UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~September 30, 2022~~March 31, 2023


o			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: 001-40631

Caribou Biosciences, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware						45-3728228
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2929 7th Street, Suite 105 Berkeley, California						94710
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (510) 982-6030

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

CRBU

The Nasdaq Global Select Market

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 x No o

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 x No o

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

Large accelerated filer

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. o

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

As of ~~November 3, 2022,~~May 4, 2023, the registrant had ~~61,001,561~~61,363,713 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CARIBOU BIOSCIENCES, INC. AND ITS SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	82,085	$	240,420	Cash and cash equivalents	$	52,744	$	58,338
Marketable securities, short-term	Marketable securities, short-term	211,284		135,412		Marketable securities, short-term	175,794		189,325
Accounts receivable	Accounts receivable	397		1,153		Accounts receivable	1,533		202
Contract assets	Contract assets	1,899		1,488		Contract assets	1,639		2,247
Other receivables	Other receivables	2,699		5,483		Other receivables	1,670		2,215
Prepaid expenses and other current assets	Prepaid expenses and other current assets	8,558		7,236		Prepaid expenses and other current assets	6,110		7,921
Total current assets	Total current assets	306,922		391,192		Total current assets	239,490		260,248
NON-CURRENT ASSETS	NON-CURRENT ASSETS					NON-CURRENT ASSETS
Investments in equity securities	Investments in equity securities	7,759		7,626		Investments in equity securities	7,683		7,698
Marketable securities, long-term	Marketable securities, long-term	49,221		37,676		Marketable securities, long-term	62,452		69,373
Property and equipment, net	Property and equipment, net	8,959		4,887		Property and equipment, net	12,646		10,678
Operating lease, right of use assets	Operating lease, right of use assets	24,626		—		Operating lease, right of use assets	23,715		24,230
Other assets	Other assets	1,336		975		Other assets	1,476		1,538
TOTAL ASSETS	TOTAL ASSETS	$	398,823	$	442,356	TOTAL ASSETS	$	347,462	$	373,765
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable	Accounts payable	$	1,228	$	3,990	Accounts payable	$	2,651	$	1,146
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	14,638		13,136		Accrued expenses and other current liabilities	12,544		16,079
Lease liabilities, current	Lease liabilities, current	912		—		Lease liabilities, current	1,022		966
Deferred revenue ($150 and $0 from related party, respectively)		12,036		8,703
Deferred revenue ($150 and $150 from related party, respectively)						Deferred revenue ($150 and $150 from related party, respectively)	10,883		9,937
Total current liabilities	Total current liabilities	28,814		25,829		Total current liabilities	27,100		28,128
LONG-TERM LIABILITIES	LONG-TERM LIABILITIES					LONG-TERM LIABILITIES
Deferred revenue, net of current portion ($0 and $100 from related party, respectively)		15,423		22,032
Deferred rent and lease incentive liability		—		2,097
Deferred revenue, net of current portion						Deferred revenue, net of current portion	13,911		15,954
MSKCC success payments liability	MSKCC success payments liability	3,039		4,080		MSKCC success payments liability	1,396		1,651
Lease liabilities, non-current	Lease liabilities, non-current	26,958		—		Lease liabilities, non-current	26,401		26,780
Other liabilities		—		17
Deferred tax liabilities	Deferred tax liabilities	475		476		Deferred tax liabilities	382		381
Total liabilities	Total liabilities	74,709		54,531		Total liabilities	69,190		72,894
COMMITMENTS AND CONTINGENCIES (Note 9)	COMMITMENTS AND CONTINGENCIES (Note 9)					COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS’ EQUITY	STOCKHOLDERS’ EQUITY					STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized at September 30, 2022 and December 31, 2021; no shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		—		—
Common stock, par value $0.0001 per share, 300,000,000 shares authorized at September 30, 2022 and December 31, 2021, respectively; 60,986,936 and 60,263,158 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		6		6
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized at March 31, 2023 and December 31, 2022; no shares issued and outstanding as of March 31, 2023 and December 31, 2022						Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized at March 31, 2023 and December 31, 2022; no shares issued and outstanding as of March 31, 2023 and December 31, 2022	—		—
Common stock, par value $0.0001 per share, 300,000,000 shares authorized at March 31, 2023 and December 31, 2022, respectively; 61,323,523 and 61,029,184 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively						Common stock, par value $0.0001 per share, 300,000,000 shares authorized at March 31, 2023 and December 31, 2022, respectively; 61,323,523 and 61,029,184 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	6		6
Additional paid-in-capital	Additional paid-in-capital	496,369		485,748		Additional paid-in-capital	504,255		499,598
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(2,035)		(135)		Accumulated other comprehensive loss	(730)		(1,518)
Accumulated deficit	Accumulated deficit	(170,226)		(97,794)		Accumulated deficit	(225,259)		(197,215)
Total stockholders’ equity	Total stockholders’ equity	324,114		387,825		Total stockholders’ equity	278,272		300,871
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	398,823	$	442,356	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	347,462	$	373,765

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

Table of Contents

CARIBOU BIOSCIENCES, INC. AND ITS SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share amounts)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Licensing and collaboration revenue	Licensing and collaboration revenue	$	3,303	$	3,977	$	10,159	$	7,039	Licensing and collaboration revenue		$	3,502	$	2,664
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	19,991		15,833		56,494		37,144		Research and development		25,709		13,924
General and administrative	General and administrative	9,849		6,760		29,486		16,469		General and administrative		8,909		9,593
Total operating expenses	Total operating expenses	29,840		22,593		85,980		53,613		Total operating expenses		34,618		23,517
Loss from operations	Loss from operations	(26,537)		(18,616)		(75,821)		(46,574)		Loss from operations		(31,116)		(20,853)
Other income (expense):	Other income (expense):									Other income (expense):
Change in fair value of equity securities	Change in fair value of equity securities	31		—		(73)		—		Change in fair value of equity securities		(15)		(88)
Change in fair value of the MSKCC success payments liability	Change in fair value of the MSKCC success payments liability	(1,607)		(2,403)		1,041		(3,584)		Change in fair value of the MSKCC success payments liability		255		1,596
Gain on extinguishment of PPP Loan		—		—		—		1,584
Other income, net	Other income, net	1,466		45		2,421		130		Other income, net		2,832		257
Total other income (expense)		(110)		(2,358)		3,389		(1,870)
Total other income										Total other income		3,072		1,765
Net loss	Net loss	(26,647)		(20,974)		(72,432)		(48,444)		Net loss		(28,044)		(19,088)
Other comprehensive loss:
Net unrealized loss on available-for-sale marketable securities, net of tax		(454)		—		(1,900)		—
Other comprehensive income (loss):										Other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale marketable securities, net of tax										Net unrealized gain (loss) on available-for-sale marketable securities, net of tax		788		(954)
Net comprehensive loss	Net comprehensive loss	$	(27,101)	$	(20,974)	$	(74,332)	$	(48,444)	Net comprehensive loss		$	(27,256)	$	(20,042)
Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.44)	$	(0.46)	$	(1.19)	$	(2.20)	Net loss per share, basic and diluted		$	(0.46)	$	(0.32)
Weighted-average common shares outstanding, basic and diluted	Weighted-average common shares outstanding, basic and diluted	60,886,921		45,889,646		60,731,520		22,052,944		Weighted-average common shares outstanding, basic and diluted		61,186,514		60,546,170

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

Table of Contents

CARIBOU BIOSCIENCES, INC. AND ITS SUBSIDIARIES

Condensed Consolidated Statements of ~~Convertible Preferred Stock and~~ Stockholders’ Equity ~~(Deficit)~~

(Unaudited)

(in thousands, except share amounts)


																						Common Stock						Additional Paid-In Capital					Accumulated Other Comprehensive Loss				Accumulated Deficit				Total Stockholders’ Equity
																						Shares			Amount
BALANCE—December 31, 2022																					BALANCE—December 31, 2022	61,029,184			$	6					$	499,598					$	(1,518)			$	(197,215)			$	300,871
Issuance of common stock under employee stock plans																					Issuance of common stock under employee stock plans	70,271			—			404					—				—				404
Issuance of common stock on exercise of options																					Issuance of common stock on exercise of options	55,433			—			115					—				—				115
Issuance of common stock in connection with at-the-market offering, net of offering expenses																					Issuance of common stock in connection with at-the-market offering, net of offering expenses	168,635			—			1,007					—				—				1,007
Stock-based compensation expense																					Stock-based compensation expense	—			—			3,131					—				—				3,131
Net loss																					Net loss	—			—			—					—				(28,044)				(28,044)
Other comprehensive income																					Other comprehensive income	—			—			—					788				—				788
BALANCE—March 31, 2023																					BALANCE—March 31, 2023	61,323,523			$	6		$	504,255				$	(730)			$	(225,259)			$	278,272

		Convertible Preferred Stock			Common Stock			Additional Paid-In Capital				Other Comprehensive Loss		Accumulated Deficit				Total Stockholders’ Equity (Deficit)
		Shares	Amount		Shares	Amount
BALANCE—December 31, 2021	BALANCE—December 31, 2021	—	$	—	60,263,158	$	6			$	485,748					$	(135)			$	(97,794)		$	387,825	BALANCE—December 31, 2021		60,263,158			$	6				$	485,748			$	(135)			$	(97,794)			$	387,825
Issuance of common stock under employee stock plans	Issuance of common stock under employee stock plans	—	—		36,596	—		361				—		—				361			Issuance of common stock under employee stock plans	36,596			—			361					—				—				361
Issuance of common stock on exercise of options	Issuance of common stock on exercise of options	—	—		389,855	—		629				—		—				629			Issuance of common stock on exercise of options	389,855			—			629					—				—				629
Stock-based compensation expense	Stock-based compensation expense	—	—		—	—		3,024				—		—				3,024			Stock-based compensation expense	—			—			3,024					—				—				3,024
Net loss	Net loss	—	—		—	—		—				—		(19,088)				(19,088)			Net loss	—			—			—					—				(19,088)				(19,088)
Other comprehensive loss	Other comprehensive loss	—	—		—	—		—				(954)		—				(954)			Other comprehensive loss	—			—			—					(954)				—				(954)
BALANCE—March 31, 2022	BALANCE—March 31, 2022	—	$	—	60,689,609	$	6	$	489,762			$	(1,089)	$	(116,882)			$	371,797		BALANCE—March 31, 2022	60,689,609			$	6		$	489,762				$	(1,089)			$	(116,882)			$	371,797
Issuance of common stock on exercise of options		—	—		148,761	—		363				—		—				363
Stock-based compensation expense		—	—		—	—		2,918				—		—				2,918
Net loss		—	—		—	—		—				—		(26,697)				(26,697)
Other comprehensive loss		—	—		—	—		—				(492)		—				(492)
BALANCE—June 30, 2022		—	$	—	60,838,370	$	6	$	493,043			$	(1,581)	$	(143,579)			$	347,889
Issuance of common stock on exercise of options		—	—		148,566	—		654				—		—				654
Stock-based compensation expense		—	—		—	—		2,672				—		—				2,672
Net loss		—	—		—	—		—				—		(26,647)				(26,647)
Other comprehensive loss		—	—		—	—		—				(454)		—				(454)
BALANCE—September 30, 2022		—	$	—	60,986,936	$	6	$	496,369			$	(2,035)	$	(170,226)			$	324,114

BALANCE—December 31, 2020		7,766,582	$	41,323	9,710,830	$	1	$	7,433			$	—	$	(30,871)			$	(23,437)
Issuance of Series C convertible preferred stock, net of issuance costs of $6.2 million		6,663,940	108,827		—	—		—				—		—				—
Issuance of common stock on exercise of options		—	—		584,614	—		564				—		—				564
Stock-based compensation expense		—	—		—	—		343				—		—				343
Net loss		—	—		—	—		—				—		(13,159)				(13,159)
BALANCE—March 31, 2021		14,430,522	$	150,150	10,295,444	$	1	$	8,340			$	—	$	(44,030)			$	(35,689)
Repayment of promissory note		—	—		—	—		1,150				—		—				1,150
Issuance of common stock on exercise of options		—	—		1,037,979	—		566				—		—				566
Stock-based compensation expense		—	—		—	—		593				—		—				593
Net loss		—	—		—	—		—				—		(14,311)				(14,311)
BALANCE—June 30, 2021		14,430,522	$	150,150	11,333,423	$	1	$	10,649			$	—	$	(58,341)			$	(47,691)
Conversion of convertible preferred stock into common stock		-14,430,522	(150,150)		26,234,654	3		150,147				—		—				150,150
Issuance of common stock upon initial public offering, net of issuance costs of $28.6 million		—	—		21,850,000	2		321,018				—		—				321,020
Issuance of common stock on exercise of options		—	—		603,246	—		961				—		—				961
Stock-based compensation expense		—	—		—	—		935				—		—				935
Net loss		—	—		—	—		—				—		(20,974)				(20,974)
BALANCE—September 30, 2021		—	$	—	60,021,323	$	6	$	483,710			$	—	$	(79,315)			$	404,401

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

Table of Contents

CARIBOU BIOSCIENCES, INC. AND ITS SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	Net loss	$	(72,432)	$	(48,444)	Net loss	$	(28,044)	$	(19,088)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	1,116		711		Depreciation and amortization	589		308
Loss on disposal of fixed assets		—		3
Gain on disposal of fixed assets						Gain on disposal of fixed assets	(34)		—
Non-cash consideration for licensing and collaboration revenue	Non-cash consideration for licensing and collaboration revenue	(205)		—		Non-cash consideration for licensing and collaboration revenue	—		(128)
Change in fair value of equity securities	Change in fair value of equity securities	73		—		Change in fair value of equity securities	15		88
Stock-based compensation expense	Stock-based compensation expense	8,615		1,871		Stock-based compensation expense	3,131		3,024
Change in fair value of MSKCC success payments liability	Change in fair value of MSKCC success payments liability	(1,041)		3,584		Change in fair value of MSKCC success payments liability	(255)		(1,596)
Acquired in-process research and development		300		1,000
Extinguishment of PPP Loan		—		(1,578)
Amortization of investment premiums	Amortization of investment premiums	106		—		Amortization of investment premiums	(1,494)		327
Non-cash lease expense	Non-cash lease expense	1,622		—		Non-cash lease expense	515		500
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	756		(428)		Accounts receivable	(1,331)		779
Contract assets	Contract assets	(411)		(525)		Contract assets	607		(6)
Other receivables	Other receivables	2,783		(1,673)		Other receivables	545		1,313
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(1,613)		(2,759)		Prepaid expenses and other current assets	1,811		(1,296)
Other assets	Other assets	(361)		(151)		Other assets	62		(487)
Accounts payable	Accounts payable	(2,568)		848		Accounts payable	1,502		(1,915)
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	909		4,855		Accrued expenses and other current liabilities	(4,138)		(2,831)
Deferred revenue, current and long-term	Deferred revenue, current and long-term	(3,277)		30,669		Deferred revenue, current and long-term	(1,097)		(572)
Deferred rent and lease incentive liability		—		909
Operating lease liabilities	Operating lease liabilities	(279)		(22)		Operating lease liabilities	(323)		(85)
Other liabilities	Other liabilities	(15)		—		Other liabilities	—		(8)
Net cash used in operating activities	Net cash used in operating activities	(65,922)		(11,130)		Net cash used in operating activities	(27,939)		(21,673)
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of marketable securities		163,130		—
Proceeds from sales and maturities of marketable securities						Proceeds from sales and maturities of marketable securities	98,665		39,300
Purchases of marketable securities	Purchases of marketable securities	(252,552)		—		Purchases of marketable securities	(75,931)		(110,684)
Purchases of property and equipment	Purchases of property and equipment	(4,697)		(1,436)		Purchases of property and equipment	(2,031)		(723)
Payments to acquire in-process research and development		(300)		(1,000)
Net cash used in investing activities		(94,419)		(2,436)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	20,703		(72,107)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial public offering of common stock, net of offering costs		—		321,020
Proceeds from issuance of Series C convertible preferred stock, net of issuance costs		—		108,827
Proceeds from exercise of stock options and purchases of common stock under employee stock purchase plan	Proceeds from exercise of stock options and purchases of common stock under employee stock purchase plan	2,006		2,091		Proceeds from exercise of stock options and purchases of common stock under employee stock purchase plan	519		990
Repayment of promissory note		—		1,150
Payments on capital lease		—		(119)
Proceeds from issuance of common stock related to at-the-market offering, net of offering expenses						Proceeds from issuance of common stock related to at-the-market offering, net of offering expenses	1,123		—
Net cash provided by financing activities	Net cash provided by financing activities	2,006		432,969		Net cash provided by financing activities	1,642		990
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(158,335)		419,403
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH						NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(5,594)		(92,790)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — BEGINNING OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — BEGINNING OF PERIOD	240,466		15,953		CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — BEGINNING OF PERIOD	58,384		240,466
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — END OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — END OF PERIOD	$	82,131	$	435,356	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — END OF PERIOD	$	52,790	$	147,676
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH					RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents	Cash and cash equivalents	$	82,085	$	435,310	Cash and cash equivalents	$	52,744	$	147,630
Restricted cash	Restricted cash	46		46		Restricted cash	46		46
TOTAL CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	TOTAL CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	$	82,131	$	435,356	TOTAL CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	$	52,790	$	147,676

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes		$	—	$	11

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:	SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:					SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of property and equipment included in accrued expenses and other current liabilities		$	757	$	268
Acquired in-process research and development accrued		$	—	$	—
Extinguishment of PPP Loan		$	—	$	1,578
Conversion of convertible preferred stock to common stock at closing of initial public offering		$	—	$	150,150
Purchases of property and equipment included in accounts payable and accrued expenses						Purchases of property and equipment included in accounts payable and accrued expenses	$	1,714	$	981
Offering costs included in accrued expenses						Offering costs included in accrued expenses	$	116	$	—
Right-of-use-assets obtained in exchange for new operating lease liabilities	Right-of-use-assets obtained in exchange for new operating lease liabilities	$	26,249	$	—	Right-of-use-assets obtained in exchange for new operating lease liabilities	$	—	$	26,249

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

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CARIBOU BIOSCIENCES, INC. AND ITS SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of the Business, Organization, and Liquidity

Business and Organization

Caribou Biosciences, Inc. (the “Company” or “we”) is a clinical-stage ~~CRISPR genome-editing biopharmaceutical company dedicated to developing innovative, transformative therapies for patients with devastating diseases. CRISPR is an acronym for~~ Clustered Regularly Interspaced Short Palindromic R~~epeats.~~epeats (“CRISPR”) genome-editing biopharmaceutical company dedicated to developing transformative therapies for patients with devastating diseases. Our genome-editing platform, including our novel ~~CRISPR platform,~~ chRDNA (CRISPR hybrid RNA-DNA~~(“chRDNA,~~, or “chRDNA,” pronounced “chardonnay”), technologies, enables ~~high genome-editing~~superior editing precision to develop cell therapies that are ~~specifically engineered~~armored to ~~target cancer and are armored for enhanced persistence.~~improve antitumor activity. We are advancing a pipeline of allogeneic, or off-the-shelf, cell therapies from our chimeric antigen receptor (“CAR”)-T T (“CAR-T”) cell and CAR-natural killer (“CAR-NK”) cell ~~therapies~~platforms as readily available therapeutic treatments for ~~the treatment of patients with hematologic malignancies and solid tumors.~~patients.

We incorporated in October 2011 as a Delaware corporation and are headquartered in Berkeley, California. We have four wholly owned subsidiaries: Antler Holdco, LLC, incorporated in Delaware in April 2019; Microbe Holdco, LLC, incorporated in Delaware in June 2020; Arboreal Holdco, LLC, incorporated in Delaware in November 2020; and Biloba Holdco, LLC, incorporated in Delaware in April 2021. Our wholly owned subsidiaries hold interests in our equity investments and do not have operating activities.

Liquidity

We have incurred net losses and negative cash flows from operations since our inception and we had an accumulated deficit of ~~$170.2~~$225.3 million as of ~~September 30, 2022.~~March 31, 2023. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we incurred a net loss of ~~$72.4~~$28.0 million and used ~~$65.9~~$27.9 million of cash in operating activities. We expect to continue to incur substantial losses, and our ability to achieve and sustain profitability will depend on the successful development, approval, and commercialization of our product candidates and on our achievement of sufficient revenue to support our cost structure. We may never achieve profitability and, unless and until we do, we will need to continue to raise additional capital. Our management expects that existing cash, cash equivalents, and marketable securities of ~~$342.6~~$291.0 million as of ~~September 30, 2022,~~March 31, 2023, will be sufficient to fund our current operating plan for at least the next 12 months from the date of issuance of our condensed consolidated financial statements.

2. Summary of Significant Accounting Policies

There have been no changes to the significant accounting policies disclosed in Note 2 to the annual consolidated financial statements for the year ended December 31, ~~2021~~2022 included in our Annual Report on Form 10-K ~~other than changes to our leasing policy described below in connection with the adoption of the guidance under the Accounting Standards Codification~~ (“~~ASC”~~Form 10-K”) ~~842, Leases.~~.

Basis of Presentation and Principles of Consolidation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of Caribou Biosciences, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities; the disclosure of contingent assets and liabilities at the date of our condensed consolidated financial statements; and the reported amounts of revenue, income, and expenses during the applicable reporting period. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, common stock valuation, stock-based compensation expense, accrued expenses related to research and development activities, valuation of the Memorial Sloan Kettering Cancer Center (“MSKCC”) success payments liability, and income taxes. Our management bases its estimates on historical experience and on various other assumptions that they believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates.

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Segments

We operate and manage our business as one reportable operating segment, which is the business of developing a pipeline of allogeneic CAR-T and CAR-NK cell therapies. Our president and chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating resources and evaluating financial performance. All long-lived assets are maintained in the United States.

Concentrations of Credit Risk and Other Uncertainties

Financial instruments that potentially subject us to concentration of credit risk consist of cash and cash equivalents, accounts receivable, contract assets, other receivables, and investments in marketable securities and equity securities. Substantially all of our cash and cash equivalents are deposited in accounts at two financial institutions, and account balances may at times exceed federally insured limits. We mitigate the risks by investing in high-grade instruments, limiting our exposure to one issuer, and we monitor the ongoing creditworthiness of the financial institutions and issuers. ~~We believe these financial institutions to be of high credit quality.~~

Licensees that represent 10% or more of our revenue and accounts receivable and contract assets were as follows:


		Revenue				Revenue				Accounts Receivable and Contract Assets							Revenue										Accounts Receivable and Contract Assets
		Three Months Ended				Nine Months Ended				As of September 30, 2022				As of December 31, 2021			Three Months Ended										As of March 31, 2023	As of December 31, 2022
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021					March 31, 2023					March 31, 2022
Licensee A	Licensee A	17.2	%	14.0	%	16.4	%	23.2	%			24.2	%				24.6		%	Licensee A	17.6		%		23.1	%				17.4		%		*
Licensee B	Licensee B	51.7	%	57.2	%	54.2	%	39.5	%	33.7	%			45.1	%	Licensee B	22.0		%			19.6		%				24.4	%		23.8		%
Licensee C	Licensee C	*		*		*		*		12.0	%			*		Licensee C	45.9		%			35.0		%				45.7	%		36.6		%
Total	Total	68.9	%	71.2	%	70.6	%	62.7	%	69.9	%			69.7	%	Total	85.5		%			77.7		%				87.5	%		60.4		%

*Less than 10%

We monitor economic conditions to identify facts or circumstances that may indicate if any of our accounts receivable are not collectible or if the contract assets should be impaired. No allowance for ~~doubtful accounts~~credit losses or contract asset impairment was recorded as of ~~September 30, 2022~~March 31, 2023 or December 31, ~~2021.~~

~~Property and Equipment, Net~~

Property and equipment are recorded at cost, net of accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets. The useful lives of property and equipment are as follows:


~~Computers~~			~~3 years~~
~~Furniture and fixtures~~			~~5 years~~
~~Laboratory equipment~~			~~5 years~~
~~Leasehold improvements~~			~~Shorter of remaining lease term or estimated useful life~~

Upon retirement or sale of the assets, the cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is recorded in the statements of operations. Repairs and maintenance are expensed as incurred.

~~Leases~~

We adopted the guidance under ASC 842 on January 1, 2022 using the modified retrospective approach with a cumulative-effect adjustment as of January 1, 2022 in accordance with the Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842). We determine whether an arrangement is or contains a lease at the inception of the arrangement and whether such a lease is classified as a finance lease or operating lease at the commencement date of the lease. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities, and long-term lease liabilities. We elected not to recognize the right-of-use assets and lease liabilities for leases with lease terms of 12 months or less (short-term leases). Lease liabilities and their corresponding right-of-use assets are recorded based on the present

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value of lease payments over the expected lease term. As the interest rate implicit in our lease contracts is not readily determinable, we utilize a collateralized incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments. Certain adjustments to the right-of-use assets may be required for items such as initial direct costs paid or incentives received and impairment charges if we determine the right-of-use assets are impaired. There was no cumulative-effect adjustment recorded to retained earnings on January 1, 2022.

We consider the lease term to be the noncancellable period that we have the right to use the underlying asset, together with any periods where it is reasonably certain we will exercise an option to extend (or not terminate) the lease. Periods covered by an option to extend (or not terminate) the lease in which the exercise of the option is controlled by the lessor are included in the lease term.

Rent expense for operating leases is recognized on a straight-line basis over the lease term and is presented in operating expenses on the statements of operations and comprehensive loss. We have elected to not separate lease and non-lease components for our facilities leases and leases of electroporation devices and, instead, we account for each separate lease component and the non-lease components associated with that lease component as a single lease component. Variable lease payments are recognized as incurred and are presented in operating expenses on the statements of operations and comprehensive loss.

As of September 30, 2022 and December 31, 2021, we had no finance leases. See Note 9 to our condensed consolidated financial statements included elsewhere in this Form 10-Q for additional information about the impact of adoption and disclosures on our leases.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”) or other standard-setting bodies and are adopted by us as of the specified effective date.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU requires a lessee to recognize in its statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. We adopted the new standard as of January 1, 2022, using the modified retrospective approach. Comparative periods were not adjusted and continue to be presented under the previous accounting guidance. We elected the package of practical expedients permitted under the transition guidance, which allows us to carry forward the historical lease classification of contracts entered into prior to January 1, 2022.

~~Our adoption of the new standard impacted the condensed consolidated balance sheets as follows (in thousands):~~

January 1, 2022
Pre-ASC 842 Balance
ASC 842 Adoption Impact
Post-ASC 842 Balance
Operating lease right-of-use assets $ — $ 22,818 $ 22,818
Prepaid rent $ 291 $ (291) $ —
Accrued expenses and other current liabilities* $ 13,136 $ 683 $ 13,819
Long-term operating lease liabilities $ — $ 23,941 $ 23,941
Deferred rent and lease incentive liability $ 2,097 $ (2,097) $ —

*Adjustment represents the current portion of operating lease liabilities of $0.8 million and reclassification of the current portion of the lease incentive liability of $0.1 million to reduce the operating lease right-of-use assets.

~~New Accounting Pronouncements Not Yet Adopted~~

In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). This ASU provides guidance on the measurement of credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the current incurred loss impairment approach with a methodology to reflect expected credit losses and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. This ASU is to be applied on a modified retrospective approach and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, and interim reporting periods within fiscal years beginning after December 15,

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2023. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, and interim periods therein. We ~~are currently evaluating the impact of adoption of~~adopted ASU 2016-13 on January 1, 2023. The impact on our ~~condensed consolidated~~ financial statements and related ~~disclosures.~~disclosures was not material.

3. Fair Value Measurements and Fair Value of Financial Instruments

The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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Assets and liabilities measured at fair value are classified in their entireties based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires our management to make judgments and consider factors specific to the asset or liability.

Our financial instruments consist of Level 1, Level 2, and Level 3 financial instruments. We generally classify our marketable securities as Level 2. Instruments are classified as Level 2 when observable market prices for identical securities that are traded in less active markets are used. When observable market prices for identical securities are not available, such instruments are priced using benchmark curves, benchmarking of like securities, sector groupings, matrix pricing, and valuation models. These valuation models are proprietary to the pricing providers or brokers and incorporate a number of inputs, including in approximate order of priority: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. For certain security types, additional inputs may be used, or some of the standard inputs may not be applicable. Evaluators may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs listed are available for use in the evaluation process for each security evaluation on any given day. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. We recognize transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs. No such transfers occurred during the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2023. Level 1 financial instruments are comprised of money market fund investments and U.S. Treasury bills. Level 2 financial instruments are comprised of commercial paper, corporate debt securities, and U.S. government agency bonds. Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. Level 3 financial instruments consist of the MSKCC success payments liability.

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The following table sets forth our financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

Fair Value Measurements as of September 30, 2022
Total Level 1 Level 2 Level 3
Assets:
Commercial paper ($52,821 included in cash and cash equivalents) $ 149,970 $ — $ 149,970 $ —
U.S. Treasury bills 87,863 87,863 — —
Corporate debt securities 46,635 — 46,635 —
Money market fund investments (included in cash and cash equivalents) 29,264 29,264 — —
U.S. government agency bonds 28,858 — 28,858 —
Total fair value of assets $ 342,590 $ 117,127 $ 225,463 $ —
Liabilities:
MSKCC success payments liability $ 3,039 $ — $ — $ 3,039
Total fair value of liabilities $ 3,039 $ — $ — $ 3,039


		Fair Value Measurements as of December 31, 2021									Fair Value Measurements as of March 31, 2023
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
Assets:	Assets:									Assets:
U.S. Treasury bills ($18,946 included in cash and cash equivalents)										U.S. Treasury bills ($18,946 included in cash and cash equivalents)	$	139,072	$	139,072	$	—	$	—
U.S. government agency bonds										U.S. government agency bonds	57,330		—		57,330		—
Commercial paper ($1,811 included in cash and cash equivalents)										Commercial paper ($1,811 included in cash and cash equivalents)	43,886		—		43,886		—
Money market fund investments (included in cash and cash equivalents)	Money market fund investments (included in cash and cash equivalents)	$	181,528	$	181,528	$	—	$	—	Money market fund investments (included in cash and cash equivalents)	31,987		31,987		—		—
Commercial paper ($58,892 included in cash and cash equivalents)		141,676		—		141,676		—
Corporate debt securities	Corporate debt securities	38,649		—		38,649		—		Corporate debt securities	18,715		—		18,715		—
U.S. Treasury bills		26,590		26,590		—		—
U.S. government agency bonds		25,065		—		25,065		—
Total fair value of assets	Total fair value of assets	$	413,508	$	208,118	$	205,390	$	—	Total fair value of assets	$	290,990	$	171,059	$	119,931	$	—
Liabilities:	Liabilities:									Liabilities:
MSKCC success payments liability	MSKCC success payments liability	$	4,080	$	—	$	—	$	4,080	MSKCC success payments liability	$	1,396	$	—	$	—	$	1,396
Total fair value of liabilities	Total fair value of liabilities	$	4,080	$	—	$	—	$	4,080	Total fair value of liabilities	$	1,396	$	—	$	—	$	1,396

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	Fair Value Measurements as of December 31, 2022
	Total		Level 1		Level 2		Level 3
Assets:
Commercial paper ($26,669 included in cash and cash equivalents)	$	96,899	$	—	$	96,899	$	—
U.S. Treasury bills	91,966		91,966		—		—
U.S. government agency bonds ($3,976 included in cash and cash equivalents)	63,659		—		63,659		—
Corporate debt securities	36,819		—		36,819		—
Money market fund investments (included in cash and cash equivalents)	27,693		27,693		—		—
Total fair value of assets	$	317,036	$	119,659	$	197,377	$	—
Liabilities:
MSKCC success payments liability	$	1,651	$	—	$	—	$	1,651
Total fair value of liabilities	$	1,651	$	—	$	—	$	1,651

The fair value and amortized cost of cash equivalents and available-for-sale marketable securities by major security type as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 are presented in the following tables (in thousands):


		As of September 30, 2022									As of March 31, 2023
		Amortized Cost Basis		Unrealized Gains		Unrealized Losses		Estimated Fair Value			Amortized Cost Basis		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Commercial paper ($52,821 included in cash and cash equivalents)		$	150,135	$	—	$	(165)	$	149,970
U.S. Treasury bills		89,027		—		(1,164)		87,863
U.S. Treasury bills ($18,946 included in cash and cash equivalents)										U.S. Treasury bills ($18,946 included in cash and cash equivalents)	$	139,537	$	65	$	(530)	$	139,072
U.S. government agency bonds										U.S. government agency bonds	57,475		53		(198)		57,330
Commercial paper ($1,811 included in cash and cash equivalents)										Commercial paper ($1,811 included in cash and cash equivalents)	43,950		4		(68)		43,886
Money market investments (included in cash equivalents)										Money market investments (included in cash equivalents)	31,987		—		—		31,987
Corporate debt securities	Corporate debt securities	47,022		—		(387)		46,635		Corporate debt securities	18,772		4		(61)		18,715
Money market investments (included in cash equivalents)		29,264		—		—		29,264
U.S. government agency bonds		29,178		1		(321)		28,858
Total cash equivalents and marketable securities	Total cash equivalents and marketable securities	$	344,626	$	1	$	(2,037)	$	342,590	Total cash equivalents and marketable securities	$	291,721	$	126	$	(857)	$	290,990

Classified as:	Classified as:									Classified as:
Cash and cash equivalents	Cash and cash equivalents							$	82,085	Cash and cash equivalents							$	52,744
Marketable securities, short-term	Marketable securities, short-term							211,284		Marketable securities, short-term							175,794
Marketable securities, long-term	Marketable securities, long-term							49,221		Marketable securities, long-term							62,452
Total cash equivalents and marketable securities	Total cash equivalents and marketable securities							$	342,590	Total cash equivalents and marketable securities							$	290,990

As of December 31, 2021

Amortized
Cost Basis
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Money market investments (included in cash equivalents) $ 181,528 $ — $ — $ 181,528
Commercial paper ($58,892 included in cash equivalents) 141,726 1 (51) 141,676
U.S. government agency bonds 25,102 — (37) 25,065
Corporate debt securities 38,661 4 (16) 38,649
U.S. Treasury bills 26,626 1 (37) 26,590
Total cash equivalents and marketable securities $ 413,643 $ 6 $ (141) $ 413,508

Classified as:
Cash and cash equivalents $ 240,420
Marketable securities, short-term 135,412
Marketable securities, long-term 37,676
Total cash equivalents and marketable securities $ 413,508

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	As of December 31, 2022
	Amortized Cost Basis		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Commercial paper ($26,669 included in cash equivalents)	$	97,024	$	6	$	(131)	$	96,899
U.S. Treasury bills	92,910		1		(945)		91,966
U.S. government agency bonds ($3,976 included in cash and cash equivalents)	63,926		25		(292)		63,659
Corporate debt securities	37,002		—		(183)		36,819
Money market investments (included in cash equivalents)	27,693		—		—		27,693
Total cash equivalents and marketable securities	$	318,555	$	32	$	(1,551)	$	317,036

Classified as:
Cash and cash equivalents							$	58,338
Marketable securities, short-term							189,325
Marketable securities, long-term							69,373
Total cash equivalents and marketable securities							$	317,036

The following table sets forth a summary of the changes in the fair value of our Level 3 financial liability (in thousands):


	MSKCC Success Payments Liability
Balance at December 31, ~~2021~~2022	$	~~4,080~~1,651
Change in fair value	~~(1,041)~~(255)
Balance at ~~September 30, 2022~~March 31, 2023	$	~~3,039~~1,396

Our liability for the MSKCC success payments is carried at fair value and changes are recognized as expense or income as part of other income (expense) until the success payments liability is paid or expires (Note 4). We recorded a

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~~$1.6~~ $0.3 million and ~~$2.4~~$1.6 million change in the fair value of the MSKCC success payments liability as a ~~loss~~gain in other income (expense) in our condensed consolidated statements of operations and comprehensive loss for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~We recorded a $1.0 million and $3.6 million change in fair value~~

As of the MSKCC success payments liability as a gain and a loss, respectively, in other income (expense) and research and development expense in our condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30,December 31, 2022, ~~and 2021, respectively.~~

~~We utilize~~we utilized a Monte Carlo simulation model that models the future movement of stock prices based on several key variables. This model requires significant estimates and assumptions in determining the estimated fair value of the MSKCC success payments liability at each balance sheet date. The assumptions used to calculate the fair value of the MSKCC success payments are subject to a significant amount of judgment including the expected volatility that was estimated using available information about the historical volatility of stocks of publicly traded companies that are similar to us, the estimated term, and the estimated number and timing of valuation measurement dates. The table below summarizes key assumptions used in the valuation of MSKCC success payments liability:

As of
September 30,
2022 As of
December 31,
2021
Fair value of common stock $ 10.55 $ 15.09
Risk-free interest rate 3.83% 1.52%
Expected volatility 81% 75%
Probability of achieving multiple of Initial Share Price 5.7% to 17.9% 7.0% to 20.9%
Expected term (years) 3.9 to 5.3 4.2 to 5.5


	As of December 31, 2022
Fair value of common stock	$	6.28
Risk-free interest rate	3.88%
Expected volatility	79%
Probability of achieving multiple of Initial Share Price	3.0% to 10.6%
Expected term (years)	4.6 to 6.0

The computation of expected volatility iswas estimated using a combination of available information about the historical volatility of stocks of similar publicly traded companies for a period matching the expected term assumption and

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the historical and implied volatility of our stock. The risk-free interest rate, expected volatility, and expected term assumptions depend on the estimated timing of our phase 1 clinical trial for our CB-012 product candidate utilizing the know-how, biological materials, and intellectual property licensed under the Exclusive License Agreement, dated November 13, 2020, with MSKCC ~~Agreement~~(the “MSKCC Agreement”) and the estimated timing of marketing approval for this product candidate from the U.S. Food and Drug Administration (“FDA”). In addition, we incorporated the estimated number and timing of valuation measurement dates in the calculation of the MSKCC success payments liability.

~~A small~~As of March 31, 2023 we did not note any significant changes to the inputs used in the MSKCC success payments liability fair value calculation, other than a change in ~~the assumptions and other inputs, such as~~ the fair value of our common stock ~~may have a relatively large change in the estimated valuation and associated liability and expense or income.~~to $5.31 per share.

4. Significant Agreements

~~The Regents of the University of California and the University of Vienna~~

We entered into an Exclusive License Agreement, dated April 16, 2013 (as amended, the “UC/Vienna Agreement”) with The Regents of the University of California (“UC”) and the University of Vienna (“Vienna”) (together, “UC/Vienna”) wherein UC/Vienna granted us an exclusive worldwide license, with the right to sublicense, in all fieldsSince December 31, 2022, there have been no material changes to the foundational CRISPR-Cas9 patent family co-owned by UC, Vienna, and Dr. Emmanuelle Charpentier (the “CVC IP”). Dr. Charpentier has not granted us any rights, either directly or indirectly. The UC/Vienna Agreement continues until the last-to-expire patent or last-to-be-abandoned patent application within the CVC IP; provided, however, that UC/Vienna may terminate the UC/Vienna Agreement upon the occurrencekey terms of ~~certain events and we may terminate the UC/Vienna Agreement at~~ our sole discretion upon written notice. Without patent term adjustment or patent term extension, the CVC IP will expire in 2033. The UC/Vienna Agreement includes certain diligence milestones that we must meet.significant agreements. For ~~products and services sold by us that are covered by the CVC IP, we will owe low- to mid-single-digit percent royalties on net sales, subject to a minimum annual royalty. Prior~~further information regarding our significant agreements, please see Note 4 to the time that we are selling products, we owe UC/Vienna an annual license maintenance fee. We may owe UC/Vienna up to $3.4 million in certain regulatory and clinical milestone payments in the field of human therapeutics and diagnostics for products that are covered by the CVC IP and developed by us, an affiliate, or a sublicensee. Additionally, we pay UC/Vienna a specified percentage of sublicensing revenue, including cash and equity, we receive from sublicensing the CVC IP, subject to certain exceptions. If we include intellectual property owned or controlled by us in a sublicense to the CVC IP, we pay UC/Vienna a low double-digit percentage of sublicensing revenues received under the sublicense. If we do not include intellectual property owned or controlled by us in a sublicense to the CVC IP, we pay UC/Vienna 50% of sublicensing revenues received under the sublicense. To date, we have entered

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into over 25 sublicensing agreements in a variety of fields such as human therapeutics, forestry, agriculture, research reagents, transgenic animals, certain livestock targets, internal research, bioproduction, cell lines, and microbial applications that include the CVC IP as well as other Cas9 intellectual property owned or controlled by us. We are obligated to reimburse UC for its prosecution and maintenance costs of the CVC IP.

For each of the three-month periods ended September 30, 2022 and 2021, we incurred $0.3 million for payments we owe to UC related to sublicensing revenues, which we recorded in research and development expensesconsolidated financial statements included in our condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2022 and 2021, we incurred $0.8 million and $1.3 million, respectively, for payments we owe to UC related to sublicensing revenues, which we recorded in research and development expenses in our condensed consolidated statements of operations and comprehensive loss.

For the three months ended September 30, 2022 and 2021, we reimbursed UC $1.4 million and $2.4 million, respectively, for prosecution and maintenance costs of the CVC IP, which were recorded in general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2022 and 2021, we reimbursed UC $4.7 million and $8.9 million, respectively, for prosecution and maintenance costs of the CVC IP, which were recorded in general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

On December 15, 2016, we entered into a Consent to Assignments, Licensing and Common Ownership and Invention Management Agreement (“IMA”) relating to the CVC IP. Under the IMA, CRISPR Therapeutics AG (“CRISPR”) reimburses us 50% of the amounts we reimburse UC for patent prosecution and maintenance costs of the CVC IP. For the three months ended September 30, 2022 and 2021, CRISPR reimbursed us $0.7 million and $1.2 million, respectively, which we recorded as reductions of general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2022 and 2021, CRISPR reimbursed us $2.4 million and $4.4 million, respectively, which we recorded as reductions of general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

~~Memorial Sloan Kettering Cancer Center~~

On November 13, 2020, we entered into an Exclusive License Agreement with MSKCC (the “MSKCC Agreement”), under which we exclusively licensed know-how, biological materials, and patent families relating to fully-human single-chain variable fragments targeting C-type lectin-like molecule-1 (CLL-1; also known as CD371) for use in T cells, NK cells, and genome-edited induced pluripotent stem cells (“iPSCs”) for allogeneic CLL-1-targeted cell therapies (currently used in our CB-012 product candidate). We paid MSKCC an upfront payment of $0.5 million in cash and $2.1 million in stock. For each licensed CLL-1 product, we may owe potential clinical, regulatory, and commercial milestone payments totaling $112.0 million. In addition, in the event we, our affiliates, or sublicensees, receive regulatory approval for a licensed CLL-1 product, we will owe low- to mid-single-digit percent royalties on net sales by us, our affiliates, and our sublicensees. Our license from MSKCC includes the right to sublicense through multiple tiers and we will owe MSKCC a percentage of upfront cash or equity received from our sublicensees. The percentage owed decreases as our licensed CLL-1 product candidate moves through development, starting at a low-double-digit percentage if clinical trials have not yet begun and decreasing to a mid-single-digit percentage if our licensed CLL-1 product candidate is in later clinical trial stages. We are also responsible for paying a percentage of licensed patent costs. The MSKCC Agreement includes certain diligence milestones that we must meet by specified dates, which may be extended upon payment of additional fees.

MSKCC is entitled to certain success payments if our common stock fair value increases by certain multiples of increasing value based on a comparison of the fair market value of our common stock to $5.1914 per share, adjusted for any future stock splits (the “Initial Share Price”), during a specified time period. Under the MSKCC Agreement, as a publicly traded company, our common stock fair value is determined by any given 45-day volume weighted-average trading price. At our option, success payments to MSKCC may be made in cash or common stock. The relevant time period commences when the first patient is dosed with a licensed CLL-1 product candidate in the first phase 1 clinical trial and ends upon the earlier of the third anniversary from the approval of our, or our affiliate’s, or sublicensee’s biologics license application (“BLA”) by the FDA or 10 years from the date the first patient was dosed with a licensed CLL-1 product candidate in the first phase 1 clinical trial. The aggregate success payments will not exceed $35.0 million. Additionally, if we undergo a change of control during the specified time period, we may owe a change of control payment, depending upon the increase in our stock price due to the change of control and also to what extent success payments have already been paid by us to MSKCC. In no event will the combination of success payments and the change of control payment owed to MSKCC exceed $35.0 million.

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~~The following table summarizes the amounts of the MSKCC success payments:~~

Multiple of Initial Share Price giving rise to a success payment 5x 10x 15x
MSKCC success payments (in millions) $ 10.0 $ 10.0 $ 15.0

We may terminate the MSKCC Agreement upon 90 calendar days’ prior written notice to MSKCC. MSKCC may terminate the MSKCC Agreement in the event of our uncured material breach, bankruptcy, or criminal activity. If MSKCC materially breaches the MSKCC Agreement in certain circumstances (e.g., granting a third party a license in our field) then, during the time of such uncured breach, MSKCC will not be entitled to receive any success payments or any change of control payment.

As of September 30, 2022, the estimated fair value of the total success payments obligation to MSKCC was $3.0 million, which was included in long-term liabilities in our condensed consolidated balance sheets. For the three months ended September 30, 2022 and 2021, we recognized a $1.6 million and $2.4 million, respectively, change in fair value of the MSKCC success payments liability, which was recorded as a loss in other income (expense) in our condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2022 and 2021, we recognized a $1.0 million and $3.6 million, respectively, change in fair value of the MSKCC success payments liability, which was recorded as a gain and a loss, respectively, in other income (expense) and research and development expense in our condensed consolidated statements of operations and comprehensive loss.

~~Intellia Therapeutics, Inc.~~

On July 16, 2014, we entered into a License Agreement (as amended, the “Intellia License Agreement”) with Intellia, LLC, to which Intellia Therapeutics, Inc. (“Intellia”) is a successor in interest. Under the Intellia License Agreement, we granted Intellia an exclusive worldwide license, with the right to sublicense, to certain CRISPR-Cas9 technology for a defined field of human therapeutics. Intellia granted us an exclusive worldwide license, with the right to sublicense, to certain of its CRISPR-Cas9 technology for all fields outside of the defined field of human therapeutics. Under the Intellia License Agreement, each party is responsible for 30% of the other party’s expenses for prosecution and maintenance of the licensed intellectual property.

During each of the three- and nine-month periods ended September 30, 2022 and 2021, we recognized less than $0.1 million of expenses in reimbursable patent prosecution and maintenance costs, which were recorded as general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss. During the three months ended September 30, 2022 and 2021, Intellia reimbursed us $0.2 million and $0.4 million, respectively (including reimbursement for a portion of the patent prosecution and maintenance costs of the CVC IP paid to UC), which were recorded as reductions of general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss. During the nine months ended September 30, 2022 and 2021, Intellia reimbursed us $0.7 million and $1.7 million, respectively (including reimbursement for a portion of the patent prosecution and maintenance costs of the CVC IP paid to UC), which were recorded as reductions of general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss. The term of the Intellia License Agreement continues for the life of the licensed patents and patent applications; provided, however, either party may terminate the agreement upon the occurrence of certain events.

On June 16, 2021, we entered into a leaseback agreement with Intellia (the “Leaseback Agreement”). Pursuant to the Leaseback Agreement, in exchange for Intellia’s grant to us of an exclusive license to certain intellectual property relating to CRISPR-Cas9, including Cas9 chRDNAs, for use solely in the manufacture of our CB-010 product candidate, we paid Intellia an upfront cash payment of $1.0 million and will pay up to $23.0 million in potential future regulatory and sales milestones. Additionally, we will owe Intellia low- to mid-single-digit percent royalties on net sales of our CB-010 product candidate by us, our affiliates, and sublicensees until the expiration, abandonment, or invalidation of the last patent within the intellectual property relating to CRISPR-Cas9, including that relating to Cas9 chRDNAs (i.e., 2036, without patent term adjustment or patent term extension).

~~Pioneer Hi-Bred International, Inc. (now Corteva Agriscience)~~

On July 13, 2015, we and Pioneer Hi-Bred International, Inc. (“Pioneer”) (now Corteva Agriscience), then a DuPont company (“DuPont”), entered into an Amended and Restated Collaboration and License Agreement, as amended (the “Pioneer Agreement”). Under the terms of the Pioneer Agreement, we and Pioneer cross licensed CRISPR intellectual property portfolios. Pioneer granted us an exclusive worldwide license, with the right to sublicense, to its CRISPR intellectual property in the field of research tools, as well as a non-exclusive worldwide license to such intellectual property

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in human and animal therapeutics, industrial biotechnology, certain agriculture segments, and other fields; and we granted Pioneer an exclusive worldwide license, with the right to sublicense, to our CRISPR intellectual property, including the CVC IP, in a defined field of agriculture relating to specified row crops, as well as a non-exclusive worldwide license to the intellectual property in other agricultural applications, industrial biotechnology, nutrition and health, and other fields. The Pioneer Agreement continues until the expiration, abandonment, or invalidation of the last patent or patent application within the licensed intellectual property; provided, however, that the parties may terminate the Pioneer Agreement by mutual consent or either party may unilaterally terminate the Pioneer Agreement in the event of an uncured breach of a payment obligation, bankruptcy, or failure to maintain or own licensed intellectual property by the other party if the non-breaching party is materially adversely affected by the failure. We are obligated to pay low-single-digit percent royalties to Pioneer for the sales of our products in the research tools field as well as certain sublicensing revenues in that field. We are eligible to receive milestone payments from Pioneer if certain regulatory and commercial milestones are met related to specified row crops, for a total of up to $22.4 million, as well as to receive low-single-digit percent royalties for sales of defined agricultural products and certain sublicensing revenues in that field. In March 2021, we received a milestone payment of $0.3 million from Pioneer. Initially, Pioneer owned the patents and patent applications developed under the collaboration, including the chRDNA patent family, and granted us an exclusive license to these patents and patent applications in the fields of research tools and therapeutics.

In December 2020, we and Pioneer entered into an amendment to the Pioneer Agreement under which Pioneer assigned to us the chRDNA patent family developed under the research collaboration, and we paid Pioneer an upfront payment of $0.5 million. We considered the payment to Pioneer in accordance with revenue recognition guidance and accounted for it as a reduction of the licensing and collaboration revenue in our condensed consolidated statements of operations and comprehensive loss. In addition to the upfront payment, we are now obligated to pay all patent prosecution and maintenance costs for the chRDNA patent family; up to $2.8 million in regulatory milestone payments for therapeutic products developed by us, our affiliates, or licensees that are covered by the chRDNA patent family; up to $20.0 million in sales milestones over a total of four therapeutics products sold by us, our affiliates, or licensees that are covered by the chRDNA patent family; and a low-single-digit percentage of licensing revenue we receive for licensing the chRDNA patent family after December 2020.

For the three and nine months ended September 30, 2022, and for the three months ended September 30, 2021, we did not incur any expenses for payments we owe to Pioneer related to licensing revenues. For the nine months ended September 30, 2021, we incurred $0.8 million for payments we owed to Pioneer related to licensing revenues, which were recorded as a research and development expense in our condensed consolidated statements of operations and comprehensive loss.

~~AbbVie Manufacturing Management Unlimited Company~~Form 10-K.

On February 9, 2021, we entered into a Collaboration and License Agreement ~~(the~~(as amended the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”). Pursuant to the AbbVie Agreement, AbbVie selects one target or, for a dual CAR-T cell product, two targets (each selection, a “Program Slot”) to develop collaboration CAR-T cell products (and corresponding licensed products). For each of AbbVie’s two Program Slots (or up to four Program Slots, if AbbVie elects to expand the number as set forth below), we are collaborating to develop one or more collaboration allogeneic CAR-T cell products directed toward the single cancer target or target combination chosen by AbbVie as described in an applicable research plan, utilizing our Cas12a chRDNA genome-editing and cell therapy technologies. We granted AbbVie an exclusive (even as to us), royalty-bearing, worldwide license, with the right to grant sublicenses, under our Cas12a chRDNA and cell therapy intellectual property, as well as certain genome-editing technology that we may gain rights to in the future and intellectual property that may be developed under the collaboration, solely for AbbVie to develop, commercialize, manufacture, and otherwise exploit the collaboration CAR-T cell products in the field of human diagnostics, prophylactics, and therapeutics. Under the terms of the AbbVie Agreement, we conduct certain preclinical research, development, and manufacturing activities under the collaboration, including certain activities for the manufacture and supply of licensed product for AbbVie’s phase 1 clinical trials. AbbVie reimburses us for all such activities, including reimbursement for time spent by employees at a designated FTE rate. The duration of the collaboration is not fixed. Under the terms of the AbbVie Agreement, AbbVie has selected its initial Program Slot and has reserved six additional targets, which AbbVie may choose to be used or substituted into the two Program Slots or used for the third or fourth Program Slots if AbbVie expands the number of Program Slots during the collaboration.

During the collaboration, AbbVie may expand from two Program Slots to a total of four Program Slots by paying us an additional $15.0 million for each Program Slot, provided that AbbVie must make such payment within the earlier of (a) 60 calendar days following completion of the phase 1 clinical trials for the initial collaboration CAR-T cell product and (b) December 31, 2025. Under the terms of the AbbVie Agreement, we are eligible to receive up to $150.0 million in future

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developmental and regulatory milestone payments for each Program Slot and up to $200.0 million in sales-based milestones for each Program Slot. We are also eligible to receive global royalties on net sales of licensed products sold by AbbVie, its affiliates, and sublicensees in the high-single-digit to low-teens percent range, subject, in certain instances, to various reductions.

The term of the AbbVie Agreement continues in force and effect until the date of expiration of the last royalty term of the last country in which a licensed product is exploited. On a licensed product-by-licensed product and country-by-country basis, the royalty term is the period of time beginning on the first commercial sale of a licensed product in a country and ending on the latest of the following three dates: (a) the expiration, invalidation, revocation, cancellation, or abandonment date of the last patent that includes a valid claim to either (i) the collaboration CAR-T cell product in the licensed product or (ii) the method of making the collaboration CAR-T cell product in the licensed product in such country (in the case of (ii), only for so long as no biosimilar product is commercially available in such country); (b) 10 years from the date of the first commercial sale of such licensed product in such country; and (c) the expiration date of regulatory exclusivity for such licensed product in such country. The AbbVie Agreement may be terminated during the term by either party for an uncured material breach or bankruptcy by the other party. Additionally, AbbVie may terminate the AbbVie Agreement, in its entirety or on a licensed product-by-licensed product basis, effective immediately upon written notice to us, if AbbVie in good faith believes that it is not advisable for AbbVie to continue to exploit the collaboration CAR-T cell products or licensed products as a result of a perceived serious safety issue. AbbVie may also terminate the AbbVie Agreement in its entirety at its sole discretion upon 90 days’ prior written notice to us.

The transaction price we received under the AbbVie Agreement associated with the first two Program Slots consisted of a $30.0 million upfront cash payment and the estimated variable consideration related to our performance of preclinical, development, and manufacturing activities under the collaboration and the developmental and regulatory milestone payments. We constrain the estimated variable consideration if we assess that it is probable that a significant reversal in the amount of cumulative revenue recognized may occur in future periods. We constrained all developmental and regulatory milestone payments as of September 30, 2022. The transaction price is reevaluated at the end of each reporting period and as changes in circumstances occur. We determined that the licenses we granted to AbbVie and our participation in the joint governance committee are not capable of being distinct from the preclinical research, development, and manufacturing activities and therefore are combined into one performance obligation. We recognize revenue based on the measure of progress using an estimated cost-based input method each reporting period.

We received an upfront cash payment of $30.0 million from AbbVie during the year ended December 31, 2021. We recognized short-term deferred revenue in the amount of ~~$11.5~~$10.4 million and long-term deferred revenue in the amount of ~~$12.7~~$11.3 million related to this upfront cash payment in our condensed consolidated balance sheets as of ~~September 30, 2022.~~March 31, 2023. We recognized short-term deferred revenue in the amount of ~~$8.3~~$9.4 million and long-term deferred revenue in the amount of ~~$19.1~~$13.3 million related to ~~these payments~~this upfront cash payment in our consolidated balance sheets as of December 31, ~~2021.~~2022.

We recognized ~~$1.7~~$1.6 million and ~~$2.3~~$0.9 million in revenue for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, relating to the AbbVie Agreement. We recognized $5.5 million and $2.8 million in revenue for the nine months ended September 30, 2022 and 2021,~~ respectively, relating to the AbbVie Agreement. As of ~~September 30, 2022,~~March 31, 2023, we ~~did not record anything~~recorded $0.9 million in accounts receivable and as of December 31, ~~2021,~~2022, we had recorded ~~$1.0 million~~no amounts in accounts receivable ~~respectively,~~in our condensed consolidated balance sheets. As of March 31, 2023 and ~~$0.8~~December 31, 2022 we had $0.6 million and ~~$0.2~~$0.9 million, respectively, in contract assets in our condensed consolidated balance sheets.

We enter into agreements with third parties to in-license intellectual property and related materials and know-how. These agreements may include non-refundable, upfront payments; annual license maintenance fees; sublicensing fees; obligations to reimburse for patent prosecution and maintenance fees; success payments; regulatory clinical and commercial milestones; and royalty payments. Our obligation to make such payments is contingent upon milestones being achieved, licensed products being commercialized, and the agreements remaining in effect.

For the three months ended March 31, 2023 and 2022, we recorded $0.4 million and $0.3 million, respectively, as research and development expense in our condensed consolidated statements of operations related to our license agreements. For the three months ended March 31, 2023 and 2022, we recorded $0.8 million and $2.6 million, respectively, as general and administrative expense for patent prosecution and maintenance costs in our condensed consolidated statements of operations and comprehensive loss, which includes reimbursements of patent prosecution and maintenance costs of $0.4 million and $1.4 million, respectively, from CRISPR Therapeutics AG and Intellia Therapeutics, Inc.

As of March 31, 2023, certain license and assignment agreements included potential future payments from us for development, regulatory, and sales milestones totaling approximately $161.2 million.

5. Revenue

Disaggregation of Revenue

We disaggregate revenue by geographical market based on the location of research and development activities of our licensees and collaborators. The following table is a summary of revenue by geographic location for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
United States	United States	$	2,966	$	3,507	$	9,761	$	6,483	United States		$	3,385	$	2,612
Rest of world	Rest of world	337		470		398		556		Rest of world		117		52
Total	Total	$	3,303	$	3,977	$	10,159	$	7,039	Total		$	3,502	$	2,664

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During the three months ended ~~September 30, 2022,~~March 31, 2023, we recognized ~~$1.6~~$1.9 million of revenue related to performance obligations satisfied at a point in time, and we recognized ~~$1.7~~$1.6 million of revenue related to performance obligations satisfied over time.

During the three months ended ~~September 30, 2021,~~March 31, 2022, we recognized $1.7 million of revenue related to performance obligations satisfied at a point in time, and we recognized ~~$2.3 million of revenue related to performance obligations satisfied over time.~~

During the nine months ended September 30, 2022, we recognized $4.7 million of revenue related to performance obligations satisfied at a point in time, and we recognized $5.5 million of revenue related to performance obligations satisfied over time.

~~During the nine months ended September 30, 2021, we recognized $4.2 million of revenue related to performance obligations satisfied at a point in time, and we recognized $2.8~~$0.9 million of revenue related to performance obligations satisfied over time.

Contract Balances

Accounts receivable relate to our right to consideration for performance obligations completed (or partially completed) for which we have an unconditional right to consideration. Our accounts receivable balances represent amounts that we billed to our licensees with invoices outstanding as of the end of a reporting period.

Contract assets are rights to consideration in exchange for a license that we have granted to a licensee when the right is conditional on something other than the passage of time. Our contract asset balances represent ~~royalties, milestone payments, and~~ research costs related to the AbbVie Agreement, as well as royalties and milestone payments from our other license agreements that are unbilled as of the end of a reporting period.

Contract liabilities consist of deferred revenue and relate to amounts invoiced to, or advance consideration received from, licensees that precede our satisfaction of the associated performance obligations. Our deferred revenue primarily results from the upfront payment received relating to the performance obligation that is satisfied over time under the AbbVie Agreement. The remaining deferred revenue relates to upfront payments received under license agreements that also include non-refundable annual license fees, which are accounted for as material rights for license renewals and are recognized at the point in time annual license fees are paid by the licensees and the renewal periods begin.

The following table presents changes in our contract assets and liabilities during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 (in thousands):


		Balance as of December 31, 2021		Additions		Deductions		Balance as of September 30, 2022			Balance as of December 31, 2022		Additions		Deductions		Balance as of March 31, 2023
Accounts receivable	Accounts receivable	$	1,153	$	6,271	$	(7,027)	$	397	Accounts receivable	$	202	$	3,003	$	(1,672)	$	1,533

Contract assets:	Contract assets:									Contract assets:
Unbilled accounts receivable	Unbilled accounts receivable	$	1,488	$	5,486	$	(5,075)	$	1,899	Unbilled accounts receivable	$	2,247	$	1,618	$	(2,226)	$	1,639

Contract liabilities:	Contract liabilities:									Contract liabilities:
Deferred revenue, current and long-term	Deferred revenue, current and long-term	$	30,735	$	3,514	$	(6,791)	$	27,458	Deferred revenue, current and long-term	$	25,891	$	1,246	$	(2,343)	$	24,794

Unbilled accounts receivable ~~increased $0.4~~decreased $0.6 million during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, primarily due to the ~~increase~~decrease in unbilled research costs under the AbbVie Agreement.

Deferred revenue decreased during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, primarily due to a higher amount of revenue recognized compared to the amount of additional billings during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we recognized ~~$3.4~~$1.1 million and ~~$0.1~~$0.6 million of revenue, respectively, which were included in the opening contract liabilities balances asat the beginning of ~~December 31, 2021 and 2020, respectively.~~

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the respective periods.

Transaction Prices Allocated to Remaining Performance Obligations

Remaining performance obligations represent in aggregate the amount of a transaction price that has been allocated to performance obligations not delivered as of the end of a reporting period. The value of transaction prices allocated to remaining unsatisfied performance obligations as of ~~September 30, 2022~~March 31, 2023 was approximately ~~$43.4~~$38.3 million. We expect to recognize approximately ~~$12.0~~$10.9 million of remaining performance obligations as revenue in the next 12 months and to recognize the remainder thereafter.

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Capitalized Contract Acquisition Costs and Fulfillment Costs

We did not incur any expenses to obtain license and collaboration agreements, and costs to fulfill those contracts do not generate or enhance our resources. As such, no costs to obtain or fulfill a contract have been capitalized in any period.

6. Balance Sheet Items

Other receivables consisted of the following (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Patent cost reimbursements	Patent cost reimbursements	$	2,197	$	4,702	Patent cost reimbursements	$	1,338	$	1,638
Accrued interest on marketable securities	Accrued interest on marketable securities	499		226		Accrued interest on marketable securities	332		570
Other	Other	3		555		Other	—		7
Total	Total	$	2,699	$	5,483	Total	$	1,670	$	2,215

Prepaid expenses and other current assets consisted of the following (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Prepaid contract manufacturing and clinical costs	Prepaid contract manufacturing and clinical costs	$	4,789	$	2,714	Prepaid contract manufacturing and clinical costs	$	3,538	$	4,803
Prepaid insurance	Prepaid insurance	2,228		1,897		Prepaid insurance	907		1,568
Prepaid income taxes	Prepaid income taxes	438		1,486		Prepaid income taxes	431		431
Prepaid rent		—		468
Other	Other	1,103		671		Other	1,234		1,119
Total	Total	$	8,558	$	7,236	Total	$	6,110	$	7,921

Property and equipment, net, consisted of the following (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Lab equipment	Lab equipment	$	10,782	$	6,848	Lab equipment	$	13,553	$	12,588
Leasehold improvements	Leasehold improvements	1,836		1,701		Leasehold improvements	1,933		1,876
Computer equipment	Computer equipment	614		273		Computer equipment	754		709
Furniture and equipment	Furniture and equipment	161		133		Furniture and equipment	161		161
Construction in progress	Construction in progress	747		9		Construction in progress	2,454		993
Total property and equipment, gross	Total property and equipment, gross	14,140		8,964		Total property and equipment, gross	18,855		16,327
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	(5,181)		(4,077)		Less: accumulated depreciation and amortization	(6,209)		(5,649)
Property and equipment, net	Property and equipment, net	$	8,959	$	4,887	Property and equipment, net	$	12,646	$	10,678

Depreciation and amortization expenses related to property and equipment were ~~$0.4~~$0.6 million and $0.3 million, respectively, for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021. Depreciation and amortization expenses related to property and equipment were $1.1 million and $0.7 million for the nine months ended September 30, 2022 and 2021, respectively.~~

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2022.

Accrued expenses and other current liabilities consisted of the following (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Accrued employee compensation and related expenses	Accrued employee compensation and related expenses	$	4,631	$	4,225	Accrued employee compensation and related expenses	$	3,220	$	5,752
Accrued research and development expenses	Accrued research and development expenses	5,717		4,065		Accrued research and development expenses	6,183		6,731
Accrued patent expenses	Accrued patent expenses	1,877		3,213		Accrued patent expenses	828		1,331
Accrued expenses related to sublicensing revenues	Accrued expenses related to sublicensing revenues	528		586		Accrued expenses related to sublicensing revenues	656		596
Credit card liability		—		259
Other	Other	1,885		788		Other	1,657		1,669
Total	Total	$	14,638	$	13,136	Total	$	12,544	$	16,079

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7. Related Party Transactions

Private Company, Related Party

On May 15, 2020, we entered into an Exclusive License Agreement, as amended, with a private company, related party (the “Private Company License Agreement”), under which we granted the private company an exclusive worldwide license to certain CRISPR intellectual property rights and know-how in a defined field. As consideration for the exclusive license, the private company issued to us 7,500,000 shares of convertible preferred stock with an estimated fair value of $7.5 million, which was the price paid for similar shares by another investor, and which was an arm’s length transaction. This represents a material voting interest in the private company and entitles us to hold one of the four private company’s board of director seats and to jointly vote with another stockholder on a second board of director seat. As of ~~September 30, 2022,~~March 31, 2023, we have appointed one of the four directors of the private company. We concluded that the private company is a variable interest entity and that we are not its primary beneficiary based on our representation on its board of directors. As the private company’s convertible preferred stock is not in substance common stock, we record this investment using the measurement alternative in accordance with ASC 321, Investments–Equity Securities. Under the measurement alternative, our investment in the private company’s convertible preferred stock was initially recorded at its estimated fair value, but the carrying value may be adjusted through earnings upon an impairment or when there is an observable price change involving the same or a similar investment with the private company. As of each of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the carrying value of the investment was $7.5 million. There have been no changes to the carrying value of the investment during the three months ended ~~September 30, 2022.~~March 31, 2023. We did not recognize any revenue in connection with the Private Company License Agreement for ~~each of~~ the ~~three-~~three months ended March 31, 2023 and ~~nine-month periods ended September 30, 2022 and 2021.~~

~~Scientific Advisory Board Payments~~

Dr. Jennifer A. Doudna, a co-founder and stockholder of the Company, receives compensation for participating on our scientific advisory board (the “SAB”). During each of the three- and nine-month periods ended September 30, 2022 and 2021, we paid Dr. Doudna less than $0.1 million for her participation on our SAB.

~~Loan to our President and Chief Executive Officer~~

In November 2018, our president and chief executive officer entered into a promissory note with us for $1.1 million, as a means to provide liquidity without triggering a taxable event. The note bore interest at a rate of 3.04%, compounded annually, and was payable in five years, together with principal and accrued interest. The promissory note was secured by 409,795 shares of our common stock owned by our president and chief executive officer and was determined to be non-recourse for accounting purposes. As such, the issuance of the promissory note was effectively the grant of a new share option. The promissory note was repaid in full amount in June 2021 by our president and chief executive officer and recognized as an increase in additional paid in capital of $1.2 million.2022.

8. ~~Paycheck Protection Program Loan~~Leases

~~On May 6, 2020,~~Operating Lease Obligations

As of March 31, 2023 we ~~entered into a promissory note with WebBank (the “Lender”) pursuant to the Paycheck Protection Program for a total amount of $1.6 million (the “PPP Loan”). Our PPP Loan~~ had a two-year term and bore interest at a stated rate of 1.0% per annum, accrued monthly, beginning on the date our PPP Loan was issued by the Lender. No monthly principal and interest payments were required under our PPP Loan. We did not provide any collateral or guaranteesoperating leases for our PPP Loan, nor did we pay any facility charge to obtain our PPP Loan. Our PPP Loan provided for customary events of default, including those relating to failure to make payment, bankruptcy, breaches of representations,

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and material adverse effects. We could have prepaid the principal of our PPP Loan at any time without incurring any prepayment charges. On May 22, 2021, our PPP Loan was forgiven in full by the SBA and, at that time, we recognized a PPP Loan extinguishment gain of $1.6 million in our condensed consolidated statements of operations and comprehensive loss.

~~9. Commitments and Contingencies~~

~~Facility Lease Agreements~~

~~We lease~~ laboratory and office space under noncancellable operating agreements. In March 2021, we entered into a ten-year lease agreement, which superseded and replaced our prior lease, as amended, for our corporate headquarters and the new lease included additional office and laboratory space located within the same building in Berkeley, ~~California. This~~California, consisting of approximately 75,000 square feet, with remaining lease ~~agreement contains~~terms up to 9.3 years. Certain of our laboratory and office space lease agreements include options to extend the terms for a ~~renewal option for an additional term~~period of five ~~years.~~years and contain provisions for future rent increases. In addition to base rent, we pay our share of operating expenses and taxes.

In January 2022, we entered into a ten-and-a-half-year lease agreement for approximately 10,000 square feet of office and laboratory space in Berkeley, California, near our current corporate headquarters. In connection with signing this lease, we paid a deposit in the amount of $0.4 million to the lessor. This lease agreement contains an escalation clause for increased base rent over the term and a renewal option for an additional term of five years. In addition to base rent, we pay our share of operating expenses and taxes. To complete certain leasehold improvements, the lessor has agreed to provide us a tenant improvement allowance of $1.8 million. The leasehold improvements constructed are presented under property and equipment on our condensed consolidated balance sheets and are depreciated on a straight-line basis over the remaining lease term.

The components of lease costs, which are included in our statements of operations and comprehensive loss, ~~are~~were as follows (in thousands):


							Three Months Ended March 31,
		Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022			2023		2022
Operating lease cost(1)	Operating lease cost(1)	$	1,822	$	5,443	Operating lease cost(1)	$	1,884	$	1,799
Short-term lease cost	Short-term lease cost	—		83		Short-term lease cost	63		63
Total lease cost	Total lease cost	$	1,822	$	5,526	Total lease cost	$	1,947	$	1,862

(1) Includes $0.6 million and ~~$1.6~~$0.5 million of variable lease cost related to operating expenses and taxes for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, respectively.

Supplemental information related to our leases iswas as follows (in thousands):


	Nine Months Ended September 30, 2022
~~Cash paid for amounts included in the measurement of lease liabilities:~~
~~Operating cash flows from operating leases~~	$	~~2,454~~


	Three Months Ended March 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,093	$	871

~~As of September 30, 2022, the~~The weighted-average remaining lease term ~~was 8.6 years for our corporate office and laboratory leases,~~ and the weighted-average discount rate ~~was 11.29%.~~for our laboratory and office leases were as follows:


	March 31, 2023		December 31, 2022
Weighted-average remaining lease term (years)	8.1		8.3
Weighted-average discount rate	11.3	%	11.3	%

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The following table summarizes a maturity analysis of our operating lease liabilities showing the aggregate lease payments as of ~~September 30, 2022~~March 31, 2023 (in thousands):


Remainder of 2022(1)		$	681
2023(2)		3,197
2024(3)		4,353
Remainder of 2023(1)				Remainder of 2023(1)	$	2,241
2024(2)				2024(2)	3,883
2025	2025	4,475		2025	4,474
2026	2026	5,720		2026	5,720
2027				2027	5,922
Thereafter	Thereafter	28,037		Thereafter	22,115
Total undiscounted lease payments	Total undiscounted lease payments	46,463		Total undiscounted lease payments	44,355
Less: imputed interest	Less: imputed interest	(18,593)		Less: imputed interest	(16,932)
Total discounted lease payments	Total discounted lease payments	27,870		Total discounted lease payments	27,423
Less: current portion of lease liability	Less: current portion of lease liability	(912)		Less: current portion of lease liability	(1,022)
Noncurrent portion of lease liability	Noncurrent portion of lease liability	$	26,958	Noncurrent portion of lease liability	$	26,401

(1) Reflects an offset of ~~$0.1 million related to incentives expected to be received in 2022.~~

~~(2) Reflects an offset of $1.5~~$1.1 million related to incentives expected to be received in 2023.

~~(3)~~(2) Reflects an offset of ~~$0.2~~$0.6 million related to incentives expected to be received in 2024.

~~Capital Lease~~

We accounted for certain leased equipment as a capital lease due to the ownership of such equipment transferring to us at the end of the lease term. As of December 31, 2021, the capital lease obligation was repaid in full9. Commitments and ~~we do not have any remaining future minimum lease payments related to this capital lease.~~Contingencies

Research and Development Agreements

We enter into various agreements in the ordinary course of business, such as those with suppliers, contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), clinical trial sites, and the like. These agreements provide for termination at the request of either party, generally with less than one-year notice and are, therefore, cancellable contracts and, if cancelled, are not anticipated to have a material effect on our condensed consolidated financial condition, results of operations, or cash flows.

Guarantees and Indemnifications

In the normal course of business, we enter into agreements that contain a variety of representations and warranties and provide for certain indemnifications by us. Our exposure under these agreements is unknown because claims may be made against us in the future. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we did not have any material indemnification claims that were probable or reasonably possible, and consequently, we have not recorded related liabilities.

Litigation

From time to time, we may become involved in ~~legal proceedings~~litigation arising in the ordinary course of business. We record a liability for such ~~matters~~litigation when it is probable that future losses will be incurred and if such losses can be reasonably estimated. Significant judgment by us is required to determine both probability and the estimated amount. ~~We are not currently subject to any material legal proceedings, and we are not aware of any unasserted claims pending that could, individually or~~

On February 10, 2023, a putative class action lawsuit was filed in the ~~aggregate, have~~U.S. District Court for the Northern District of California against our company and certain of our officers and current and former members of our board of directors, Greenhalgh v. Caribou Biosciences, Inc., et al., Case Number 3:23-cv-00609-VC (the “Greenhalgh Case”). The Greenhalgh Case was voluntarily dismissed on March 16, 2023.

On April 11, 2023, a ~~material adverse~~putative class action lawsuit was filed in the U.S. District Court for the Northern District of California against our company and certain of our officers and current and former members of our board of directors, Bergman v. Caribou Biosciences, Inc., et al., Case Number 4:23-cv-01742-YGR (the “Bergman Case”). The Bergman complaint challenges disclosures regarding our company’s business, operations, and prospects, specifically with respect to the alleged durability of CB-010’s therapeutic effect ~~on our results~~and the product candidate’s clinical and commercial prospects, in alleged violation of ~~operations or financial condition.~~Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended. The allegations and claims asserted in the Bergman Case are the same allegations and claims asserted in the Greenhalgh Case. Plaintiff in the Bergman Case has filed a motion to consolidate the Bergman Case with the Greenhalgh case, and that motion is pending.

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Additionally, on March 22, 2023, a putative class action lawsuit was filed in Superior Court of the State of California for the County of Alameda against our company and certain of our officers and current and former members of our board of directors, Lowry v. Caribou Biosciences, Inc., et al., Case Number T23-1084 (the “Lowry Case”). The Lowry Case challenges disclosures regarding our company’s business, operations, and prospects, specifically with respect to the alleged durability of CB-010’s therapeutic effect and the product candidate’s clinical and commercial prospects, in alleged violation of Sections 11 and 15 of the Securities Act. The allegations and claims in the Lowry Case are substantially similar to the Securities Act claims asserted in the Bergman and Greenhalgh Cases. On April 26, 2023, we filed a motion to stay the Lowry Case during the pendency of the parallel federal court litigation in the Bergman Case and the Greenhalgh Case. We believe all of these lawsuits are without merit.

10. Common Stock

Common stock reserved for future issuance ~~consists~~consisted of the following:


		As of September 30, 2022	As of December 31, 2021		As of March 31, 2023	As of December 31, 2022
Stock options, issued and outstanding	Stock options, issued and outstanding	6,649,892	6,757,591	Stock options, issued and outstanding	9,102,960	6,733,074
Stock options, authorized for future issuance	Stock options, authorized for future issuance	5,955,761	3,749,339	Stock options, authorized for future issuance	6,495,096	5,833,979
Stock available under our employee stock purchase plan	Stock available under our employee stock purchase plan	1,044,518	511,000	Stock available under our employee stock purchase plan	1,584,538	1,044,518
Unvested restricted stock units and performance-based restricted stock units	Unvested restricted stock units and performance-based restricted stock units	259,769	—	Unvested restricted stock units and performance-based restricted stock units	236,169	256,146
		13,909,940	11,017,930		17,418,763	13,867,717

Shelf Registration Statement

On August 9, 2022, we filed a shelf registration statement on Form S-3 (“Shelf Registration Statement”) with the U.S. Securities and Exchange Commission (“SEC”). The Shelf Registration Statement allows us to sell from time to time up to $400.0 million of common stock, preferred stock, debt securities, warrants, rights, or units comprised of any combination of these securities, for our own account in one or more offerings (including the $100.0 million of common stock reserved for our at-the-market equity offering program described below). The SEC declared the Shelf Registration Statement effective on August 16, 2022. The terms of any offering under the Shelf Registration Statement will be established at the time of such offering and will be described in a prospectus supplement to the Shelf Registration Statement filed with the SEC prior to the completion of any such offering.

At-the-market Equity Offering Program

On August 9, 2022, we also entered into an Open Market Sale AgreementSM (the ~~“Sales~~“ATM Sales Agreement”) with Jefferies LLC (“Jefferies”) with respect to an at-the-market (“ATM”) equity offering program, pursuant to which, through Jefferies as sales agent, we may from time to time, sell shares of our common stock having an aggregate offering price of up to $100.0 million in gross proceeds under the Shelf Registration Statement. As of ~~September 30, 2022, there~~March 31, 2023, we have ~~been no sales~~sold 168,635 shares of our common stock under the ATM ~~equity~~Sales Agreement at an average price per share of $7.32 for aggregate gross proceeds of $1.2 million ($1.0 million net of offering ~~program and, as of September 30, 2022, the full capacity remained available for issuance.~~expenses).

11. Stock-Based Compensation

Equity Incentive Plans

In July 2021, our board of directors adopted and our stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”) that became effective on July 22, 2021. We reserved 5,200,000 shares of common stock for issuance under the 2021 Plan. In addition, 934,562 shares available for issuance under the 2013 Equity Incentive Plan, adopted in 2013 and amended and restated in 2019, were transferred into the 2021 Plan. In addition, any shares subject to awards under the 2013 Plan that terminate, expire, or lapse for any reason without the delivery of shares, or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price, will be added to the 2021 Plan. The 2021 Plan also provides that the number of shares initially reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022 and ending on January 1, 2031, by an amount equal to the lesser of (a) 5% of the shares of common stock outstanding on the last day of the immediately preceding fiscal year and (b) such smaller number of shares of stock as determined by our Board. No more than 56,000,000 shares of stock may be issued upon the exercise of incentive stock options under the 2021 Plan. Options under the 2021 Plan may be granted for periods of up to 10 years at exercise prices no less than the fair market value of our common stock on the date of grant; provided, however, that the exercise price of an incentive stock option granted to a 10% stockholder may not be less than 110% of the fair market value of the shares on the date of grant and such option may not be exercisable after the expiration of five years from the date of grant. The grant date fair market value of all awards made under the 2021 Plan and all cash compensation paid by us to any non-employee director for services as a director in any fiscal year may not exceed $750,000, increased to $1,000,000 in the fiscal year of their initial service as a non-employee director. As of ~~September 30, 2022,~~March 31, 2023, we had ~~5,955,761~~6,495,096 shares available for issuance under the 2021 Plan.

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The following table summarizes stock option activity under our equity incentive plans during the ~~nine~~three months ended ~~September 30, 2022:~~March 31, 2023:

Stock Options Weighted-
Average
Exercise Price Weighted-
Average
Remaining
Contractual
Term (years) Aggregate
Intrinsic Value (in thousands)*
Outstanding at December 31, 2021 6,757,591 $ 8.57 8.7 $ 50,085
Options granted 1,206,750 8.88
Options exercised (654,665) 2.09
Options cancelled or forfeited (659,784) 9.74
Outstanding at September 30, 2022 6,649,892 $ 9.14 8.5 $ 24,431
Exercisable at September 30, 2022 2,207,115 $ 6.13 7.4 $ 12,416
Vested and expected to vest at September 30, 2022 6,649,892 $ 9.14 8.5 $ 24,431


	Stock Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)*

Outstanding at December 31, 2022	6,733,074	$	9.01	8.2	$	8,203
Options granted	2,536,340	6.06
Options exercised	(40,433)	2.84
Options cancelled or forfeited	(126,021)	10.12
Outstanding at March 31, 2023	9,102,960	$	8.20	8.5	$	4,824
Exercisable at March 31, 2023	3,019,066	$	7.30	7.2	$	3,551
Vested and expected to vest at March 31, 2023	9,102,960	$	8.20	8.5	$	4,824

*The aggregate intrinsic value is calculated as the difference between the stock option exercise price and the estimated fair value of the underlying common stock at the end of each reporting period referenced above.

Grant Date Fair Value

During the three months ended ~~September 30,~~March 31, 2023 and 2022, we granted ~~372,600~~2,536,340 and 339,030 stock options to employees ~~(no stock options were granted to non-employees)~~ with a weighted average grant date fair value of ~~$6.43. During the nine months ended September 30, 2022, we granted 1,206,750 stock options to employees~~$4.13 and ~~non-employees with a weighted average grant date fair value of $5.84.~~

During the three months ended September 30, 2021, we granted 351,750 stock options to employees (no stock options were granted to non-employees) with a weighted average grant date fair value of $16.64. During the nine months ended September 30, 2021, we granted 2,809,660 stock options to employees and non-employees with a weighted average grant date fair value of $4.70.$6.68, respectively.

We estimated the fair value of each employee and non-employee stock option award on the grant date using the Black-Scholes option-pricing model based on the following assumptions:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2022

2021

2022

2021

2023

2022

Volatility

74.2%

74.8%

71.7% to 74.2%

74.8% to 76.5%

Volatility

74.9% to 75.0%

71.7% to 72.0%

Expected term (in years)

6.0

7.0

5.5 to 6.0

5.5 to 7.0

Expected term (in years)

5.0 to 6.0

5.5 to 6.0

Risk-free interest rate

3.1% to 3.7%

1.1%

1.7% to 3.7%

0.9% to 1.2%

Risk-free interest rate

3.5% to 4.1%

1.7% to 2.3%

Expected dividend yield

0.0%

Expected dividend yield

0.0%

As of ~~September 30, 2022,~~March 31, 2023, there was ~~$29.2~~$34.2 million of unrecognized stock-based compensation expense related to employee and non-employee stock options that is expected to be recognized over a weighted-average period of ~~2.8~~2.9 years.

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Restricted Stock Units

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we ~~granted 200,058~~did not grant any restricted stock units (“RSUs”) ~~and 59,781~~or performance-based RSUs (“PSUs”) under the 2021 Plan. A summary of the status of and change in unvested RSUs and PSUs as of ~~September 30, 2022~~March 31, 2023 was as follows:

Number of Shares Underlying Outstanding RSUs and PSUs Weighted-Average Grant Date Fair Value per RSU and PSU
Unvested, January 1, 2022 — $ —
Granted 259,839 10.07
Forfeited (70) 9.90
Unvested, September 30, 2022 259,769 $ 10.07


	Number of Shares Underlying Outstanding RSUs and PSUs	Weighted-Average Grant Date Fair Value per RSU and PSU
Unvested, January 1, 2023	256,146	$	10.07
Vested	(15,000)	10.64
Forfeited	(4,977)	9.90
Unvested, March 31, 2023	236,169	$	10.04

The PSUs were granted to our executive officers and will vest ~~if and when a certain milestone is reached within a specific time period,~~ contingent upon the achievement of a clinical milestone for CB-010 during a performance period ending December 31, 2024 and the executive ~~officer remaining an employee at that time.~~officer’s continued

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employment during the performance period. As of ~~September 30, 2022,~~March 31, 2023, the achievement of this milestone was not considered probable and, therefore, no stock-based compensation was recorded.

As of ~~September 30, 2022,~~March 31, 2023, the total unrecognized stock-based compensation expense related to unvested RSUs was ~~$1.8~~$0.9 million, which is expected to be recognized over the remaining weighted-average vesting period of ~~2.3~~1.7 years. As of ~~September 30, 2022,~~March 31, 2023, there was approximately $0.6 million of unrecognized stock-based compensation expense related to unvested PSUs.

Employee Stock Purchase Plan (“ESPP”)

In July 2021, our board of directors adopted and our stockholders approved the ESPP, which became effective on July 22, 2021. The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (the “Tax Code”). We reserved 511,000 shares of our common stock for employee purchases under the ESPP. The number of shares of common stock reserved for issuance under the ESPP will be automatically increased each January 1, beginning on January 1, 2022 and ending on January 1, 2031 by an amount equal to the lesser of (a) 1% of the shares of common stock outstanding on the last day of the immediately preceding fiscal year and (b) such smaller number of shares of stock as determined by our Board; provided that the maximum number of shares that may be issued under the ESPP is 10,000,000 shares. The ESPP allows an eligible employee to purchase shares of our common stock at a discount through payroll deductions of up to 15% of the employee’s eligible compensation. At the end of each purchase period, employees are able to purchase shares at 85% of the lower of the fair market value of our common stock at the beginning of the offering period or at the end of each applicable offering period. The first offering period commenced on August 16, 2021 and ended on February 15, 2022. We have issued ~~36,596~~139,384 shares of common stock under the ESPP as of ~~September 30, 2022.~~March 31, 2023. We recorded $0.1 million in accrued liabilities related to contributions withheld as of ~~September 30, 2022.~~March 31, 2023.

Stock-Based Compensation Expense

We recorded stock-based compensation expense related to employee and non-employee equity-based awards grants in our condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Research and development $ 1,072 $ 484 $ 3,139 $ 970
General and administrative 1,601 451 5,476 901
Total $ 2,673 $ 935 $ 8,615 $ 1,871

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	Three Months Ended March 31,
		2023		2022
Research and development		$	1,310	$	1,100
General and administrative		1,821		1,924
Total		$	3,131	$	3,024

The above stock-based compensation expense related to the following equity-based awards (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Stock options	Stock options	$	2,479	$	894	$	8,190	$	1,830	Stock options		$	2,798	$	2,930
ESPP	ESPP	80		41		209		41		ESPP		142		63
RSUs	RSUs	114		—		216		—		RSUs		191		31
Total	Total	$	2,673	$	935	$	8,615	$	1,871	Total		$	3,131	$	3,024

Stock-based compensation expense related to employees was ~~$2.7~~$3.1 million and ~~$0.9~~$2.9 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~Stock-based compensation expense related to employees~~There was ~~$8.5 million and $1.9 million for the nine months ended September 30, 2022 and 2021, respectively. Stock-based~~no stock-based compensation expense related to non-employees ~~was less than~~for the three months ended March 31, 2023, and $0.1 million for the three months ended September 30, 2022 and 2021, respectively. Stock-based compensation expense related to non-employees was $0.1 million and less than $0.1 million for the nine months ended September 30, 2022 and 2021, respectively.March 31, 2022.

12. 401(k) Savings Plan

In 2017, we established a defined-contribution savings plan under Section 401(k) of the Tax Code. Our 401(k) plan is available to all employees and allows participants to defer a portion of their annual compensation on a pretax basis subject to applicable laws. We also provide a 4% match for employee contributions up to a certain limit. During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we contributed ~~$0.6~~$0.3 million and ~~$0.3~~$0.2 million, respectively, to our 401(k) plan.

13. Income Taxes

No income tax expense was recorded during each of the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ due to our operating losses.

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14. Net Loss Per Share

The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share amounts):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Numerator:	Numerator:									Numerator:
Net loss	Net loss	$	(26,647)	$	(20,974)	$	(72,432)	$	(48,444)	Net loss		$	(28,044)	$	(19,088)
Denominator:	Denominator:									Denominator:
Weighted-average common shares outstanding used to compute net loss per share, basic and diluted	Weighted-average common shares outstanding used to compute net loss per share, basic and diluted	60,886,921		45,889,646		60,731,520		22,052,944		Weighted-average common shares outstanding used to compute net loss per share, basic and diluted		61,186,514		60,546,170
Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.44)	$	(0.46)	$	(1.19)	$	(2.20)	Net loss per share, basic and diluted		$	(0.46)	$	(0.32)

Because we were in a net loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods, as the inclusion of all common stock equivalents outstanding would have been anti-dilutive.

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Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:


		As of September 30, 2022	As of September 30, 2021		As of March 31, 2023	As of March 31, 2022
Convertible preferred stock		—	—
Stock options outstanding	Stock options outstanding	6,649,892	4,965,952	Stock options outstanding	9,102,960	6,286,542
RSUs and PSUs issued and outstanding	RSUs and PSUs issued and outstanding	259,769	—	RSUs and PSUs issued and outstanding	236,169	60,000
Shares committed under ESPP	Shares committed under ESPP	49,109	18,804	Shares committed under ESPP	149,350	51,687
		6,958,770	4,984,756		9,488,479	6,398,229

15. Subsequent Events

We did not have any subsequent events as of the filing date of this Quarterly Report on Form 10-Q.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes included in Part I, Item 1, of this Quarterly Report on Form 10-Q (“Form 10-Q”) and with the audited consolidated financial statements and the related notes for the fiscal year ended December 31, ~~2021~~2022 included in our Annual Report on Form 10-K (“Form 10-K”) filed with the U.S. Securities and Exchange Commission (“SEC”) on March ~~21, 2022.~~9, 2023.

Special Note Regarding Forward-Looking Statements

This Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding our business strategy, plans, and objectives; expectations regarding our clinical and preclinical development programs, including our timing expectations with respect to such programs and the expected timing of disclosure of clinical data from such programs; future regulatory filings; our results of operations and financial position; plans and objectives of management for future operations; and the like, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.

As a result of many factors, including but not limited to risks related to our limited operating history, history of net operating losses, financial position and our ability to raise additional capital as needed to fund our operations and product candidate development; risks associated with the initiation, cost, timing, progress, and results of current and future research and development programs, preclinical studies, and clinical trials; the risk that initial or interim clinical trial data will not ultimately be predictive of the safety and efficacy of our product candidates or that clinical outcomes may differ as more clinical data becomes available; the risk that preclinical study results will not be borne out in human patients; risks related to our ability to obtain and maintain regulatory approval for our product candidates; risks that our product candidates, if approved, may not gain market acceptance due to negative public opinion and increased regulatory scrutiny of cell therapies involving genome editing; risks related to our ability to meet future regulatory standards with respect to our products; risks related to our ability to establish and/or maintain intellectual property rights covering our product candidates and genome-editing technology; risks of third parties asserting that our product candidates infringe their patents; risks related to developments of our competitors and our industry; risks related to our reliance on third parties to conduct our clinical trials and manufacture our product candidates; risks caused by the impact of the COVID-19 pandemic and other public health crises or geopolitical events on our business and operations; and other risks described in greater detail in the section of our Form 10-K titled “Risk Factors,” and in other filings we make with the SEC, the events and circumstances reflected in our forward-looking statements may not be achieved or may not occur, and actual results could differ materially from those described in or implied by the forward-looking statements contained in the following discussion and analysis. As a result of these risks, you should not place undue reliance on these forward-looking statements. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Overview

We are a clinical-stage ~~CRISPR genome-editing biopharmaceutical company dedicated to developing innovative, transformative therapies for patients with devastating diseases. CRISPR is an acronym for~~ Clustered Regularly Interspaced Short Palindromic R~~epeats.~~epeats (“CRISPR”) genome-editing biopharmaceutical company dedicated to developing transformative therapies for patients with devastating diseases. Our genome-editing platform, including our novel chRDNA (CRISPR hybrid RNA-DNA, or “chRDNA,” pronounced “chardonnay”) technologies, enables superior editing precision to develop cell therapies that are armored to improve antitumor activity. We are advancing a pipeline of allogeneic, or off-the-shelf, cell therapies from our chimeric antigen receptor (“CAR”)-T T (“CAR-T”) cell and CAR-natural killer (“CAR-NK”) cell platforms as readily available therapeutic treatments for patients.

We are initially focused on advancing multiple allogeneic cell therapies for the treatment of ~~patients with~~ hematologic malignancies and solid tumors. Our ~~renowned founders,~~therapies are directed at established tumor cell surface targets for which autologous CAR-T cell therapeutics have already demonstrated clinical proof of concept, including CD19 and B cell maturation antigen (“BCMA”), as well as targets such as C-type lectin-like molecule-1 (“CLL-1,” also known as CD371). We use our chRDNA technologies to armor our cell therapies by using multiple genome-editing strategies, such as checkpoint disruption, immune cloaking, or a ~~Nobel Prize laureate, are pioneers in the field~~combination of CRISPR genome editing. Our novel CRISPR platform, CRISPR hybrid RNA-DNA (“chRDNA,” pronounced “chardonnay”) genome-editing technology, has demonstrated superior specificity and high efficiency in preclinical studies and enables usthese two strategies to ~~perform multiple, precise genomic edits, while maintaining genomic integrity.~~enhance their antitumor activity.

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Our lead product candidate, CB-010, to our knowledge, is the first clinical-stage allogeneic anti-CD19 CAR-T cell therapy with programmed cell death protein 1 (“PD-1”) removed from the CAR-T cell surface by a genome-edited knockout of the PDCD1 gene. We have demonstrated in preclinical models that the PD-1 knockout ~~improves~~improved the ~~persistence~~durability of antitumor activity by disrupting a pathway that leads to rapid T cell exhaustion. CB-010 is being evaluated in our ongoing ANTLER phase 1 clinical trial in patients with relapsed or refractory B cell non-Hodgkin lymphoma (“r/r B-NHL”). We ~~presented initial clinical~~completed the dose escalation portion of the ANTLER trial and advanced into the dose expansion portion, enrolling second-line large B cell lymphoma (“LBCL”) patients to determine the recommended phase 2 dose. CB-010 has received Regenerative Medicine Advanced Therapy (“RMAT”) designation for r/r LBCL and fast track designation for r/r B-NHL from the U.S. Food and Drug Administration (“FDA”). We plan to provide a safety and efficacy update in the second half of 2023 from the ongoing ANTLER trial, including data from ~~cohort 1~~ at least 15 patients from dose ~~level 1 (40x10~~6 ~~CAR-T cells) from our ANTLER trial in June 2022 at the European Hematology Association 2022 Congress, and we expect to share additional clinical data from cohort 1 by the end~~escalation with a minimum of ~~2022. The ANTLER trial is currently enrolling patients at dose level 2 (80x10~~6 ~~CAR-T cells).~~six months of follow up.

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Our ~~CB-011~~second product candidate, CB-011, is an allogeneic CAR-T cell ~~product candidate~~therapy that targets ~~B cell maturation antigen (“BCMA”).~~BCMA. To our knowledge, it is the first anti-BCMA CAR-T cell therapy incorporating an immune cloaking approach that includes both the removal of the endogenous beta-2 microglobulin (“B2M”) protein by a genome-edited knockout of the B2M gene and insertion of a B2M–human-leukocyte-antigen-E–peptide transgene (“B2M–HLA-E”), enabling expression of HLA-E on the CAR-T cell surface. This strategy is designed to ~~blunt~~reduce CAR-T cell rejection by both patient T cells and natural killer (“NK”) cells to potentially enable more durable antitumor activity. CB-011 is being evaluated in ~~preclinical development for~~our ongoing CaMMouflage phase 1 clinical trial in patients with relapsed or refractory multiple myeloma (“r/r MM”). ~~We submitted our investigational new drug (“IND”) application to the U.S. Food and Drug Administration (“FDA”)~~CB-011 has received fast track designation for ~~CB-011 in~~ r/r MM infrom the ~~fourth quarter of 2022.~~FDA. We plan to provide updates on dose escalation as the CaMMouflage Phase 1 trial advances.

Our third product candidate, CB-012, is ~~our~~an allogeneic ~~armored~~ CAR-T cell ~~product candidate~~therapy targeting CLL-1, ~~(also known as CD371),~~ currently in preclinical development for the treatment of relapsed or refractory acute myeloid leukemia (“r/r AML”). CB-012 is, to our knowledge, the first allogeneic CAR-T cell therapy with both checkpoint disruption and immune cloaking strategies. We believe that CLL-1 is an attractive target for ~~AML~~acute myeloid leukemia (“AML”) due to its expression on myeloid cancer cells, its enrichment in leukemic stem cells, and its absence on hematopoietic stem ~~cells. We expect~~cells (“HSCs”). CB-012 is being evaluated in investigational new drug (“IND”) application-enabling studies to ~~submit an~~support a planned IND application ~~to the FDA~~submission for ~~CB-012 in~~ r/r AML in the second half of 2023.

We are ~~also~~ developing allogeneic CAR-NK cell therapies derived from genome-edited induced pluripotent stem cells (“iPSCs”) for the treatment of solid tumors. CB-020 is our first CAR-NK product candidate from our CAR-NK platform and itwe have selected receptor tyrosine kinase like orphan receptor 1 (“ROR1”) as the tumor cell-surface target for CB-020. CB-020 and potential future CAR-NK cell therapy product candidates will contain genome edits designed to overcome some of the challenges of targeting solid tumors, such as trafficking, tumor infiltration, heterogeneity, and the immunosuppressive tumor microenvironment. We expect to select a tumor cell-surface target for our CB-020 product candidate in the fourth quarter of 2022. Also in the fourth quarter of 2022, we expect to disclose armoring strategies we are developing for our CAR-NK platform.

Since our founding in 2011, we have devoted substantially all of our resources to organizing and staffing, business planning, raising capital, ~~developing~~expanding our genome-editing platform technologies, developing our product candidates and building our pipeline, creating and maintaining our intellectual property portfolio, and establishing arrangements with third parties for the manufacture, testing, and ~~testing~~clinical trial evaluations of our product candidates. We do not have any products approved for commercial sale and have not generated any revenue from product sales. We have incurred net losses since commencement of our operations.

To date, we have primarily funded our operations through revenue from our license ~~agreements, license~~ and collaboration ~~agreements, and a service agreement;~~agreements; the sale of shares of Intellia Therapeutics, Inc. (“Intellia”) common ~~stock that we received as consideration for a License Agreement (as amended, the “Intellia License Agreement”) with Intellia, LLC, to which Intellia is a successor in interest;~~stock; the sale of our convertible preferred stock in private placements before our initial public offering (“IPO”); in 2021; and proceeds from our IPO.

Our net losses for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were ~~$26.6~~$28.0 million and ~~$21.0 million, respectively. Our net losses for the nine months ended September 30, 2022 and 2021 were $72.4 million and $48.4~~$19.1 million, respectively. We had an accumulated deficit of ~~$170.2~~$225.3 million as of ~~September 30, 2022.~~March 31, 2023. Our net losses and operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of expenses associated with our clinical trials and nonclinical studies and our other research and development expenses. In addition, we are incurring increased costs associated with operating as a public company, including legal, audit, and accounting fees; maintaining compliance with the rules and regulations of the SEC and Nasdaq; director and officer insurance premiums; investor and public relations activities; and other accompanying compliance and governance requirements. We anticipate that our expenses will increase substantially if and as we:

•progress our ANTLER phase 1 clinical trial for our CB-010 product candidate and our CaMMouflage phase 1 clinical trial for our CB-011 product candidate;

•continue our current research programs and our preclinical and clinical development of our other current product candidates, including ~~CB-011,~~ CB-012, ~~and~~ CB-020, and any other product candidates we identify and choose to develop;

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•hire additional clinical, quality control, regulatory, technical operations, and scientific personnel;

•seek to identify additional research programs and additional product candidates;

•further develop our genome-editing technologies;

•acquire or in-license technologies;

•expand, maintain, enforce, and defend our intellectual property portfolio;

•seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical trials, if any;

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•establish and expand manufacturing capabilities and supply chain capacity for our product candidates;

•add operational, legal, financial, and management information systems and personnel;

•experience any delays, challenges, or other issues associated with any of the above, including the failure of clinical trials meeting endpoints, the generation of unanticipated preclinical results or clinical trial data subject to differing interpretations, or the occurrence of potential safety issues or other development or regulatory challenges;

•make royalty, milestone, or other payments under current, and any future, in-license or assignment agreements;

•establish a sales, marketing, and distribution infrastructure to commercialize any product candidates for which we obtain marketing approval; and

•continue to operate as a public company.

We do not own or operate any manufacturing facilities and we outsource a substantial portion of our clinical trial studies to third parties. We use multiple contract manufacturing organizations (“CMOs”) to individually manufacture, under current good manufacturing processes, chRDNA guides, ~~Cas~~Cas9 and Cas12a proteins, plasmids, and adeno-associated virus serotype 6 vectors used in the manufacture of our CAR-T cells as well as our CAR-NK cell therapy product candidates. We expect to rely on our CMOs for the manufacturing of our product candidates to expedite readiness for future clinical trials, and most of these CMOs have capabilities for commercial manufacturing. Additionally, we may decide to build our own manufacturing facility in the future to provide us greater flexibility and control over our clinical or commercial manufacturing needs.

Because of the numerous risks and uncertainties associated with therapeutic product development, we may never achieve profitability and, unless and until we are able to develop and commercialize our product candidates, we will need to continue to raise additional capital. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through ~~public or private~~ equity orofferings (including our at-the-market facility), debt financings, collaborations and strategic alliances, ~~and~~ licensing arrangements, ~~with third parties.~~or other sources. There are no assurances that we will be successful in obtaining an adequate level of financing to support our business plans as needed on acceptable terms, or at all. If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise capital as and when needed or on attractive terms, we may have to significantly delay, reduce, or discontinue the development and commercialization of our product candidates or scale back or terminate our pursuit of new in-licenses and acquisitions.

~~Impact of the COVID-19 Pandemic and Geopolitical Events~~

We are currently unable to predict the effect that the ongoing COVID-19 pandemic may have on our Company in the future. Furthermore, we cannot predict the impact that national or international geopolitical events, such as the ongoing war in Ukraine, may have on our operations. To the extent the COVID-19 pandemic or geopolitical events adversely affect our business prospects, financial condition, and results of operation, they may also have the effect of exacerbating many of the other risks described or referenced in the section of our Form 10-K titled “Risk Factors,” such as those relating to the supply of materials for our product candidates, and the timing and possible disruptions to our ongoing and future preclinical studies and clinical trials, and our access to the financial markets.

Components of Results of Operations

Licensing and Collaboration Revenue

We have not generated any revenue from product sales to date and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval and commercialization, we may generate revenue in the future from product sales. We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our product candidates if we succeed in obtaining regulatory approval for these product candidates.

To date, all of our revenue consists of licensing and collaboration revenue earned from collaboration and/or licensing agreements entered into with third parties, including related parties. Under these agreements, we license rights to certain intellectual property controlled by us. The terms of these arrangements typically include payments to us of one or more of the following: nonrefundable, upfront license fees or exclusivity fees; annual maintenance fees; regulatory and/or

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commercial milestone payments; research and development payments; and royalties on the net sales of products and/or services. Each of these payments results in licensing and collaboration revenue. Revenue under such licensing and collaboration agreements was ~~$3.3~~$3.5 million and ~~$4.0~~$2.7 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $10.2 million and $7.0 million for the nine months ended September 30, 2022 and 2021,~~ respectively. See Notes 4 and 5 to our condensed consolidated financial statements included elsewhere in this Form 10-Q.

For additional information about our revenue recognition policy related to our licensing and collaboration agreements, see Note 2 to the annual consolidated financial statements included in our Form 10-K.

For the foreseeable future we expect substantially all of our revenue will be generated from licensing and collaboration agreements.

Operating Expenses

Research and Development Expenses

Our research and development expenses consist of internal and external expenses incurred in connection with the development of our product candidates and our platform technologies, and our in-licensing and assignment agreements.

External costs include:

•costs associated with acquiring technology and intellectual property licenses that have no alternative future uses, sublicensing revenue, and ~~milestones;~~milestones under our licensing agreements;

•costs incurred in connection with the preclinical and clinical development and manufacturing of our product candidates, including under agreements with contract research organizations (“CROs”), CMOs, and clinical sites; and

•other research and development costs, including laboratory materials and supplies, and consulting services.

Internal costs include:

•personnel-related costs, including salaries, benefits, and share-based compensation expense, for our research and development personnel; and

•allocated facilities and other overhead expenses, including expenses for rent, facilities maintenance, and depreciation.

We expense research and development costs as incurred. Costs of certain activities are recognized based on an evaluation of the progress to completion of specific tasks. However, payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized as prepaid expenses and other current assets on our condensed consolidated balance sheets. The capitalized amounts are recognized as expense as the goods are delivered or as related services are performed. ~~Historically, we have not tracked external costs by clinical program.~~ We ~~intend to~~ separately track certain external costs ~~for each clinical program. However,~~on a program-by-program basis; however, we do not ~~currently track, and do not intend to~~ track costs that are deployed across multiple programs.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially for the foreseeable future as we continue to implement our business strategy; advance our CB-010 and CB-011 product ~~candidate~~candidates through clinical trials and later stages of development; conduct preclinical studies and clinical trials for our other product candidates; seek regulatory approvals for any product candidates that successfully complete clinical trials; expand our research and development efforts and incur expenses associated with hiring additional personnel to support our research and development efforts; and seek to identify, in-license, acquire, and/or develop additional product candidates.

The successful development of our CB-010, CB-011, CB-012, and CB-020 product candidates, as well as other potential future product candidates, is highly uncertain. Accordingly, at this time, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the development of our product candidates. We are also unable to predict when, if ever, we will generate revenue and material net cash inflows from the commercialization and sale of any of our product candidates for which we may obtain marketing approval. We may never

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succeed in achieving regulatory approval for any of our product candidates. The duration, costs, and timing of preclinical studies, clinical trials, and development of our product candidates will depend on a variety of factors, including:

•sufficiency of our financial and other resources;

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•acceptance of our CRISPR chRDNA genome-editing technology;

•ability to develop differentiating features so that our products have a competitive edge;

•completion of preclinical studies;

•establishment, maintenance, enforcement, and defense of our patents and other intellectual property rights;

•our ability to not infringe, misappropriate, or otherwise violate third-party intellectual property rights;

•clearance of IND applications to initiate clinical trials on product candidates;

•successful enrollment in, and completion of, our clinical trials on our product candidates;

•data from our clinical trials that support an acceptable risk-benefit profile of our product candidates for the intended patient populations and that demonstrate safety and efficacy;

•entry into collaborations to further the development of our product candidates or for the development of new product candidates;

•successful development of our internal process development and transfer to larger-scale facilities;

•establishment of agreements with CMOs for clinical and commercial supplies and scaling up manufacturing processes and capabilities to support our clinical trials;

•receipt of marketing approvals from applicable regulatory authorities;

•grant of regulatory exclusivity for our product candidates;

•establishment of sales, marketing, and distribution capabilities necessary for commercialization of our product candidates if and when approved, whether by us or in collaboration with third parties;

•maintenance of a continued acceptable safety profile of our products post-approval;

•acceptance of our product candidates, if and when approved by the applicable regulatory authorities, by patients, the medical community, and third-party payors;

•ability of our products to compete with other therapies and treatment options;

•establishment and maintenance of healthcare coverage and adequate reimbursement; and

•expanded indications and patient populations for our products.

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The following table summarizes our research and development expenses for the periods indicated:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
		(in thousands)				(in thousands)					(in thousands)
External costs:	External costs:									External costs:
Expenses related to licensing, sublicensing revenue, and milestones	Expenses related to licensing, sublicensing revenue, and milestones	$	439	$	359	$	1,301	$	3,644	Expenses related to licensing, sublicensing revenue, and milestones		$	430	$	308
Services provided by CROs, CMOs, clinical sites, and other third parties that conduct preclinical studies and clinical trials on our behalf	Services provided by CROs, CMOs, clinical sites, and other third parties that conduct preclinical studies and clinical trials on our behalf	6,557		7,515		20,190		14,210		Services provided by CROs, CMOs, clinical sites, and other third parties that conduct preclinical studies and clinical trials on our behalf		10,279		3,972
Other research and development expenses	Other research and development expenses	4,627		2,322		11,957		5,981		Other research and development expenses		4,719		2,336
Total external costs	Total external costs	11,623		10,196		33,448		23,835		Total external costs		15,428		6,616
Internal costs:	Internal costs:									Internal costs:
Personnel-related expenses	Personnel-related expenses	6,365		4,176		17,256		9,380		Personnel-related expenses		7,936		5,597
Facilities and other allocated expenses	Facilities and other allocated expenses	2,003		1,461		5,790		3,929		Facilities and other allocated expenses		2,345		1,711
Total internal costs	Total internal costs	8,368		5,637		23,046		13,309		Total internal costs		10,281		7,308
Total research and development expenses	Total research and development expenses	$	19,991	$	15,833	$	56,494	$	37,144	Total research and development expenses		$	25,709	$	13,924

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General and Administrative Expenses

Our general and administrative expenses consist primarily of personnel-related costs, intellectual property costs, consulting costs, and allocated overhead, including rent, equipment depreciation, and utilities. Personnel-related costs consist of salaries, benefits, and stock-based compensation for our general and administrative personnel. Intellectual property costs include expenses for filing, prosecuting, and maintaining patents and patent applications, including certain patents and patent applications that we license from third parties. We are entitled to receive reimbursement from third parties ~~for~~of a portion of the costs for filing, prosecuting, and maintaining certain patents and patent applications. We accrue for these reimbursements as the respective expenses are incurred and classify such reimbursements as a reduction of general and administrative expenses. During the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we recorded ~~$1.0~~$0.4 million and $1.6 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense. During the nine months ended September 30, 2022 and 2021, we recorded $3.1 million and $6.1$1.5 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense.

We expect that our general and administrative expenses may increase in the future as a result of expanding our operations, including hiring personnel, preparing for potential commercialization of our product candidates, and additional facility occupancy costs, as well as other expenses necessary to support the growth and operations of a clinical-stage public company.

Other Income (Expense)

Other income (expense) consists primarily of interest income earned on cash and marketable securities, change in the fair value of our equity investments, and change in the fair value of the Memorial Sloan Kettering Cancer Center (“MSKCC”) success payments liability under the Exclusive License Agreement, dated November 13, 2020, with MSKCC (the “MSKCC Agreement”).

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Results of Operations

Comparison of the Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

The following table summarizes our results of operations for the periods indicated:


		Three Months Ended September 30,							Three Months Ended March 31,
		2022		2021		Change			2023		2022		Change
		(in thousands)							(in thousands)
Licensing and collaboration revenue	Licensing and collaboration revenue	$	3,303	$	3,977	$	(674)	Licensing and collaboration revenue	$	3,502	$	2,664	$	838
Operating expenses
Operating expenses:								Operating expenses:
Research and development	Research and development	19,991		15,833		4,158		Research and development	25,709		13,924		11,785
General and administrative	General and administrative	9,849		6,760		3,089		General and administrative	8,909		9,593		(684)
Total operating expenses	Total operating expenses	29,840		22,593		7,247		Total operating expenses	34,618		23,517		11,101
Loss from operations	Loss from operations	(26,537)		(18,616)		(7,921)		Loss from operations	(31,116)		(20,853)		(10,263)
Other income (expense)
Other income (expense):								Other income (expense):
Change in fair value of equity securities	Change in fair value of equity securities	31		—		31		Change in fair value of equity securities	(15)		(88)		73
Change in fair value of the MSKCC success payments liability	Change in fair value of the MSKCC success payments liability	(1,607)		(2,403)		796		Change in fair value of the MSKCC success payments liability	255		1,596		(1,341)
Gain on extinguishment of PPP Loan		—		—		—
Other income, net	Other income, net	1,466		45		1,421		Other income, net	2,832		257		2,575
Total other income (expense)		(110)		(2,358)		2,248
Total other income								Total other income	3,072		1,765		1,307
Net loss	Net loss	$	(26,647)	$	(20,974)	$	(5,673)	Net loss	$	(28,044)	$	(19,088)	$	(8,956)

Licensing and Collaboration Revenue

Licensing and collaboration revenue ~~decreased~~increased by ~~$0.7~~$0.8 million ~~or 17%,~~ to ~~$3.3~~$3.5 million for the three months ended ~~September 30, 2022~~March 31, 2023 from ~~$4.0~~$2.7 million for the three months ended ~~September 30, 2021.~~March 31, 2022. This ~~decrease~~increase was primarily related to ~~a decrease~~increases of ~~$0.6~~$0.7 million related to recognition of revenue under the Collaboration and License Agreement ~~(the~~(as amended, the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”). and $0.2 million related to other license agreements with various licensees.

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The following table summarizes our revenue by licensee for the periods indicated:


		Three Months Ended September 30,							Three Months Ended March 31,
		2022		2021		Change			2023		2022		Change
		(in thousands)							(in thousands)
AbbVie	AbbVie	$	1,709	$	2,274	$	(565)	AbbVie	$	1,608	$	933	$	675
Other licensees	Other licensees	1,594		1,703		(109)		Other licensees	1,894		1,731		163
Total licensing revenue	Total licensing revenue	$	3,303	$	3,977	$	(674)	Total licensing revenue	$	3,502	$	2,664	$	838

Research and Development Expenses

Research and development expenses increased by ~~$4.2~~$11.8 million ~~or 26%,~~ to ~~$20.0~~$25.7 million for the three months ended ~~September 30, 2022~~March 31, 2023 from ~~$15.8~~$13.9 million for the three months ended ~~September 30, 2021.~~March 31, 2022. This increase was primarily related to increases of ~~$2.2~~$6.3 million in other research and development expenses to advance IND-enabling studies for CB-011 and preclinical research for additional programs, as well as other consulting services related to research and development; $2.2 million in personnel-related expenses (which include an increase in stock-based compensation expense of $0.7 million) due to incremental hiring; and $0.5 million in other facilities and allocated expenses; partially offset by a net decrease of $0.8M in external CMO and CRO activities, driven by ~~a decrease~~increases of ~~$2.2~~$4.8 million due to timing of CMO activities for our product candidates, ~~partially offset by a $1.4~~and $1.5 million ~~increase~~ in CRO activities primarily to advance our CB-010 ANTLER phase 1 ~~trial for CB-010.~~trial; $2.4 million in other research and development expenses to advance CB-012 investigational new drug (“IND”) application-enabling studies and other preclinical research, as well as other outside services related to research and development; $2.3 million in personnel-related expenses, including stock-based compensation, due to headcount increases; and $0.7 million in facilities and other allocated expenses.

General and Administrative Expenses

General and administrative expenses ~~increased~~decreased by ~~$3.1~~$0.7 million ~~or 46%,~~ to ~~$9.8~~$8.9 million for the three months ended ~~September 30, 2022~~March 31, 2023 from ~~$6.8~~$9.6 million for the three months ended ~~September 30, 2021.~~March 31, 2022. This ~~increase~~decrease was primarily related

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~~to increases~~$0.8 million in director and officer insurance and legal expenses; and $0.4 million in patent prosecution and maintenance costs; partially offset by an increase of ~~$1.6~~$0.5 million in personnel-related expenses, ~~(which include an increase in~~including stock-based compensation, ~~expense of $1.1 million)~~ due to incremental hiring; $0.7 million in facilities and other allocated expenses; and $0.7 million in legal, accounting, insurance, and other expenses necessary to support the growth and operations of a clinical-stage public company.headcount increases.

Total Other Income ~~(Expense)~~

Total other income increased by $1.3 million for three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

We recognized a ~~loss~~gain related to the change in the fair value of the MSKCC success payments liability in the amount of $0.3 million and $1.6 million, ~~and $2.4 million~~respectively, for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

Other income, net ~~during the three months ended September 30, 2022~~ increased ~~to $1.5 million from less than $0.1~~by $2.6 million during the three months ended ~~September 30, 2021~~March 31, 2023 compared to March 31, 2022. The increase primarily ~~due~~relates to ana $2.5 million increase in interest income ~~related to increased market rates and growth of our~~earned from marketable ~~securities portfolio.~~

~~Comparison of the Nine Months Ended September 30, 2022 and 2021~~

~~The following table summarizes our results of operations for the periods indicated:~~

Nine Months Ended September 30,
2022 2021 Change
(in thousands)
Licensing and collaboration revenue $ 10,159 $ 7,039 $ 3,120
Operating expenses
Research and development 56,494 37,144 19,350
General and administrative 29,486 16,469 13,017
Total operating expenses 85,980 53,613 32,367
Loss from operations (75,821) (46,574) (29,247)
Other income (expense)
Change in fair value of equity securities (73) — (73)
Change in fair value of the MSKCC success payments liability 1,041 (3,584) 4,625
Gain on extinguishment of PPP Loan — 1,584 (1,584)
Other income, net 2,421 130 2,291
Total other income (expense) 3,389 (1,870) 5,259
Net loss $ (72,432) $ (48,444) $ (23,988)

~~Licensing and Collaboration Revenue~~

Licensing and collaboration revenue increased by $3.1 million, or 44%, to $10.2 million for the nine months ended September 30, 2022 from $7.0 million for the nine months ended September 30, 2021. This increase was primarily related to increases of $2.7 million related to recognition of revenue under the AbbVie Agreement and $0.4 million related to other license agreements with various licensees.

~~The following table summarizes our revenue by licensee for the periods indicated:~~

Nine Months Ended September 30,
2022 2021 Change
(in thousands)
AbbVie $ 5,506 $ 2,781 $ 2,725
Other licensees 4,653 4,258 395
Total licensing revenue $ 10,159 $ 7,039 $ 3,120

~~Research and Development Expenses~~

Research and development expenses increased by $19.4 million, or 52%, to $56.5 million for the nine months ended September 30, 2022 from $37.1 million for the nine months ended September 30, 2021. This increase was primarily

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related to increases of $7.8 million in personnel-related expenses (which include an increase in stock-based compensation expense of $2.3 million) due to incremental hiring; $6.4 million in external CMO and CRO activities, driven by increases of $4.6 million due to the timing of CMO activities for our product candidates, and $1.8 million in CRO activities primarily to advance our ANTLER phase 1 trial for CB-010; $5.7 million in other research and development expenses to advance IND-enabling studies for CB-011 and preclinical research for additional programs, as well as other consulting services related to research and development; and $1.8 million in other facilities and allocated expenses; partially offset by a decrease of $2.3 million in expenses related to licensing, sublicensing revenue, and milestones.

~~General and Administrative Expenses~~

General and administrative expenses increased by $13.0 million, or 79%, to $29.5 million for the nine months ended September 30, 2022 from $16.5 million for the nine months ended September 30, 2021. This increase was primarily related to increases of $8.0 million in personnel-related expenses (which include an increase in stock-based compensation expense of $4.5 million) due to incremental hiring; $4.0 million in legal, accounting, insurance, and other expenses associated with being a public company; and $1.9 million in facilities and other allocated expenses; partially offset by a $0.9 million decrease in patent cost reimbursements.

~~Total Other Income (Expense)~~

We recognized a gain and a loss related to the change in the fair value of the MSKCC success payments liability in the amount of $1.0 million and $3.6 million, respectively, for the nine months ended September 30, 2022 and 2021, respectively.

The PPP Loan was forgiven in May 2021, and we recognized gain on the PPP Loan extinguishment of $1.6 million for the nine months ended September 30, 2021. No such gain was recognized for the nine months ended September 30, 2022.

Other income, net during the nine months ended September 30, 2022 increased to $2.4 million from $0.1 million during the nine months ended September 30, 2021 primarily due to an increase in interest income related to increased market rates and growth of our marketable securities portfolio.securities.

Liquidity, Capital Resources, and Capital Requirements

Sources of Liquidity

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. We have funded our operations through sales of our convertible preferred stock, which generated approximately $150.1 million in aggregate net proceeds, and from our IPO, which generated approximately $321.0 million in net proceeds. We have also received approximately $88.4 million in net proceeds from the sale of Intellia common ~~stock that we received under the Intellia Agreement.~~stock. Additionally, through ~~September 30, 2022,~~March 31, 2023, we received approximately ~~$82.3~~$85.9 million from licensing agreements, licensing and collaboration agreements, a service agreement, patent assignments, and government grants, including ~~$33.0~~$33.8 million that was received from AbbVie under the AbbVie Agreement.

In order to assist in funding our future operations, including our planned clinical trials, on August 9, 2022, we filed a universal shelf registration statement on Form S-3 (the “Shelf Registration Statement”) with the SEC, which allows us to, from time to time, sell up to $400.0 million of common stock, preferred stock, debt securities, warrants, rights, or units comprised of any combination thereof (including the $100.0 million of common stock reserved for our at-the-market

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equity offering program described below). The Shelf Registration Statement was declared effective by the SEC on August 16, 2022. We believe that our Shelf Registration Statement will provide us with the flexibility to raise additional capital to finance our operations as needed. From time to time, we may offer securities under our Shelf Registration Statement in response to market conditions or other circumstances if we believe such a plan of financing is in the best interests of our stockholders. The terms of any offering under the Shelf Registration Statement will be established at the time of such offering and will be described in a prospectus supplement to the Shelf Registration Statement filed with the SEC prior to the completion of any such offering.

On August 9, 2022, we entered into an Open Market Sale AgreementSM (the ~~“Sales~~“ ATM Sales Agreement”) with Jefferies LLC (“Jefferies”), pursuant to which, upon the terms and subject to the conditions and limitations set forth in the ATM Sales Agreement, we may, from time to time, in our sole discretion, issue and sell, through Jefferies, acting as sales agent, up to $100.0 million of our shares of common stock, by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as ~~amended (the “Securities Act”).~~

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amended. Jefferies ~~will use~~uses commercially reasonable efforts consistent with its normal sales and trading practices to sell shares from time to time, based upon our instructions (including any price or size limits or other customary parameters or conditions we may impose). We ~~will~~ pay Jefferies a commission equal to 3.0% of the aggregate gross proceeds of any shares sold through Jefferies pursuant to the ATM Sales Agreement. ~~We are not obligated to sell any~~As of March 31, 2023, we have sold 168,635 shares of our common stock under the ~~Sales Agreement. Unless otherwise terminated earlier, the~~ATM Sales Agreement ~~will continue until all shares available under the Sales Agreement have been sold. As~~at an average price per share of ~~September 30, 2022, there have been no sales under the Sales Agreement and, as~~$7.32 for aggregate gross proceeds of ~~September 30, 2022, the full capacity remained available for issuance.~~$1.2 million ($1.0 million net of offering expenses).

As of ~~September 30, 2022,~~March 31, 2023, we had cash, cash equivalents, and marketable securities of ~~$342.6~~$291.0 million. We will continue to be dependent upon equity financing, debt financing, ~~collaborations~~collaboration and licensing arrangements, and/or other forms of capital raises at least until we are able to generate significant positive cash flows from our operations. We have no current ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, except for our lease commitments as described in Note 98 to our condensed consolidated financial statements included elsewhere in this Form 10-Q, and payments under certain of our license agreements as described in Note 4 to our condensed consolidated financial statements included elsewhere in this Form 10-Q.

Based on our current operating plan, we expect that our existing cash, ~~and~~ cash equivalents, and marketable securities will ~~enable us~~be sufficient to fund our current operating plan for at least the next 12 months from the date of this Form 10-Q. We have based these estimates on our current assumptions, which may require future adjustments based on our ongoing business decisions.

Funding Requirements

Our primary use of cash is to fund operating expenses and research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses, and prepaid expenses.

Our future funding requirements will depend on many factors, including the following:

•the initiation, progress, timing, costs, and results of preclinical studies and clinical trials for our product candidates;

•the clinical development plans we establish for these product candidates;

•the number and characteristics of the product candidates that we develop;

•the increase in the number of our employees and expansion of our physical facilities to support growth initiatives;

•the outcome, timing, and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;

•whether we enter into any additional collaboration agreements and the terms of any such agreements;

•the cost of filing and prosecuting our patent applications, and maintaining and enforcing our patents and other intellectual property rights;

•the extent to which we acquire or in-license other product candidates and technologies;

•the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against our products after we receive regulatory approval;

•the effect of competing technological and market developments;

•the cost and timing of completion of commercial-scale outsourced manufacturing activities or the cost and timing of completion of clinical-scale and commercial-scale internal manufacturing activities;

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•the cost of establishing sales, marketing, and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products without a partner;

•the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;

•the achievement of milestones or occurrence of other developments that trigger payments by or to third parties under any collaboration or licensing agreements;

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•our implementation of various computerized informational systems and efforts to enhance operational systems;

•the impact of the COVID-19 pandemic or other public health crises or geopolitical events on our clinical development or operations;

•the impact of inflationary pressures on the cost of our operations; and

•the costs associated with being a public company.

Furthermore, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures.

If we need to raise additional capital to fund our operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or suspend one or more of our preclinical studies, clinical trials, research and development programs, and/or commercialization efforts. We may seek to raise any necessary additional capital through a combination of ~~public or private~~ equity offerings (including our at-the-market equity offering program), debt financings, collaborations and strategic alliances, licensing ~~arrangements.~~arrangements, or other sources. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in dilution to our stockholders. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties or other sources, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams, or research programs or grant licenses on terms that may not be favorable to us.

Cash Flows

Comparison of the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

The following table summarizes our cash flows for the periods indicated:


		Nine Months Ended September 30,							Three Months Ended March 31,
		2022		2021		Change			2023		2022		Change
		(in thousands)							(in thousands)
Cash used in operating activities	Cash used in operating activities	$	(65,922)	$	(11,130)	$	(54,792)	Cash used in operating activities	$	(27,939)	$	(21,673)	$	(6,266)
Cash used in investing activities		(94,419)		(2,436)		(91,983)
Cash provided by (used in) investing activities								Cash provided by (used in) investing activities	20,703		(72,107)		92,810
Cash provided by financing activities	Cash provided by financing activities	2,006		432,969		(430,963)		Cash provided by financing activities	1,642		990		652
Net (decrease) increase in cash and cash equivalents		$	(158,335)	$	419,403	$	(577,738)
Net decrease in cash and cash equivalents								Net decrease in cash and cash equivalents	$	(5,594)	$	(92,790)	$	87,196

Cash Used in Operating Activities

Net cash used in operating activities was ~~$65.9~~$27.9 million and ~~$11.1~~$21.7 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

Cash used in operating activities for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was primarily due to our net loss of ~~$72.4~~$28.0 million, adjusted by non-cash charges of ~~$10.6~~$2.5 million and net changes in our operating assets and liabilities of ~~$4.1~~$2.4 million. Our non-cash charges were primarily comprised of ~~$8.6~~$3.1 million of stock-based compensation, $0.6 million of depreciation and amortization expense, and non-cash lease expense of $0.5 million, which were partially offset by amortization of investment premiums of $1.5 million, and change in the fair value of the MSKCC success payments liability of $0.3 million. The changes in our operating assets and liabilities were due to increases of $1.3 million in

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accounts receivable, and decreases of $4.1 million in accrued expenses and other current liabilities, $1.1 million in deferred revenue, and $0.3 million in operating lease liabilities, partially offset by decreases in prepaid expenses and other current assets of $1.8 million, contract assets of $0.6 million, and other receivables of $0.5 million, and an increase of $1.5 million in accounts payable.

Cash used in operating activities in the three months ended March 31, 2022 was primarily due to our net loss of $19.1 million, adjusted by non-cash charges of $2.5 million and net changes in our operating assets and liabilities of $5.1 million. Our non-cash charges were primarily comprised of $3.0 million of stock-based compensation, non-cash lease expense of ~~$1.6~~$0.5 million, ~~$1.1~~amortization of investment premiums of $0.3 million, and $0.3 million of depreciation and amortization expense, ~~and acquired in-process research and development of $0.3 million,~~ which were partially offset by the change in the fair value of the MSKCC success payments liability of ~~$1.0~~$1.6 million. The changes in our operating assets and liabilities were due to increases of $1.6 million in prepaid expenses and other current assets, $0.4 million in contract assets, $0.4 million in other assets, and decreases of $2.6 million in accounts payable, $3.3 million in deferred revenue, and $0.3 million in operating lease liabilities, partially offset by decreases of $0.8 million in accounts receivable and ~~$2.8~~$1.3 million in other receivables, ~~an increase of $0.9 million~~offset by increases in ~~accrued~~prepaid expenses and other current ~~liabilities.~~

~~Cash used in operating activities in the nine months ended September 30, 2021 was primarily due to our net loss~~assets of ~~$48.4~~$1.3 million, ~~adjusted by non-cash charges~~other assets of ~~$5.6~~$0.5 million, and ~~net changes in our net operating assets and liabilities~~increases of ~~$31.7 million. Our non-cash charges consisted of a change in the fair value of the MSKCC success payments liability of $3.6 million,~~ $1.9 million of stock-based compensation, $1.0 million of acquired in-process research development, which represents an investing activity, and $0.7 million of depreciation and amortization expense, which were offset by our PPP

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~~Loan extinguishment gain upon the loan forgiveness of $1.6 million. The changes~~ in ~~our net operating assets and liabilities were due to increases of $30.7 million in deferred revenue, $4.9~~accounts payable, $2.8 million in accrued expenses and other current liabilities, ~~$0.9~~$0.6 million in deferred ~~rent~~revenue, and ~~lease incentive liability, and $0.8~~$0.1 million in accounts payable, partially offset by increases of $2.8 million in prepaid expenses and other current assets, $1.7 million in other receivables, $0.5 million in contract assets, $0.4 million in accounts receivable, and $0.2 million in other assets.operating lease liabilities.

Cash ~~Used in~~Provided by (Used in) Investing Activities

During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 cash provided by investing activities was $20.7 million, and during the three months ended March 31, 2022 ~~and 2021~~ cash used in investing activities was ~~$94.4~~$72.1 million.

Cash provided by investing activities for the three months ended March 31, 2023, was primarily due to proceeds from the sales and maturities of marketable securities of $98.7 million, partially offset by purchases of marketable securities of $75.9 million and ~~$2.4 million, respectively.~~property and equipment of $2.0 million.

Cash used in investing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 was primarily due to purchases of marketable securities of ~~$252.6~~$110.7 million and property and equipment of ~~$4.7 million, and in-process research and development of $0.3~~$0.7 million, partially offset by the proceeds from maturities of marketable securities of ~~$163.1 million.~~

Cash used in investing activities for the nine months ended September 30, 2021 was primarily due to purchases of property and equipment of $1.4 million and payments for the acquisition of in-process research and development of $1.0$39.3 million.

Cash Provided by Financing Activities

During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ cash provided by financing activities was ~~$2.0~~$1.6 million and ~~$433.0~~$1.0 million, respectively.

Cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was due to net proceeds from our at-the-market equity offering program of $1.1 million and the exercise of stock options and purchases of common stock under the 2021 Employee Stock Purchase Plan of ~~$2.0~~$0.5 million.

Cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was primarily due to ~~the receipt of net proceeds from our IPO in the amount of $321.0 million, net proceeds from the issuance of Series C convertible preferred stock in the amount of $108.8 million, proceeds from the~~ exercise of stock options and purchases of ~~$2.1 million, and repayment~~common stock under the 2021 ESPP plan of ~~the promissory note issued to our president and chief executive officer in the amount of $1.2~~$1.0 million.

Critical Accounting Policies and Significant Judgments and Estimates

Our critical accounting policies are disclosed in our audited consolidated financial statements for the year ended December 31, ~~2021,~~2022, and the related notes included in our Form 10-K. Since the date of such financial statements, there have been no material changes to our significant accounting ~~policies other than those described in Note 2 to our condensed consolidated financial statements included elsewhere in this Form 10-Q.~~policies. There have been no material changes to our critical accounting estimates as compared to those disclosed in our Form 10-K.

Recently Issued Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements included elsewhere in this Form 10-Q for more information regarding recently issued accounting pronouncements.

Indemnification Agreements

As permitted under Delaware General Corporation Law and in accordance with our amended and restated bylaws, we indemnify our executive officers and directors for certain events or occurrences while such officer or director is or was serving in such capacity. We are also party to indemnification agreements with our executive officers, directors, and controller. We believe the fair value of the indemnification rights and agreements is minimal. Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of ~~September 30, 2022.~~March 31, 2023.

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Emerging Growth Company and Smaller Reporting Company Status

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (a) are no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a

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result, our condensed consolidated financial statements may not be comparable to those of companies that comply with the new or revised accounting pronouncements as of public company effective dates.

We expect to use the extended transition period for any other new or revised accounting standards during the period in which we remain an emerging growth company. ~~As described in Note 2~~

We are also a “smaller reporting company.” If we are a smaller reporting company at the time we cease to ~~our condensed consolidated financial statements included elsewhere in this Form 10-Q, we have early adopted certain accounting standards, because the JOBS Act does not preclude~~be an emerging growth company, we may continue to rely on exemptions from ~~adopting~~certain disclosure requirements that are available to smaller reporting companies. Specifically, as a ~~new or revised accounting standard earlier than~~smaller reporting company, we may choose to present only the ~~time that such standard applies~~two most recent fiscal years of audited consolidated financial statements in our Annual Report on Form 10-K and, similar to ~~private~~emerging growth companies, ~~to the extent early adoption is allowed by the accounting standard.~~smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes to ~~the Company’s~~our market risk during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. For a discussion of ~~the Company’s~~our exposure to market risk, refer to the section titled “Quantitative and Qualitative Disclosures About Market Risk” in our Form 10-K.

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, as amended (the “Exchange Act”) is (a) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

As of ~~September 30, 2022,~~March 31, 2023, 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 Exchange Act). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded that, based upon the evaluation described above, as of ~~September 30, 2022,~~March 31, 2023, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(f) or 15d-15(f) under the Exchange Act during the three months ended ~~September 30, 2022~~March 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may ~~be subject to various legal proceedings and claims that arise~~become involved in litigation arising in the ordinary course of ~~our business activities.~~business. Regardless of the outcome, litigation can have a material adverse effect on us due to defense and settlement costs, diversion of our management resources, and other factors.

On February 10, 2023, a putative class action lawsuit was filed in the U.S. District Court for the Northern District of California against our company and certain of our officers and current and former members of our board of directors, Greenhalgh v. Caribou Biosciences, Inc., et al., Case Number 3:23-cv-00609-VC (the “Greenhalgh Case”). The Greenhalgh Case was voluntarily dismissed on March 16, 2023.

On April 11, 2023, a putative class action lawsuit was filed in the U.S. District Court for the Northern District of California against our company and certain of our officers and current and former members of our board of directors, Bergman v. Caribou Biosciences, Inc., et al., Case Number 4:23-cv-01742-YGR (the “Bergman Case”). The Bergman complaint challenges disclosures regarding our company’s business, operations, and prospects, specifically with respect to the alleged durability of CB-010’s therapeutic effect and the product candidate’s clinical and commercial prospects, in alleged violation of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended. The allegations and claims asserted in the Bergman Case are the same allegations and claims asserted in the Greenhalgh Case. Plaintiff in the Bergman Case has filed a motion to consolidate the Bergman Case with the Greenhalgh case, and that motion is pending.

On March 22, 2023, a putative class action lawsuit was filed in Superior Court of the State of California for the County of Alameda against our company and certain of our officers and current and former members of our board of directors, Lowry v. Caribou Biosciences, Inc., et al., Case Number T23-1084 (the “Lowry Case”). The Lowry Case challenges disclosures regarding our company’s business, operations, and prospects, specifically with respect to the alleged durability of CB-010’s therapeutic effect and the product candidate’s clinical and commercial prospects, in alleged violation of Sections 11 and 15 of the Securities Act. The allegations and claims in the Lowry Case are substantially similar to the Securities Act claims asserted in the Bergman and Greenhalgh Cases. On April 26, 2023, we filed a motion to stay the Lowry Case during the pendency of the parallel federal court litigation in the Bergman Case and the Greenhalgh Case. We believe all of these lawsuits are ~~not currently subject to any material legal proceedings.~~without merit.

Item 1A. Risk Factors.

There have been no material changes to the Risk Factors previously disclosed in Item 1A. to Part I of our Form 10-K. The risks described in our Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities for the Three Months Ended ~~September 30, 2022~~March 31, 2023

There were no unregistered sales of equity securities during the three months ended ~~September 30, 2022.~~March 31, 2023.

Use of Proceeds from our IPO

The net proceeds from our IPO, after deducting underwriting discounts and commissions and offering expenses of $28.6 million, were $321.0 million. We are holding a significant portion of the balance of the net proceeds from our IPO in money market mutual funds, U.S. Treasury bills, corporate debt securities, and U.S. government agency bonds. There has been no material change in our planned use of the net proceeds from our IPO described in the final prospectus for our IPO filed on July 23, 2021 with the SEC pursuant to Rule 424(b)(4) of the Securities ~~Act of 1933, as amended.~~Act.

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Item 6. Exhibits.


Exhibit Number						Description
3.1						Amended and Restated Certificate of Incorporation of Caribou Biosciences, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by the Registrant with the SEC on July 28, 2021)
3.2						Amended and Restated Bylaws of Caribou Biosciences, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed by the Registrant with the SEC on July 28, 2021)
4.1						Description of Common Stock (incorporated by reference to Exhibit 4.1 to the Form 10-K filed by the Registrant on March 21, 2022)
10.1*10.1†						~~Form of Restricted Stock Unit Award Grant Notice~~First Amendment to the Collaboration and ~~Restricted Stock Unit Award~~License Agreement, ~~under the 2021 Equity Incentive Plan of the Registrant~~
10.2*						~~Form of Performance Stock Unit Award Grant Notice and Performance Stock Unit Award Agreement under the 2021 Equity Incentive Plan of the Registrant~~
~~10.3~~						~~Open Market Sale Agreement~~SM, dated ~~August 9, 2022, by and~~February 21, 2023, between the Registrant and ~~Jefferies LLC~~AbbVie Manufacturing Management Unlimited Company (incorporated by reference to Exhibit ~~1.2~~10.2 to the ~~Company’s Registration Statement on~~ Form ~~S-3 (File No. 333-266712)~~10-K filed by the Registrant with the SEC on ~~August~~March 9, ~~2022)~~2023)
10.2†						Side Letter to the Collaboration and License Agreement, dated January 30, 2023, between the Registrant and AbbVie Manufacturing Management Unlimited Company (incorporated by reference to Exhibit 10.3 to the Form 10-K filed by the Registrant with the SEC on March 9, 2023)
10.3+						Compensation Letter, dated February 16, 2023, from the Registrant to Rachel E. Haurwitz, Ph.D. (incorporated by reference to Exhibit 10.34 to the Form 10-K filed by the Registrant with the SEC on March 9, 2023)
10.4+						Compensation Letter, dated February 16, 2023, from the Registrant to Jason V. O’Byrne (incorporated by reference to Exhibit 10.38 to the Form 10-K filed by the Registrant with the SEC on March 9, 2023)
10.5+						Compensation Letter, dated February 16, 2023, from the Registrant to Barbara G. McClung, J.D. (incorporated by reference to Exhibit 10.41 to the Form 10-K filed by the Registrant with the SEC on March 9, 2023)
10.6+						Compensation Letter, dated February 16, 2023, from the Registrant to Steven B. Kanner, Ph.D. (incorporated by reference to Exhibit 10.44 to the Form 10-K filed by the Registrant with the SEC on March 9, 2023)
10.7+						Compensation Letter, dated February 16, 2023, from the Registrant to Ruhi Khan (incorporated by reference to Exhibit 10.47 to the Form 10-K filed by the Registrant with the SEC on March 9, 2023)
10.8+						Compensation Letter, dated February 16, 2023, from the Registrant to Syed Rizvi, M.D. (incorporated by reference to Exhibit 10.50 to the Form 10-K filed by the Registrant with the SEC on March 9, 2023)
31.1*						Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*						Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema Document
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*						Cover Page Interactive Data File (embedded within the Inline XBRL document)

*Filed herewith.

**Furnished herewith.

† Indicates certain portions of this document that constitute confidential information have been redacted in accordance

with Regulation S-K, Item 601(b)(10)

Table of Contents

+ Indicates management contract or compensatory plan

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Caribou Biosciences, Inc.

Date: ~~November 8, 2022~~May 9, 2023	By:	/s/ Rachel E. Haurwitz
		Rachel E. Haurwitz President and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~November 8, 2022~~May 9, 2023	By:	/s/ Jason V. O'Byrne
		Jason V. O’Byrne
		Chief Financial Officer (Principal Financial Officer)

4133


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of ~~Convertible Preferred Stock and~~ Stockholders’ Equity ~~(Deficit)~~	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2619
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3829
Item 4.	Controls and Procedures	3829
PART II.	OTHER INFORMATION	3930
Item 1.	Legal Proceedings	3930
Item 1A.	Risk Factors	3930
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3930
Item 6.	Exhibits	4031
Signatures		4133


	January 1, 2022
	Pre-ASC 842 Balance		ASC 842 Adoption Impact		Post-ASC 842 Balance
Operating lease right-of-use assets	$	—	$	22,818	$	22,818
Prepaid rent	$	291	$	(291)	$	—
Accrued expenses and other current liabilities*	$	13,136	$	683	$	13,819
Long-term operating lease liabilities	$	—	$	23,941	$	23,941
Deferred rent and lease incentive liability	$	2,097	$	(2,097)	$	—


	As of December 31, 2021
	Amortized Cost Basis		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Money market investments (included in cash equivalents)	$	181,528	$	—	$	—	$	181,528
Commercial paper ($58,892 included in cash equivalents)	141,726		1		(51)		141,676
U.S. government agency bonds	25,102		—		(37)		25,065
Corporate debt securities	38,661		4		(16)		38,649
U.S. Treasury bills	26,626		1		(37)		26,590
Total cash equivalents and marketable securities	$	413,643	$	6	$	(141)	$	413,508

Classified as:
Cash and cash equivalents							$	240,420
Marketable securities, short-term							135,412
Marketable securities, long-term							37,676
Total cash equivalents and marketable securities							$	413,508


	As of September 30, 2022		As of December 31, 2021
Fair value of common stock	$	10.55	$	15.09
Risk-free interest rate	3.83%		1.52%
Expected volatility	81%		75%
Probability of achieving multiple of Initial Share Price	5.7% to 17.9%		7.0% to 20.9%
Expected term (years)	3.9 to 5.3		4.2 to 5.5


Multiple of Initial Share Price giving rise to a success payment	5x		10x		15x
MSKCC success payments (in millions)	$	10.0	$	10.0	$	15.0


	Number of Shares Underlying Outstanding RSUs and PSUs	Weighted-Average Grant Date Fair Value per RSU and PSU
Unvested, January 1, 2022	—	$	—
Granted	259,839	10.07
Forfeited	(70)	9.90
Unvested, September 30, 2022	259,769	$	10.07