NTLA US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included in this Annual Report on Form 10-K, which have been prepared by us in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with Regulation S-X, promulgated under the Securities Exchange Act of 1934, as amended. This discussion and analysis should be read in conjunction with these consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Information pertaining to fiscal year 2020 was included in our Annual Report on Form 10-K for the year ended December 31, 2021 on pages 101 through 109 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2022.

Management Overview

Intellia Therapeutics, Inc. (“we,” “us,” “our,” “Intellia,” or the “Company”) is a leading clinical-stage genome editing company, focused on developing potentially curative therapeutics using CRISPR/Cas9-based technologies. CRISPR/Cas9, an acronym for Clustered, Regularly Interspaced Short Palindromic Repeats (“CRISPR”)/CRISPR associated 9 (“Cas9”), is a technology for genome editing, the process of altering selected sequences of genomic deoxyribonucleic acid (“DNA”). To fully realize the transformative potential of CRISPR/Cas9-based technologies, we are building a full-spectrum genome editing company, by leveraging our modular platform, to advance in vivo and ex vivo therapies for diseases with high unmet need by pursuing two primary approaches. For in vivo applications to address genetic diseases, we deploy CRISPR/Cas9 as the therapy that targets cells within the body. In parallel, we are developing ex vivo applications to address immuno-oncology and autoimmune diseases, where we use CRISPR/Cas9 as the tool to create the engineered cell therapy. Our deep scientific, technical and clinical development experience, along with our robust intellectual property (“IP”) portfolio, have enabled us to unlock broad therapeutic applications of CRISPR/Cas9 and related technologies to create new classes of genetic medicine. For more information regarding our business, mission and pipeline, see above sections in Part I entitled “Overview”, “Strategy” and “Our Pipeline”.

Financial Overview

Collaboration Revenue

Our revenue consists of collaboration revenue, including amounts recognized related to upfront technology access payments for licenses, technology access fees, research materials shipped, research funding and milestone payments earned under our collaboration and license agreements.

Research and Development

Research and development costs consist of expenses incurred in performing research and development activities, such as compensation and benefits, which includes equity-based compensation, for full-time research and development employees, allocated facility-related expenses, overhead expenses, license and milestone fees, contract research, development and manufacturing services, clinical trial costs and other related costs.

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General and Administrative

General and administrative expenses consist primarily of compensation and benefits, including equity-based compensation, for our executive, finance, legal, human resources, business development and support functions. Also included in general and administrative expenses are allocated facility-related costs not otherwise included in research and development expenses, travel expenses and professional fees for auditing, tax and legal services, including IP-related legal services, and other consulting fees and expenses.

Other (Expense) Income, Net

Other (expense) income consists of interest income earned on our cash, cash equivalents, restricted cash equivalents and marketable securities, loss from equity method investment and change in fair value of contingent consideration.

Results of Operations

The following discussion of the financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and the related footnotes thereto.

Comparison of Years Ended December 31, 2022 and 2021

The following table summarizes our results of operations for the years ended December 31, 2022 and 2021 (in thousands):

Year Ended December 31, Period-to-

Operating expenses:

Other (expense) income, net:

Change in fair value of contingent consideration (13,485 ) - (13,485 )

Collaboration Revenue

Collaboration revenue increased by $19.1 million to $52.1 million during the year ended December 31, 2022, as compared to $33.1 million during the year ended December 31, 2021. The increase in collaboration revenue during the year ended December 31, 2022 is primarily due to revenue from our joint venture with AvenCell Therapeutics, Inc. (“AvenCell”) and revenue from our license and collaboration agreement with Kyverna Therapeutics, Inc. (“Kyverna”). Refer to Note 9 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for further details.

Research and Development

Research and development expenses increased by $190.2 million to $420.0 million during the year ended December 31, 2022, as compared to $229.8 million during the year ended December 31, 2021.

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The following table summarizes our research and development expenses for the years ended December 31, 2022 and 2021, together with the changes in those items in dollars (in thousands) and the respective percentages of change.

Year Ended December 31, Period-to- Percent

External development expenses by program:

Unallocated research and development expenses:

In-process research and development 55,990 - 55,990 -

The increasein research and development expenses for the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily attributable to:

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a $13.5 million increase in external costs related to the development of NTLA-2001, our lead product candidate for the treatment of transthyretin (“ATTR”) amyloidosis, primarily due to an increase in spend on contracted services and drug components;

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a $4.2 million increase in external costs related to the development of NTLA-2002, our lead product candidate for the treatment of hereditary angioedema (“HAE”), primarily due to an increase in spend on contracted services;

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a $4.3 million decrease in external costs related to the development of NTLA-5001, our former product candidate for acute myeloid leukemia (“AML”), primarily due to a decrease in contracted services as we continued to wind down the program during the fourth quarter of 2022;

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a $42.2million increase in employee-related expenses, primarily driven by the increase in personnel growth to support our lead programs;

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a $36.5million increase in research materials and contracted services primarily driven by an increase in drug component expenses and consumables to support our pipelines;

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$56.0 million of acquired in-process research and development expense in the first half of 2022 related to the acquisition of Rewrite Therapeutics, Inc. (“Rewrite”);

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a $10.7million increase in facility-related expenses primarily related to rent, depreciation and technology expense allocated to research and development; and

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a $29.6million increase in stock-based compensation driven by our larger workforce.

During 2023, we expect research and development expenses to increase as we continue to grow our development team, initiate global pivotal trials for NTLA-2001 and NTLA-2002, progress our NTLA-3001 and NTLA-2003 programs and nominate new development candidates.

General and Administrative

General and administrative expenses increased by $19.2million to $90.3million during the year ended December 31, 2022, compared to $71.1 million during the year ended December 31, 2021. This increase was primarily related to an increase in employee-related expenses, including stock-based compensation of $14.8 million.

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Other (Expense) Income, Net

The increase in other (expense) income of $16.0 million is primarily related to an increase in the fair value of our contingent consideration liability of $13.5 million and an increase in our share of AvenCell's losses of $9.8 million, offset in part by a $7.3 million increase in interest income.

Liquidity and Capital Resources

Since our inception through December 31, 2022, we have raised an aggregate of $2,395.2 million to fund our operations through our collaboration agreements, our initial public offering and concurrent private placements, follow-on public offerings, at-the-market offerings and the sale of convertible preferred stock.

As of December 31, 2022, we had $1,262.0million in cash, cash equivalents and marketable securities.

We are eligible to earn a significant amount of milestone payments and royalties, in each case, on a per-product basis under our collaborations with Novartis Institutes for BioMedical Research, Inc. (“Novartis”), SparingVision SAS (“SparingVision”) and ONK Therapeutics, Ltd. (“ONK”), on a per-target basis under our collaboration with Regeneron Pharmaceuticals, Inc. (“Regeneron”) and upon achievement of certain events under our collaboration with Kyverna. Our ability to earn these milestone payments and the timing of achieving these milestones is dependent upon the outcome of our research and development activities and is uncertain at this time. Our rights to payments under our collaboration agreements are our only committed external source of funds.

Follow-on Offering

In December 2022, we closed an underwritten public offering of 7,532,751 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 982,532 shares of common stock, at the public offering price of $45.80 per share, for aggregate net proceeds of $337.9 million, after deducting the underwriting discount, commissions and approximately $0.3million related to legal, accounting and other fees in connection with the sales.

At-the-Market Offering Programs

In August 2019, we entered into an Open Market Sale Agreement (the “2019 Sale Agreement”) with Jefferies LLC (“Jefferies”), under which Jefferies was able to offer and sell, from time to time in “at-the-market” offerings, shares of our common stock having aggregate gross proceeds of up to $150.0 million. We agreed to pay to Jefferies cash commissions of 3.0% of the gross proceeds of sales of common stock under the 2019 Sale Agreement. During the first quarter of 2022, we issued 579,788 shares of our common stock in a series of sales at an average price of $69.43 per share in accordance with the 2019 Sale Agreement, for aggregate net proceeds of $38.9 million after payment of cash commissions to Jefferies and approximately $0.2 million related to legal, accounting and other fees in connection with the sales. The 2019 Sale Agreement expired in the third quarter of 2022.

In March 2022, we entered into an Open Market Sale Agreement (the “2022 Sale Agreement”) with Jefferies, under which Jefferies is able to offer and sell, from time to time in “at-the-market” offerings, shares of our common stock having aggregate gross proceeds of up to $400.0 million. We agreed to pay to Jefferies cash commissions of 3.0% of the gross proceeds of sales of common stock under the 2022 Sale Agreement.

During the year ended December 31, 2022, we issued 3,395,339 shares of our common stock in a series of sales at an average price of $57.43 per share in accordance with the 2022 Sale Agreement, for aggregate net proceeds of $189.0 million after payment of cash commissions to Jefferies and approximately $0.1 million related to legal, accounting and other fees in connection with the sales. As of December 31, 2022, $205.0 million in shares of common stock remain eligible for sale under the 2022 Sale Agreement.

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Funding Requirements

Our primary uses of capital are, and we expect will continue to be, research and development research materials and contracted services, clinical trial costs, compensation and related expenses, laboratory and office facilities, research supplies, legal and regulatory expenses, patent prosecution filing and maintenance costs for our licensed IP, milestone and royalty payments and general overhead costs. During 2023, we expect our expenses to increase compared to prior periods in connection with our ongoing activities as we continue to grow our research and development team, develop our clinical programs and advance additional programs into clinical development.

Because our lead programs are still in the early clinical stage and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of any future product candidates 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 ongoing cash needs through equity financings and collaboration arrangements. We receive cost reimbursements from Regeneron for the ATTR and hemophilia programs. Additionally, we are eligible to earn milestone payments and royalties, in each case, on a per-product basis under our collaborations with Novartis, SparingVision and ONK, on a per-target basis under our collaboration with Regeneron, and upon achievement of certain events with Kyverna, subject to the provisions of our agreements with each of them. Except for these sources of funding, we will not have any committed external source of liquidity. To the extent that we raise additional capital through the future sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. 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 financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Outlook

Based on our research and development plans and our expectations related to the progress of our programs, we expect that our cash, cash equivalents and marketable securities as of December 31, 2022, as well as research and cost reimbursement funding from our collaboration agreements will enable us to fund our ongoing operating expenses and capital expenditure requirements beyond the next 24 months, excluding any potential milestone payments or extension fees that could be earned and distributed under our collaboration agreements or any strategic use of capital not currently in the base case planning assumptions. We have based this estimate on current assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect.

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 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; addressing any competing technological and market developments; negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter; maintaining good relationships with our collaborators and licensors; maintaining, protecting, and expanding our portfolio of IP rights, including patents, trade secrets, and know-how; and attracting, hiring, and retaining qualified personnel.

Cash Flows

The following is a summary of cash flows for the years ended December 31, 2022 and 2021:

Year Ended December 31,

(In millions)

Net cash used in operating activities $ (333.3 ) $ (225.0 )

Net cash provided by (used in) investing activities 160.3 (550.8 )

Net cash provided by financing activities 583.0 736.7

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Net cash used in operating activities

Net cash used in operating activities of $333.3 million during the year ended December 31, 2022 primarily reflects the increased spend in our research and development activities, offset by the receipt of $10.7 million in payments from our collaboration partners during that period. Net cash used in operating activities of $225.0 million during the year ended December 31, 2021 primarily reflects increased spend in our research and development activities offset by the receipt of $6.7 million in payments from our collaboration partners during that period.

Net cash provided by (used in) investing activities

During the year ended December 31, 2022, our investing activities provided net cash of $160.3million primarily due to $647.6 million in marketable securities maturing, offset in part by $429.0 million of marketable securities purchased, $44.8 million in net cash for the acquisition of Rewrite, and $13.6 million in cash for the purchase of property and equipment. During the year ended December 31, 2021, our investing activities used net cash of $550.8 million. The increase in the year ended December 31, 2021 is primarily due to marketable securities activity during the period, as $1,020.6 million in marketable securities were purchased and $485.6 million in marketable securities matured, as well as the use of $12.8 million in cash for the purchase of property and equipment and $3.0 million for an investment in Kyverna.

Net cash provided by financing activities

Net cash provided by financing activities of $583.0million during the year ended December 31, 2022 is primarily due to the receipt of $337.9million in net proceeds from a follow-on offering of our common stock, $227.9million in net proceeds from at-the-market offerings, $14.5million in cash received from the exercise of stock options and $2.6million in cash received from the issuance of shares through our employee stock purchase plan. Net cash provided by financing activities of $736.7 million during the year ended December 31, 2021 is primarily due to the receipt of $648.3 million in net proceeds from a follow-on offering of our common stock, $45.3 million in net proceeds from at-the-market offerings, $41.1 million in cash received from the exercise of stock options and $2.0 million in cash received from the issuance of shares through our employee stock purchase plan.

Contractual and Other Obligations

We have entered into arrangements that contractually obligate us to make payments that will affect our liquidity and cash flows in future periods.

Property Leases - Commenced

As of December 31, 2022, our contractual commitments for leases were $170.4 million, which will be paid over the term of such leases. For additional information on our leases and timing of future payments refer to Note 12 of the consolidated financial statements included in this Annual Report on Form 10-K.

Property Leases – Not Yet Commenced

In February 2022, we entered into a lease agreement for office, general laboratory and good manufacturing practice (“GMP”) manufacturing space at 840 Winter Street in Waltham, Massachusetts, which is described in further detail in Note 12 of the consolidated financial statements included in this Annual Report on Form 10-K. In connection therewith, we have committed to making at least $146.0 million in rental payments over a lease term of 144 months estimated to begin in 2024.

Other Obligations

We enter into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies, supply manufacturing and other services and products for operating purposes. As of December 31, 2022, we have $8.0 million of commitments that are legally enforceable and due within one year.

We do not include any potential future pass-through milestone payments or royalty payments we may be required to make under our existing license agreements or the merger agreement related to our acquisition of Rewrite due to the uncertainty of the occurrence of the events requiring payment under those agreements. These payments are not reflected in the disclosures above. In January 2023, a research milestone related to Rewrite was achieved and settled (see Note 11).

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Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the balance sheets and the reported amounts of collaboration revenue and expenses during the reporting periods. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances at the time such estimates are made. Actual results and outcomes may differ materially from our estimates, judgments and assumptions. We periodically review our estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in the consolidated financial statements prospectively from the date of the change in estimate. Refer to Note 2 to our consolidated financial statements of this Annual Report on Form 10-K for our significant accounting policies related to our critical accounting estimates.

We define our critical accounting policies as those accounting principles generally accepted in the U.S. that require the most significant estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific manner in which we apply those principles. We believe the critical accounting policies used in the preparation of our consolidated financial statements which require significant estimates and judgments are as follows:

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) and its related amendments (collectively known as Accounting Standard Codification (“ASC”) 606 (“ASC 606”).

At inception, we determine whether contracts are within the scope of ASC 606 or other topics. For contracts that are determined to be within the scope of ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods and services. To achieve this core principle, we apply the following five steps: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as we satisfy a performance obligation. We only apply the five-step model to contracts when we determine that collection of substantially all consideration for goods and services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

As of December 31, 2022, our only revenue recognized is related to collaboration agreements with third parties which are either within the scope of ASC 606, under which we license certain rights to our product candidates to third parties, or within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) if it involves a joint operating activity pursuant to which we are an active participant and are exposed to significant risks and rewards with respect to the arrangement. As discussed in further detail in Note 9 to our consolidated financial statements of this Annual Report on Form 10-K, we enter into out-licensing agreements which are within the scope of ASC 606, under which we license certain rights to our product candidates to third parties and may provide services related to the research and development of the product candidates. The terms of these arrangements typically include consideration payable to us of one or more of the following: nonrefundable, upfront fees; development, regulatory, and commercial milestone payments; research and development funding payments; and royalties on the net sales of licensed products. Additionally, the terms of certain arrangements may include an equity interest in the other company. Consideration received from each of these payments results in collaboration revenues, except for revenues from royalties on the net sales of licensed products, which are classified as royalty revenues. For arrangements within the scope of ASC 808, the terms of these arrangements typically include payments received or made under the cost sharing provisions which are recognized as a component of collaboration revenues in the consolidated statements of operations and comprehensive loss.

In determining the accounting for each contract, the significant areas of management judgment or estimation include determining the transaction price, identifying the distinct performance obligations within a contract, determining the standalone selling prices for distinct performance obligations when more than one distinct performance obligation is

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identified within a contract and determining the revenue recognition pattern for each performance obligation that best reflects the timing of when we transfer control of goods and services to the customer. If the consideration received in exchange for entering into a contract is in the form of noncash consideration, we are required to estimate the fair value of the noncash consideration received. If our estimates of the noncash consideration received are not appropriate it could impact the total amount of revenue recognized for the contract. Furthermore, many of our performance obligations, whether distinct or combined, do not have readily available standalone selling prices and therefore we are required to make judgments and estimates regarding the standalone selling prices when relevant. To the extent the estimates are not appropriate in the circumstances, it could impact the timing of our revenue recognition. We evaluate the measure of progress each reporting period and if estimates related to the measure of progress change, related revenue recognition is adjusted accordingly.

Accrued Research and Development Expenses

As part of the process of preparing our financial statements, we are required to estimate our accrued expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees paid to vendors in connection with clinical research organizations (“CROs”) in connection with clinical studies, vendors in connection with preclinical development activities and vendors related to development, manufacturing and distribution of clinical trial materials.

We base our expenses related to preclinical studies on our estimates of the services received and efforts expended pursuant to contracts with multiple CROs that conduct and manage clinical studies on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense.

Contingent Consideration Liability

As discussed in Notes 2, 4 and 11 to our consolidated financial statements of this Annual Report on Form 10-K, during the year ended December 31, 2022, we entered into the Rewrite Merger Agreement. Under the Rewrite Merger Agreement, the Rewrite Holders are eligible to receive a $25.0 million research milestone payment, payable in a combination of cash and our common stock. We account for contingent consideration identified in an asset acquisition that is settled in shares of common stock under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), which results in us applying judgment in estimating the fair value of the liability at the end of each reporting period. We engaged an independent valuation specialist to determine the fair value of the contingent consideration liability (see Note 4 to our consolidated financial statements for specifics related to the valuation model and inputs utilized). The estimated probability of achievement is a highly sensitive input into the model. A 10% decrease in the probability of achievement, keeping all other variables the same, yields a 10% decrease in the earnout liability.

Equity-Based Compensation

We measure employee equity-based compensation based on the grant date fair value of the equity awards using the Black-Scholes option pricing model. Equity-based compensation expense is recognized on a straight-line basis over the requisite service period of the awards and is adjusted for pre-vesting forfeitures in the period in which the forfeitures occur. For equity awards that have a performance condition, we recognize stock-based compensation expense using the accelerated attribution method, based on our assessment of the probability that the performance condition will be achieved. Our stock price is a key input that will drive the grant date fair value of the equity awards.

We classify equity-based compensation expense in our consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s salary and related costs are classified or in which the award recipient’s service payments are classified.

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Recent Accounting Pronouncements

Please read Note 2 to our consolidated financial statements included in Part IV, Item 15, “Notes to Consolidated Financial Statements,” of this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our business.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates. As of December 31, 2022, we had cash equivalents, restricted cash equivalents and marketable securities of $1,273.0million consisting of interest-bearing money market accounts, reverse repurchase agreements, corporate and financial institution debt securities, U.S. Treasury and other government securities and asset-backed securities. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments are primarily in marketable securities. Due to the short-term duration of our investment portfolios and the low risk profile of our investments, we do not believe an immediate change of 100 basis points, or one percentage point, would have a material effect on the fair market value of our investment portfolio. Declines in interest rates, however, would reduce future investment income.

We do not have any foreign currency or derivative financial instruments. Inflation generally affects us by increasing our cost of labor, preclinical and clinical trial costs. We do not believe that inflation had a material effect on our results of operations during the year ended December 31, 2022.

Item 8. Financial Statements and Supplementary Data

The information required by this item is presented at the end of this report beginning on page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company has established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including the principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), to allow timely decisions regarding required disclosure.

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2022.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable

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assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

•

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

•

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013 framework) (“COSO”). Based on its assessment, management believes that, as of December 31, 2022, our internal control over financial reporting is effective based on those criteria.

Deloitte & Touche LLP, our independent registered public accounting firm, has issued an attestation report on the effectiveness of our internal control over financial reporting, which is included below.

Changes in Internal Controls over Financial Reporting

No change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Intellia Therapeutics, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Intellia Therapeutics, Inc. and subsidiary (the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated February 23, 2023, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

February 23, 2023

105

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

106

PART III

Certain information required by Part III is omitted from this Annual Report on Form 10-K and is incorporated by reference from our definitive proxy statement to be filed with the SEC with respect to our 2023 Annual Meeting of Stockholders, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, which we expect to file with the SEC no later than May 1, 2023.

Item 10. Directors, Executive Officers and Corporate Governance

Information regarding our directors, including the audit committee and audit committee financial experts, and executive officers and compliance with Section 16(a) of the Exchange Act will be included in our 2023 Proxy Statement and is incorporated herein by reference.

We have adopted a Code of Business Conduct and Ethics for all of our directors, officers and employees as required by Nasdaq governance rules and as defined by applicable SEC rules. Stockholders may locate a copy of our Code of Business Conduct and Ethics on our website at www.intelliatx.com or request a copy without charge from:

Intellia Therapeutics, Inc.

Attention: Investor Relations

40 Erie Street, Suite 130

Cambridge, MA 02139

We will post to our website any amendments to the Code of Business Conduct and Ethics, and any waivers that are required to be disclosed by the rules of either the SEC or Nasdaq.

Item 11. Executive Compensation

The information required by this item regarding executive compensation will be included in our definitive proxy statement to be filed with the SEC with respect to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item regarding security ownership of certain beneficial owners and management and securities authorized for issuance under equity compensation plans will be included in our definitive proxy statement to be filed with the SEC with respect to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item regarding certain relationships and related transactions and director independence will be included in our definitive proxy statement to be filed with the SEC with respect to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

Information about aggregate fees billed to us by our independent principal accountant, Deloitte & Touche LLP (PCAOB ID No. 34), located in Boston, Massachusetts, will be presented in our definitive proxy statement to be filed with the SEC with respect to our 2023 Annual Meeting of Stockholders under the caption “Audit Committee Matters — Principal Accounting Firm Fees” and is incorporated herein by reference.

107

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)

The following documents are included in this Annual Report on Form 10-K:

1.

The following Report and Consolidated Financial Statements of the Company are included in this Annual Report:

Report of Independent Registered Public Accounting Firm (PCAOB ID No.34)

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

2.

All financial schedules have been omitted because the required information is either presented in the consolidated financial statements or the notes thereto or is not applicable or required.

3.

The exhibits required by Item 601 of Regulation S-K and Item 15(b) of this Annual Report on Form 10-K are listed in the Exhibit Index immediately preceding the signature page of this Annual Report on Form 10-K. The exhibits listed in the Exhibit Index are incorporated by reference herein.

Item 16. Form 10-K Summary

The Company has elected not to include summary information.

108

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID No.34) F-2

Consolidated Balance Sheets F-4

Consolidated Statements of Operations and Comprehensive Loss F-5

Consolidated Statements of Stockholders’ Equity F-6

Consolidated Statements of Cash Flows F-7

Notes to Consolidated Financial Statements F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Intellia Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Intellia Therapeutics, Inc. and subsidiary (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Rewrite Asset Acquisition - Contingent Consideration Liability – Refer to Notes 2, 4, and 11 to the financial statements

Critical Audit Matter Description

In February 2022, the Company completed the acquisition of Rewrite Therapeutics, Inc. (“Rewrite”) and the transaction was accounted for as an asset acquisition.

Pursuant to the terms of the agreement to acquire Rewrite (the “Rewrite Merger Agreement”), the Company may be required to make a payment to the previous stockholders and option holders of Rewrite in the form of the Company’s common stock based on the achievement of a research milestone. As this milestone is payable in the

F-2

Company’s common stock, the contingent consideration qualifies as a liability under ASC 480, Distinguishing Liabilities from Equity. As of the acquisition date and as of December 31, 2022, the Company recorded an estimated liability for the acquisition-related contingent consideration at its fair value. The Company estimated the fair value using unobservable inputs by applying a probability-based valuation model.

The key assumptions management used in the valuation model are the probability and estimated timing of achieving the research milestone. These assumptions are not observable in the market and therefore represent Level 3 measurements within the fair value hierarchy.

Given that the fair value of the Rewrite contingent consideration liability is estimated based on unobservable inputs and is sensitive to changes in the probability and timing of milestone achievement, auditing the key assumptions required a high degree of auditor judgment and additional audit procedures, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our principal audit procedures related to the Rewrite contingent consideration liability included the following, among others:

•

We read the Rewrite Merger Agreement and other documents related to the acquisition to understand the terms of the contingent consideration obligation and compared the contract terms to the valuation model to evaluate consistency.

•

We tested the design, implementation, and effectiveness of controls over management’s review of the inputs and assumptions used in the valuation of the Rewrite contingent consideration liability, including the probability and timing of achievement of the research milestone.

•

With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology.

•

We also assessed the qualification, competence and objectivity of the external valuation professionals engaged by the Company.

•

We inquired of management and the Company’s scientific personnel to understand the milestone and the underlying assumptions, including current progress of development and underlying data associated with development efforts and timing of the related milestone.

•

We evaluated the reasonableness of management’s assumptions of the probability and timing of achievement of the research milestone by reviewing internal communications to management and the board of directors.

•

We evaluated whether management’s assumptions used for the research milestone were consistent with evidence obtained in other areas of the audit.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

February 23, 2023

We have served as the Company's auditor since 2015.

F-3

INTELLIA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands except share and per share data)

ASSETS

Current Assets:

Prepaid expenses and other current assets 20,407 18,584

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Current portion of operating lease liability 16,685 9,112

Contingent consideration liability 24,026 -

Commitments and contingencies (Note 8)

Stockholders’ Equity:

Accumulated other comprehensive loss (7,461 ) (2,632 )

See notes to consolidated financial statements.

F-4

INTELLIA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Amounts in thousands except per share data)

Year Ended December 31,

Operating expenses:

Other (expense) income, net:

Loss from equity method investment (11,079 ) (1,325 ) -

Change in fair value of contingent consideration (13,485 ) - -

Net loss per share, basic and diluted $ (6.16 ) $ (3.78 ) $ (2.40 )

Other comprehensive loss:

Unrealized loss on marketable securities (1,637 ) (2,126 ) (260 )

Other comprehensive loss from equity method investment (3,192 ) (507 ) -

See notes to consolidated financial statements.

F-5

INTELLIA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands, except share data)

Additional AccumulatedOther Total

Common Paid-In Comprehensive Accumulated Stockholders’

Shares Amount Capital Income (Loss) Deficit Equity

Vesting of restricted stock units 82,829 - - - - -

Issuance of shares under employee stock purchase plan 101,911 - 1,557 - - 1,557

Vesting of restricted stock units 119,715 - - - - -

Issuance of shares under employee stock purchase plan 30,897 - 2,024 - - 2,024

Other comprehensive loss - equity method investment - - - (507 ) - (507 )

Vesting of restricted stock units 147,674 - - - - -

Issuance of shares under employee stock purchase plan 77,618 - 2,649 - - 2,649

Other comprehensive loss - equity method investment - - - (3,192 ) - (3,192 )

F-6

INTELLIA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

Year Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net loss to net cash used in operating activities:

(Gain) loss on disposal of property and equipment (162 ) - 35

Loss from equity method investment 11,079 1,325 -

Deferral of equity method investment intra-entity profit on sales 11,405 2,937 -

Change in fair value of contingent consideration 13,485 - -

In-process research and development charge 55,990 - -

Changes in operating assets and liabilities:

Prepaid expenses and other current assets (2,160 ) (9,798 ) (9,206 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of property and equipment 150 - -

Investment in Kyverna Therapeutics, Inc. - (3,000 ) -

CASH FLOWS FROM FINANCING ACTIVITIES:

Issuance of shares through employee stock purchase plan 2,649 2,024 1,557

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Purchases of property and equipment unpaid at period end $ 1,623 $ 667 $ 1,508

Contingent consideration liability assumed in asset acquisition 10,541 - -

Non-cash trade-in of property and equipment 200 - -

Non-cash contribution of intellectual property to SparingVision SAS - 14,759 -

See notes to consolidated financial statements.

F-7

INTELLIA THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.

The Company

Intellia Therapeutics, Inc. (“Intellia” or the “Company”) is a leading clinical-stage genome editing company focused on developing potentially curative therapies using CRISPR/Cas9-based technologies. CRISPR/Cas9, an acronym for Clustered, Regularly Interspaced Short Palindromic Repeats (“CRISPR”)/CRISPR associated 9 (“Cas9”), is a technology for genome editing, the process of altering selected sequences of genomic deoxyribonucleic acid (“DNA”). To fully realize the transformative potential of CRISPR/Cas9-based technologies, Intellia is building a full-spectrum genome editing company, by leveraging its modular platform, to advance in vivo and ex vivo therapies for diseases with high unmet need by pursuing two primary approaches. For in vivo applications to address genetic diseases, the Company deploys CRISPR/Cas9 as the therapy that targets cells within the body. In parallel, the Company is developing ex vivo applications to address immuno-oncology and autoimmune diseases, where we use CRISPR/Cas9 as the tool to create the engineered cell therapy. The Company's deep scientific, technical and clinical development experience, along with its robust intellectual property (“IP”) portfolio, have enabled it to unlock broad therapeutic applications of CRISPR/Cas9 and related technologies to create new classes of genetic medicine.

The Company was founded and commenced active operations in mid-2014. The Company will require substantial additional capital to fund its research and development. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of more advanced or effective therapies, dependence on key executives, protection of and dependence on proprietary technology, compliance with government regulations and ability to secure additional capital to fund operations. Programs currently in development or moving into development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Liquidity

Since its inception through December 31, 2022, the Company has raised an aggregate of $2,395.2 million to fund its operations through its initial public offering (“IPO”) and concurrent private placements, follow-on public offerings, at-the-market offerings and the sale of convertible preferred stock, as well as through its collaboration agreements. The Company expects that its cash, cash equivalents and marketable securitiesas of December 31, 2022 will enable the Company to fund its ongoing operating expenses and capital expenditure requirements for at least the twelve-month period following the issuance of these consolidated financial statements.

2.

Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Intellia Therapeutics, Inc. and its wholly owned, controlled subsidiary, Intellia Securities Corp. All intercompany balances and transactions have been eliminated in consolidation. Comprehensive loss is comprised of net loss and gain/loss on marketable securities and equity method investments.

On February 2, 2022, the Company entered into an agreement to acquire Rewrite Therapeutics, Inc., a Delaware corporation (“Rewrite”). On the effective date of the agreement, Rewrite became a wholly-owned subsidiary of the Company. In September 2022, Rewrite merged into Intellia, with Intellia the surviving entity.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates in these consolidated financial statements have been made in connection with the calculation of revenues, research and development expenses, valuation of equity and fair value method investments, contingent consideration and equity-based compensation expense. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances at the time such estimates are made. Actual results could differ from those estimates. The Company periodically reviews its estimates in light of changes in circumstances, facts and experience. The extent of the impact of the coronavirus disease 19 (“COVID-19”) pandemic on the Company’s operational and financial performance will depend on certain developments, including the length and severity of this pandemic, as well as its effect on the Company's employees, collaborators and vendors, all of which are uncertain and cannot be predicted. The Company cannot reasonably estimate the extent to which the disruption may materially impact its consolidated results of operations or financial position.

F-8

The effects of material revisions in estimates are reflected in the consolidated financial statements prospectively from the date of the change in estimate.

Fair Value Measurements

The Company’s financial instruments include cash equivalents, marketable securities, accounts receivable, non-marketable securities, accounts payable, accrued expenses and a contingent consideration liability. Certain of the Company’s financial assets, including cash equivalents and marketable securities, have been initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third-party pricing services or other observable market data. The pricing services utilize industry standard valuation models and observable market inputs to determine value.

Refer to Note 4 for further information regarding the Company’s fair value measurements.

Other financial instruments, including accounts receivable, accounts payable and accrued expenses, are carried at cost, which approximate fair value due to the short duration and term to maturity.

Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. As of December 31, 2022, cash equivalents consisted of interest-bearing money market accounts and reverse repurchase agreements. As of December 31, 2021, cash equivalents consisted of interest-bearing money market accounts.

Restricted Cash Equivalents

The Company has restricted cash equivalents made up of money market funds held in collateral accounts that are restricted to secure letters of credit in accordance with certain of its leases. As of December 31, 2022, these restricted cash equivalents amounted to $12.0 million. As of December 31, 2021, these restricted cash equivalents amounted to $2.1 million. The letters of credit are required to be maintained throughout the term of the leases; in some cases, the Company is able to reduce the amounts held over time. These restricted cash equivalents are long-term in nature and are included in “Investments and other assets” in the Company’s consolidated balance sheets.

Marketable Securities

The Company’s marketable securities are accounted for as available-for-sale and recorded at fair value with the related unrealized gains and losses included in accumulated other comprehensive (loss)/income, a component of stockholders’ equity.

The Company reviews its investment portfolio to identify and evaluate investments that have an indication of possible other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

Refer to Note 3 for further information regarding the Company’s marketable securities.

Asset Acquisitions

At the time of acquisition, the Company determines if a transaction should be accounted for as a business combination or acquisition of assets. The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes transaction costs, and the consideration is allocated to the items acquired based on a relative fair value methodology. Goodwill is not recognized in asset acquisitions. In an asset acquisition, the cost allocated to acquire in-process research and development with no alternative future use is charged to research and development expense at the acquisition date.

Non-Marketable Equity Securities

The Company also invests in equity securities of companies whose securities are not publicly traded and where fair value is not readily available. These investments are accounted for using the measurement alternative at cost minus impairment adjusted for changes in observable prices. The Company monitors these investments to evaluate whether any increase or decline in their value has occurred, based on the implied value of recent company financings and general market conditions, or if the investment has a readily determinable fair value. These investments are included in “Investments and other assets” in the Company’s consolidated balance sheets. Refer to Note 10 for further information regarding the Company’s investments in non-marketable equity securities.

F-9

Concentrations of Credit Risk

The Company’s cash, cash equivalents and marketable securities may potentially be subject to concentrations of credit risk. The Company generally maintains balances in various accounts in excess of federally insured limits with financial institutions that management believes to be of high credit quality.

Accounts receivable represents amounts due from collaboration partners and joint ventures. The Company monitors economic conditions to identify facts or circumstances that may indicate that any of its accounts receivable are at risk of collection. As of December 31, 2022, the Company’s accounts receivable were related to its collaborations with Regeneron Pharmaceuticals, Inc. (“Regeneron”), AvenCell Therapeutics, Inc. (“AvenCell”), SparingVision SAS (“SparingVision”) and ONK Therapeutics, Ltd. (“ONK”). As of December 31, 2021, the Company’s accounts receivable were related to its collaborations with Regeneron and AvenCell.

Property and Equipment

The Company records property and equipment at cost and recognizes depreciation and amortization using the straight-line method over the following estimated useful lives of the respective assets:

Asset Category Useful Life

Laboratory equipment 5 years

Office furniture and equipment 5 years

Computer software 3 years

Computer equipment 3 years

Leasehold improvements 5 years or term of respective lease, if shorter

Expenditures for repairs and maintenance of assets are expensed as incurred. Upon retirement or sale, the cost of assets disposed and the corresponding accumulated depreciation are removed from the related accounts and any resulting gain or loss is reflected in the results of operations.

Impairment of Long-Lived Assets

The Company tests long-lived assets to be held and used, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of assets or asset groups may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets.

Evaluation of recoverability of the asset or asset group is based on an estimate of undiscounted future cash flows resulting from the use of the asset or asset group and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the asset or asset group, the assets are written down to their estimated fair values. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows. To date, the Company has not recorded any material impairment losses on long-lived assets.

Contingent Consideration

The Company accounts for contingent consideration identified in an asset acquisition, that is payable in cash and does not meet the definition of a derivative under Accounting Standard Codification (“ASC”) 815, Derivatives and Hedging, when the contingency is resolved and the consideration is paid or becomes payable.

The Company accounts for contingent consideration identified in an asset acquisition that is settled in shares of common stock under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). The contingent consideration liability will be recorded at fair value at the end of each reporting period with changes in estimated fair values recorded in other (expense) income in the consolidated statements of operations and comprehensive loss.

The estimated fair value of the contingent consideration liability related to the acquisition of Rewrite (see Notes 4 and 11) is determined based on a probability adjusted discounted cash flow model that includes significant estimates and assumptions pertaining to research and development. Significant changes in any of the probabilities of success or in the probabilities as to the periods in which the milestone would be achieved would result in a significantly higher or lower fair value measurement. The Company will continue to adjust the liability for changes in fair value until the obligation is settled or the research is abandoned.

F-10

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes and for operating loss and tax credit carryforwards. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes.

The Company’s deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which these temporary differences are expected to be recovered or settled. A valuation allowance is recorded to reduce deferred tax assets if it is determined that it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company considers many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings results, expectations of future taxable income, carryforward periods available and other relevant factors. The Company records changes in the required valuation allowance in the period that the determination is made.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available as of the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, the Company does not recognize a tax benefit in the financial statements. The Company records interest and penalties related to uncertain tax positions, if applicable, as a component of income tax expense.

Revenue Recognition

The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) and its related amendments (collectively known as “ASC 606”).

At inception, the Company determines whether contracts are within the scope of ASC 606 or other topics. For contracts that are determined to be within the scope of ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services. To achieve this core principle, the Company applies the following five steps: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when the Company determines that collection of substantially all consideration for goods and services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. To the extent a contract includes multiple promised goods and services, the Company applies judgment to determine whether promised goods and services are both capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation.

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes. Determining the transaction price requires significant judgment, which is discussed in further detail for each of the Company’s collaboration agreements in Note 9. In addition, none of the Company’s contracts as of December 31, 2022 or 2021 contained a significant financing component.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The consideration to be received is allocated among the separate performance obligations based on relative standalone selling prices. The Company typically determines standalone selling prices using an adjusted market assessment approach model.

F-11

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized over time if either (i) the customer simultaneously receives and consumes the benefits provided by the entity’s performance, (ii) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. If the entity does not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring the control of a promised good or service to a customer. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

As of December 31, 2022, the Company’s only revenue recognized is related to collaboration agreements with third parties which are either within the scope of ASC 606, under which the Company licenses certain rights to its product candidates to third parties, or within the scope of ASC 808, Collaborative Arrangements (“ASC 808”) if it involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement. For the collaboration arrangements under the scope of ASC 606, as discussed in further detail in Note 9, the terms of these arrangements typically include payment to the Company of one or more of the following: nonrefundable, upfront fees; development, regulatory, and commercial milestone payments; research and development funding payments; and royalties on the net sales of licensed products. Additionally, the terms of certain arrangements may include an equity interest in the other company. Each of these payments results in collaboration revenues, except for revenues from royalties on the net sales of licensed products, which are classified as royalty revenues. For arrangements within the scope of ASC 808, the terms of these arrangements typically include payments received or made under the cost sharing provisions which are recognized as a component of revenues in the consolidated statements of operations and comprehensive loss.

Licenses of intellectual property: If the license to the Company’s IP is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from consideration allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the licenses. For licenses that are combined with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue.

Milestone payments: At the inception of each arrangement that includes development milestone payments, the Company evaluates the probability of reaching the milestones and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur in the future, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore revenue recognized is constrained as management is unable to assert that a reversal of revenue would not be probable. The transaction price is then allocated to each performance obligation on a relative standalone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment.

Royalties: For arrangements that include sales-based royalties, including milestone payments based on levels of sales, if the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of its collaboration agreements.

The Company receives payments from its customers based on billing schedules or upon the achievement of milestones established in each contract. The Company’s contract liabilities consist of deferred revenue. Upfront payments and fees are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until the Company satisfies its obligations under these arrangements.

The Company also considers the nature and contractual terms of an arrangement and assesses whether the arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement. If the Company is an active participant and is exposed to the significant risks and rewards with respect to the arrangement, the Company accounts for the arrangement under ASC 808. Based on this consideration, the Company accounts for its co-development and co-promotion (“Co/Co”) agreements with Regeneron and AvenCell under ASC 808. Because ASC 808 does not

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provide recognition and measurement guidance for collaborative arrangements, the Company has analogized to ASC 606. Refer to Note 9 for additional information regarding the Company’s collaboration agreements.

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development costs consist of expenses incurred in performing research and development activities, such as salaries, equity-based compensation and benefits of employees, allocated facility-related expenses, overhead expenses, license, sublicense and milestone fees, contract research, clinical trial costs, development and manufacturing services, and other related costs.

The Company records payments made for research and development services prior to the services being rendered as prepaid expenses on the consolidated balance sheet and expenses them as the services are provided. Contracts for multi-year research and development services are recorded on a straight-line basis over each annual contractual period based on the total contractual fee when the services rendered are expected to be substantially equivalent over the term of the arrangement. The cost of obtaining licenses for certain technology or IP is recorded to research and development expense when incurred if the licensed technology or IP has not yet reached technological feasibility and has no alternative future use.

Equity-Based Compensation

The Company measures employee equity-based compensation based on the grant date fair value of the equity awards using the Black-Scholes option pricing model. Equity-based compensation expense is recognized on a straight-line basis over the requisite service period of the awards and is adjusted for pre-vesting forfeitures in the period in which the forfeitures occur. For equity awards that have a performance condition, the Company recognizes stock-based compensation expense using the accelerated attribution method, based on its assessment of the probability that the performance condition will be achieved.

The Company classifies equity-based compensation expense in its consolidated statement of operations and comprehensive loss in the same manner in which the award recipient’s salary and related costs are classified or in which the award recipient’s service payments are classified.

(Loss) Earnings per Share

The Company calculates basic (loss) earnings per share by dividing net (loss) income for each respective period by the weighted average number of common shares outstanding for each respective period. The Company computes diluted (loss) earnings per share after giving consideration to the dilutive effect of stock options and unvested restricted stock that are outstanding during the period, except where such securities would be anti-dilutive.

Segment Information

The Company's chief executive officer, its chief operating decision maker, manages the Company's operations as a single segment for the purpose of assessing performance and making operating decisions. The Company’s one business segment is the development of genome editing-based therapies. All of the Company’s assets are held in the U.S. and all of the Company’s revenue has been generated in the U.S.

Variable Interest Entity

The Company evaluates at the inception of each arrangement, and whenever a reconsideration event occurs, whether an entity in which the Company holds an investment or in which the Company has other variable interests is considered a variable interest entity (“VIE”) in accordance with FASB ASC Topic 810, Consolidation (“ASC 810”). If the entity meets the criteria to qualify as a VIE, the Company assesses whether or not the Company is the primary beneficiary of that VIE based on a number of factors, including (i) which party has the power to direct the activities that most significantly affect the VIE’s economic performance, (ii) the parties’ contractual rights and responsibilities pursuant to any contractual agreements and (iii) which party has the obligation to absorb losses or the right to receive benefits from the VIE. If the Company is deemed the primary beneficiary of a VIE, the Company consolidates such entity and reflects the non-controlling interest of other beneficiaries of that entity. If the Company is not the primary beneficiary, no consolidation is necessary, and the Company accounts for the investment or other variable interest in accordance with applicable U.S. GAAP.

Equity Method of Accounting

In circumstances where the Company has the ability to exercise significant influence, but not control, over the operating and financial policies of an entity in which the Company has a common stock or in-substance common stock investment, the Company utilizes the equity method of accounting for recording related investment activity. In assessing whether the Company exercises significant influence, the Company considers the nature and magnitude of the investment, the voting and protective rights the Company holds, any

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participation in the governance of the other entity and other relevant factors such as the presence of a collaborative or other business relationship.

Under the equity method of accounting, the Company’s investments are initially recorded at cost on the consolidated balance sheets. Upon recording an equity method investment, the Company evaluates whether there are basis differences between the carrying value and fair value of the Company’s proportionate share of the investee’s underlying net assets. Typically, the Company amortizes basis differences identified on a straight-line basis over the underlying assets’ estimated useful lives when calculating the attributable earnings or losses, excluding the basis differences attributable to in-process research and development (“IPR&D”) that has no alternative future use. If the Company is unable to attribute all of the basis difference to specific assets or liabilities of the investee, the residual excess of the cost of the investment over the proportional fair value of the investee’s assets and liabilities is considered to be Equity Method Goodwill and is recognized within the equity investment balance, which is tracked separately within the Company’s memo accounts. The Company subsequently records in the consolidated statements of operations and comprehensive loss its share of income or loss of the other entity within other income/expense. If the share of losses exceeds the carrying value of the Company’s investment, the Company will suspend recognizing additional losses and will continue to do so unless it commits to providing additional funding; however, if there are intra-entity profits this can cause the investment balance to go negative.

The Company evaluates its equity method investments for impairment whenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired and considers qualitative and quantitative factors including the investee's financial metrics, product and commercial outlook and cash usage. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period and the investment is written down to fair value.

At December 31, 2022 and 2021, the Company accounted for its investment in AvenCell under the equity method of accounting and no impairment charges were recognized during the years ended December 31, 2022 or 2021. Refer to Note 10 for further details.

Recent Accounting Pronouncements

There were no accounting pronouncements adopted by the Company in 2022 other than as noted above.

3.

Marketable Securities

The following table summarizes the Company’s available-for-sale marketable securities as of December 31, 2022 and 2021 at net book value:

AmortizedCost Gross UnrealizedGains Gross UnrealizedLosses Estimated FairValue

(In thousands)

Marketable securities:

AmortizedCost Gross UnrealizedGains Gross UnrealizedLosses Estimated FairValue

(In thousands)

Marketable securities:

The amortized cost of available-for-sale securities is adjusted for amortization of premiums and accretion of discounts to maturity. At December 31, 2022 and 2021, the balance in the Company’s accumulated other comprehensive (loss)/income was composed of activity related to the Company’s available-for-sale marketable securities and equity method investment. There were no material realized gains or losses in the years ended December 31, 2022, 2021 or 2020. The Company did not reclassify any amounts out of accumulated other comprehensive income (loss) during these periods. The Company generally does not intend to sell any investments prior to recovery of their amortized cost basis for any investment in an unrealized loss position. As such, the Company has classified these losses as temporary in nature.

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The Company's available-for-sale securities that are classified as short-term marketable securities in the consolidated balance sheet mature within one year or less as of the balance sheet date. Available-for-sale securities that are classified as noncurrent in the consolidated balance sheet are those that mature after one year but within five years from the balance sheet date and that the Company does not intend to dispose of within the next twelve months. At December 31, 2022 and 2021, the Company did not hold any investments that matured beyond five years of the balance sheet date.

4.

Fair Value Measurements

The Company classifies fair value-based measurements using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1, quoted market prices in active markets for identical assets or liabilities; Level 2, observable inputs other than quoted market prices included in Level 1, such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data; and Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of December 31, 2022 and 2021, the Company’s financial assets recognized at fair value on a recurring basis consisted of the following:

Fair Value as of December 31, 2022

Total Level 1 Level 2 Level 3

(In thousands)

Cash equivalents and restricted cash equivalents $ 534,581 $ 534,581 $ - $ -

Marketable securities:

Fair Value as of December 31, 2021

Total Level 1 Level 2 Level 3

(In thousands)

Cash equivalents and restricted cash equivalents $ 124,636 $ 124,636 $ - $ -

Marketable securities:

Certain of the Company’s financial assets, including cash equivalents, restricted cash equivalents and marketable securities, have been initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third-party pricing services or other observable market data. The pricing services utilize industry standard valuation models and observable market inputs to determine value. After completing its validation procedures, the Company did not adjust or override any fair value measurements provided by the pricing services as of December 31, 2022 or 2021.

Other financial instruments, including accounts receivable, accounts payable and accrued expense, are carried at cost, which approximates fair value due to the short duration and term to maturity.

The Company's investment in AvenCell was initially recorded at fair value, determined according to Level 3 inputs in the fair value hierarchy described above. Refer to Note 10 for further details.

The Company's investment in SparingVision was initially recorded at fair value, determined according to Level 3 inputs in the fair value hierarchy described above. The Company's investment in Kyverna Therapeutics, Inc. (“Kyverna”) was initially recorded at cost, which is representative of fair value. Refer to Note 10 for further details. The SparingVision and Kyverna investments (the “investments”) are included in “Investments and other assets” on the consolidated balance sheets. These investments are accounted for using the measurement alternative at cost minus impairment adjusted for changes in observable prices. There were no changes in observable prices of these investments as of December 31, 2022 or 2021.

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As discussed further in Note 11, under the Rewrite Merger Agreement, the Rewrite Holders are eligible to receive a $25.0 million research milestone payment, payable in a combination of cash and the Company’s common stock valued using the volume-weighted average price of the Company’s stock over the ten-day trading period ending two trading days prior to the date on which the applicable milestone is achieved. The milestone payable in the Company’s common stock results in liability classification under ASC 480. This contingent consideration liability is carried at fair value which was estimated by applying a probability-based model, which utilized inputs based on timing of achievement that were unobservable in the market. The contingent consideration liability is classified within Level 3 of the fair value hierarchy.

The following table reconciles the change in fair value of the contingent consideration liability based on the level 3 inputs listed below (in thousands):

For the year ended December 31, 2022

Balance at February 2, 2022 (at inception) $ 10,541

Change in fair value 13,485

As of inception (February 2, 2022) As of December 31, 2022

Discount rate 7% 10.1%

Probability of achievement 50% 100%

5.

Property and Equipment, Net

Property and equipment, net consisted of the following:

December 31,

(In thousands)

Office furniture and equipment 2,633 2,186

Less: accumulated depreciation and amortization (33,199 ) (26,114 )

Depreciation and amortization expense was $7.6 million, $6.9 million and $6.3million for the years ended December 31, 2022, 2021 and 2020, respectively.

6.

Accrued Expenses

Accrued expenses consisted of the following:

December 31,

(In thousands)

Accrued legal and professional expenses 1,457 3,100

7.

Income Taxes

The Company did not record net income tax benefits for the operating losses incurred during the periods presented due to the uncertainty of realizing a tax benefit from those losses. Accordingly, any benefit recorded related to these deferred tax assets was offset by a valuation allowance reflecting management’s conclusion that realization of those assets was not more likely than not.

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A reconciliation of the federal statutory income tax rate and the Company’s effective income tax rate is as follows:

Year Ended December 31,

Federal statutory income tax rate (21.0 )% (21.0 )% (21.0 )%

State income taxes (8.3 ) (16.6 ) (7.4 )

Research and development tax credits (5.3 ) (8.7 ) (1.8 )

Stock-based compensation (0.1 ) (16.8 ) (1.3 )

In-process research and development 2.5 - -

Effective income tax rate — % — % — %

The Company’s net deferred tax assets (liabilities) consisted of the following:

December 31,

(in thousands)

Deferred tax assets:

Capitalized start-up costs 296 334

Research and development credit carryforwards 101,326 61,698

Equity investment adjustments 3,358 359

Deferred tax liabilities:

Operating lease right-of-use assets (36,028 ) (21,442 )

Net deferred tax asset (liability) $ - $ -

As of December 31, 2022 and 2021, the Company had federal net operating loss carryforwards of $852.1 million and $800.5 million, respectively, which may be available to offset future income tax liabilities.

Approximately $36.9 million of the federal net operating losses generated prior to 2018 will begin to expire in 2034, unless previously utilized. Losses incurred prior to 2018 will generally be deductible to the extent of the lesser of a corporation’s net operating loss carryover or 100% of a corporation’s taxable income and be available for twenty years from the period the loss was generated. The federal net operating losses generated after 2017 of approximately $815.2 million will be carried over indefinitely, but will generally limit the net operating loss deduction to the lesser of the net operating loss carryforward or 80% of a corporation’s taxable income (subject to Section 382 of the Internal Revenue Code of 1986, as amended). Also, there will be no carryback for losses incurred after 2017.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act, (the “CARES Act”) was enacted in the U.S. The CARES Act temporarily removes the 80% limit for taxable years beginning before 2021 to allow a net operating loss carryforward to fully offset an organization’s income. The CARES Act allows a five-year carryback of any net operating loss generated in a taxable year beginning after December 31, 2017, and before January 1, 2021. The impact of the CARES Act was not material to the Company.

As of December 31, 2022 and 2021, the Company also had state net operating loss carryforwards of $797.8 million and $767.8 million, respectively, which may be available to offset future income tax liabilities and begin to expire in 2034.

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As of December 31, 2022 and 2021, the Company had federal tax credit carryforwards of approximately $63.4 million and $37.9 million, respectively, which begin to expire in 2034. As of December 31, 2022 and 2021, the Company had state research and development and other credit carryforwards of approximately $48.0 million and $30.2 million, which begin to expire in 2029.

The Company evaluated the expected realizability of its net deferred tax assets and determined that there was significant negative evidence due to its net operating loss position and insufficient positive evidence to support the realizability of these net deferred tax assets. The Company concluded it is more likely than not that its net deferred tax assets would not be realized in the future; therefore, the Company has provided a full valuation allowance against its net deferred tax asset balance as of December 31, 2022 and 2021. The valuation allowance increased by $150.0 million in 2022, $163.9 million in 2021, and $42.4 million in 2020.

Ownership changes may limit the amount of net operating loss carryforwards or research anddevelopment tax credit carryforwards that can be utilized to offset future taxable income or tax liability. In general, an ownership change, as defined by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50% over a three-year period. If the Company has experienced a change of control, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382 and 383 of the Code. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. During 2022, the Company completed an assessment of the available net operating loss carryforwards and other tax attributes under Section 382. The analysis is not expected to result in a material limitation to the Company’s tax attributes and the results of this analysis are reflected herein.

As of December 31, 2022, the Company had not identified any unrecognized tax benefits. The Company files income tax returns in the U.S. federal tax jurisdiction and Massachusetts and various other state tax jurisdictions. The Company is subject to examination by the Internal Revenue Service, Massachusetts taxing authorities and state taxing authorities for tax year 2018 through present. The returns in these jurisdictions since inception remain open for examination; however, there are currently no pending tax examinations. The Company will recognize interest and/or penalties related to uncertain tax benefits in income tax expense if they arise.

8.

Commitments and Contingencies

Litigation

During the year ended December 31, 2022, there have been no material changes to any outstanding litigation, nor is the Company a party to any new litigation.

License Agreements

The Company is party to license agreements, which include contingent payments. These payments will become payable if and when certain development, regulatory and commercial milestones are achieved. As of December 31, 2022, the satisfaction and timing of the contingent payments is uncertain and not reasonably estimable.

9.

Collaborations and Other Arrangements

To accelerate the development and commercialization of CRISPR-based products in multiple therapeutic areas, the Company has formed, and intends to seek other opportunities to form, strategic alliances with collaborators who can augment its leadership in CRISPR therapeutic development. As of December 31, 2022, the Company’s accounts receivable were related to its collaborations with Regeneron, AvenCell, SparingVision and ONK and the Company's contract liabilities were related to its collaborations with Regeneron, AvenCell, SparingVision and Kyverna. As of December 31, 2021, the Company’s accounts receivable were related to its collaborations with Regeneron and AvenCell and the Company's contract liabilities were related to its collaborations with Regeneron, AvenCell, SparingVision and Kyverna.

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The following table presents changes in the Company’s accounts receivable and contract liabilities during the years ended December 31, 2022 and 2021 (in thousands):

Balance atBeginning ofPeriod Additions Deductions Balance at Endof Period

Balance atBeginning ofPeriod Additions Deductions Balance at Endof Period

During the years ended December 31, 2022, 2021 and 2020, the Company recognized the following revenues as a result of changes in the contract liability balance (in thousands):

Costs to obtain and fulfill a contract

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

Regeneron Pharmaceuticals, Inc.

In April 2016, the Company entered into a license and collaboration agreement with Regeneron (the “2016 Regeneron Agreement”). The 2016 Regeneron Agreement has two principal components: i) a product development component under which the parties will research, develop and commercialize CRISPR/Cas-based therapeutic products primarily focused on genome editing in the liver, and ii) a technology collaboration component, pursuant to which the Company and Regeneron will engage in research-related activities aimed at discovering and developing novel technologies and improvements to CRISPR/Cas technology to enhance the Company’s genome editing platform. Under this agreement, the Company also may access the Regeneron Genetics Center and proprietary mouse models to be provided by Regeneron for a limited number of the Company’s liver programs. At the inception of the 2016 Regeneron Agreement, Regeneron selected the first of its 10 targets, transthyretin (“ATTR”) amyloidosis, which is subject to a co-development and co-promotion agreement between the Company and Regeneron (the “ATTR Co/Co”).

On May 30, 2020, the Company entered into (i) amendment no. 1 (the “2020 Regeneron Amendment”) to the 2016 Regeneron Agreement, (ii) co-development and co-funding agreements for the treatment of hemophilia A and hemophilia B (the “Hemophilia Co/Co”) agreements and (iii) a stock purchase agreement. The collaboration expansion builds upon the jointly developed targeted transgene insertion capabilities designed to durably restore missing therapeutic protein, and to overcome the limitations of traditional gene therapy. The collaboration was extended until April 2024, at which point Regeneron has an option to renew for an additional two years. The 2020 Regeneron Amendment also grants Regeneron exclusive rights to develop products for five additional in vivo CRISPR/Cas-based therapeutic liver targets and non-exclusive rights to independently develop and commercialize up to 10 ex vivo gene edited products made using certain defined cell types.

Since December 31, 2021, there have been no material changes to the key terms of the 2016 Regeneron Agreement and the 2020 Regeneron Amendment (the “Amended Agreements”). For further information on the terms and conditions of these agreements, please see the notes to the consolidated financial statements included in the Company’s Annual Report for the year ended December 31, 2021.

Revenue Recognition: Collaboration Revenue. Through December 31, 2022, excluding amounts allocated to Regeneron’s purchase of the Company’s common stock, the Company recorded $145.0 million in upfront payments under the Amended Agreements and $39.5 million for research and development services, primarily under the ATTR Co/Co agreement. Through December 31, 2022, the Company has recognized $173.1 million of collaboration revenue under all arrangements, including $24.1 million, $25.7 million and $53.0 million of collaboration revenue in the years ended December 31, 2022, 2021 and 2020, respectively, in the consolidated statements of operations and comprehensive loss. This includes $11.9 million, $5.9 million, and $10.7 million, respectively, primarily representing payments due

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from Regeneron pursuant to the ATTR Co/Co agreement. These revenues are offset in part by contra-revenue related to the Hemophilia Co/Co agreements amounting to $10.4 million in the year ended December 31, 2022, $2.7 million in the year ended December 31, 2021 and $0 million in the year ended December 31, 2020.

As of December 31, 2022, there was approximately $28.8 million of the aggregate transaction price of the Amended Agreements remaining to be recognized, which the Company expects to be recognized during the research term through April 2024.

As of December 31, 2022 and 2021, the Company had accounts receivable of $3.2 million and $2.0 million, respectively, and deferred revenue of $28.8 million and $51.4 million, respectively, related to the Amended Agreements.

AvenCell Therapeutics, Inc.

On July 30, 2021 (the “Effective Date”), the Company entered into two agreements with AvenCell, a privately held chimeric antigen receptor T (“CAR-T”) cell therapy company formed on that date in a joint venture between the Company, Cellex Cell Professionals GmbH (“Cellex”) and funds managed by Blackstone Life Sciences Advisors L.L.C. (“BXLS”): (i) a license and collaboration agreement (the “AvenCell LCA”), under which the Company will collaborate to develop allogeneic universal CAR-T cell therapies and which granted AvenCell a license to develop and commercialize genome edited universal CAR-T cell therapies (limited to its use with their switchable, universal CAR-T cell UniCAR and RevCAR platforms); and (ii) a co-development and co-funding agreement (the “AvenCell Co/Co”), under which the Company will co-develop and co-commercialize allogeneic universal CAR-T cell products for an immuno-oncology indication.

Since December 31, 2021, there have been no material changes to the key terms of the AvenCell LCA and AvenCell Co/Co agreements. In November 2022, the Company decided to re-prioritize its ex vivo programs and terminated the AvenCell Co/Co, effectively turning over control of the program to AvenCell. The Company will also have one option to enter into an additional co-development and co-funding agreement for a payment of $30.0 million to AvenCell. For further information on the terms and conditions of these agreements, please see the notes to the consolidated financial statements included in the Company's Annual Report for the year ended December 31, 2021.

Revenue Recognition – Collaboration Revenue. The Company recognized $22.8 million and $5.9million in revenue related to the AvenCell LCA for the years ended December 31, 2022 and 2021, respectively, after eliminating $11.4 million and $2.9 million in intra-entity profits during those respective periods. The elimination of intra-entity profits results in the deferral of revenue that will be recognized if and when AvenCell commercializes a product with the Company's license or abandons the related project. Until such time, this revenue is indefinitely deferred and excluded from the results of operations of the Company. The Company also recognized $0.3 million related to materials shipped in accordance with the AvenCell LCA in the year ended December 31, 2022. The Company recognized $2.0 million in contra-revenue in the year ended December 31, 2022 related to the AvenCell Co/Co agreement. The Company recognized $0.2 million in revenues related to the AvenCell Co/Co agreement for the year ended December 31, 2021.

As of December 31, 2022, there was approximately $19.9 million of the aggregate transaction price of the AvenCell LCA remaining to be recognized, which the Company expects to recognize through July 2023.

As of December 31, 2022 and 2021, the Company had $0.3 million and $0.1 million in accounts receivable, respectively, related to the AvenCell agreements. The Company had deferred revenue of $19.9 million and $54.1 million as of December 31, 2022 and 2021, respectively, related to the AvenCell LCA.

SparingVision SAS

In October 2021, the Company and SparingVision, a genomic medicine company developing vision saving treatments for ocular diseases, entered into a license and collaboration agreement (the “SparingVision LCA”) to develop novel genomic medicines utilizing CRISPR/Cas9 technology for the treatment of ocular diseases.

Since December 31, 2021, there have been no material changes to the key terms of the SparingVision LCA agreement. For further information on the terms and conditions of these agreements, please see the notes to the consolidated financial statements included in the Company's Annual Report for the year ended December 31, 2021.

Revenue Recognition: Collaboration Revenue. The Company recognized $0.2 million in revenue related to the SparingVision LCA for the year ended December 31, 2022. The Company did not recognize collaboration revenue in the year ended December 31, 2021 related to the SparingVision LCA. As of December 31, 2022, the Company had $0.1 million in accounts receivable related to the SparingVision LCA. The Company did not have accounts receivable related to the SparingVision LCA as of December 31, 2021. As of December 31, 2022 and 2021, the Company had deferred revenue of $14.7 million and $14.8 million related to the SparingVision LCA, respectively, which is expected to be recognized over a six to nine year period from the signing of the agreement.

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Kyverna Therapeutics, Inc.

In December 2021, the Company and Kyverna, a cell therapy company engineering a new class of therapies for autoimmune and inflammatory diseases, entered into a licensing and collaboration agreement (the “Kyverna LCA”), for the development of an allogeneic CD19 CAR-T cell therapy for the treatment of a variety of B cell-mediated autoimmune diseases.

Since December 31, 2021, there have been no material changes to the key terms of the Kyverna LCA agreement. For further information on the terms and conditions of this agreement, please see the notes to the consolidated financial statements included in the Company's Annual Report for the year ended December 31, 2021.

Revenue Recognition: Collaboration Revenue. The Company recognized $6.6 million in revenue for the year ended December 31, 2022 related to the Kyverna LCA. The Company did not recognize any revenue for the year ended December 31, 2021 related to the Kyverna LCA. As of December 31, 2022 and 2021, the Company did not have accounts receivable related to the Kyverna LCA. As of December 31, 2022 and 2021 the Company had deferred revenue of $0.4 million and $7.0 million, respectively, related to the Kyverna LCA, which is expected to be recognized through January 2023.

ONK Therapeutics, Ltd.

On February 12, 2022 the Company entered into a license, collaboration and option agreement with ONK (the “ONK LCA”), an innovative company dedicated to developing optimally engineered natural killer (“NK”) cell therapies to cure patients with cancer.

Scope: The agreement grants ONK a non-exclusive license to the Company's proprietary ex vivo CRISPR/Cas9-based genome editing platform and its Lipid Nanoparticle (“LNP”)-based delivery technologies for development of up to five allogeneic NK cell therapy products, which license is exclusive with respect to certain guide ribonucleic acids (“gRNAs”).

Responsibilities in the earlier stage of the license and collaboration agreement (the “evaluation program”) will be shared between the two parties, with each party bearing their own cost burden. Upon completion of the evaluation program, ONK will identify up to five allogeneic targets for further development under a development program. Once these allogeneic targets have been selected by ONK, any further development costs incurred by the Company are eligible for reimbursement. ONK will be responsible for preclinical and clinical development for the engineered NK cell therapies enabled by the agreement.

Financial Terms: The Company will be eligible to receive up to $184 million per product in future development and commercial milestone payments as achieved, as well as up to mid-single-digit royalties on potential future sales. In addition, the agreement grants the Company options to co-develop and co-commercialize up to two products developed through the collaboration worldwide with rights to lead commercialization in the U.S. There is no fee related to the exercise of these co-development and co-commercialization options.

Governance: The parties formed a joint steering committee, which is responsible for monitoring and managing the collaboration prior to program completion.

ONK LCA – Accounting Analysis: The Company determined that the accounting for the ONK LCA is within the scope of ASC 606. The Company identified one combined performance obligation related to the license, evaluation and development programs. The LCA did not include an exchange of upfront consideration between the parties. As the ONK LCA progresses, the Company will incur certain expenses. Expenses incurred under the evaluation program will be accounted for under ASC 730, Research and Development. Reimbursements under the development programs represent variable constrained consideration, whereas the Company is acting as the principal, and revenue will be recognized as expenses are incurred. Milestone payments and royalties are constrained consideration and will be recorded as revenue upon achievement.

Revenue Recognition: Collaboration Revenue. The Company recognized $0.1 million in revenue for the year ended December 31, 2022 related to materials shipped in accordance with the ONK LCA.

Novartis Institutes for BioMedical Research, Inc.

In December 2014, the Company entered into a strategic collaboration agreement with Novartis Institutes for BioMedical Research, Inc. (“Novartis”) (the “2014 Novartis Agreement”), primarily focused on the research of new ex vivo CRISPR/Cas9-edited therapies using CAR-T cells and hematopoietic stem cells (“HSCs”). The agreement was amended in December 2018 (the “Novartis Amendment”) to also include research on ocular stem cells (“OSCs”). In December 2019, per the terms of the 2014 Novartis Agreement, the research term ended, although the 2014 Novartis Agreement remains in effect, for which the Company will be eligible to receive milestone and royalty payments in the future. In June 2021, the Company entered into Amendment No. 3 (the “Amendment”) to the 2014 Novartis Agreement. The Amendment amends Novartis’ rights with respect to all of the CAR-T Therapeutic Targets (as defined in the 2014

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Novartis Agreement) that Novartis selected under the 2014 Novartis Agreement, including (a) making Novartis’ license non-exclusive for such CAR-T Therapeutic Targets, (b) removing Novartis’ diligence and related reporting obligations for such CAR-T Therapeutic Targets, and (c) refining the scope of Novartis’ sublicense rights for such CAR-T Therapeutic Targets. The Company made a one-time payment to Novartis of $10.0 million within 30 days after the effective date of the Amendment, which was recorded as research and development expense in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021. Since December 31, 2021, there have been no material changes to the key terms of the 2014 Novartis Agreement and the Novartis Amendments. For further information on the terms and conditions of these agreements, please see the notes to the consolidated financial statements included in the Company’s Annual Report for the year ended December 31, 2021.

Revenue Recognition – Milestone: No milestones under the 2014 Novartis Agreement and the Novartis Amendments were achieved during the year ended December 31, 2022. In September 2021, a milestone related to a CRISPR/Cas9-based engineered cell therapy for the treatment of sickle cell disease was reached and, as a result, the Company recognized $0.3 million as collaboration revenue within the consolidated statement of operations and comprehensive loss. In March 2020, the U.S. Food and Drug Administration (“FDA”) accepted the Investigational New Drug (“IND”) application submitted by Novartis for a CRISPR/Cas9-based engineered cell therapy for the treatment of sickle cell disease. As a result of meeting this milestone, the Company recognized $5.0 million as collaboration revenue within the consolidated statement of operations and comprehensive loss. The Company is eligible to receive additional downstream success-based milestones and royalties.

As of December 31, 2022 and 2021, the Company had no accounts receivable or deferred revenue related to the 2014 Novartis Agreement and the Novartis Amendments.

10.

Equity-Method Investment and Other Investments

AvenCell Therapeutics, Inc.

On July 30, 2021, the Company finalized a transaction in which the Company, Cellex and BXLS established AvenCell, a joint venture and privately held company. In exchange for contributing an exclusive license to the joint venture, the Company entered into a Preferred Stock Purchase Agreement with AvenCell for a 33.33% equity interest in AvenCell at the time of the initial closing. Cellex and BXLS each equally owned the remaining 66.67% at that time.

The Company has significant influence over, but does not control, AvenCell through its noncontrolling representation on AvenCell’s Board of Directors and the Company’s equity interest in AvenCell. The Company has determined that the preferred stock it owns is in-substance common stock. The Company is not the primary beneficiary as it does not have the power to direct the activities of AvenCell that most significantly impact AvenCell’s economic performance. Accordingly, the Company does not consolidate the financial statements of AvenCell and accounts for its investment using the equity method of accounting.

As of the closing date, the fair value of the Company’s investment in AvenCell was $62.9 million which represents the fair value of the preferred stock received in exchange for the exclusive license to the Company’s CRISPR/Cas9 allogeneic platform (See Note 9). In determining the fair value of the Company’s investment, the Company used an option pricing model which requires the input of certain subjective assumptions. The key assumptions used in the option pricing model, which are level 3 inputs, include the anticipated holding period to an exit and liquidity event, the volatility of market participants (76%), the probability of AvenCell achieving certain milestones to obtain subsequent financings (75%) and the discount for lack of marketability (11%).

The Company recorded the initial investment in AvenCell of $62.9 million in “Equity method investments” on its consolidated balance sheet. Due to the timing and availability of AvenCell's financial information, the Company is recording its share of losses from AvenCell on a quarterly basis on a one-quarter lag. Therefore, the Company recorded its share of twelve months of AvenCell’s losses generated in the fourth quarter of 2021 and the first three quarters of 2022 in the Company's operating results and other comprehensive loss for the year ended December 31, 2022, resulting in a reduction of the Company's investment by $14.3 million. The Company recorded its share of two months of AvenCell's losses generated in the third quarter of 2021 in the Company's operating results and other comprehensive loss in the fourth quarter of 2021, resulting in a reduction of the Company's investment by $1.8 million. The elimination of the intra-entity profit component of $11.4 million and $2.9 million for the years ended December 31, 2022 and 2021, respectively (See Note 9) resulted in a further reduction in the balance of the investment in AvenCell, bringing the carrying value of the investment to $32.5 million and $58.1 million as of December 31, 2022 and 2021, respectively. The Company is not aware of any material events or transactions during this period that would warrant additional disclosure or recognition in the financial statements.

At December 31, 2022, the maximum exposure to loss is limited to the Company’s equity investment in the joint venture.

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SparingVision SAS

In connection with the SparingVision LCA (See Note 9), the Company received 83,316 shares of Series A2 Preferred Stock (“Series A2”). Attached to each share of Series A2, the Company received three warrants for the right to purchase additional Series A2 shares at designated prices that are subject to certain vesting conditions (collectively referred to as the “SparingVision investments”). The Company accounts for the SparingVision investments using the measurement alternative as SparingVision is a private company and there is no readily observable transaction price. In determining the fair value of the SparingVision investments, the Company used an option pricing model which requires the input of certain subjective assumptions. The key assumptions used in the option pricing model, which are level 3 inputs, include the anticipated holding period to an exit and liquidity event, the volatility of market participants (90%), and the rate of return (65%). The Company recorded the initial investment in SparingVision of $14.8 million in “Investments and other assets” on its consolidated balance sheet. There was no change in the observable price or impairment of the SparingVision investment as of December 31, 2022 or 2021.

Kyverna Therapeutics, Inc.

In connection with the Kyverna LCA (See Note 9), the Company received 3,739,515 shares of Series B Preferred Stock with a fair value of $7.0 million. The Company separately made an additional investment in Kyverna, purchasing 1,602,649 shares of Series B Preferred Stock in exchange for $3.0 million in cash (collectively referred to as the “Kyverna investment”).The Company accounts for the Kyverna investment using the measurement alternative as Kyverna is a private company and there is no readily observable transaction price. The Company recorded the initial investment in Kyverna of $10.0 million in “Investments and other assets” on its consolidated balance sheet. There was no change in the observable price or impairment of the Kyverna investment as of December 31, 2022 or 2021.

11. Rewrite Acquisition

On February 2, 2022, the Company entered into an agreement to acquire Rewrite (the “Rewrite Merger Agreement”). Under the Rewrite Merger Agreement, the Company paid Rewrite’s former stockholders and optionholders (the “Rewrite Holders”) upfront consideration in an aggregate amount of $45.0 million, excluding customary purchase price adjustments and closing costs, payable in cash. Pursuant to the Rewrite Merger Agreement, the Company acquired all of the issued and outstanding shares of Rewrite. The Rewrite transaction resulted in the acquisition of certain know-how and IP assets related to Rewrite’s proprietary DNA writing technology. The Company's management determined that the acquired assets did not meet the definition of a business pursuant to ASC 805, Business Combinations, as substantially all of the fair value of the acquired assets is concentrated into one identifiable asset, the DNA writing technology. As of the date of closing of the transactions contemplated by the Rewrite Merger Agreement (the “Rewrite Merger Agreement Date”), the asset acquired had no alternative future use and had not reached a stage of technological feasibility. As a result, all payment obligations have been recorded as research and development expense in the Company's consolidated statements of operations and other comprehensive loss in the amount of $56.0 million (see table below for details). The total transaction price was allocated to the assets acquired and liabilities assumed on a relative fair value basis.

In addition, the Rewrite Holders are eligible to receive up to an additional $155.0 million in milestone payments, including $55.0 million upon the achievement of certain pre-specified research milestones and $100.0 million upon the achievement of a certain regulatory approval milestone, payable through a mixture of $130.0 million in cash and $25.0 million in a combination of cash and the Company’s common stock, which will be valued using the volume-weighted average price of the Company’s Common Stock over the ten consecutive trading day period ending on and including the trading day that is two trading days immediately prior to the issuance of the consideration issued in connection with the applicable milestone. In September 2022, Rewrite Therapeutics, Inc. merged into Intellia, with Intellia the surviving entity.

The Company determined that the research milestone settled in the Company’s common stock is classified as a contingent consideration liability under ASC 480 and, therefore, the Company recorded a liability for this milestone payment as of the Rewrite Merger Agreement Date at its fair value of $10.5 million. The contingent consideration liability is remeasured at fair value each financial reporting period, with the resulting impact reflected in the Company’s consolidated statements of operations and other comprehensive loss, presented within other (expense) income. The milestones that will be settled in cash will be recorded when the contingency is resolved and the consideration is paid or becomes payable. As of December 31, 2022, none of the milestones that will be settled in cash were resolved. In January 2023, the $25.0 million research milestone noted above was achieved and, in February 2023, the Company paid the Rewrite Holders a mixture of cash and 567,045 shares of common stock in order to fulfill this obligation.

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The transaction price was determined and allocated as follows (in thousands):

Transaction Price

Upfront cash consideration $ 43,730

Research contingent consideration liabilities 10,541

Transaction costs 1,838

Total transaction price $ 56,109

Transaction Price Allocated

In-process research and development $ 55,990

Cash acquired 287

Other current assets acquired 153

Other liabilities assumed (321 )

Total transaction price $ 56,109

12.

Leases

In October 2014, the Company entered into an agreement to lease office and laboratory space at 130 Brookline Street in Cambridge, Massachusetts under an operating lease agreement with a term through January 2020. In April 2019, the lease was amended to extend the term for an additional five-year period, through January 2025.In March 2020, the Company entered into a second amendment to this lease which extended the term by approximately six years through January 31, 2031. There is an option to extend the lease for two consecutive five-year terms. The option for these further extensions is not included as part of the lease liability and right-of-use asset at December 31, 2022, as it is not reasonably certain that it will be exercised.

In January 2016, the Company entered into a ten-year agreement to lease office and laboratory space at 40 Erie Street (the “40 Erie Lease”) in Cambridge, Massachusetts under an operating lease agreement, with an option to terminate the lease at the end of the sixth year and an option to extend the term of the lease for an additional three years.In November 2020, the Company entered into a second amendment to the 40 Erie Lease which provides the Company with a right of first offer with respect to any space that becomes available at the 40 Erie Street building, and in consideration for this right the Company agreed to nullify the option to terminate the lease at the end of the sixth year that was included in the 40 Erie Lease. The option to extend the term of the lease for an additional three years is not included as part of the lease liability and right-of-use asset at December 31, 2022, as it is not reasonably certain that it will be exercised.

In March 2020, the Company entered into an agreement to lease approximately 39,000 square feet of office and laboratory space at 281 Albany Street in Cambridge, Massachusetts under an operating lease agreement (the “281 Albany Lease”). The initial term of the 281 Albany Lease is ten years following the rent commencement date which was determined to be March 2021. The Company has the option to extend the 281 Albany Lease for two successive five-year terms; this option is not included as part of the lease liability and right-of-use asset at December 31, 2022, as it is not reasonably certain that it will be exercised.

In July 2021, the Company entered into an agreement to lease 13,662 square feet of office space at 17 Tudor Street in Cambridge, Massachusetts under an operating lease agreement (the “17 Tudor Lease”).The initial term of the 17 Tudor Lease is five years, and the Company has an option to extend the 17 Tudor Lease for one three-year term. The option is not included as part of the lease liability and right-of-use asset at December 31, 2022, as it is not reasonably certain that it will be exercised.

In January 2022, the Company entered into an agreement to lease approximately 38,000 square feet of office and laboratory space at 730 Main Street, Cambridge, Massachusetts under an operating lease agreement (the “730 Main Lease”). The initial term of the 730 Main Lease is for ten years following the Rent Commencement Date and the Company has the option to extend the 730 Main Lease for one five-year term. The base rent under the 730 Main Lease is $130.00 per square foot per year during the first year of the term, which is subject to scheduled 3% annual increases, plus certain operating expenses and taxes. In October 2022, the Company determined that in accordance with ASC 842, Leases (Topic 842) (“ASC 842”), the commencement date of the lease had been met as the lessor had made the space available for the Company's use. Therefore, the Company recognized a right-of-use asset and a lease liability of approximately $36.4 million in the fourth quarter of 2022 related to the 730 Main Lease. In determining the lease liability, the Company used an incremental borrowing rate of 9.33% based on a number of factors including the Company’s credit rating and the lease term. In January 2023, the Company executed a sublease for a portion of the 730 Main Lease.

F-24

In February 2022, the Company entered into an agreement to lease approximately 140,000square feet of office, general laboratory and manufacturing space located at 840 Winter Street, Waltham, Massachusetts (the “840 Winter Lease”), which will provide the Company with the ability to manufacture its own products in a good manufacturing practice (“GMP”) compliant facility as well as to supplement the Company’s current leased premises in Cambridge, Massachusetts. The 840 Winter Lease, including the obligation to pay rent, is expected to commence in 2024 for an initial term of twelve years. The base rent under the 840 Winter Lease is $73.50 per square foot per year during the first year of the term, which is subject to scheduled 3% annual increases, plus certain operating expenses and taxes. The Company has the option to extend the 840 Winter Lease for two five-year terms.The Company did not record a right of use asset or liability related to the 840 Winter Lease under ASC 842 during the twelve months ended December 31, 2022, as the Company had not taken control of the premises.

In June 2022, the Company entered into an agreement to lease approximately 62,000 square feet of office and laboratory space located at 640 Memorial Drive, Cambridge, Massachusetts under an operating lease agreement (the “640 Memorial Drive Lease”). The term of the lease is five years, ending in August 2027. The Company does not have an option to extend the 640 Memorial Drive Lease. The base rent under the 640 Memorial Drive Lease is approximately $97 per square foot per year during the first year of the term, which is subject to scheduled 4% annual increases, plus certain operating expenses and taxes. In September 2022 the Company determined, in accordance with ASC 842, that the commencement date for the lease had been met as the lessor had made the space available for the Company's use. The Company recorded a right of use asset of $30.7 million and a lease liability of $30.2 million related to the 640 Memorial Drive Lease under ASC 842. The difference between the right of use asset and the lease liability of $0.5 million relates to prepaid rent. In determining the lease liability, the Company used an incremental borrowing rate of 7.99% based on a number of factors including the Company's credit rating and the lease term.

Throughout the term of its leases, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the lease, including a proportionate share of applicable taxes, operating expenses and utilities. The variable portion of these costs are expensed as incurred and are disclosed as variable lease costs.

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases for the years ended December 31, 2022 and 2021:

Year Ended December 31,

(In thousands)

Lease cost

Short-term lease cost - 31

Year Ended December 31,