as amended, “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”). In connection with the termination of the AbbVie Agreement, we recognized the remaining deferred revenue of $20.8 million during the year ended December 31, 2023.
- Research and development expenses increased by $29.8 million to $112.1 million for the year ended December 31, 2023 from $82.2 million for the year ended December 31, 2022. This increase was primarily related to an increase of $15.4 million of external CMO and CRO activities for our clinical CAR-T cell therapy product candidates, including an increase of $5.1 million due to timing of CMO activities, and $10.3 million in CRO activities for clinical
- trials; $11.3 million in personnel-related expenses, including stock-based compensation, due to headcount increases; and $3.3 million in facilities and other allocated expenses. These increases were partially offset by a $0.4 million decrease in expenses related to licenses, sublicensing revenue, and milestones.