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~~ Yes☒ NO No☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). ~~YES~~ Yes☒ NO No☐

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

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

~~Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.~~

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

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

As of ~~November 3, 2017,~~May 5, 2023, there were ~~41,019,352~~78,935,098 shares of registrant’s common shares outstanding.

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

“CRISPR Therapeutics®” standard character mark and design logo, “COBALTTM,”“CRISPRXTM,” “CRISPR TXTM,” “CTX001TM,” “CTX110®,” “CTX112TM,” “CTX130TM,” “CTX131TM,”“CTX310TM,”“CTX320TM,”“VCTX210TM” and “VCTX211TM,” are trademarks and registered trademarks of CRISPR Therapeutics AG. All other trademarks and registered trademarkscontained in this Quarterly Report on Form 10-Q are the property of their respective owners.Solely for convenience, trademarks, service marks and trade names referred to in this Quarterly Report on Form 10-Q may appear without the ® or ™ symbols and any such omission is not intended to indicate waiver of any such rights.

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

Any forward-looking statements in this Quarterly Report on Form 10-Qreflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and assumptions that could cause our actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q, if any, our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on February 21, 2023, and in other SEC filings. You should not rely upon forward-looking statements as predictions of future events. Such forward-looking statements speak only as of the date of this report. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make or enter into.

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

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


		As of							As of
		September 30,			December 31,				March 31,			December 31,
		2017			2016				2023			2022
Assets	Assets							Assets
Current assets:
Cash		$	253,519		$	315,520
Accounts receivable, including related party amounts of $1,133 and $752 as of September 30, 2017 and December 31, 2016, respectively			3,211			3,157
Prepaid expenses and other current assets, including related party amounts of $583 and $0 as of September 30, 2017 and December 31, 2016, respectively			1,856			1,511
Cash and cash equivalents									$	344,407		$	211,885
Marketable securities										1,538,763			1,603,433
Prepaid expenses and other current assets										24,796			37,708
Total current assets			258,586			320,188				1,907,966			1,853,026
Property and equipment, net			19,564			21,027				162,198			163,634
Marketable securities, non-current										6,320			53,130
Intangible assets, net			358			399				57			71
Restricted cash			3,154			3,150				11,717			11,635
Operating lease assets										153,346			156,921
Other non-current assets			657			198				2,760			4,640
Total assets		$	282,319		$	344,962			$	2,244,364		$	2,243,057
Liabilities and shareholders’ equity	Liabilities and shareholders’ equity							Liabilities and shareholders’ equity
Current liabilities:
Accounts payable		$	2,116		$	4,569			$	45,153		$	27,428
Accrued expenses, including related party amounts of $0 and $537 as of September 30, 2017 and December 31, 2016, respectively			8,485			16,320
Accrued expenses										85,631			77,682
Accrued tax liabilities			427			23				273			135
Deferred rent			1,027			1,027
Operating lease liabilities										15,717			15,842
Other current liabilities			62			59				20			20
Total current liabilities			12,117			21,998				146,794			121,107
Deferred revenue, including related party amounts of $171 and $527 as of September 30, 2017 and December 31, 2016, respectively			79,689			77,646
Deferred rent non-current			11,380			12,283
Deferred revenue, non-current										12,323			12,323
Operating lease liabilities, net of current portion										224,552			228,179
Other non-current liabilities			175			189				5,799			5,969
Total liabilities			103,361			112,116				389,468			367,578
Commitments and contingencies (Note 6)
Commitments and contingencies, see Note 7
Shareholders’ equity:
Common shares, CHF 0.03 par value, 40,890,954 and 40,253,674 shares authorized at September 30, 2017 and December 31, 2016, respectively, 40,826,727 and 40,164,307 shares issued at September 30, 2017 and December 31, 2016, respectively, 40,381,854 and 39,719,434 shares outstanding at September 30, 2017 and December 31, 2016, respectively, 16,746,246 and 15,325,607 shares in conditional capital at September 30, 2017 and December 31, 2016, respectively.			1,234			1,216
Treasury shares, at cost, 444,873 shares at September 30, 2017 and December 31, 2016, respectively			-		-
Common shares, CHF 0.03 par value, 150,347,467 shares authorized at March 31, 2023 and at December 31, 2022, 79,044,050 and 78,692,766 shares issued at March 31, 2023 and December 31, 2022, respectively, 78,863,734 and 78,512,450 shares outstanding at March 31, 2023 and December 31, 2022, respectively										2,452			2,441
Treasury shares, at cost, 180,316 shares at March 31, 2023 and at December 31, 2022										(63	)		(63	)
Additional paid-in capital			303,292			288,739				2,761,050			2,734,838
Accumulated deficit			(125,580	)		(57,083	)			(899,155	)		(846,090	)
Accumulated other comprehensive income (loss)			12			(26	)
Accumulated other comprehensive loss										(9,388	)		(15,647	)
Total shareholders' equity			178,958			232,846				1,854,896			1,875,479
Total liabilities and shareholders’ equity		$	282,319		$	344,962			$	2,244,364		$	2,243,057

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Collaboration revenue (1)

$
2,387

$
1,549

$
8,672

$
2,820

Operating expenses:

Research and development (2)

17,845

12,052

49,770

26,666

General and administrative

8,112

4,107

24,522

18,974

Total operating expenses

25,957

16,159

74,292

45,640

Loss from operations

(23,570
)

(14,610
)

(65,620
)

(42,820
)
Other (expense) income:

Interest expense

-

(1
)

-

(8,051
)
Loss from equity method investment

(359
)

-

(1,310
)

(686
)
Gain on extinguishment of convertible loan

-

-

-

11,482

Other expense, net

(71
)

(75
)

(238
)

(141
)
Total other (expense) income, net

(430
)

(76
)

(1,548
)

2,604

Net loss before income taxes

(24,000
)

(14,686
)

(67,168
)

(40,216
)
Provision for income taxes

(707
)

(8
)

(1,330
)

(84
)
Net loss

(24,707
)

(14,694
)

(68,498
)

(40,300
)
Foreign currency translation adjustment

8

(1
)

38

(18
)
Comprehensive loss

$
(24,699
)

$
(14,695
)

$
(68,460
)

$
(40,318
)
Reconciliation of net loss to net loss attributable to common
   shareholders:

Net loss

$
(24,707
)

$
(14,694
)

$
(68,498
)

$
(40,300
)
Loss attributable to noncontrolling interest

-

14

-

24

Net loss attributable to common shareholders

$
(24,707
)

$
(14,680
)

$
(68,498
)

$
(40,276
)
Net loss per share attributable to common shareholders—basic and
   diluted

$
(0.62
)

$
(2.77
)

$
(1.72
)

$
(7.43
)
Weighted-average common shares outstanding used in net loss per
   share attributable to common shareholders—basic and diluted

40,088,718

5,292,348

39,904,863

5,422,617

(1) Including the following revenue from a related party, see Note 11:

$
1,249

$
385

$
3,888

$
385

(2) Including the following research and development expense with a related party, See Note 11:

$
1,208

$
361

$
3,699

$
361

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

Nine Months Ended September 30,

2017

2016

Operating activities:

Net loss

$
(68,498
)

$
(40,300
)
Reconciliation of net loss to net cash used in operating activities:

Depreciation and amortization

2,218

513

Equity-based compensation

11,894

6,816

Non-cash interest

-

8,050

Loss from disposal of property and equipment

-

28

Unrealized foreign currency remeasurement loss

(9
)

(7
)
Gain on extinguishment of convertible loan

-

(11,482
)
Loss from equity method investment

1,310

686

Changes in:

Restricted cash

(4
)

(2,453
)
Accounts receivable

(54
)

(1,753
)
Prepaid expenses and other assets

(304
)

(694
)
Accounts payable and accrued expenses

(2,979
)

3,275

Deferred revenue

2,043

1,220

Deferred rent

(903
)

196

Other liabilities, net

31

11

Net cash used in operating activities

(55,255
)

(35,894
)
Investing activities:

Purchase of property and equipment

(7,609
)

(2,788
)
Proceeds from contribution of intellectual property to equity method investee

-

20,000

Purchase of available for sale debt security

(500
)

(100
)
Net cash (used in) provided by investing activities

(8,109
)

17,112

Financing activities:

Proceeds from issuance of common shares

-

16

Proceeds from issuance of Series A-3 preferred shares

-

22,850

Proceeds from issuance of Series B preferred shares

-

38,075

Issuance costs for preferred share financings

-

(1,810
)
Payment of public offering costs

-

(2,677
)
Proceeds from issuance of convertible loans

-

35,000

Proceeds from exercise of options

1,324

-

Net cash provided by financing activities

1,324

91,454

Effect of exchange rate changes on cash

39

(20
)
(Decrease) increase in cash

(62,001
)

72,652

Cash, beginning of period

315,520

155,961

Cash, end of period

$
253,519

$
228,613

Supplemental disclosure of non-cash investing and financing activities

Property and equipment purchases in accounts payable and accrued expenses

$
118

$
246

Conversion of Vertex convertible loan and accrued interest

$
-

$
61,929

Noncash contribution of intellectual property to Casebia Therapeutics LLP

$
-

$
36,372

Issuance costs for public offering in accounts payable and accrued expenses

$
-

$
825

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

1. ~~Organization~~Basis of Presentation and ~~Operations~~

~~The Company~~

CRISPR Therapeutics AG (“CRISPR” or the “Company”) was formed on October 28, 2013 in Basel, Switzerland. The Company was established to translate CRISPR/Cas9, a genome editing technology, into transformative gene-based medicines for the treatment of serious human diseases. The foundational intellectual property underlying the Company’s operations was licensed to the Company and its subsidiaries in April 2014. The Company devotes substantially all of its efforts to product research and development activities, initial market development and raising capital. The Company’s principal offices are located in Zug, Switzerland and its principal research operations are in Cambridge, Massachusetts.

On January 23, 2014, the founders of the Company formed TRACR Hematology Limited (“TRACR”), wholly-owned subsidiary of the Company, in the United Kingdom, to further the development of the CRISPR/Cas9 technology into medicines for the treatment of blood-borne illnesses. As the Company was funding and managing TRACR’s operations in 2014, it has been consolidated by the Company from the date that the Company established a variable interest in TRACR in April 2014. In March 2015, the Company acquired 82.1% of the outstanding equity of TRACR in a share exchange transaction. Concurrent with its initial public offering (“IPO”) in October 2016, the Company acquired the outstanding non-controlling interest in TRACR.

On February 7, 2014, the Company formed a wholly-owned subsidiary in the United Kingdom, CRISPR Therapeutics Limited (“CRISPR Ltd.”), and on February 16, 2015, the Company formed a wholly-owned subsidiary in the United States, CRISPR Therapeutics, Inc. (“CRISPR Inc.”), as its principal research and development operation.

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations and ability to transition from pilot-scale manufacturing to large-scale production of products.

The Company had an accumulated deficit of $125.6 million as of September 30, 2017 and has financed its operations to date from proceeds obtained from its IPO, private placements of our preferred and common shares, convertible loans and collaboration agreements with strategic partners. The Company will require substantial additional capital to fund its research and development and ongoing operating expenses.

~~Liquidity~~

The Company expects its cash of $253.5 million at September 30, 2017 to be sufficient to fund its current operating plan through at least the next 24 months. Thereafter, the Company may be required to obtain additional funding. There can be no assurance that the Company will be able to obtain additional debt or equity financing or generate product revenue or revenues from collaborative partners, on terms acceptable to the Company, on a timely basis or at all. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations, and financial condition.

~~2. Summary of~~ Significant Accounting Policies

Basis of Presentation

The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the “Annual Report”). There have been no material changes to the significant accounting policies during the nine months ended September 30, 2017.

~~Unaudited Interim Financial Information~~

~~The~~accompanying condensed consolidated financial statements ~~of the Company included herein~~are unaudited and have been prepared ~~without audit, pursuant to~~by the ~~rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared~~Company in accordance with accounting principles generally accepted in the United States of America, ~~(“GAAP”)~~or U.S. GAAP.

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company views its operations and manages its business in one operating segment, which is the business of discovering, developing and commercializing therapies derived from or incorporating genome-editing technology. Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or ~~omitted from this report,~~omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position and results of operations for the three-month interim periods ended March 31, 2023 and 2022.

Beginning in 2022, "collaboration expense, net" in the condensed consolidated statements of operations and comprehensive loss present collaboration costs related to the exagamglogene autotemcel, or exa-cel (formerly known as ~~is permitted by such rules~~CTX001), program under the Company's collaboration with Vertex Pharmaceuticals Incorporated and ~~regulations. Accordingly,~~certain of its subsidiaries, or Vertex, accounted for under ASC 808, Collaborative Agreements, or ASC 808. Refer to Note 6 to these condensed consolidated financial statements for further discussion on the Company's agreements with Vertex, including the exa-cel program.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. These interim financial statements should be read in conjunction with the audited financial statements ~~and notes thereto included~~for the year ended December 31, 2022, which are contained in the 2022 Annual ~~Report.~~

~~Basis of Presentation~~Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on February 21, 2023.

Use of Estimates

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, and include the accounts of (i) the Company, and (ii) its wholly-owned subsidiaries, CRISPR Ltd., CRISPR Inc., and TRACR. All intercompany accounts and transactions have been eliminated. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”). The Company accounts for its 50% interest in Casebia Therapeutics LLP (“Casebia”) under the equity method of accounting. See Note 7 for further details.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company’s management evaluates its estimates, which include, but are not limited to, revenue recognition, equity-based compensation expense ~~revenue recognition, equity method investments, fair value of intangible assets, the provision for or benefit from income taxes~~ and reported amounts of ~~research and development~~ expenses during the period. Significant estimates in these consolidated financial statements have been made in connection with revenue recognition and equity-based compensation expense. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. ~~The consolidated statements reflect all adjustments which are of a normal recurring nature necessary for presentation.~~ Actual results may differ from those estimates or assumptions. Changes in estimates are reflected in reported results in the period in which they become known.

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, 2023 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s 2022 Annual Report on Form 10-K filed with the SEC on February 21, 2023.

New Accounting Pronouncements – Recently Adopted

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies that the Company adopts as of the specified effective date. The Company does not believe that the adoption of recently issued standards have or may have a material impact on its consolidated financial statements and disclosures.

2. Marketable Securities

The following table summarizes cash equivalents and marketable securities held at March 31, 2023 and December 31, 2022 (in thousands), which are recorded at fair value. The table below excludes $263.6 million and $159.3 million of cash at March 31, 2023 and December 31, 2022, respectively.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2023
Cash equivalents:
Money market funds	$	19,387	$	—	$	—		$	19,387
Corporate debt securities		2,358		—		—			2,358
Commercial paper		13,527		—		(1	)		13,526
U.S. Treasury securities		45,557		9		—			45,566
Total cash equivalents		80,829		9		(1	)		80,837
Marketable securities:
U.S. Treasury securities		2,991		—		(7	)		2,984
Corporate debt securities		1,034,507		1,143		(9,773	)		1,025,877
Certificates of deposit		81,948		—		—			81,948
Government-sponsored enterprise securities		145,034		81		(477	)		144,638
Commercial paper		289,987		6		(357	)		289,636
Total marketable securities		1,554,467		1,230		(10,614	)		1,545,083
Total cash equivalents and marketable securities	$	1,635,296	$	1,239	$	(10,615	)	$	1,625,920
December 31, 2022
Cash equivalents:
Money market funds	$	17,766	$	—	$	—		$	17,766
Corporate debt securities		2,151		—		(2	)		2,149
Commercial paper		32,675		—		—			32,675
Total cash equivalents		52,592		—		(2	)		52,590
Marketable securities:
Corporate debt securities		1,236,770		615		(15,006	)		1,222,379
Certificates of deposit		92,417		—		—			92,417
Government-sponsored enterprise securities		79,746		11		(712	)		79,045
Commercial paper		263,231		—		(509	)		262,722
Total marketable securities		1,672,164		626		(16,227	)		1,656,563
Total cash equivalents and marketable securities	$	1,724,756	$	626	$	(16,229	)	$	1,709,153

As of March 31, 2023 and December 31, 2022, marketable securities were in a net unrealized loss position of $9.4 million and $15.6 million, respectively. The Company has recorded a net unrealized gain of $6.2 million and a net unrealized loss of $11.8 million during the three months ended March 31, 2023 and 2022, respectively, related to its debt securities, which is included in comprehensive loss on the condensed consolidated statements of operations and comprehensive loss.

As of March 31, 2023 and December 31, 2022, the aggregate fair value of marketable securities that were in an unrealized loss position for less than twelve months was $630.5 million and $628.4 million, respectively. As of March 31, 2023 and December 31, 2022, the aggregate fair value of marketable securities that were in an unrealized loss position for more than twelve months was $468.0 million and $619.2 million, respectively. Of this amount, securities totaling $6.3 million and $53.1 million as of March 31, 2023 and December 31, 2022, respectively, will mature beyond one year.

The Company determined that there is no material credit risk associated with the above investments as of March 31, 2023. The Company has the intent and ability to hold such securities until recovery. As a result, the Company did not record any charges for credit-related impairments for its marketable securities for the three months ended March 31, 2023 and 2022. No available-for-sale debt securities held as of March 31, 2023 had remaining maturities greater than thirty months.

3. Fair Value Measurements

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the fair value hierarchy classification of such fair values as of March 31, 2023 and December 31, 2022 (in thousands):


	Fair Value Measurements at
	March 31, 2023
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents:
Cash	$	263,570	$	263,570	$	—	$	—
Money market funds		19,387		19,387		—		—
Corporate debt securities		2,358		—		2,358		—
Commercial paper		13,526		—		13,526		—
U.S. Treasury securities		45,566		—		45,566		—
Marketable securities:
U.S. Treasury securities		2,984		—		2,984		—
Corporate debt securities		1,025,877		—		1,025,877		—
Certificates of deposit		81,948		—		81,948		—
Government-sponsored enterprise securities		144,638		—		144,638		—
Commercial paper		289,636		—		289,636		—
Total	$	1,889,490	$	282,957	$	1,606,533	$	—
	Fair Value Measurements at
	December 31, 2022
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents:
Cash	$	159,295	$	159,295	$	—	$	—
Money market funds		17,766		17,766		—		—
Corporate debt securities		2,149		—		2,149		—
Commercial paper		32,675		—		32,675		—
Marketable securities:
Corporate debt securities		1,222,379		—		1,222,379		—
Certificates of deposit		92,417		—		92,417		—
Government-sponsored enterprise securities		79,045		—		79,045		—
Commercial paper		262,722		—		262,722		—
Other non-current assets		2,212		—		—		2,212
Total	$	1,870,660	$	177,061	$	1,691,387	$	2,212

Marketable securities classified as Level 2 within the valuation hierarchy generally consist of U.S. treasury securities and government agency securities, certificates of deposit, corporate bonds and commercial paper. The Company estimates the fair value of these marketable securities by taking into consideration valuations obtained from third-party pricing sources.

Agreements with Vertex

2015 collaboration

In 2015, the Company entered into a strategic collaboration, option and license agreement, or the 2015 Collaboration Agreement, with Vertex. The 2015 Collaboration Agreement is focused on the use of the Company’s CRISPR/Cas9 gene editing technology to discover and develop potential new treatments aimed at the underlying genetic causes of human disease. The Company and Vertex amended the 2015 Collaboration Agreement in 2017 and 2019 with Amendment No. 1 and Amendment No. 2, respectively, namely to clarify Vertex’s option rights under the 2015 Collaboration Agreement and to modify certain definitions and provisions of the 2015 Collaboration Agreement to make them consistent with the JDA (as defined below) and the 2019 Collaboration Agreement (as defined below). In 2017, Vertex exercised an option granted to it under the 2015 Collaboration Agreement to obtain a co-exclusive license to develop and commercialize hemoglobinopathy and beta-globin targets, and in 2019, Vertex exercised the remaining options granted to it under the 2015 Collaboration Agreement to exclusively license certain collaboration targets developed under the 2015 Collaboration Agreement.

Exa-cel collaboration

In 2017, following Vertex's exercise of its option to obtain a co-exclusive license to develop and commercialize hemoglobinopathy and beta-globin targets, the Company and Vertex entered into a joint development and commercialization agreement, or the JDA, and agreed for potential hemoglobinopathy treatments, including exa-cel, the Company and Vertex would share equally all research and development costs and worldwide revenues. In 2021, the Company and Vertex amended and restated the JDA, or the A&R Vertex JDCA, pursuant to which the parties agreed to, among other things, (a) adjust the governance structure for the collaboration and adjust the responsibilities of each party thereunder, whereby Vertex leads and has all decision making (i.e., control) in relation to the exa-cel program prospectively; (b) adjust the allocation of net profits and net losses between the parties with respect to exa-cel only, which will be allocated 40% to the Company and 60% to Vertex, prospectively; and (c) exclusively license (subject to the Company’s reserved rights to conduct certain activities) certain intellectual property rights to Vertex relating to the specified product candidates and products (including exa-cel) that may be researched, developed, manufactured and commercialized on a worldwide basis under the A&R Vertex JDCA. Additionally, the A&R Vertex JDCA allows the Company to defer a portion of its share of costs under the arrangement if spending on the exa-cel program exceeds specified amounts. Any deferred amounts are only payable to Vertex as an offset against future profitability of the exa-cel program and the amounts payable are capped at a specified maximum amount per year.

DMD and DM1 exclusive license

In 2019, the Company and Vertex entered into a series of agreements, including a strategic collaboration and license agreement, or the 2019 Collaboration Agreement, for the development and commercialization of products for the treatment of Duchenne muscular dystrophy, or DMD, and Myotonic Dystrophy Type 1, or DM1. For the DMD and DM1 programs, Vertex is responsible for all research, development, manufacturing and commercialization activities and all related costs. Upon IND filing, the Company has the option to forego the DM1 milestones and royalties, and instead, co-develop and co-commercialize all DM1 products globally in

exchange for payment of 50% of research and development costs incurred by Vertex from the effective date of the agreement through IND filing.

Collaboration in the field of diabetes

In 2021, CRISPR and ViaCyte, Inc., or ViaCyte, entered into a joint development and commercialization agreement, or the ViaCyte JDCA, to jointly develop and commercialize product candidates and shared products for the diagnosis, treatment or prevention of diabetes type 1, diabetes type 2 or insulin dependent / requiring diabetes throughout the world. In the third quarter of 2022, Vertex acquired ViaCyte, and ViaCyte became a wholly-owned subsidiary of Vertex. In March 2023, (1) the Company and ViaCyte entered into an amendment to the ViaCyte JDCA, or the ViaCyte JDCA Amendment, and adjusted certain rights and obligations of the Company and ViaCyte under the ViaCyte JDCA, and (2) the Company and Vertex entered into a non-exclusive license agreement, or the Non-Ex License Agreement, pursuant to which the Company agreed to license to Vertex, on a non-exclusive basis, certain of its gene editing intellectual property to exploit certain products for the diagnosis, treatment or prevention of diabetes type 1, diabetes type 2 or insulin dependent / requiring diabetes throughout the world. In connection with entering into these agreements, the Company received a $100.0 million up front payment from Vertex. Under the Non-Ex License Agreement, the Company is eligible to receive milestone payments from Vertex of up to $230.0 million in the aggregate, depending on the achievement of pre-determined research, development and commercial milestones for certain products utilizing the licensed intellectual property. Additionally, the Company is eligible to receive tiered royalties on the sales of certain products in the low to mid-single digits.

Accounting Analysis

The 2015 Collaboration Agreement, Amendment No. 1, Amendment No. 2, A&R Vertex JDCA, and 2019 Collaboration Agreement are collectively the “Vertex Agreements” for purposes of this Note 6. The Non-Ex License Agreement and ViaCyte JDCA Amendment are collectively the “March 2023 Agreements.”

The Vertex Agreements and the March 2023 Agreements include components of a customer-vendor relationship as defined under ASC 606, Revenue from Contracts with Customers,or ASC 606, collaborative arrangements as defined under ASC 808, Collaborative Agreements,or ASC 808, and research and development costs as defined under ASC 730, Research and Development, or ASC 730. Specifically, with regards to the March 2023 Agreements, the Company concluded that the non-exclusive license is a performance obligation under ASC 606 and the ongoing research and development services under the ViaCyte JDCA Amendment are a unit of account under ASC 808.

Accounting Analysis Under ASC 606

March 2023 Agreements

Identification of the contract

The March 2023 Agreements were negotiated as a package with a single commercial objective and, as such, the March 2023 Agreements were combined for accounting purposes and treated as a single arrangement. The Company determined for accounting purposes that the combined contract terminates the original ViaCyte JDCA and created a new contract.

Identification of performance obligations

The Company concluded the transfer of the non-exclusive license, including certain modified rights and obligations provided as part of the ViaCyte JDCA Amendment to support the delivery of the license, was both capable of being distinct and distinct within the context of the contract.

Determination of transaction price

The transaction price was comprised of the upfront payment of $100.0 million. The Company determined that all other possible variable consideration resulting from milestones and royalties discussed below was fully constrained at the time of the transaction. The Company will reevaluate the transaction price in each reporting period.

Allocation of transaction price to performance obligations

The Company identified one performance obligation for the March 2023 Agreements and, as a result, no allocation of the transaction price was required.

Recognition of revenue

The Company determined the non-exclusive license, including certain modified rights and obligations provided as part of the ViaCyte JDCA Amendment to support the delivery of the license, represented functional intellectual property, as the intellectual property provides Vertex with the ability to perform a function or task in the form of research and development in the field of diabetes. The Company recognized revenue for the non-exclusive license at the onset of the arrangement, as this was the point in time in which the non-exclusive license was delivered. Revenue recognized under the March 2023 Agreements was $100.0 million for the three months ended March 31, 2023.

Milestones under the Non-Ex License Agreement

The Company is eligible to receive milestone payments from Vertex of up to $230.0 million in the aggregate under the Non-Ex License Agreement, depending on the achievement of pre-determined research, development and commercial milestones for certain products utilizing the licensed intellectual property. Additionally, the Company is eligible to receive tiered royalties on the sales of certain products in the low to mid-single digits. Each of the milestones under the Non-Ex License Agreement are fully constrained as of March 31, 2023. There is uncertainty as to whether the events to obtain the research and developmental milestones will be achieved given the nature of clinical development and the stage of the CRISPR/Cas9 technology. The remaining research, development and regulatory milestones will be constrained until it is probable that a significant revenue reversal will not occur. Commercial milestones and royalties relate predominantly to a license of intellectual property and are determined by sales or usage-based thresholds. The commercial milestones and royalties are accounted for under the royalty recognition constraint and will be accounted for as constrained variable consideration. The Company applies the royalty recognition constraint for each commercial milestone and will not recognize revenue for each until the subsequent sale of a licensed product (achievement of each) occurs.

Vertex Agreements

Deferred revenue

As of March 31, 2023 and December 31, 2022, there was no current deferred revenue related to the Vertex Agreements. As of March 31, 2023, there was $12.3 million of non-current deferred revenue related to the Vertex Agreements, which is unchanged from December 31, 2022. The transaction price allocated to the remaining performance obligations was $12.3 million.

Milestones

The Company has evaluated the milestones that may be received in connection with the Vertex Agreements.

Under the 2015 Collaboration Agreement and subsequent amendments, the Company is eligible to receive up to $410.0 million in additional development, regulatory and commercial milestones and royalties on net product sales for each of the three collaboration targets that Vertex licensed in 2019. Each milestone is payable only once per collaboration target, regardless of the number of products directed to such collaboration target that achieve the relevant milestone event.

The Company is eligible to receive potential future payments of up to $775.0 million under the 2019 Collaboration Agreement based upon the successful achievement of specified development, regulatory and commercial milestones for the DMD and DM1 programs. The Company is also eligible to receive tiered royalties on future net sales on any products that may result from this collaboration; however, the Company has the option to forego the DM1 milestones and royalties to co-develop and co-commercialize all DM1 products globally.

The Company is eligible to receive potential future payments of up to $200.0 million under the A&R Vertex JDCA upon receipt by Vertex of the first marketing approval of the initial product candidate from the FDA or the European Commission. In addition, the Company has the option to conduct research at their own cost in certain defined areas that, if beneficial to the exa-cel program and exa-cel ultimately achieves regulatory approval in such areas, then the Company could be entitled to certain milestone payments aggregating to high eight digits from Vertex.

Each of the remaining milestones described above are fully constrained as of March 31, 2023. There is uncertainty that the events to obtain the research and developmental milestones will be achieved given the nature of clinical development and the stage of the CRISPR/Cas9 technology. The remaining research, development and regulatory milestones will be constrained until it is probable that a significant revenue reversal will not occur. Commercial milestones and royalties relate predominantly to a license of intellectual property and are determined by sales or usage-based thresholds. The commercial milestones and royalties are accounted for under the royalty recognition constraint and will be accounted for as constrained variable consideration. The Company applies the royalty recognition constraint for each commercial milestone and will not recognize revenue for each until the subsequent sale of a licensed product (achievement of each) occurs.

Accounting Analysis under ASC 808

Vertex Agreements

In connection with the Vertex Agreements, the Company identified the following collaborative elements, which are accounted for under ASC 808: (i) development and commercialization services for shared products, including any transition services related to exa-cel under the A&R Vertex JDCA; (ii) R&D Services for follow-on products; and (iii) committee participation. The related impact of the cost sharing is included within collaboration expense, net, in the condensed consolidated statements of operations and comprehensive loss. During the three months ended March 31, 2023 and 2022, the Company recognized $42.2 million and $30.6 million of collaboration expense, net, related to the exa-cel program, respectively. Collaboration expense, net, was net of $2.8 million and $7.4 million of reimbursements from Vertex related to the exa-cel program, respectively.

9. Stock-based Compensation

During the three months ended March 31, 2023 and 2022, the Company recognized the following stock-based compensation expense (in thousands):


	Three Months Ended March 31,
	2023		2022
Research and development	$	11,676	$	14,589
General and administrative		9,199		11,156
Total	$	20,875	$	25,745

Stock option activity

The following table summarizes stock option activity for the three months ended March 31, 2023:


	Shares			Weighted- average exercise price per share
Outstanding at December 31, 2022		7,230,233		$	60.22
Granted		1,236,882			44.05
Exercised		(159,184	)		30.37
Cancelled or forfeited		(390,947	)		86.12
Outstanding at March 31, 2023		7,916,984		$	57.01
Exercisable at March 31, 2023		4,853,602		$	52.83
Vested and expected to vest at March 31, 2023		7,916,984		$	57.01

As of March 31, 2023, total unrecognized compensation expense related to stock options was $117.4 million, which the Company expects to recognize over a remaining weighted-average period of 2.6 years.

Restricted stock activity

The following table summarizes restricted stock activity for the three months ended March 31, 2023:


	Shares			Weighted- Average Grant Date Fair Value
Unvested balance at December 31, 2022		1,325,185		$	80.13
Granted		643,724			43.76
Vested		(172,995	)		74.21
Cancelled or forfeited		(125,084	)		86.11
Unvested balance at March 31, 2023		1,670,830		$	66.29

As of March 31, 2023, total unrecognized compensation expense related to unvested restricted common shares was $82.0 million, which the Company expects to recognize over a remaining weighted-average vesting period of 2.8 years.

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606) (“ASU 2014-09”). Subsequently, the FASB also issued ASU 2015-14,~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606), which adjusted the effective date of ASU 2014-09; ASU No. 2016-08,~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606):~~ ~~Principal versus Agent Considerations~~ ~~(Reporting Revenue Gross versus Net), which amends the principal-versus-agent implementation guidance and illustrations in ASU 2014-09; ASU No. 2016-10,~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606):~~ ~~Identifying Performance Obligations and Licensing, which clarifies identifying performance obligation and licensing implementation guidance and illustrations in ASU 2014-09; and ASU No. 2016-12,~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606):~~ ~~Narrow-Scope Improvements and Practical Expedients, which addresses implementation issues and is intended to reduce the cost and complexity of applying the new revenue standard in ASU 2014-09 (collectively, the “Revenue ASUs”).~~

The Revenue ASUs noted above provide an accounting standard for a single comprehensive model for use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for interim and annual periods beginning after December 15, 2017, with an option to early adopt for interim and annual periods beginning after December 15, 2016. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (the full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). ~~The Company currently anticipates adopting the new standard effective January 1, 2018 under the modified retrospective method.~~

The Company is in the process of evaluating its two revenue generating collaboration arrangements to determine the impact, if any, resulting from the adoption of the new revenue recognition standard. The Company expects that under the new standard, the Company will continue to recognize revenue allocated to R&D services overtime with the recognition of amounts allocated to certain licenses at a point in time, which is consistent with our current revenue recognition model. The Company is still evaluating the impact of the new standard will have on the accounting for costs to obtain and fulfill its contracts, as well as changes to the Company’s disclosures. The actual impact of adoption may change until the Company has finalized its evaluation.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases~~ (“ASU 2016-02”), which applies to all leases and will require lessees to record most leases on the balance sheet, but recognize expense in a manner similar to the current standard. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those years, which is the year ended December 31, 2019 for the Company. Entities are required to use a modified retrospective approach of adoption for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited. The Company is evaluating the new guidance and the impact on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) (“ASU 2016-09”). The guidance changes how companies account for certain aspects of equity-based payments to employees. Entities will be required to recognize income tax effects of awards in the income statement when the awards vest or are settled. The guidance also allows an employer to repurchase more of an employee’s shares than it can under current guidance for tax withholding purposes providing for withholding at the employee’s maximum rate as opposed to the minimum rate without triggering liability accounting and to make a policy election to account for forfeitures as they occur. The Company adopted the new standard January 1, 2017. The Company made an accounting policy election to account for the impact of pre-vesting forfeitures as they occur rather than applying an estimated forfeiture rate, as previously required. Adoption did not materially impact the consolidated financial statements.

~~In October 2016, the FASB issued ASU No. 2016-16,~~ 11. Income Taxes ~~(Topic 740):~~ ~~Intra-Entity Transfers of Assets Other Than Inventory~~ (“ASU 2016-16”), to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Current guidance prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party, which is an exception to the principle of comprehensive recognition of current and deferred income taxes. The amendments in this update eliminate the exception for an intra-entity transfer of an asset other than inventory. The amendments should be applied on a modified retrospective transition basis, and are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption is permitted. The Company is evaluating the new guidance and the expected effect on its consolidated financial statements.

~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~Statement of Cash Flows~~ ~~(Topic 230):~~ ~~Restricted Cash~~ (“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning and ending balances shown on the statement of cash flows. The guidance is effective in the first quarter of fiscal 2018 and early adoption is permitted. ASU 2016-18 must be applied retrospectively to all periods presented. Upon adoption, the Company’s 2016 statement of cash flows will reflect an increase in operating cash flows resulting from the adoption of this new standard. The Company does not expect any additional impact on its financial statements.

~~In January 2017, the FASB issued ASU No. 2017-01,~~ ~~Business Combinations~~ (Topic 805) (“ASU 2017-01”). ASU 2017-01 clarifies whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The purpose of the guidance is to narrow the definition of a business at it relates recording transactions as business acquisitions or asset acquisitions. The guidance is effective in annual periods beginning after December 15, 2017, including interim periods within those years, with early adoption permitted under certain circumstances. The Company does not expect any additional impact on its financial statements.

Depreciation expense for the three and nine months ended September 30, 2017 was $0.8 million and $2.2 million respectively. Depreciation expense for the three and nine months ended September 30, 2016 was $0.2 million and $0.5 million, respectively.

~~2015 Convertible Loan Agreement with Vertex and certain existing shareholders~~

On October 26, 2015, the Company entered into a convertible loan agreement with Vertex Pharmaceuticals Incorporated (“Vertex”) and certain existing shareholders (the “Vertex Convertible Loan”) under which the Company borrowed $38.2 million. The Vertex Convertible Loan accrued interest at 2.5% per annum and had an initial maturity date of April 26, 2016 subject to acceleration upon the occurrence of certain conditions. The Vertex Convertible Loan included various embedded conversion, redemption and other features, none of which required separate accounting from the host instrument under ASC Topic 815: ~~Derivatives and Hedging~~ ~~(“ASC 815”).~~

~~The conversion terms, redemption terms, and other features of the Vertex Convertible Loan are included in the Annual Report.~~

On January 29, 2016, in connection with a Joint Venture (“JV”) with Bayer HealthCare LLC (“Bayer HealthCare”), the Company entered into a Convertible Loan Agreement (the “Bayer Convertible Loan”) with Bayer Global Investments B.V. (“Bayer BV”) under which the Company borrowed $35.0 million. The Bayer Convertible Loan accrued interest at 2.0% per annum and matured on January 29, 2016. The Bayer Convertible Loan included various embedded conversion, redemption and other features, none of which required separate accounting from the host instrument under ASC 815.

~~The conversion terms, redemption terms, and other features of the Bayer Convertible Loan are included in the Annual Report.~~

On January 29, 2016, concurrent with the issuance of the Bayer Convertible Loan, all of the outstanding principal under the $35.0 million Bayer Convertible Loan automatically converted into 2,605,330 Series B Redeemable Convertible Preferred Shares (“Series B Preferred Shares”) at $13.43 per share. The Company determined the fair value of the Bayer Convertible Loan to be $24.5 million based on the fair value of the underlying Series B Preferred Shares that were exchanged as part of the immediate conversion. As the Bayer Convertible Loan was executed in contemplation of the joint venture agreement with Bayer, the Company evaluated the Bayer Convertible Loan as part of one multiple-element arrangement and, using a relative fair value allocation method, allocated $27.0 million of aggregate arrangement consideration to the Bayer Convertible Loan upon issuance. Upon conversion, the Company accreted the Bayer Convertible Loan to its face value of $35.0 million through a charge to interest expense of $8.0 million and converted the $35.0 million to Series B Preferred Shares under the conversion model.

The receipt of $35.0 million in proceeds under the Bayer Convertible Loan in exchange for equity securities, combined with the $38.2 million in proceeds from Vertex Convertible Loan, triggered an automatic conversion provision of the Vertex Convertible Loan Agreement. Accordingly, on January 29, 2016, the Vertex Convertible Loan, including loans from existing shareholders, plus accrued interest also converted into 2,859,278 of Series B Preferred Shares at $13.43 per share. The Company determined the fair value of the Vertex Convertible Loan to be $26.9 million based on the fair value of the underlying Series B Preferred Shares that were exchanged as part of the conversion. Upon extinguishment, the Company recorded a gain on extinguishment of $11.5 million for the difference between the carrying value of the debt and the fair value of the Series B Preferred Shares issued to settle the debt under the general extinguishment model.

The Company is party to a number of research license agreements which require upfront payments, future royalty payments and potential milestone payments from time to time which could be significant. In connection with these agreements, the Company has made upfront payments of $1.2 million and milestone payments of $0.6 million to date.

In March 2017, the Company subleased a portion of one research and office facility to a third party effective April 1, 2017. The sublease term is less than the remaining term under the original lease, and as a result, the Company does not believe it has met a cease use date as it may re-enter the space following the sublease. Payments to be received from the sublessee are approximately $2.8 million and will offset scheduled rent payments due to the landlord under the original lease for the sublease term.

The Company licenses a U.S. patent application that is currently subject to interference proceedings declared by the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office. Following motions by the parties and other procedural matters, the PTAB concluded in February 2017 that the declared interference should be dismissed because the claim sets of the two parties were not directed to the same patentable invention in accordance with the PTAB’s two-way test for patent interferences. In April 2017, the regents of the University of California (“California”) appealed the PTAB decision to the U.S. Court of Appeals for the Federal Circuit. In the appeal, California is seeking review and reversal of the PTAB’s February 2017 decision, which terminated the interference without determining which inventors actually invented the use of the CRISPR/Cas9 genome editing technology in eukaryotic cells.

~~Under the Invention Management Agreement signed on December 15, 2016, the Company is obligated to share costs related to patent maintenance, defense and prosecution.~~ During the three ~~and nine~~ months ended ~~September 30, 2017, the Company incurred $0.1 million~~March 31, 2023 and $1.1 million, respectively, in shared costs. During the three and nine months ended September 30, 2016, the Company incurred $0.2 million, and $1.0 million, respectively, in shared costs. The Company had accrued legal costs from the cost sharing of $0.5 million and $2.8 million as of September 30, 2017 and December 31, 2016, respectively.

In April 2014, the Company entered into a technology license agreement with Dr. Charpentier pursuant to which the Company licensed certain intellectual property rights under joint ownership from Dr. Charpentier to develop and commercialize products for the

treatment or prevention of human diseases other than hemoglobinopathies (“CRISPR—Charpentier License Agreement”). In consideration for the granting of the license, the Company paid Dr. Charpentier an upfront fee of CHF 0.1 million ($0.1 million), and agreed to pay an immaterial annual license maintenance fee if Dr. Charpentier is not otherwise engaged in a service arrangement with the Company. During the years ended December 31, 2016 and 2015, and three months ended September 30, 2017 and 2016, Dr. Charpentier has been in a consulting arrangement with the Company, as such, no annual payments have been made under this provision. Dr. Charpentier is entitled to receive nominal clinical milestone payments. The Company is also obligated to pay Dr. Charpentier a low single digit percentage of sublicensing payments received under any sublicense agreement with a third party. In addition, the Company is also obligated to pay to Dr. Charpentier a low single-digit percentage royalty based on annual net sales of licensed products and licensed services by the Company and its affiliates and sublicensees.

During the three and nine months ended September 30, 2017, the Company did not record any sublicensing fees due to Dr. Charpentier. During the three and nine months ended September 30, 2016, the Company recorded $0 and $0.3 million, respectively, of sublicensing fees due to Dr. Charpentier These expenses were under the terms of the CRISPR—Charpentier License Agreement that was triggered by the execution of the JV agreement with Bayer Healthcare (“Bayer Agreement”).

In April 2014, TRACR entered into a technology license agreement (“TRACR—Charpentier License Agreement”) with Dr. Charpentier pursuant to which TRACR licensed certain intellectual property rights under joint ownership from Dr. Charpentier to develop and commercialize products for the treatment or prevention of human diseases related to hemoglobinopathies. In consideration for the granting of the license, Dr. Charpentier is entitled to receive nominal clinical milestone payments. TRACR is also obligated to pay Dr. Charpentier a low single digit percentage of sublicensing payments received under any sublicense agreement with a third party. In addition, TRACR is obligated to pay to Dr. Charpentier low single digit percentage royalties based on annual net sales of licensed products and licensed services by the Company and its affiliates and sublicensees.

During the three and nine months ended September 30, 2017 and 2016, the Company did not record any sublicensing fees due to Dr. Charpentier under the terms of the TRACR—Charpentier License Agreement.

In November 2014, the Company entered into a patent assignment agreement (“Patent Assignment Agreement”) with Dr. Charpentier, Dr. Ines Fonfara, and the University of Vienna (collectively, the “Assignors”), pursuant to which the Company received from the Assignors all rights, title and interest in and to certain patent rights claimed in the U.S. Patent Application No.61/905,835. In consideration for the assignment of such rights, the Assignors are entitled to receive clinical milestone payments totaling up to €0.3 million (approximately $0.4 million) in the aggregate for the first human therapeutic product. The Company is also obligated to pay to the Assignors low single digit royalties based on annual net sales of certain products and services by the Company and its affiliates and sublicensees.

During the three and nine months ended September 30, 2017 and 2016, the sublicensing fees due to the Assignors under the terms of the Patent Assignment Agreement that was triggered under the collaboration agreement with Vertex and by the execution of the Bayer Agreement were immaterial.

On October 26, 2015, the Company entered into a strategic collaboration, option, and license agreement (“Collaboration Agreement”) with Vertex, focused on the use of CRISPR’s gene editing technology, CRISPR/Cas9, to discover and develop potential new treatments aimed at the underlying genetic causes of human disease.

During the three and nine months ended September 30, 2017, the Company recognized $1.2 million and $4.8 million of revenue related to the collaboration with Vertex. During the three and nine months ended September 30, 2016, the Company recognized $1.2 million and $2.4 million of revenue related to the collaboration with Vertex. Research and development expense incurred by the Company in relation to its performance under the Collaboration Agreement for the three and nine months ended September 30, 2017 was $2.1 million and $8.0 million, respectively. Research and development expense incurred by the Company in relation to its performance under the Collaboration Agreement for the three and nine months ended September 30, 2016 was $1.7 million and $4.5 million, respectively. As of September 30, 2017, and December 31, 2016, there was $79.5 million and $77.1 million of non-current deferred revenue related to the Collaboration Agreement, respectively.

On December 19, 2015, the Company entered into an agreement with Bayer HealthCare LLC to establish a joint venture to discover, develop and commercialize new therapeutics to cure blood disorders, blindness, and congenital heart disease. On February 12, 2016, the Company and Bayer HealthCare completed the formation of the joint venture entity, Casebia Therapeutics LLP (“Casebia”). CRISPR contributed its proprietary CRISPR/Cas9 gene editing technology and intellectual property for selected disease indications to Casebia and Bayer HealthCare contributed its protein engineering expertise and relevant disease know-how to Casebia.

~~At September 30, 2017 and December 31, 2016, the value of the Company’s equity method investment in Casebia was zero.~~

During the three and nine months ended September 30, 2017, the Company recognized $1.2 million and $3.9 million of revenue, respectively, related to the collaboration with Casebia. During the three and nine months ended September 30, 2017, the Company recognized $1.2 million and $3.7 million of research and development expense, respectively, in relation to its performance under the agreement. During the three and nine months ended September 30, 2017, the Company recognized $0.4 million and $1.3 million respectively, of stock-based compensation expense related to Casebia employees. During the three and nine months ended September 30, 2016, the Company recognized $0.4 million and $0.4 million of revenue, respectively, related to the collaboration with Casebia. During the three and nine months ended September 30, 2016, the Company recognized $0.4 million and $0.4 million of research and development expense, respectively, in relation to its performance under the agreement. During the three and nine months ended September 30, 2016, the Company recognized $6.0 thousand of stock-based compensation expense related to the collaboration with Casebia. Non-current deferred revenue related to the Company’s collaboration with Casebia was $0.2 million and $0.5 million as of September 30, 2017 and December 31, 2016, respectively. Unrecognized equity method losses in excess of the Company’s equity investment in Casebia was $15.7 million and $4.0 million as of September 30, 2017 and December 31, 2016, respectively.

Total operating expenses, and net loss of Casebia for the three and nine months ended September 30, 2017 was $10.2 million and $24.7 million, respectively. Total operating expenses, and net loss of Casebia for the three and nine months ended September 30, 2016 was $3.0 million and $77.1 million, respectively, which included research and development expenses of $71.4 million for the fair value of the CRISPR license contributed to Casebia in the formation of the joint venture.

The Company had 40,890,954 registered common shares as of September 30, 2017, with a par value of CHF 0.03 per share, which includes 64,227 shares of unvested unissued restricted common stock and 444,873 treasury shares which are legally outstanding but not considered outstanding for accounting purposes.

~~The Company had the following conditional capital reserved for future issuance:~~

The Company uses the straight-line attribution method to recognize stock-based compensation expense for stock options and restricted stock awards. Stock options and restricted stock awards generally vest over four years with 25% vesting on the first anniversary of service commencement and the remaining 75% vesting monthly thereafter. Effective January 1, 2017, the Company adopted ASU 2016-09, and made an accounting policy election to account for the impact of pre-vesting forfeitures as they occur rather than applying an estimated forfeiture rate, as previously required. The following table presents stock-based compensation expense included in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss:

~~The Company 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:~~

The fair value of the restricted stock awards was determined based on the fair value of the common shares on the grant date. Non-employee stock options and restricted stock awards, including those granted to employees of Casebia, are marked-to-market at each reporting period.

~~The following table summarizes stock option activity for employees and non-employees (intrinsic value in thousands):~~

Stock
Options

Weighted-Average Exercise Price

Weighted-Average Remaining Contractual Term (years)

Aggregate Intrinsic Value

Outstanding at December 31, 2016

4,535,371

$
8.38

9.1

$
53,966

Granted

2,240,347

$
16.45

Exercised

(645,365
)

$
2.28

Cancelled or forfeited

(351,724
)

$
5.25

Outstanding at September 30, 2017

5,778,629

$
12.36

8.9

$
34,230

Exercisable at September 30, 2017

1,411,943

$
8.34

8.5

$
13,486

Vested or expected to vest at September 30, 2017 (1)

5,771,129

$
12.35

8.9

$
34,230

As of September 30, 2017, total unrecognized compensation expense related to stock options was $37.0 million which the Company expects to recognize over a remaining weighted-average period of 3.1 years.

During the nine months ended September 30, 2017 and 2016, the Company granted options to purchase 60,000 and 429,998 common shares, respectively, subject to performance-based vesting conditions. As of September 30, 2017, options to purchase 347,872 common shares subject to performance-based vesting conditions have vested, as performance conditions were achieved, and 7,500 options to purchase common shares subject to performance-based vesting conditions were deemed probable of vesting.

~~The following table summarizes restricted stock activity for employees and non-employees during the nine months ended September 30, 2017:~~

During the nine months ended September 30, 2017, the total fair value of vested restricted common shares was $6.2 million. As of September 30, 2017, total unrecognized compensation expense related to unvested restricted common shares was $4.0 million which the Company expects to recognize over a remaining weighted-average period of one year.

The Company did not grant any restricted common shares subject to performance-based vesting conditions during the nine months ended September 30, 2017. As of September 30, 2017, 50,000 restricted common shares subject to performance-based vesting conditions were vested.

During the year ended December 31, 2016, the Company and Fay Corp. transferred 290,400 common shares to a founder, 268,093 of which were subject to vesting conditions with a weighted average grant date fair value of $12.65 per share. The unvested common shares are subject to repurchase by the Company upon termination of the holder’s service relationship with the Company as well as upon certain triggering events such as termination for cause, material breach of agreement and insolvency of the holder. During the three and nine months ended September 30, 2017, the Company recognized expense related to these common shares in the amount of $0.2 million and $0.6 million respectively. During the three and nine months ended September 30, 2016, the Company recognized expense related to these common shares in the amount of $0.2 million and $2.4 million respectively.

~~During the three and nine months ended September 30, 2017,~~2022, the Company recorded an income tax provision of ~~$0.7~~$1.3 million and ~~$1.3~~$3.6 million, respectively, representing an effective tax rate of ~~-2.9%,~~(2.6%) and -2.0%, respectively. During the three and nine months ended September 30, 2016, the Company recorded an income tax provision of $8.0 thousand and $0.1 million, respectively, representing an effective tax rate of -0.1% and -0.2%(2.1%), respectively. The income tax provision for the three months ended March 31, 2023 and 2022 is primarily attributable to the ~~year-to-date pre-tax~~Company's U.S. subsidiaries. The change in the rate for the three months ended March 31, 2023 is primarily attributable to reduced forecasted capitalized R&D expense addback offset by an increase in forecasted interest income ~~earned by~~in the ~~Company’s U.S. and U.K. subsidiaries.~~United States. The difference in the statutory tax rate and effective tax rate is primarily a result of the jurisdictional mix of earnings, research credits generated, and ~~losses that are not benefited.~~the valuation allowance recorded against certain deferred tax assets. The Company maintains a valuation allowance against certain deferred tax assets that are not more-likely-than-not realizable. ~~As a result, the Company has not recognized a tax benefit related to losses generated in Switzerland in the current periods.~~

The Company is a party to intellectual property license agreements with Dr. Charpentier. As of September 30, 2017, and December 31, 2016, the Company owed Dr. Charpentier approximately $0 and $0.5 million, respectively, of sublicense fees primarily related to the Bayer Agreement. During the three and nine months ended September 30, 2017, the Company did not record any sublicensing fees due to Dr. Charpentier in research and development expense related to the Bayer Agreement. During the three and nine months ended September 30, 2016, the Company recorded sublicensing fees of $17.0 thousand and $1.0 million, respectively, due to Dr. Charpentier in research and development expense related to the Bayer Agreement.15

The Company is a party to the JV with Bayer HealthCare. During the three and nine months ended September 30, 2017, the Company recognized revenue of $1.2 million, and $3.9 million, respectively, related to the collaboration with Casebia. During the three and nine months ended September 30, 2017, the Company recognized research and development expense of $1.2 million and $3.7 million, respectively, related to the performance of services for Casebia. During the three and nine months ended September 30, 2017, the Company received payments of $0.9 million and $1.6 million, respectively, in connection with research agreements with Casebia that the Company recognized as contra research and development expense. During the three and nine months ended September 30, 2016 the Company recognized $0.4 million in revenue and $0.4 million in research and development expenses related to the collaboration with Casebia. As of September 30, 2017, and December 31, 2016, the Company had accounts receivable of $1.1 million and $0.8 million, respectively, other current assets related to receivables associated with shared license research arrangements of $0.6 million and $0, respectively, and deferred revenue of $0.2 million and $0.5 million, respectively, related to Casebia.

~~As of November 8, 2017, the Company is not aware of any events have occurred that have a material effect on the financial statements.~~

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (i) our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) our audited consolidated financial statements and related notes and management’s discussion and analysis of financial condition and results of operations included in our ~~annual report~~Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 filed with the Securities and Exchange Commission, or the SEC, on ~~March 10, 2017. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A~~February 21, 2023. Some of the ~~Securities Act~~information contained in this discussion and ~~Section 21E of the Securities Exchange Act of 1934, as amended,~~analysis or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors”, set forth elsewhere in ~~Part II, Item 1A of~~ this Quarterly Report on Form 10-Q, ~~if any,~~including information with respect to our plans and instrategy for our ~~other SEC filings. You should not rely upon~~business and impact and potential impacts on our business, includes forward-looking statements ~~as predictions~~that involve risks and uncertainties. As a result of ~~future events. Furthermore, such~~many factors, including, without limitation, those factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022 and the “Risk Factors” section of subsequent Quarterly Reports on Form 10-Q, our actual results or timing of certain events could differ materially from the results or timing described in, or implied by, these forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

We are a leading gene editing company focused on the development of CRISPR/Cas9-based therapeutics. CRISPR/Cas9 ~~stands for~~ C~~lustered,~~ R~~egularly~~ I~~nterspaced~~ S~~hort~~ P~~alindromic~~ R~~epeats (CRISPR)~~ A~~ssociated Protein~~ 9 ~~and~~ is a revolutionary gene editing technology that allows for precise, directed changes to genomic DNA. The application of CRISPR/Cas9 for gene editing was co-invented by one of our scientific founders, Dr. Emmanuelle Charpentier. Dr. Charpentier ~~who, along with~~and her collaborators published work elucidating how CRISPR/Cas9, a naturally occurring viral defense mechanism found in bacteria, can be adapted for use in gene editing. We are applying this technology to disrupt, delete, correct and insert genes to potentially treat ~~a broad set of rare~~genetically defined diseases and ~~common diseases by disrupting, correcting or regulating the genes related to the disease.~~engineer advanced cellular therapies. We believe that our scientific expertise, together with our gene editing approach, may enable an entirely new class of highly ~~active~~effective and potentially curative ~~treatments~~therapies for patients with both rare and common diseases for whom current biopharmaceutical approaches have had limited success.

We have established a portfolio of therapeutic programs in a broad range of disease areas across four core franchises: hemoglobinopathies, immuno-oncology, regenerative medicine and in vivo approaches. Our most advanced programs target the genetically defined diseases transfusion-dependent beta thalassemia, or TDT, and severe sickle cell disease, or SCD, two hemoglobinopathies with high unmet medical need. We are also progressing several gene-edited allogeneic cell therapy programs, including allogeneic chimeric antigen receptor T cell, or CAR T, candidates for the treatment of hematological and solid tumor cancers, and investigational, allogeneic, gene-edited, immune-evasive, stem cell-derived therapies for the treatment of type 1 diabetes, or T1D. In addition, we are advancing multiple programs leveraging in vivo editing approaches, initially for the treatment and prevention of cardiovascular disease.

Our lead product candidate, exa-cel, is an investigational, autologous, ex vivo CRISPR gene-edited hematopoietic stem cell therapy that is being evaluated for the treatment of TDT and severe SCD. Exa-cel is being developed under a joint development and commercialization agreement between us and Vertex. We and Vertex are investigating exa-cel in two ongoing Phase 1/2/3 open-label clinical trials that are designed to assess the safety and efficacy of a single dose of exa-cel in patients ages 12 to 35 with TDT (CLIMB-111) or severe SCD (CLIMB-121), respectively. Enrollment is complete for both CLIMB-111 and CLIMB-121. In the second and fourth quarters of 2022, at the European Hematology Association Congress and American Society of Hematology Annual Meeting, respectively, we presented updated clinical data from CLIMB-111 and CLIMB-121 for 44 patients with TDT and 31 patients with severe SCD treated with exa-cel. In addition, we and Vertex are conducting two additional Phase 3 open-label clinical trials of exa-cel in pediatric patients with TDT (CLIMB-141) and severe SCD (CLIMB-151). Patients who received exa-cel in CLIMB-111, CLIMB-121, CLIMB-141 or CLIMB-151 are followed for approximately two years after exa-cel infusion and are asked to participate in a long-term, open-label follow-up trial, CLIMB-131, to evaluate the safety and efficacy of exa-cel. CLIMB-131 is designed to follow participants for up to 15 years after exa-cel infusion.

We and Vertex recently completed rolling submissions of the Biologics Licensing Applications, or BLAs, for exa-cel in the United States. Exa-cel has been granted RMAT, Fast Track, Orphan Drug, and Rare Pediatric Disease designations by the FDA for the treatment of both TDT and SCD. In addition, in the fourth quarter of 2022, we and Vertex completed regulatory submissions for exa-cel in the EU and the United Kingdom, and the European Medicines Agency, or EMA, and the Medicines and Healthcare products Regulatory Agency, or MHRA, have validated the marketing applications, respectively, indicating acceptance of the marketing applications and initiation of the review. Exa-cel has also been granted Orphan Drug Designation from the European Commission, as well as PRIME designation from the EMA for the treatment of both TDT and SCD. In the United Kingdom, exa-cel has been granted an Innovation Passport under the Innovative Licensing and Access Pathway from the MHRA.

In addition, building upon exa-cel, we have next-generation efforts in targeted conditioning and in vivo editing of hematopoietic stem cells, either of which could broaden the number of patients that can benefit from our therapies.

We believe CRISPR/Cas9 has the potential to create the next generation of CAR T cell therapies that may have a superior product profile compared to current autologous therapies and allow accessibility to broader patient populations. Drawing from the ex vivo gene editing capabilities gained through our lead programs, we are advancing several immuno-oncology cell therapy programs, including allogeneic CAR T programs targeting Cluster of Differentiation 19, or CD19, and Cluster of Differentiation 70, or CD70.

CTX110, our lead immuno-oncology product candidate, is a healthy donor-derived gene-edited allogeneic CAR T investigational therapy targeting CD19. We are investigating CTX110 in our CARBON clinical trial, which is designed to assess the safety and efficacy of CTX110 in adult patients with relapsed or refractory CD19-positive B-cell malignancies who have received at least two prior lines of therapy. CTX110 has been granted RMAT designation by the FDA.

The Phase 1 CARBON clinical trial is being conducted in two parts – Part A and Part B. In Part A of the Phase 1 CARBON clinical trial, or Phase 1 Part A, patients were infused with a single dose of CTX110 across escalating dose levels following a standard lymphodepletion regimen, with an option to re-dose CTX110 based on clinical benefit. In Part B of the Phase 1 CARBON clinical trial, or Phase 1 Part B, patients received CTX110 at Dose Level 4 following standard lymphodepletion, as well as a consolidation dose of CTX110 at the same dose level between four and eight weeks after the initial dose for patients that demonstrated clinical benefit.

In the fourth quarter of 2022, we presented updated clinical data from Phase 1 Part A for 32 patients treated with CTX110, which showed the potential for CTX110 to achieve long-term durable complete remissions with a positively differentiated safety profile in heavily pre-treated patients, and described emerging data from Phase 1 Part B, which showed an encouraging efficacy profile with the potential to improve efficacy with the use of a consolidation dose. Based on this emerging data from our Phase 1 CARBON clinical trial and discussions with regulatory agencies, we have expanded CARBON to include a Phase 2, potentially registrational, single-arm, multi-center, open-label clinical trial that incorporates consolidation dosing. The Phase 2 clinical trial is ongoing.

In parallel with CTX110, we are advancing CTX112, a next-generation investigational, allogeneic CAR T product candidate targeting CD19. CTX112 incorporates additional edits designed to enhance CAR T potency and reduce CAR T exhaustion. In the fourth quarter of 2022, the IND for CTX112 was cleared by the FDA. CTX112 is being investigated in an ongoing Phase 1/2 clinical trial designed to assess the safety and efficacy of CTX112 in adult patients with relapsed or refractory CD19-positive B-cell malignancies who have received at least two prior lines of therapy.

CTX130 is a healthy donor-derived gene-edited allogeneic CAR T investigational therapy targeting CD70, an antigen expressed on various solid tumors and hematologic malignancies. CTX130 is being investigated in two ongoing independent Phase 1, single-arm, multi-center, open-label clinical trials, COBALT, that are designed to assess the safety and efficacy of several dose levels of CTX130 in adult patients. The COBALT-LYM trial is evaluating the safety and efficacy of CTX130 for the treatment of relapsed or refractory T or B cell malignancies. The COBALT-RCC trial is evaluating the safety and efficacy of CTX130 for the treatment of relapsed or refractory clear cell renal cell carcinoma. CTX130 has received Orphan Drug Designation from the FDA for the treatment of T cell lymphoma and RMAT designation for the treatment of Mycosis Fungoides and Sézary Syndrome (MF/SS), subtypes of Cutaneous T cell Lymphoma (CTCL). In the second quarter of 2022, at the European Hematology Association Congress, we released initial clinical data from the ongoing COBALT-LYM trial for 18 patients with T cell lymphoma treated with CTX130 who had reached at least 28 days of follow-up. Also, in the fourth quarter of 2022, at the Society of Immuno-therapy in Cancer Annual Meeting, we released initial clinical data from the COBALT-RCC trial for 14 patients.

In parallel with CTX130, we are advancing CTX131, a next-generation investigational allogeneic CAR T product candidate targeting CD70 in a basket of solid tumors. CTX131 incorporates additional edits designed to enhance CAR T potency and reduce CAR T exhaustion. In the first quarter of 2023, the IND for CTX131 was cleared by the FDA. CTX131 is being investigated in an ongoing Phase 1/2 clinical trial designed to assess the safety and efficacy of CTX131 in adult patients with relapsed or refractory solid tumors.

Our CRISPR/Cas9 platform enables us to innovate continuously by incorporating incremental edits into next-generation products. In addition to CTX112 and CTX131, we are advancing several additional investigational CAR T product candidates.

Regenerative medicine, or the use of stem cells to repair or replace tissue or organ function lost due to disease, damage or age, holds the potential to treat both rare and common diseases. Building upon our ex vivo gene editing expertise, we have expanded our efforts in this field with a focus on allogeneic stem cell-derived therapies gene edited using CRISPR/Cas9 to enable immune evasion,

improve cell function, and direct cell fate. Our first major effort in this area is in diabetes, and we and ViaCyte, Inc., or ViaCyte, which was acquired by Vertex in the third quarter of 2022, are advancing a series of programs as part of a strategic collaboration for the discovery, development, and commercialization of gene-edited stem cell therapies for the treatment of diabetes. We believe the combination of ViaCyte’s stem cell capabilities and our gene editing capabilities has the potential to enable a beta-cell replacement product candidate that may deliver durable benefit to patients without requiring concurrent immune suppression.

We have a multi-staged product strategy that leverages our CRISPR/Cas9 platform to advance multiple product candidates incorporating incremental edits designed to increase benefit. Our initial product candidate, VCTX210, is an investigational, allogeneic, gene-edited, immune-evasive, stem cell-derived product candidate for the treatment of type 1 diabetes, or T1D, developed by applying our gene editing technology to ViaCyte’s proprietary stem cell capabilities. VCTX210 has gene edits designed to promote immune evasion and cell fitness. We and ViaCyte are investigating VCTX210 in an ongoing Phase 1 clinical trial that is designed to assess VCTX210’s safety, tolerability, and immune evasion in patients with T1D, and we are in the follow-up stage for this clinical trial. Our next generation product candidate, VCTX211, is an investigational, allogeneic, gene-edited, stem cell-derived product candidate for the treatment of T1D, which incorporates additional gene edits that aim to further enhance cell fitness. In the fourth quarter of 2022, the Clinical Trial Application for VCTX211 was cleared by Health Canada. VCTX211 is being investigated in an ongoing Phase 1/2 clinical trial designed to assess the safety, tolerability and efficacy of VCTX211 in adult patients with T1D.

Our in vivo gene editing strategy focuses on gene disruption and whole gene correction – the two technologies required to address the vast majority of the most prevalent severe monogenic diseases. We have established a leading platform for in vivo gene disruption in the liver and are rapidly advancing a broad portfolio of in vivo programs for both rare and common diseases towards clinical trials. Within the liver, we are pursuing diseases that are amenable to a gene disruption strategy and have well-understood genetic linkages, such as cardiovascular disease, or CVD. Our lead investigational in vivo programs, CTX310 and CTX320, target angiopoietin-related protein 3 (ANGPTL3) and lipoprotein(a) (Lp(a)), respectively, two validated targets for CVD. We believe this approach of leveraging existing proofs of concept reduces the challenges associated with delivering CRISPR/Cas9-based therapeutics in vivo. Beyond the liver, for delivery to hematopoietic stem cells, the central nervous system, and other extrahepatic tissues, we are pursuing additional delivery technologies, including adeno-associated virus vectors, or AAV, and further advancements to nanoparticle technology.

While we have made significant progress with our current portfolio of programs, we recognize that we need to continue to innovate to unlock the full potential of CRISPR gene editing and bring the potential of transformative therapies to even more patients. In 2022, we launched a new early-stage research team known as CRISPR-X that focuses on innovative research to develop next-generation editing modalities. CRISPR-X focuses on technologies to enable whole gene correction and insertion without requiring homology-directed repair or viral delivery of DNA, such as all-RNA gene correction, non-viral delivery of DNA and novel gene insertion techniques.

Given the numerous potential therapeutic applications for CRISPR/Cas9, we have partnered strategically to broaden the indications we can pursue and accelerate development of programs by accessing specific technologies and/or disease-area expertise. We maintain broad partnerships to develop gene editing-based therapeutics in specific disease areas.

Vertex. We established our initial collaboration agreement in 2015 with Vertex, which focused on TDT, SCD, cystic fibrosis and select additional indications. In December 2017, we entered into a joint development and commercialization agreement with Vertex pursuant to which, among other things, we are co-developing and preparing to co-commercialize exa-cel for TDT and SCD. In April 2021, we and Vertex amended and restated our existing joint development and commercialization agreement, pursuant to which, among other things, we will continue to develop and prepare to commercialize exa-cel for TDT and severe SCD in partnership with Vertex. In addition, we entered into a strategic collaboration and license agreement with Vertex in June 2019 for the development and commercialization of products for the treatment of Duchenne muscular dystrophy and myotonic dystrophy type 1, and, in March 2023, we entered into a non-exclusive license agreement with Vertex for Vertex to utilize our gene editing technology in diabetes.

ViaCyte. We entered into a research and collaboration agreement in September 2018 with ViaCyte to pursue the discovery, development and commercialization of gene-edited allogeneic stem cell therapies for the treatment of diabetes, and in July 2021, we entered into a joint development and commercialization agreement with ViaCyte, or the ViaCyte JDCA. In connection with entering into the ViaCyte JDCA, our existing research collaboration agreement with ViaCyte expired in accordance with its terms. Under the ViaCyte JDCA, we and ViaCyte are jointly developing and will commercialize product candidates and shared products for use in the treatment of diabetes type 1, diabetes type 2 and insulin dependent/requiring diabetes, or the ViaCyte Collaboration Field, throughout the world. The ViaCyte JDCA includes, among other things, provisions relating to collaboration and program governance, clinical activities for the product candidates and shared products under the agreement and continuing research by the parties in the ViaCyte

Collaboration Field. Unless otherwise mutually agreed, research costs incurred by a party will be solely borne by such party. The program expenses, as originally set forth in the research and collaboration agreement, as applicable, incurred through the date of first commercial sale of a shared product will be allocated 60% to us and 40% to ViaCyte. Following first commercial sale of a shared product, such program expenses will be shared equally between us and ViaCyte. Shared product revenues will be shared equally by us and ViaCyte. In the third quarter of 2022, Vertex announced it had acquired ViaCyte and the rights to the ViaCyte Collaboration Field, and in March 2023, we entered into an amendment to the ViaCyte JDCA pursuant to which, among other things, we adjusted certain rights and obligations of the parties thereunder.

Bayer. We entered into an option agreement in the fourth quarter of 2019 with Bayer pursuant to which Bayer has an option to co-develop and co-commercialize two products that we advance for the diagnosis, treatment, or prevention of certain autoimmune disorders, eye disorders, or hemophilia A disorders for a specified period of time, or, under certain circumstances, exclusively license such optioned products.

Other Partnerships. We have entered into a number of additional collaborations and license agreements to support and complement our hematopoietic stem cell, immuno-oncology, regenerative medicine and in vivo programs and platform, including agreements with: Nkarta, Inc. to co-develop and co-commercialize two donor-derived, gene-edited CAR-NK cell product candidates and a product candidate combining NK and T cells; Capsida Biotherapeutics, Inc. to develop in vivo gene editing therapies delivered with engineered AAV vectors for the treatment of amyotrophic lateral sclerosis and Friedreich’s ataxia; Moffitt Cancer Center and Roswell Park Comprehensive Cancer Center to advance autologous CAR T programs against new targets; MaxCyte, Inc. on ex vivo delivery for our hemoglobinopathy and immuno-oncology programs; CureVac AG on optimized mRNA constructs and manufacturing for certain in vivo programs; and KSQ Therapeutics, Inc. on intellectual property for our allogeneic immuno-oncology programs.

We have been actively monitoring the coronavirus pandemic situation and its impact globally. We believe our financial results for the three months ended March 31, 2023 and 2022 were not significantly impacted by the outbreak of the coronavirus. We believe our hybrid and remote working arrangements have had limited impact on our ability to maintain internal operations during such time periods. Further, disruption of global financial markets and a recession or market correction, including as a result of the coronavirus pandemic, the recent failure of certain banks and financial institutions in the United States and globally, the ongoing military conflict between Russia and Ukraine and the related sanctions imposed against Russia, and other global macroeconomic factors such as inflation, could reduce our ability to access capital, which could, in the future, negatively affect our business and the value of our common shares.

Since our inception in October 2013, we have devoted substantially all of our resources to ~~initiating the conduct of~~ our research and development efforts, identifying potential product candidates, undertaking drug discovery and preclinical development activities, building and protecting our intellectual property ~~portfolio,~~estate, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations. To date, we have primarily financed our operations through ~~the initial public offering (“IPO”) of our common shares,~~ private placements of our preferred ~~and~~shares, common ~~shares,~~share issuances, convertible loans and collaboration agreements with strategic partners. ~~From~~

While we were in a net income position in certain previous years due to certain payments associated with our inception through September 30, 2017, we raised an aggregate of $398.4 million of which $53.7 million consisted of proceeds from our IPO, $35.0 million from a concurrent private placement of our common shares, $125.2 million of gross proceeds from private placements of preferred shares, $73.2 million from the issuance of convertible loans, $75.0 million from an upfront payment under our collaborationcollaborations with Vertex, ~~Pharmaceuticals, Incorporated, or Vertex, $35.0 million from~~we have a ~~technology access fee related to our license~~history of ~~technology to Casebia Therapeutics LLP, our joint venture, or JV, with Bayer HealthCare LLC, or Bayer HealthCare and $1.3 million from the exercise of stock options.~~

In October 2016, we issued 4,429,311 of our common shares, including 429,311 common shares sold pursuant to the underwriters’ partial exercise of their option to purchase additional common shares, in our IPO, at a public offering price of $14.00 per share, for aggregate gross proceeds of approximately $62.0 million. Concurrent with the IPO, we issued an aggregate of 2,500,000 common shares to Bayer Global Investments BV, or Bayer BV, in a private placement, at the IPO price of $14.00 a share, for aggregate net proceeds of $35.0 million.

~~All of our revenue to date has been collaboration revenue. We have incurred significant net operating~~recurring losses ~~in every year since our inception~~ and expect to continue to incur ~~net operating~~ losses for the foreseeable future. As of September 30, 2017, we had $253.5 million in cash and an accumulated deficit of $125.6 million. We expect to continue to incur significant expenses and increasing operating losses for the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase significantly as we continue our current research programs and development activities; seek to identify additional research programs and additional product ~~candidates,~~candidates; conduct initial drug application supporting preclinical studies ~~enabling clinical trial applications~~ and initiate clinical trials for our ~~most advanced~~ product ~~candidates which are from our hemoglobinopathy program targeting both beta thalassemia and sickle cell disease;~~candidates; initiate preclinical testing and clinical trials for any other product candidates we identify and ~~develop,~~develop; seek regulatory approval for our product candidates; maintain, ~~expand~~defend, protect and ~~protect~~expand our intellectual property ~~portfolio,~~estate; further develop our gene editing platform; hire additional research, clinical and scientific personnel; ~~acquire or in license other technologies;~~incur facilities costs associated with such personnel growth; develop manufacturing infrastructure and conduct related regulatory validation activities; and incur additional costs associated with operating as a public company.

In October 2015, we entered into a strategic research collaboration agreement with Vertex focused on the development of CRISPR/Cas9-based therapies. Under the terms of our agreement, we received an upfront, nonrefundable payment of $75.0 million and proceeds from a convertible loan of $30.0 million.Revenue Recognition

In December 2015, we entered into a joint venture agreement, or the JV Agreement, with Bayer HealthCare to create a joint venture, Casebia, to discover, develop and commercialize new breakthrough therapeutics to cure blood disorders, blindness and heart disease. We and Bayer HealthCare each have a 50% interest in the JV. Under the JV Agreement, Bayer HealthCare is making available its protein engineering expertise and relevant disease know-how and we are contributing our proprietary CRISPR/Cas9 gene editing technology and intellectual property. Bayer HealthCare will also provide up to $300.0 million in research and development investments to the JV over the first five years, subject to specified conditions.

In connection with the JV Agreement, the JV was required to pay us a technology access fee of $35.0 million consisting of an upfront payment of $20.0 million, which was paid at the closing of the JV Agreement in March 2016, and another payment of $15.0 million for specified intellectual property rights relating to our CRISPR/Cas9 technology outside of the United States, which was paid in December 2016. In January 2016, we also issued a convertible note to Bayer BV (the “Bayer Convertible Loan”) for gross proceeds of $35.0 million which was immediately converted to Series B Preferred Shares at a conversion price of $13.43 per share. Concurrent with the IPO in October 2016, we issued 2,500,000 common shares to Bayer BV, at the IPO price of $14.00 per share resulting in aggregate net proceeds of $35.0 million.

We have not generated any revenue to date from product sales and do not expect to do so in the ~~next several years. During~~near future. Revenue recognized for the three ~~and nine~~ months ended ~~September 30, 2017, we recognized revenue~~March 31, 2023 was $100.0 million related to our ~~collaboration~~receipt of an upfront payment from Vertex in connection with entering into agreements with Vertex and ~~Casebia~~ViaCyte relating to the research, development, manufacture and commercialization of therapeutic products in the ~~aggregate amount of $2.4 million and $8.7 million respectively. During~~diabetes field. Revenue recognized for the three ~~and nine~~ months ended September 30, 2016, we recognized revenue related to our collaboration agreements with Vertex and Casebia in the aggregate amount $1.6 million and $2.8 million, respectively. As of September 30, 2017, we hadMarch 31, 2022 was not ~~received any milestone or royalty payments under the Collaboration Agreement with Vertex.~~material. For additional information about our revenue recognition policy, see ~~the “Critical~~Note 2, “Summary of Significant Accounting Policies, ~~and Estimates—Revenue~~” in our Annual ~~Report.~~Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 21, 2023, as well as Note 6 of the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Research and development expenses consist primarily of costs incurred for our research activities, including our product discovery efforts and the development of our product candidates, which include:

Our external research and development expenses support our various preclinical and clinical programs, and as such we do not break down external research and development expenses further. Our internal research and development expenses consist of payroll and benefits expenses, facilities expense, and other indirect research and development expenses incurred in support of overall research and development activities and as such are not allocated to a specific development stage or therapeutic area. Research and development costs are expensed as incurred. Nonrefundable advance payments for research and development goods or services to be received in the future are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed. At this time, we cannot reasonably estimate or know the nature, timing or estimated costs of the efforts that will be necessary to complete the development of any product candidates we may identify and develop. This is due to the numerous risks and uncertainties associated with developing such product candidates, including the uncertainty of:

A change in the outcome of any of these variables with respect to the development of any product candidates or the subsequent commercialization of any product candidates we may successfully develop could significantly change the costs, timing and viability associated with the development of that product candidate.

Except for activities we perform in connection with our collaborations with Vertex and Casebia, we do not track research and development costs on a program-by-program basis. We plan to track research and development costs for individual development programs when we identify a product candidate from the program that we believe we can advance into clinical trials.

Research and development activities are central to our business model. We expect to continue to incur research and development costs toconsistent with research and development at companies of our size and stage of development, which may increase ~~significantly for~~in the foreseeable future as our current development programs progress, ~~and~~ new programs are ~~added.~~added and we continue to prepare regulatory filings. These increases will likely include the costs related to the implementation and expansion of clinical trial sites and related patient enrollment, monitoring, program management and manufacturing expenses for current and future clinical trials.

General and administrative expenses consist primarily of employee related expenses, including salaries, benefits and equity-based compensation, for personnel in executive, finance, accounting, business development, ~~and~~ human resources and other general and administrative functions. Other significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters and fees for accounting and consulting services.

We ~~anticipate that our~~expect to continue to incur general and administrative expenses ~~will~~consistent with research and development at companies of our size and stage of development, which may increase in the future to support continued research and development activities, and potential commercialization of our product ~~candidates and increased costs of operating as a public company. We~~candidates. In addition, we anticipate increased costs associated with being a public company, including expenses related to services associated with maintaining compliance with exchange listing and SEC requirements, insurance costs and investor relations costs, the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses. We also anticipate increasedongoing expenses related to the reimbursements of third-party patent related expenses in connection with ~~respect to~~ certain of our in-licensed intellectual property.

Collaboration expense, net, consists of operating expense related to the exa-cel program under our collaboration with Vertex. Under the A&R Vertex JDCA, we have an option to defer our portion of specified costs on the exa-cel program in excess of $110.3 million for the years ended December 31, 2023 and 2024. Vertex may only recover any such deferred amounts as an offset against future profitability of the exa-cel program, determined on an annual basis in accordance with the A&R Vertex JDCA. Any such deferred amounts are capped at a specified maximum amount per year.

Other income (expense), net consists primarily of interest income earned on investments.

~~The following table summarizes our results of operations for the three~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, together with the dollar change in those items:~~2022 (in thousands):

Three Months Ended September 30,

Period to Period

2017

2016

Change

(in thousands)

Collaboration revenue

$
2,387

$
1,549

$
838

Operating expenses:

Research and development

17,845

12,052

5,793

General and administrative

8,112

4,107

4,005

Total operating expenses

25,957

16,159

9,798

Loss from operations

(23,570
)

(14,610
)

(8,960
)
Other expense, net

(430
)

(76
)

(354
)
Net loss before income taxes

(24,000
)

(14,686
)

(9,314
)
Provision for income taxes

(707
)

(8
)

(699
)
Net loss

$
(24,707
)

$
(14,694
)

$
(10,013
)

Collaboration revenue for the three months ended ~~September 30, 2017~~March 31, 2023 was ~~$2.4~~$100.0 million ~~compared~~due to ~~$1.5~~an upfront payment from Vertex. Revenue for the three months ended March 31, 2022 was not material. Please refer to Note 6 of the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further information.

Research and development expenses were $99.9 million for the three months ended ~~September 30, 2016. The increase of $0.8 million was due~~March 31, 2023, compared to ~~an increase in research and development service revenue from our collaboration agreements with Vertex and Casebia.~~

~~Research and development expenses were $17.8~~$118.2 million for the three months ended ~~September 30, 2017, compared~~March 31, 2022. The following table summarizes our research and development expenses for the three months ended March 31, 2023 and 2022, together with the changes in those items in dollars (in thousands):

The decrease of approximately $18.3 million was primarily attributable to ~~$12.1~~the following:

General and administrative expenses were $22.4 million for the three months ended ~~September 30, 2016. The increase of $5.8 million was primarily attributable~~March 31, 2023, compared to the following increases: $2.3 million of variable research and development costs including significant toxicology studies, $1.7 million of employee-related costs, $1.1 million of employee stock based compensation costs and the remainder primarily of facilities costs including rent and utilities at our new research facility.

~~General~~general and administrative expenses ~~were $8.1~~of $28.0 million for the three months ended ~~September 30, 2017, compared~~March 31, 2022. The decrease in general and administrative expenses of $5.6 million was primarily attributable to ~~$4.1~~decreased stock-based compensation expense and decreased intellectual property costs.

Collaboration expense, net, was $42.2 million for the three months ended ~~September 30, 2016.~~March 31, 2023, compared to $30.6 million for the three months ended March 31, 2022. The increase of ~~$4.0~~approximately $11.5 million was primarily attributable to increased manufacturing and other pre-commercial costs with regards to the ~~following increases: $1.5~~exa-cel program.

Other income was $12.7 million of employee stock based compensation costs, $1.3 million of employee-related costs to support our overall growth, $1.0 million of professional and consulting expenses and $1.0 million in facilities costs including rent and utilities at our new facility. These increases were partially offset by a decrease of $0.8 million in legal and intellectual property fees.

~~Other expense, net, was $0.4 million of expense~~ for the three months ended ~~September 30, 2017,~~March 31, 2023, compared to ~~$0.1~~$0.4 million of ~~expense~~income for the three months ended ~~September 30, 2016.~~March 31, 2022. The increase was primarily due to ~~the loss from equity method investment.~~

~~Comparison of nine months Ended September 30, 2017~~interest income earned on cash, cash equivalents and ~~2016~~

~~The following table summarizes our results of operations~~marketable securities for the ~~nine~~three months ended ~~September 30, 2017 and 2016, together with the dollar change in those items:~~March 31, 2023.

Nine Months Ended September 30,

Period to Period

2017

2016

Change

(in thousands)

Collaboration revenue

$
8,672

$
2,820

$
5,852

Operating expenses:

Research and development

49,770

26,666

23,104

General and administrative

24,522

18,974

5,548

Total operating expenses

74,292

45,640

28,652

Loss from operations

(65,620
)

(42,820
)

(22,800
)
Other (expense) income, net

(1,548
)

2,604

(4,152
)
Net loss before income taxes

(67,168
)

(40,216
)

(26,952
)
Provision for income taxes

(1,330
)

(84
)

(1,246
)
Net loss

$
(68,498
)

$
(40,300
)

$
(28,198
)

Collaboration revenue for the nine months ended September 30, 2017 was $8.7 million, compared to $2.8 million for the nine months ended September 30, 2016. The increase of $5.9 million was due to an increase in research and development service revenue from our collaboration agreements with Vertex and Casebia.

Research and development expenses were $49.8 million for the nine months ended September 30, 2017, compared to $26.7 million for the nine months ended September 30, 2016. The increase of $23.1 million was primarily attributable to the following increases: $5.5 million of facilities costs including rent and utilities at our new research facility, $8.3 million of variable research and development program costs with toxicology studies, $6.4 million of employee-related costs and $3.3 million of employee stock based compensation costs. These increases were primarily offset by a decrease in professional services costs.

General and administrative expenses were $24.5 million for the nine months ended September 30, 2017, compared to $19.0 million for the nine months ended September 30, 2016. The increase of $5.5 million was primarily due to the following increases: $3.1 million of employee-related costs to support our overall growth, $2.9 million in facilities costs including rent and utilities at our new research facility, $1.8 million of employee stock based compensation costs and $0.5 million in professional services costs. The increases were offset by a reduction of our 2016 Passive Foreign Investment Company tax obligation and franchise taxes on the convertible preferred stock financings.

Other (expense) income, net was $1.5 million of expense for the nine months ended September 30, 2017, compared to $2.6 million of income for the nine months ended September 30, 2016. The increase of $4.2 million was primarily due to an increase in the loss from equity method investment of $0.6 million in the nine months ended September 30, 2017 as compared to a gain of $11.5 million on the extinguishment of the convertible loan with Vertex, and an increase of $0.1 million due to currency transaction and translation losses. The increases were partially offset by a decrease in interest expense of $8.1 million on the convertible loan with Bayer recognized in the nine months ended September 30, 2016.

~~From~~We have predominantly incurred losses and cumulative negative cash flows from operations since our inception through September 30, 2017, we raised an aggregate of $398.4 million, of which $53.7 million consisted of proceeds from our IPO, $35.0 million from a concurrent private placement of our common shares, $125.2 million of gross proceeds from private placements of preferred shares, $73.2 million from the issuance of convertible notes, an up-front payment under our collaboration agreement with Vertex of $75.0 million, technology access fee of $35.0 million from Casebia, pursuant to our JV Agreement with Bayer HealthCare and $1.3 million from the exercise of stock options.

inception. As of ~~September 30, 2017,~~March 31, 2023, we had ~~$253.5~~$1,889.5 million in cash, cash equivalents and marketable securities, of which approximately ~~$252.8~~$2.5 million was held outside of the United ~~States.~~States, and an accumulated deficit of $899.2 million. We anticipate that we will continue to incur losses for at least the next several years. We expect to continue to incur research and development costs and general and administrative expenses consistent with costs associated with research and development at companies of our size and stage of development, and, as a result, we will need additional capital to fund our operations, which we may raise through public or private equity or debt financings, strategic collaborations, or other sources.

In August 2019, we entered into the August 2019 Sales Agreement with Jefferies and filed our current prospectus supplement for $419.8 million in July 2021. As of March 31, 2023, we have issued and sold an aggregate of 1.1 million common shares under the current prospectus supplement at an average price of $168.79 per share for aggregate proceeds of $178.8 million, which were net of equity issuance costs of $2.4 million.

Our primary uses of capital are, and we expect will continue to be, research and development activities, manufacturing activities, compensation and related expenses, laboratory and related supplies, legal and other regulatory expenses, patent prosecution, filing, defense and intellectual property maintenance costs, ~~for our licensed intellectual property~~ and general overhead ~~costs.~~costs, including costs associated with operating as a public company. We expect ~~our~~to continue to incur operating expenses ~~to increase compared to prior periods in connection~~consistent with ~~our ongoing activities, particularly as we continue~~costs associated with research and development at companies of our size and ~~preclinical activities, including preclinical studies~~stage of development, which may increase in the future to support ~~clinical trial applications,~~continued research and ~~we initiate clinical trial.~~development activities and potential commercialization of our product candidates.

Because most of our ~~research~~ programs are still in ~~preclinical~~early stages of development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development, manufacture and commercialization of any current or future product candidates, if approved, or whether, or when, we may achieve profitability. Until such time as we can generate substantial product revenues, if ever, we expect to finance our cash needs through a combination of equity orfinancings, debt financings and ~~collaboration arrangements. We are entitled to research~~ payments ~~under~~received in connection with our collaboration ~~with Vertex. Additionally,~~agreements. We intend to consider opportunities to raise additional funds through the sale of equity or debt securities when market conditions are favorable to us to do so. However, the trading prices for our common shares and other biopharmaceutical companies have been highly volatile. As a result, we ~~are eligible to earn payments,~~may face difficulties raising capital through sales of our common shares or such sales may be on unfavorable terms. In addition, a recession, depression or other sustained adverse market event, including resulting from the continued spread of the coronavirus or the recent failure of certain banks and financial institutions in ~~each case, on a per-product basis under~~ the ~~JV Agreement with Casebia~~United States and globally, could materially and adversely affect our ~~collaboration with Vertex. Except for these sources~~business and the value of ~~funding, we do not have any committed external source of liquidity.~~our common shares. To the extent that we raise additional capital through the future sale of equity or ~~convertible~~ debt securities, the ownership ~~interest~~interests of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing shareholders. If we raise additional funds through collaboration arrangements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be

required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Based on our research and development plans and our timing expectations related to the progress of our programs, we expect ~~that the net proceeds from our IPO, including the proceeds from the concurrent private placement with Bayer BV, together with~~ our existing cash will enable us to fund our operating expenses and capital expenditures ~~through~~for at least the next 24 months without giving effect to any additional proceeds we may receive under our collaboration ~~agreement~~ with Vertex and ~~the JV.~~any other capital raising transactions we may complete. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Given our need for additional financing to support the long-term clinical development of our programs, we intend to consider additional financing opportunities when market terms are favorable to us.

Our ability to generate revenue and achieve profitability depends significantly on our success in many areas, including: developing our delivery technologies and our ~~CRISPR/Cas9~~gene editing technology platform; selecting appropriate product candidates to develop; completing research and preclinical and clinical development of selected product candidates; obtaining regulatory approvals and marketing authorizations for product candidates for which we complete clinical trials; developing a sustainable and scalable manufacturing process for product candidates; launching and commercializing product candidates for which we obtain regulatory approvals and marketing authorizations, either directly or with a collaborator or distributor; obtaining market acceptance of our product ~~candidates;~~candidates, if approved; addressing any competing technological and market developments; negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; maintaining good relationships with our collaborators and licensors; maintaining, defending, protecting and expanding our ~~portfolio~~estate of intellectual property rights, including patents, trade secrets and know-how; and attracting, hiring and retaining qualified personnel.

The following table provides information regarding our cash flows for each of the ~~period below:~~periods below (in thousands):

Net cash provided by operating activities was $8.8 million for the three months ended March 31, 2023, compared to cash used in operating activities ~~was $55.3~~of $135.2 million for the ~~nine~~three months ended ~~September 30, 2017 as compared to $35.9 million for the nine months ended September 30, 2016.~~March 31, 2022. The ~~net~~increase from a cash used in operating activities ~~for the nine months ended September 30, 2017~~position to a cash provided by operating activities position of $144.0 million was primarily ~~consisted~~driven by a reduction in our net loss position of $126.2 million, from a net loss of ~~$68.5~~$179.2 million ~~adjusted~~ for the three months ended March 31, 2022 to net loss of $53.1 million for the three months ended March 31, 2023 driven by revenue recognized in the connection with an upfront payment from Vertex in the first quarter of 2023. Additionally, non-cash ~~items (including equity-based compensation~~ expense ~~of $11.9~~decreased by $12.9 million, depreciation and amortization expense of $2.2 million and a loss from an equity method investment of $1.3 million), an increase in accounts receivable of $0.1 million, an increase in prepaid expenses and other assets of $0.3 million andprimarily related to a decrease in ~~accounts payable~~stock-based compensation expense and ~~accrued expenses~~amortization of ~~$3.0 million,~~premiums and ~~a decrease~~discounts on marketable securities, while net changes of ~~$0.9 million in deferred rent, partially offset by an increase in deferred revenue of $2.0~~operating assets and liabilities increased $30.8 million.

Net ~~cash used in investing activities for the nine months ended September 30, 2017 was $8.1 million as compared with net~~ cash provided by investing activities for the ~~nine~~three months ended ~~September 30, 2016 of $17.1 million. The~~March 31, 2023 was $117.8 million, compared to net cash used in investing activities of $114.5 million for the ~~nine~~three months ended ~~September 30, 2017 and 2016 consisted primarily of purchases of property and equipment for use~~March 31, 2022. The change from a net cash used in ~~research and development activities. Net~~investing activities to a net cash provided by investing activities ~~during the nine months ended September 30, 2016~~ consisted primarily of ~~proceeds~~an increase in marketable securities maturities, in addition to a reduction of ~~$20.0 million from the contribution~~purchases of ~~intellectual~~marketable securities and property ~~to the JV.~~and equipment.

Net cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 was ~~$1.3~~$5.4 million, compared with ~~$91.5~~$10.6 million for the ~~nine~~three months ended ~~September 30, 2016. The net~~March 31, 2022. Net cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and 2022 consisted of option exercise proceeds, ~~from the exercise~~net of stock options. The cash provided by financing activities for the nine months ended September 30, 2016 consisted of the proceeds from our issuances of common shares, Series A-3 preferred shares, Series B preferred shares and convertible loans.issuance costs.

The disclosure of our contractual obligations and commitments was reported in our Annual Report on Form 10-K for the year ended December 31, 2016. There have been no material changes from the contractual commitments and obligations previously disclosed in our Annual Report on Form 10-K other than the changes described below and in Note 6 to the accompanying financial statements.

~~We have long-term liabilities associated with uncertain tax positions recorded under ASC 740,~~ ~~Income Taxes~~ totaling $13.0 thousand. Due to the complexity associated with tax uncertainties, we cannot reasonably make a reliable estimate of the period in which we expect to settle these non-current liabilities. See Note 10 of the unaudited condensed consolidated financial statements contained in Item 1 of this interim report for more information on our unrecognized tax benefits.

Under the Invention Management Agreement signed on December 15, 2016, we are is obligated to share costs related to patent maintenance, defense and prosecution for the CRISPR/Cas9 gene editing intellectual property with California, Vienna and their licensees including Caribou Biosciences, Inc. and Caribou’s licensee Intellia Therapeutics, Inc.

~~As of September 30, 2017, we do not have any off-balance sheet arrangements as defined under applicable SEC rules.~~

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. ~~generally accepted accounting principles.~~GAAP. We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as critical because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate, and different estimates—which also would have been reasonable—could have been used. On an ongoing basis, we evaluate our estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe that our most critical accounting policies are those relating to revenue recognition ~~variable interest entities~~ and equity-based compensation, and there have been no ~~significant~~ changes to our accounting policies discussed in our Annual Report on Form 10-K for the ~~Annual Report.~~year ended December 31, 2022 filed with the SEC on February 21, 2023.

Refer to Note ~~2, “Summary~~1 of ~~Significant Accounting Policies,” in~~ the ~~accompanying~~ notes to ~~the~~our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements. ~~There were no new accounting pronouncements adopted during 2017 that had a material effect on our financial statements.~~

We are exposed to market risk related to changes in interest rates. As of March 31, 2023, we had cash, cash equivalents and marketable securities of $1,889.5 million, primarily invested in U.S. treasury securities and government agency securities, corporate bonds, commercial paper and money market accounts invested in U.S. government agency securities. Due to the conservative nature of these instruments, we do not believe that we have a material exposure to interest rate risk. If interest rates were to increase or decrease by 1%, the fair value of our investment portfolio would increase or decrease by an immaterial amount.

As a result of our foreign operations, we face exposure to movements in foreign currency exchange rates, primarily the Swiss Franc and British Pound, against the U.S. dollar. The current exposures arise primarily from cash, accounts payable and intercompany receivables and payables. Changes in foreign exchange rates affect our consolidated statement of operations and distort comparisons between periods. To date, foreign currency transaction gains and losses have not been material to our financial statements, and we have not engaged in any foreign currency hedging transactions.

Inflation generally affects us by increasing our cost of labor, clinical trial and manufacturing costs. We do not ~~engage in any foreign exchange rate hedging activities~~believe that inflation had a material effect on our business, financial condition or results of operations during the three months ended March 31, 2023 and ~~therefore we are subject to foreign currency impacts.~~2022.

We ~~have established~~maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or ~~submits~~submit under the Securities and Exchange Act of 1934 is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and is(2) accumulated and communicated to our management, including ~~the~~our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

~~Our~~As of March 31, 2023, our management, with the participation of our ~~Principal Executive Officer~~principal executive officer and ~~Principal Financial Officer,~~principal financial officer, evaluated the effectiveness of our disclosure controls and procedures ~~as of September 30, 2017. The term “disclosure controls and procedures,” as~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934 (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures

designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.1934). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and ~~our~~ management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. ~~Based on~~Our principal executive officer and principal financial officer have concluded based upon the evaluation ~~of our disclosure controls and procedures as of September 30, 2017, our Chief Executive Officer and Principal Financial Officer concluded~~described above that, as of ~~such date,~~March 31, 2023, our disclosure controls and procedures were effective at the reasonable assurance level.

~~There was~~During the quarter ended March 31, 2023, there were no ~~change~~changes in our internal control over financial reporting, ~~(as~~as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Securities Exchange ~~Act)~~Act of 1934, that ~~occurred during the period covered by this Quarterly Report on Form 10-Q that has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

~~From time to time, we may become involved in litigation or other legal proceedings relating to claims arising from~~In the ordinary course of ~~business. Except as described below, there~~business, we are from time to time involved in lawsuits, investigations, proceedings and threats of litigation related to, among other things, our intellectual property estate (including certain in-licensed intellectual property), commercial arrangements and other matters. Such proceedings may include quasi-litigation, inter partes administrative proceedings in the U.S. Patent and Trademark Office and the European Patent Office involving our intellectual property estate including certain in-licensed intellectual property. There are currently no claims or actions pending against us that, in the opinion of our management, are likely to have a material adverse effect on our business.

In January 2016, the U.S. Patent and Trademark Office, or USPTO, declared an interference between one of the pending U.S. patent applications we have in-licensed from Dr. Charpentier and twelve issued U.S. patents owned jointly by the Broad Institute and Massachusetts Institute of Technology and, in some instances, the President and Fellows of Harvard College, which we refer to individually and collectively as Broad. The interference was redeclared in March 2016 to add a U.S. patent application owned by Broad. An interference is a proceeding conducted at the USPTO by the Patent Trial and Appeal Board, or PTAB, to determine which party was the first to invent subject matter claimed by at least two parties. There were two parties to this interference being Dr. Charpentier, the regents of the University of California, and the University of Vienna (collectively, “UC”) and Broad.

Following motions by the parties and other procedural matters, in February 2017 the PTAB concluded that the declared interference should be dismissed. In its decision, the PTAB concluded that, although the claims overlap, the respective scope of UC and Broad’s claim sets as presented did not define the same patentable invention and, accordingly, terminated the interference.

In April 2017, UC appealed the PTAB decision to the U.S. Court of Appeals for the Federal Circuit, or the Federal Circuit. In the appeal, UC is seeking review and reversal of the PTAB’s February 2017 decision, which terminated the interference without determining which inventors actually invented the use of the CRISPR/Cas9 genome editing technology in eukaryotic cells.

In addition to the appeal of the PTAB decision to the Federal Circuit, in parallel, either party can also pursue existing or new patent applications in the U.S. and elsewhere. Going forward, either party and other parties could seek a new interference related to the uses of the technology in eukaryotic cells or other aspects of the technology, and any existing or new patents could be the subject of other challenges to their validity of enforceability. If there is a second interference, either party could again appeal an adverse decision to the U.S. Court of Appeals for the Federal Circuit.

In any case, it may be years before there is a final determination on priority. Pursuant to the terms of the license agreement with Dr. Charpentier, we are responsible for covering or reimbursing Dr. Charpentier’s patent prosecution, defense and related costs associated with our in-licensed technology.

There have been no material ~~changes from~~developments with respect to the legal proceedings previously disclosed in “Item 3. Legal Proceedings” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 21, 2023.

We are updating and supplementing our risk factors previously disclosed in ~~Part I,~~ Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022 filed with the SEC on February 21, 2023 to add the following new risk factor:

Conditions in the banking system and financial markets, including the failure of banks and financial institutions, could have an adverse effect on our operations and financial results.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10 and March 12, 2023, the Federal Deposit Insurance Corporation took control and was appointed receiver of Silicon Valley Bank, or SVB, and Signature Bank and Silvergate Capital Corp., or Silvergate Capital, respectively, after each bank was unable to continue their operations. Since then, additional financial institutions have experienced similar failures and have been placed into receivership. It is possible that other banks will face similar difficulty in the future. These events exposed vulnerabilities in the banking sector, including legal uncertainties, significant volatility and contagion risk, and caused market prices of regional bank stocks to plummet.

As of the date of this Quarterly Report on Form 10-Q, our exposure to SVB, Signature Bank, Silvergate Capital, and other banks in financial difficulty is immaterial; however, we are unable to predict the extent or nature of the impacts of these evolving circumstances at this time. If, for example, other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened. While it is not possible at this time to predict the extent of the impact that high market volatility and instability of the banking sector could have on economic activity and our business in particular, the failure of other banks and financial institutions and the measures taken by governments, businesses and other organizations in response to these events could adversely impact our business, financial condition and results of operations.

There have been no other material changes to the risk factors previously disclosed in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the year ended December 31, 2022. Please refer to the complete Part I, Item 1A of our Annual Report for additional risks and uncertainties we are facing that may have a material adverse effect on our business prospects, financial condition and results of operations. In addition to the risks described in our Annual Report on Form 10-K, you should carefully consider the other information set forth in this Form 10-Q and the information in our other filings with the SEC, as they could materially affect our business, financial condition or future results of operations.

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

During the period between July 1, 2017 and September 30, 2017, we issued to certain of our employees options to purchase an aggregate of 465,300 common shares at a weighted-average exercise price of $17.49 per share. We deemed these issuances to be exempt from registration under the Securities Act either in reliance on Rule 701 of the Securities Act as sales and offers under compensatory benefit plans and contracts relating to compensation in compliance with Rule 701, or in reliance on Section 4(a)(2), as transactions by an issuer not involving a public offering. All recipients either received adequate information about our Company or had access, through employment or other relationships, to such information. No underwriters were involved in the foregoing issuances of securities. Total forfeitures during the period between July 1, 2017 and September 30, 2017 amounted to 7,264.None.

During the period between July 1, 2017 and September 30, 2017, we issued to Casebia employees options to purchase an aggregate of 24,999 common shares at a weighted-average exercise price of $19.04 per share. We deemed these issuances to be exempt from registration under the Securities Act either in reliance on Rule 701 of the Securities Act as sales and offers under compensatory benefit plans and contracts relating to compensation in compliance with Rule 701, or in reliance on Section 4(a)(2), as transactions by an issuer not involving a public offering. All recipients either received adequate information about our Company or had access, through employment or other relationships, to such information. No underwriters were involved in the foregoing issuances of securities.Item 3. Defaults Upon Senior Securities.

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth in the Exhibit Index below.

† Certain portions of this exhibit have been omitted because they are not material and the registrant customarily and actually treats that information as private or confidential.

^ Certain exhibits and schedules to these agreements have been omitted pursuant to Item 601 of Regulation S-K. The registrant will furnish copies of any of the exhibits and schedules to the Securities and Exchange Commission upon request.

+ The certification attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of CRISPR Therapeutics AG under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

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


Switzerland	Not Applicable
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Baarerstrasse 14 6300Zug, Switzerland	Not Applicable
(Address of principal executive offices)	(~~zip code)~~Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, nominal value CHF 0.03	CRSP	The Nasdaq Global Market


Large Accelerated ~~Filer~~filer	☐☒	Accelerated ~~Filer~~filer	☐

Non-accelerated ~~Filer~~filer	☒ ~~(Do not check if smaller reporting company)~~☐	Smaller ~~Reporting Company~~reporting company	☐

		Emerging growth company	☐


	Page Number
PART I: FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)	2

Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~2022	2

Condensed Consolidated Statements of Operations and Comprehensive Loss for the ~~Three~~three months ended March 31, 2023 and ~~Nine Months Ended September 30, 2017 and 2016~~2022	3

Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2023 and 2022	4

Condensed Consolidated Statements of Cash Flows for the ~~Nine Months Ended September 30, 2017~~three months ended March 31, 2023 and ~~2016~~2022	45

Notes to Condensed Consolidated Financial Statements	56

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1516

Item 3. Quantitative and Qualitative Disclosures about Market Risk	2124

Item 4. Controls and Procedures	2125

PART II: OTHER INFORMATION

Item 1. Legal Proceedings	2226

Item 1A. Risk Factors	2326

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2326

Item ~~6. Exhibits~~3. Defaults Upon Senior Securities	2326

~~SIGNATURES~~Item 4. Mine Safety Disclosures	2426

Item 5. Other Information	27

Item 6. Exhibits	27

SIGNATURES	28


	Three Months Ended
	March 31,
	2023			2022
Revenue:
Collaboration revenue	$	100,000		$	178
Grant revenue		—			762
Total revenue		100,000			940
Operating expenses:
Research and development		99,935			118,245
General and administrative		22,360			28,021
Collaboration expense, net		42,192			30,646
Total operating expenses		164,487			176,912
Loss from operations		(64,487	)		(175,972	)
Other income:
Other income, net		12,742			363
Total other income, net		12,742			363
Net loss before income taxes		(51,745	)		(175,609	)
Provision for income taxes		(1,320	)		(3,608	)
Net loss		(53,065	)		(179,217	)
Foreign currency translation adjustment		32			(27	)
Unrealized gain (loss) on marketable securities		6,227			(11,799	)
Comprehensive loss	$	(46,806	)	$	(191,043	)

Net loss per common share — basic	$	(0.67	)	$	(2.32	)
Basic weighted-average common shares outstanding		78,676,986			77,098,319
Net loss per common share — diluted	$	(0.67	)	$	(2.32	)
Diluted weighted-average common shares outstanding		78,676,986			77,098,319


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


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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Collaboration revenue (1)	$	2,387		$	1,549		$	8,672		$	2,820
Operating expenses:
Research and development (2)		17,845			12,052			49,770			26,666
General and administrative		8,112			4,107			24,522			18,974
Total operating expenses		25,957			16,159			74,292			45,640
Loss from operations		(23,570	)		(14,610	)		(65,620	)		(42,820	)
Other (expense) income:
Interest expense		-			(1	)		-			(8,051	)
Loss from equity method investment		(359	)		-			(1,310	)		(686	)
Gain on extinguishment of convertible loan		-			-			-			11,482
Other expense, net		(71	)		(75	)		(238	)		(141	)
Total other (expense) income, net		(430	)		(76	)		(1,548	)		2,604
Net loss before income taxes		(24,000	)		(14,686	)		(67,168	)		(40,216	)
Provision for income taxes		(707	)		(8	)		(1,330	)		(84	)
Net loss		(24,707	)		(14,694	)		(68,498	)		(40,300	)
Foreign currency translation adjustment		8			(1	)		38			(18	)
Comprehensive loss	$	(24,699	)	$	(14,695	)	$	(68,460	)	$	(40,318	)
Reconciliation of net loss to net loss attributable to common shareholders:
Net loss	$	(24,707	)	$	(14,694	)	$	(68,498	)	$	(40,300	)
Loss attributable to noncontrolling interest		-			14			-			24
Net loss attributable to common shareholders	$	(24,707	)	$	(14,680	)	$	(68,498	)	$	(40,276	)
Net loss per share attributable to common shareholders—basic and diluted	$	(0.62	)	$	(2.77	)	$	(1.72	)	$	(7.43	)
Weighted-average common shares outstanding used in net loss per share attributable to common shareholders—basic and diluted		40,088,718			5,292,348			39,904,863			5,422,617
(1) Including the following revenue from a related party, see Note 11:	$	1,249		$	385		$	3,888		$	385
(2) Including the following research and development expense with a related party, See Note 11:	$	1,208		$	361		$	3,699		$	361

	Nine Months Ended September 30,
	2017			2016
Operating activities:
Net loss	$	(68,498	)	$	(40,300	)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization		2,218			513
Equity-based compensation		11,894			6,816
Non-cash interest		-			8,050
Loss from disposal of property and equipment		-			28
Unrealized foreign currency remeasurement loss		(9	)		(7	)
Gain on extinguishment of convertible loan		-			(11,482	)
Loss from equity method investment		1,310			686
Changes in:
Restricted cash		(4	)		(2,453	)
Accounts receivable		(54	)		(1,753	)
Prepaid expenses and other assets		(304	)		(694	)
Accounts payable and accrued expenses		(2,979	)		3,275
Deferred revenue		2,043			1,220
Deferred rent		(903	)		196
Other liabilities, net		31			11
Net cash used in operating activities		(55,255	)		(35,894	)
Investing activities:
Purchase of property and equipment		(7,609	)		(2,788	)
Proceeds from contribution of intellectual property to equity method investee		-			20,000
Purchase of available for sale debt security		(500	)		(100	)
Net cash (used in) provided by investing activities		(8,109	)		17,112
Financing activities:
Proceeds from issuance of common shares		-			16
Proceeds from issuance of Series A-3 preferred shares		-			22,850
Proceeds from issuance of Series B preferred shares		-			38,075
Issuance costs for preferred share financings		-			(1,810	)
Payment of public offering costs		-			(2,677	)
Proceeds from issuance of convertible loans		-			35,000
Proceeds from exercise of options		1,324			-
Net cash provided by financing activities		1,324			91,454
Effect of exchange rate changes on cash		39			(20	)
(Decrease) increase in cash		(62,001	)		72,652
Cash, beginning of period		315,520			155,961
Cash, end of period	$	253,519		$	228,613
Supplemental disclosure of non-cash investing and financing activities
Property and equipment purchases in accounts payable and accrued expenses	$	118		$	246
Conversion of Vertex convertible loan and accrued interest	$	-		$	61,929
Noncash contribution of intellectual property to Casebia Therapeutics LLP	$	-		$	36,372
Issuance costs for public offering in accounts payable and accrued expenses	$	-		$	825


	Common Shares				Treasury Shares
	Shares		CHF 0.03 Par Value		Shares		Amount, at cost			Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at December 31, 2021		76,990,066	$	2,391		180,316	$	(63	)	$	2,598,114	$	(195,915	)	$	(5,067	)	$	2,399,460
Vesting of restricted shares		123,564		4		—		—			—		—			—			4
Exercise of vested options, net of issuance costs of $0.2 million		261,280		12		—		—			9,998		—			—			10,010
Purchase of common stock under ESPP		11,495		—		—		—			740		—			—			740
Stock-based compensation expense		—		—		—		—			25,745		—			—			25,745
Other comprehensive loss		—		—		—		—			—		—			(11,826	)		(11,826	)
Net loss		—		—		—		—			—		(179,217	)		—			(179,217	)
Balance at March 31, 2022		77,386,405	$	2,407		180,316	$	(63	)	$	2,634,597	$	(375,132	)	$	(16,893	)	$	2,244,916

Balance at December 31, 2022		78,512,450	$	2,441		180,316	$	(63	)	$	2,734,838	$	(846,090	)	$	(15,647	)	$	1,875,479
Vesting of restricted shares		172,995		5		—		—			—		—			—			5
Exercise of vested options, net of issuance costs of $0.2 million		159,184		6		—		—			4,677		—			—			4,683
Purchase of common stock under ESPP		19,105		—		—		—			660		—			—			660
Stock-based compensation expense		—		—		—		—			20,875		—			—			20,875
Other comprehensive income		—		—		—		—			—		—			6,259			6,259
Net loss		—		—		—		—			—		(53,065	)		—			(53,065	)
Balance at March 31, 2023		78,863,734	$	2,452		180,316	$	(63	)	$	2,761,050	$	(899,155	)	$	(9,388	)	$	1,854,896


	As of March 31,
Reconciliation to amounts within the condensed consolidated balance sheets	2023		2022
Cash and cash equivalents		344,407		683,906
Prepaid expenses and other current assets		—		4,783
Restricted cash		11,717		12,123
Cash, cash equivalents and restricted cash at end of period	$	356,124	$	700,812


		As of
Type of Share Capital	Conditional Capital	March 31, 2023		December 31, 2022
Common shares	Registered share capital		83,538,347		82,028,328
Common shares	Authorized share capital		39,316,975		39,316,975
Common shares	Conditional share capital - Bonds or similar debt instruments		8,202,832		8,202,832
Common shares	Conditional share capital - Employee benefit plans		19,289,313		20,799,332
	Total		150,347,467		150,347,467

	As of
	September 30, 2017		December 31, 2016
Outstanding options		5,778,629		4,535,371
Unvested unissued restricted common shares		64,227		89,367
Total		5,842,856		4,624,738

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Research and development	$	2,420	$	1,343	$	6,095	$	2,834
General and administrative		2,448		950		5,799		3,982
Loss from equity method investment		359		-		1,310		-
Total	$	5,227	$	2,293	$	13,204	$	6,816

	Stock Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2016		4,535,371		$	8.38		9.1	$	53,966
Granted		2,240,347		$	16.45
Exercised		(645,365	)	$	2.28
Cancelled or forfeited		(351,724	)	$	5.25
Outstanding at September 30, 2017		5,778,629		$	12.36		8.9	$	34,230
Exercisable at September 30, 2017		1,411,943		$	8.34		8.5	$	13,486
Vested or expected to vest at September 30, 2017 (1)		5,771,129		$	12.35		8.9	$	34,230

	As of
	September 30,			December 31,
	2017			2016
Computer equipment and software	$	285		$	110
Furniture, fixtures, and other		2,104			2,044
Laboratory equipment		6,392			2,970
Leasehold improvements		13,774			15,780
Construction work in process		127			1,065
		22,682			21,969
Accumulated Depreciation		(3,118	)		(942	)
Property and equipment, net	$	19,564		$	21,027

	Nine Months Ended September 30,
	2017			2016
Employees:
Weighted average expected volatility		72.6	%		81.8	%
Expected term (in years)		6.0			6.0
Risk free interest rate	1.8 - 2.3		%	1.1 - 1.5		%
Expected dividend yield		0.0	%		0.0	%
Non-employees:
Weighted average expected volatility		82.7	%		93.6	%
Expected term (in years)		9.6			10.0
Risk free interest rate		2.3	%		1.6	%
Expected dividend yield		0.0	%		0.0	%

	Reflected as outstanding upon vesting			Reflected as outstanding upon grant date			Total			Weighted- Average Grant Date Fair Value
Unvested restricted common shares as of December 31, 2016		89,367			650,856			740,223		$	3.84
Granted		-			75,000			75,000			16.90
Vested		(25,140	)		(314,941	)		(340,081	)		6.22
Cancelled or forfeited		-			(23,938	)		(23,938	)		1.72
Unvested restricted common shares as of September 30, 2017		64,227			386,977			451,204		$	7.30


	Three Months Ended March 31,						Period to Period
	2023			2022			Change
Revenue:
Collaboration revenue	$	100,000		$	178		$	99,822
Grant revenue		—			762			(762	)
Total revenue		100,000			940			99,060
Operating expenses:
Research and development		99,935			118,245			(18,310	)
General and administrative		22,360			28,021			(5,661	)
Collaboration expense, net		42,192			30,646			11,546
Total operating expenses		164,487			176,912			(12,425	)
Loss from operations		(64,487	)		(175,972	)		111,485
Other income, net		12,742			363			12,379
Loss before income taxes		(51,745	)		(175,609	)		123,864
Benefit for income taxes		(1,320	)		(3,608	)		2,288
Net loss	$	(53,065	)	$	(179,217	)	$	126,152


Exhibit Number		Description of Document

~~3.1~~10.1		~~Amended~~Employment Agreement, dated March 14, 2023, by and ~~Restate Articles of Association of~~between CRISPR Therapeutics, ~~AG, dated May 31, 2017~~Inc., and Raju Prasad, Ph.D. (incorporated herein by reference to Exhibit ~~3.1~~10.1 to the ~~Company’s~~Company's Current Report on Form 8-K filed on ~~July 25, 2017)~~March 14, 2023).

~~10.1~~10.2†^		Non-Exclusive License Agreement, dated March 23, 2023, by and between Vertex Pharmaceuticals Incorporated and CRISPR Therapeutics AG ~~Amended and Restated 2016 Stock Option and Incentive Plan~~ (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on ~~June 2, 2017)~~March 27, 2023).

~~10.2~~31.1*		~~Form of Incentive Stock Option Agreement under CRISPR Therapeutics AG’s Amended and Restated 2016 Stock Option and Incentive Plan.~~

~~10.3~~		~~Form of Non-Qualified Stock Option Agreement for Company Employees under Registrant’s Amended and Restated 2016 Stock Option and Incentive Plan.~~

~~10.4~~		~~Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under CRISPR Therapeutics AG’s Amended and Restated 2016 Stock Option and Incentive Plan.~~

~~10.5~~		~~Form of Restricted Stock Award Agreement under CRISPR Therapeutics AG’s Amended and Restated 2016 Stock Option and Incentive Plan.~~

~~10.6~~		~~Form of Restricted Stock Award Agreement for Company Employees under Registrant’s Amended and Restated 2016 Stock Option and Incentive Plan.~~

~~10.7~~		~~Form of Restricted Stock Award Agreement for Non-Employee Directors under CRISPR Therapeutics AG’s Amended and Restated 2016 Stock Option and Incentive Plan.~~

~~31.1~~		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002

~~31.2~~31.2*		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002

32.1*+		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002

~~101~~101.INS*		~~Financials~~Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL ~~format.~~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 (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)


	CRISPR Therapeutics AG

Dated: ~~November~~May 8, ~~2017~~2023	By:	/s/ ~~Rodger Novak~~Samarth Kulkarni
		~~Rodger Novak~~Samarth Kulkarni
		Chief Executive Officer
		(Principal Executive Officer)

Dated: ~~November~~May 8, ~~2017~~2023	By:	/s/ ~~Samarth Kulkarni~~Raju Prasad
		~~Samarth Kulkarni~~Raju Prasad
		~~President and~~ Chief ~~Business~~Financial Officer
		(Principal Financial Officer)