Crispr Therapeutics AG (CRSP) Risk Analysis

Subject to the terms and conditions of the Amended A&R Vertex JDCA, Vertex has the right to conduct all research, development, manufacturing and commercialization activities relating to specified product candidates and products (including CASGEVY) throughout the world subject to our reserved rights to participate in certain aspects of such activities in an observer capacity and conduct certain other activities. Therefore, Vertex controls the development and commercialization of CASGEVY and certain future hemoglobinopathies product candidates that are subject to the Amended A&R Vertex JDCA, including, for example, clinical development, manufacturing, regulatory submission and commercialization activities for CASGEVY and any other future hemoglobinopathies product candidate. As a result, we do not control the timing of and completion of IND and BLA filings or other applicable regulatory or required pricing approvals, including foreign equivalents, for the product candidates, including CASGEVY, under the Amended A&R Vertex JDCA. This could cause delays or difficulties in the development and commercialization of certain product candidates, including CASGEVY, and have a material adverse effect on our business, financial condition, results of operations, and prospects. We must rely on Vertex to manufacture and commercialize CASGEVY. For example, the manufacture of cell and genetic therapies requires significant expertise, and even with the relevant experience and expertise, manufacturers of cell and genetic therapy products often encounter difficulties in production, including difficulties with production costs and yields, quality control, and compliance with federal, state and foreign regulations. We cannot make any assurances that Vertex will not encounter any of these problems or that it will be able to resolve or address problems that occur in a timely manner, or at all. In addition, to increase production to commercial levels, Vertex is making significant investments to coordinate manufacturing, testing, and logistics activities at a larger scale across multiple facilities to serve the geographies in which CASGEVY is approved. We cannot make any assurances that Vertex will be able to increase production to commercial levels in a timely manner, or at all. In addition, we must rely on Vertex to obtain pricing approvals in certain jurisdictions, establish and maintain relationships with authorized treatment centers that will be treating the patients who receive CASGEVY, and manage manufacturing capabilities and supply chain operations in the coordination and delivery of CASGEVY to patients at such authorized treatment centers. We have no involvement in these and other commercialization efforts for CASGEVY from which we may receive revenue and cannot control the extent or effectiveness of such commercialization efforts. Our revenues from CASGEVY may fall below our expectations and the expectations of our shareholders, which could have a material adverse effect on our results of operations and the market price of our common shares. We are obligated to share equally the net profits and net losses, as applicable, incurred under the Amended A&R Vertex JDCA with respect to all product candidates and products specified in the A&R Vertex JDCA other than for CASGEVY. With respect to CASGEVY only, beginning in July 2021, the net profits and net losses are allocated 40% to CRISPR and 60% to Vertex. Vertex may have additional expenditures related to the CASGEVY program or other programs under the Amended A&R Vertex JDCA that we cannot predict and that we will be required to pay our portion of or agree to pay a portion of in the future pursuant to the agreement. For example, under certain circumstances, either party can propose to in-license intellectual property that it believes is necessary or commercially reasonable to obtain to develop and commercialize CASGEVY or future hemoglobinopathies product candidates that are subject to the Amended A&R Vertex JDCA, and any costs associated with acquiring such intellectual property rights would be shared by the parties in accordance with the terms of the Amended A&R Vertex JDCA. Moreover, under the Amended A&R Vertex JDCA, for the years ended December 31, 2022, 2023 and 2024, we had the option to defer and did defer costs on the CASGEVY program in excess of $110.3 million annually, subject to certain adjustments under certain circumstances. Beginning in 2025, we will no longer have the option to defer such costs on the CASGEVY program. As a result, our expenses related to the CASGEVY program may be significantly greater than in 2022, 2023 and 2024 as a result of Vertex's commercialization efforts for CASGEVY. Disagreements between us and Vertex regarding the development, manufacture and commercialization of CASGEVY or future hemoglobinopathies product candidates that are subject to the Amended A&R Vertex JDCA could lead to delays and, in some cases, result in litigation or arbitration, which would be time-consuming and expensive. If we materially breach the Amended A&R Vertex JDCA, we are forced to opt-out or such agreement is otherwise terminated, we would be prevented from receiving any milestone, royalty payments and other benefits under such agreement, which could have a materially adverse effect on our results of operations and the market price of our common shares.

Any product candidate for which we, or any collaborators we may have, obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, advertising, and promotional activities for such product, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, current Good Manufacturing Practice, or cGMP, requirements relating to quality control, quality assurance and corresponding maintenance of records and documents and requirements regarding recordkeeping. Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. The FDA also may place other conditions on approvals including the requirement for a REMS to assure the safe use of the product. If the FDA concludes a REMS is needed, the sponsor of the BLA, must submit a proposed REMS before it can obtain approval. A REMS could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Accordingly, assuming we, or any collaborators we may have, receive marketing approval for one or more product candidates we develop, we, and such collaborators, and our and their third-party contract manufacturers will continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance, and quality control. In addition, the holder of an approved BLA is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the BLA. The holder of an approved BLA must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws. If we and such collaborators are not able to comply with post-approval regulatory requirements, we and such collaborators could have the marketing approvals for our products withdrawn by regulatory authorities and our, or such collaborators', ability to market any future products could be limited, which could adversely affect our ability to achieve or sustain profitability. Further, the cost of compliance with post-approval regulations may have a negative effect on our business, operating results, financial condition, and prospects.

We may seek designation for our platform technology as a designated platform technology. Under FDORA, a platform technology incorporated within or utilized by a drug or biological product is eligible for designation as a designated platform technology if (1) the platform technology is incorporated in, or utilized by, a drug approved under a BLA; (2) preliminary evidence submitted by the sponsor of the approved or licensed drug, or a sponsor that has been granted a right of reference to data submitted in the application for such drug, demonstrates that the platform technology has the potential to be incorporated in, or utilized by, more than one drug without an adverse effect on quality, manufacturing, or safety; and (3) data or information submitted by the applicable person indicates that incorporation or utilization of the platform technology has a reasonable likelihood to bring significant efficiencies to the drug development or manufacturing process and to the review process. A sponsor may request the FDA to designate a platform technology as a designated platform technology concurrently with, or at any time after, submission of an IND application for a drug that incorporates or utilizes the platform technology that is the subject of the request. If so designated, the FDA may expedite the development and review of any subsequent original BLA for a drug that uses or incorporates the platform technology. Even if we believe our platform technology meets the criteria for such designation, the FDA may disagree and instead determine not to grant such designation. In addition, the receipt of such designation for a platform technology does not ensure that a drug will be developed more quickly or receive FDA approval. Moreover, the FDA may revoke a designation if the FDA determines that a designated platform technology no longer meets the criteria for such designation.

We may seek a Breakthrough Therapy Designation for some of our product candidates. Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a Breakthrough Therapy Designation for a product candidate may not result in a faster development process, review or approval compared to therapies considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our product candidates qualify as breakthrough therapies, the FDA may later decide that such product candidates no longer meet the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. We have obtained and may seek Fast Track Designation for some of our product candidates. For instance, CASGEVY was granted Fast Track Designation by the FDA for the treatment of TDT and SCD. The FDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it. Even if we do receive Fast Track Designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. For Fast Track products, sponsors may have greater interactions with the FDA and the FDA may initiate review of sections of a Fast Track product's marketing application before the application is complete. However, the FDA's time period goal for reviewing an application does not begin until the last section of the application is submitted. The FDA may withdraw Fast Track Designation if it believes that the designation is no longer supported by data from our clinical development program. Fast Track Designation alone does not guarantee qualification for the FDA's priority review procedures. We have obtained and may seek RMAT designation for some of our product candidates. For instance, CASGEVY was granted RMAT designation by the FDA for the treatment of TDT and SCD, as well as CTX112 for the treatment of relapsed or refractory follicular lymphoma and marginal zone lymphoma. There is no assurance that we will be able to obtain RMAT designation for other of our product candidates. RMAT designation does not change the FDA's standards for product approval, and there is no assurance that such designation will result in expedited review or approval or that the approved indication will not be narrower than the indication covered by the designation. Additionally, RMAT designation can be revoked if the criteria for eligibility cease to be met as clinical data emerges. If the FDA determines that a product candidate offers a treatment for a serious condition and, if approved, the product would provide a significant improvement in safety or effectiveness, the FDA may designate the product candidate for priority review. A priority review designation means that the goal for the FDA to review an application is six months, rather than the standard review period of ten months. The FDA has broad discretion with respect to whether or not to grant priority review status to a product candidate, so even if we believe a particular product candidate is eligible for such designation or status, the FDA may decide not to grant it. Moreover, a priority review designation does not necessarily result in expedited regulatory review or approval process or necessarily confer any advantage with respect to approval compared to conventional FDA procedures. Receiving priority review from the FDA does not guarantee approval within the six-month review cycle or at all. Finally, we have obtained and may seek to qualify our product candidates under the PRIME scheme from the EMA. For instance, CASGEVY was granted PRIME designation for the treatment of TDT and SCD. There is no assurance that we will be able to obtain PRIME qualification for other of our product candidates. PRIME does not change the standards for product approval, and there is no assurance that such qualification will result in expedited review or approval. Moreover, where, during the course of development, a medicine no longer meets the eligibility criteria, support under the PRIME scheme may be withdrawn. For additional information regarding Breakthrough Therapy Designation, Fast Track Designation, RMAT Designation and priority review by the FDA, see the section entitled, "Business-Government Regulation-Licensure and Regulation of Biologics in the United States – Expedited Programs." For additional information regarding the PRIME scheme from the EMA, see the section entitled "Business-Government Regulation-Regulation and Procedures Governing Approval of Medicinal Products in Europe – PRIME scheme."

In order to eventually market any of our product candidates in any particular jurisdiction, we must establish and comply with numerous and varying regulatory requirements on a jurisdiction-by-jurisdiction basis regarding safety and efficacy. Approval by the FDA in the United States, if obtained, does not ensure approval by regulatory authorities in other countries or jurisdictions. Similarly, approval by foreign regulatory authorities does not ensure approval by the FDA. In addition, data from clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking regulatory approval in multiple jurisdictions could result in difficulties and costs for us and require additional preclinical studies or clinical trials which could be costly and time-consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our products in certain countries. Regulatory approval processes outside the United States involve all of the risks associated with FDA approval. We do not have any wholly-owned product candidates approved for sale in any jurisdiction, including international markets, and, as a company, do not have experience in obtaining regulatory approval in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of our products will be unrealized.

Any product candidates we may develop and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, and distribution, are subject to comprehensive regulation by the FDA and other regulatory authorities in the United States, by EMA in the EU and by comparable authorities in other countries. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate in a given jurisdiction. While CASGEVY has received approval or clearance to be marketed from certain regulatory authorities in certain jurisdictions, it is possible that none of our other product candidates or any product candidates we may seek to develop, alone or in conjunction with collaborators, in the future will ever obtain regulatory approval or clearance or that we and Vertex will receive additional marketing approvals for CASGEVY. For example, while we have multiple product candidates in clinical development and advanced preclinical development for a range of diseases, we have not yet submitted BLAs to the FDA or similar marketing applications to comparable foreign authorities for any of our other product candidates. We have limited experience in submitting and supporting the applications necessary to gain regulatory and marketing approvals. We expect to rely on third-party contract research organizations, or CROs, and/or regulatory consultants to assist us in this process for our wholly-owned product candidates and, pursuant to our Amended A&R Vertex JDCA, we have relied on Vertex for submitting such applications for our hemoglobinopathies product candidates. Submission of a BLA or other similar marketing applications to comparable foreign authorities and securing regulatory approval requires the submission of extensive preclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the biologic product candidate's safety, purity, efficacy and potency, also known as safety and effectiveness, for each desired therapeutic indication. A BLA must also include significant information regarding the chemistry, manufacturing and controls for the product candidate. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. In general, the FDA requires the successful completion of two pivotal trials to support approval of a BLA, but in certain circumstances, will approve a BLA based on only one pivotal trial; and our ability to submit and obtain approval of a BLA is ultimately an FDA review decision, which will be dependent upon the data available at such time, and the available data may not be sufficiently robust from a safety and/or efficacy perspective to support the submission or approval of a BLA. For example, there is no assurance that data obtained at the completion of any of our clinical trials, including for our ongoing wholly-owned product candidates, including CTX112 and CTX131, will indicate clinically meaningful benefit or support submission of a BLA, or will be sufficiently robust from a safety and/or efficacy perspective to support either accelerated or conditional approval or full approval. Moreover, there is no assurance that the data obtained to date in the ongoing clinical trials of CASGEVY and being submitted or planned to be submitted is or will be sufficiently robust from a safety and/or efficacy perspective to support either accelerated or conditional approval or full approval of a BLA or a foreign equivalent in all jurisdictions for which regulatory applications are submitted. Depending on the outcome of these ongoing clinical trials and robustness of the data submitted, once submitted, the FDA may require that we conduct additional or larger pivotal trials before we can submit or obtain approval of a BLA. Furthermore, if any undesirable or unacceptable side effects, unexpected characteristics or other serious adverse events occur, and if we are unable to demonstrate such adverse events were caused by factors other than our product candidate, the FDA could suspend our clinical trial until we are able to gather sufficient information or order us to cease further clinical studies of our product candidate. If this were to occur this would likely result in delays in our ability to submit a BLA for regulatory approval. We may face similar challenges with foreign regulatory authorities. Furthermore, failure of one or more clinical trials can occur at any stage in the clinical trial process. Any product candidates we develop may not be effective, may be only moderately effective, or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use. Accordingly, the regulatory pathway for our product candidates is still uncertain, complex, and lengthy, and ultimately, approval may not be obtained. Even if our product candidates demonstrate safety and efficacy in clinical studies, regulatory delays or rejections may be encountered as a result of many factors, including changes in regulatory policy during the period of product development. The process of obtaining marketing approvals, both in the United States and in other foreign jurisdictions, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity, and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit, or prevent marketing approval of a product candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable. If we experience delays in obtaining approval or if we fail to obtain approval of any product candidates we may develop, the commercial prospects for those product candidates may be harmed, and our ability to generate revenues will be materially impaired.

Any positive results from our preclinical studies or preliminary results from our clinical trials of our product candidates may not necessarily be predictive of the results from required later preclinical studies and clinical trials. For example, for our in vivo product candidates, our proposed delivery modalities combined with or separate from our product candidates, have a limited history of being evaluated in human clinical trials. Any of our product candidates, including our in vivo candidates CTX310 and CTX320 and our CAR T candidates, CTX112 and CTX131, may fail to show the desired safety and efficacy in later stages of clinical development despite having successfully advanced through initial clinical trials. Preliminary, interim and top-line data from clinical trials may change as more patient data become available. Preliminary, interim or top-line data from clinical trials are not necessarily predictive of final results, including the results submitted in support of approval in a BLA or equivalent submission outside the United States. Interim, top-line and preliminary data remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously announced. As a result, preliminary, interim and top-line data should be viewed with caution until the final data are available. Material adverse changes in the final data compared to the interim data could significantly harm our business prospects. Moreover, preliminary, interim and top-line data are subject to the risk that one or more of the clinical outcomes may materially change as more patient data become available when patients mature on study, patient enrollment continues or as other ongoing or future clinical trials with a product candidate further develop. For example, consistent with the FDA's recommendation, certain of our clinical trials include a 15 year follow-up observation period in which we will continue to collect patient data. The information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically more extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure. Any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or our business. Similarly, even if we are able to complete our planned preclinical studies or any future clinical trials of our product candidates according to our current development timeline, the positive results from such preclinical studies and clinical trials of our product candidates may not be replicated in subsequent preclinical studies or clinical trial results. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in early-stage development and we cannot be certain that we will not face similar setbacks. Similarly, many companies in the pharmaceutical and biotechnology industries have failed to receive regulatory approval despite completing registration trials. These setbacks have been caused by, among other things, preclinical and other nonclinical findings made while clinical trials were underway or safety or efficacy observations made in preclinical studies and clinical trials, including previously unreported adverse events. Moreover, preclinical, nonclinical and clinical data are often susceptible to varying interpretations and analyses and many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA or EMA approval.

We or our collaborators may not be able to initiate or continue clinical trials for any product candidates we identify or develop if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or analogous regulatory authorities outside the United States, or as needed to provide appropriate statistical power for a given trial. Enrollment may be particularly challenging for any rare genetically defined diseases we may target in the future. In addition, if patients are unwilling to participate in our gene editing trials because of negative publicity from adverse events related to the biotechnology, gene therapy or gene editing fields, competitive clinical trials for similar patient populations, clinical trials with competing products, or for other reasons, the timeline for recruiting patients, conducting studies and obtaining regulatory approval of any product candidates we may develop may be delayed. Moreover, some of our competitors may have ongoing clinical trials for product candidates that would treat the same indications as any product candidates we may develop, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors' product candidates. Patient enrollment is also affected by other factors, including: - severity of the disease under investigation;- size of the patient population and process for identifying clinical trial participants;- design of the trial protocol;- availability of eligible prospective patients that are otherwise eligible patients for competitive clinical trials;- availability and efficacy of approved medications for the disease under investigation;- availability of genetic testing for potential patients;- ability to obtain and maintain clinical trial participant consent;- risk that enrolled clinical trial participants will drop out before completion of the trial;- eligibility and exclusion criteria for the trial in question;- perceived risks and benefits of the product candidate under trial;- perceived risks and benefits of gene editing and cellular therapies as therapeutic approaches;- efforts to facilitate timely enrollment in clinical trials;- patient referral practices of physicians;- ability to monitor patients adequately during and after treatment; and - proximity and availability of clinical trial sites for prospective patients. Enrollment delays in our clinical trials may result in increased development costs for any product candidates we may develop, which would cause our value to decline and limit our ability to obtain additional financing. If we or our collaborators have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit, or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business, financial condition, results of operations, and prospects.

For our immuno-oncology programs, we are developing a pipeline of allogeneic T cell product candidates (including, for example, CTX112 and CTX131) that are engineered from healthy donor T cells to express chimeric antigen receptors, or CARs, and are intended for use in any patient with certain cancers. Unlike for autologous chimeric antigen receptor, or CAR T, therapies, for allogeneic CAR T therapies, we are reliant on receiving healthy donor material to manufacture our product candidates. Healthy donor T cells vary in type and quality, and this variation makes producing standardized allogeneic CAR T product candidates challenging and makes the development and commercialization pathway of those product candidates uncertain. We have developed screening processes designed to enhance the quality and consistency of T cells used in the manufacture of our CAR T cell product candidates, but our screening processes may fail to identify suitable donor material and we may discover failures with the material after production. We may also have to update our specifications for new risks that may emerge, such as to screen for new viruses. We have strict specifications for donor material, which include specifications required by regulatory authorities. If we are unable to identify and obtain donor material that satisfy specifications, agree with regulatory authorities on appropriate specifications, or address variability in donor T cells, there may be inconsistencies in the product candidates we produce or we may be unable to initiate or continue ongoing clinical trials on the timelines we expect, which could harm our reputation and adversely impact our business and prospects. In addition, approved autologous CAR T therapies and those under development have shown frequent rates of cytokine release syndrome, neurotoxicity, serious infections, prolonged cytopenia and hypogammaglobulinemia, and other serious adverse events that have resulted in patient deaths. We expect similar adverse events for our allogeneic CAR T product candidates. Moreover, patients eligible for allogeneic CAR T cell therapies but ineligible for autologous CAR T cell therapies due to aggressive cancer and inability to wait for autologous CAR T cell therapies may be at greater risk for complications and death from therapy. Our allogeneic CAR T cell product candidates may also cause unique adverse events related to the differences between the donor and patients, such as Graft versus Host Disease, or GvHD, or infusion reactions. GvHD results when allogeneic T cells start recognizing the patient's normal tissue as foreign. We have designed our CRISPR/Cas9 gene editing technology to eliminate the T-cell receptor from the healthy donor T cells to reduce the risk of GvHD from our product candidates, as well as to remove the class I major histocompatibility complex from the cell surface in order to limit the patient's immune system from attacking the allogeneic T cells and to improve the persistence of the CAR T cells. However, the gene editing of our product candidates may not be successful in limiting the risk of GvHD or premature rejection by the patient. In addition, results of our immuno-oncology clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. If significant GvHD or other adverse events are observed with the administration of our product candidates, or if any of the product candidates are viewed as less safe or effective than autologous therapies or other allogenic therapies, our ability to develop allogeneic therapies may be adversely affected. Further, in November 2023, the FDA announced that it would be conducting an investigation into reports of T-cell malignancies following B-cell maturation antigen, or BCMA, directed or CD19-directed autologous CAR T cell immunotherapies following reports of T cell lymphoma in patients receiving these therapies. In January 2024, the FDA determined that new safety information related to T cell malignancies should be included in the labeling with boxed warning language on these malignancies for all BCMA- and CD19-directed genetically modified autologous T cell immunotherapies. FDA's investigation into CAR T therapies and other similar actions could result in increased government regulation, unfavorable public perception and publicity, and, although we are developing allogeneic CAR T candidates, the FDA's investigation could result in potential impacts on enrollment in our clinical trials, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.

We aim to develop treatments and therapies for people suffering from serious diseases through transformative gene-based medicines, including ex vivo engineered cell therapies and in vivo therapies. Although there have been significant advances in recent years in the fields of gene therapy and genome editing, including CRISPR/Cas9 gene editing technology, such technologies, including in vivo CRISPR-based genome editing technologies in particular, are relatively new and only a limited number of clinical trials of product candidates based on such gene editing technologies have been commenced and their therapeutic utility is largely unproven. As such it is difficult to accurately predict the developmental challenges we may incur for our product candidates as they proceed through product discovery or identification, preclinical studies and clinical trials. For example, no genome editing in vivo therapy has been approved in the United States, EU or other key jurisdictions. While we and our partner, Vertex, have received marketing approvals for CASGEVY in certain jurisdictions, we cannot guarantee we and Vertex will receive additional marketing approvals for CASGEVY or we will receive marketing approvals for our other product candidates in the future. In addition, because we have only recently commenced clinical trials for certain of our other product candidates, we have not yet been able to fully assess safety in humans. There may be long-term effects from treatment with any product candidates that we develop that we cannot predict at this time. Any product candidates we may develop will act at the level of DNA, and, because animal DNA differs from human DNA, testing of our product candidates in animal models may not be predictive of the results we observe in human clinical trials of our product candidates for either safety or efficacy. Also, animal models may not exist for some of the diseases we choose to pursue in our programs. As a result of these factors, it is more difficult for us to predict the time and cost of product candidate development, and we cannot predict whether the application of our gene editing technology, or any similar or competitive gene editing technologies, will result in the identification, development, and regulatory approval of any products. There can be no assurance that any development problems we experience in the future related to our gene editing technology or any of our research and development programs will not cause significant delays or unanticipated costs, or that such development problems can be solved. Any of these factors may prevent us from completing our preclinical studies or any clinical trials that we may initiate or commercializing any product candidates we may develop on a timely or profitable basis, if at all. The clinical trial requirements of the FDA, the EMA and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of the product candidate. Although we and our partner, Vertex, have received marketing approvals for CASGEVY in certain jurisdictions, we cannot guarantee we and Vertex will receive additional marketing approvals for CASGEVY or we will receive marketing approvals for our other product candidates in the future, and the regulatory approval process for product candidates such as ours remains uncertain and may be more expensive and take longer than the approval process for product candidates based on other, better known or more extensively studied technologies. It is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for our future product candidates in either the United States or the EU or how long it will take to commercialize our product candidates. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product candidate to market could decrease our ability to generate sufficient product revenue, and our business, financial condition, results of operations and prospects may be harmed.

Our development efforts are ongoing and we have primarily focused our research and development efforts to date on gene editing and other technologies, including CRISPR/Cas9 technology, and our initial product candidates. Our future success depends heavily on the successful development of our next-generation product candidates and other future product candidates. We have invested substantially all of our efforts and financial resources in the development of our proprietary technologies and identification and development of our current product candidates. Our ability to generate product revenue will depend heavily on the successful development and eventual commercialization of our product candidates, which may never occur. For example, while we and our partner, Vertex, have received marketing approvals for CASGEVY in certain jurisdictions, we cannot guarantee we and Vertex will receive additional marketing approvals for CASGEVY or we will receive marketing approvals for our other product candidates in the future, and our research programs, including additional programs subject to current and future collaboration agreements with third parties, may fail to identify potential product candidates for clinical development for a number of reasons or may fail to successfully advance any product candidates through clinical development. Our potential product candidates may be shown to have harmful side effects or may have other characteristics or unforeseeable consequences that may make the product candidates impractical to manufacture, unmarketable, or unlikely to receive marketing approval, or that lead to product-related claims or litigation, including without limitation personal injury or product liability claims, adverse or serious adverse events, regulatory enforcement actions, or product recalls or market withdrawals. Our partner, Vertex, generates product sales from CASGEVY, of which we receive 40% through our collaboration arrangement with Vertex. This amount is currently insufficient to cover program expenses and as such, we are responsible for 40% of losses, subject to certain limitations. We currently generate no revenue from sales of any wholly-owned product and we may never be able to again research, develop or commercialize a marketable product. We must file IND applications, clinical trial applications, or CTAs, or their equivalents with regulatory authorities to commence clinical trials. The filing of INDs, CTAs or their equivalents for any product candidate is subject to the identification and selection of one or more guide RNAs with acceptable efficiency, among other activities. In addition, commencing any future clinical trial is also subject to acceptance by the European regulatory authorities, or its equivalent, of our CTAs, or by the FDA of our INDs, and finalizing the trial design based on discussions with the applicable regulatory authorities. In the event that the European regulatory authorities, FDA or their equivalent require us to complete additional preclinical studies or we are required to satisfy other requests, our clinical trials may be delayed. Even after we receive and incorporate guidance from these regulatory authorities, they could disagree that we have satisfied their requirements to commence a clinical trial or change their position on the acceptability of our trial design or the clinical endpoints selected, which may require us to complete additional preclinical studies or clinical trials or impose stricter approval conditions than we currently expect. Regulatory authorities have limited experience with the clinical development of CRISPR/Cas9-based therapeutics, including in vivo therapeutics, which may require additional significant testing or data compared to more traditional therapies or otherwise delay the development of our product candidates. There is no certainty that the FDA or other similar regulatory agencies will continue to apply to all our gene-editing product candidates, including CRISPR/Cas9 product candidates, the same regulatory pathway and requirements it applied to CASGEVY and is applying to other ex vivo engineered therapeutics and in vivo therapies. To become and remain profitable, we must develop and commercialize product candidates with significant market potential, which will require us to be successful in a range of challenging activities. In general, our product candidates require preclinical and clinical development; regulatory and marketing approval in multiple jurisdictions; obtaining manufacturing supply, capacity, and expertise; building a commercial organization; substantial investment and significant marketing efforts before we generate any revenue from product sales. In addition, our product development programs must be approved for marketing by the FDA, EMA or certain other health regulatory agencies before we may commercialize our product candidates. We may never succeed in any or all of these activities and, even if we do, we may never generate revenues that are significant or large enough to achieve profitability. Although we and our partner, Vertex, have received marketing approvals for CASGEVY in certain jurisdictions, we cannot guarantee we and Vertex will receive additional marketing approvals for CASGEVY or we will receive marketing approvals for our other product candidates in the future, or that CASGEVY, or any other future product candidate we develop, will be profitable. For additional information, see also "Risk Factors-Risks Related to Our Relationships with Third Parties-We Have Partnered With Vertex On Our Lead Program CASGEVY; Vertex Has Significant Control Over The CASGEVY Program." If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease our value and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in our value also could cause shareholders to lose all or part of their investment. The success of our product candidates will depend on several factors, including the following: - successful enrollment in, and completion of, clinical trials and preclinical studies;- sufficiency of our financial and other resources to complete the necessary clinical trials and preclinical studies;- ability to develop safe and effective delivery mechanisms for our in vivo therapeutic programs;- ability to identify optimal RNA sequences to guide genomic editing;- maintenance of current, and entry into additional, collaborations to further the development of our product candidates;- approval of INDs, CTAs or their equivalents for our product candidates to commence clinical trials;- successful data from our clinical programs that support an acceptable risk-benefit profile of our product candidates for the intended patient populations;- receipt of regulatory and marketing approvals from applicable regulatory authorities;- establishing and maintaining arrangements with third-party manufacturers for clinical and commercial supply and, where applicable, commercial manufacturing capabilities;- successful development of our internal manufacturing processes and transfer to larger-scale facilities operated by either a third-party contract manufacturing organization or by us;- establishment and maintenance of patent and trade secret protection or regulatory exclusivity for our product candidates;- commercial launch of our product candidates, if and when approved, whether alone or in collaboration with others;- acceptance of our product candidates, if and when approved, by patients, the medical community and third-party payors;- effective competition with other therapies and treatment options;- establishment and maintenance of healthcare coverage and adequate reimbursement;- enforcement and defense of intellectual property rights and claims;- maintenance of a continued acceptable safety profile of our product candidates following approval; and - achieving desirable medicinal properties for the intended indications. Additionally, because our technology involves gene editing across multiple cell and tissue types, we are subject to many of the challenges and risks that gene therapies face, including: - regulatory requirements and guidance governing gene and cell therapy products have changed frequently and may continue to change in the future, including, e.g., the final guidance document titled "Human Gene Therapy Products Incorporating Human Genome Editing" that the FDA issued in January 2024;- to date, only a limited number of products that involve the genetic modification of patient cells have been approved in the United States, the European Union, or EU, and globally;- the administration processes or related procedures for certain of our product candidates (e.g., treatment with myeloablative busulfan conditioning prior to receiving CASGEVY or undergoing a lymphodepletion regimen prior to receiving our immunotherapy product candidates);- improper modulation of a gene sequence, including unintended editing events, insertion of a gene sequence into certain locations in a patient's chromosome or other effects related to the technology underlying our product candidates could lead to lymphoma, leukemia or other cancers, or other aberrantly functioning cells, or other diseases, including death;- transient expression of the Cas9 protein or other genome editing components of our product candidates could lead to patients having an immunological reaction towards those cells, which could be severe or life-threatening;- corrective expression of a missing protein in patients' cells could result in the protein being recognized as foreign, and lead to a sustained immunological reaction against the expressed protein or expressing cells, which could be severe or life-threatening; and - the FDA recommends a follow-up observation period of up to 15 years for all patients who receive treatment using gene therapies, and we may need to adopt and support, and have adopted and are supporting for certain of our trials, such an observation period for our product candidates. If we do not succeed in one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business. Ultimately, if we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations. In addition, if any product candidates encounter safety or efficacy problems, development delays, regulatory issues or other problems, our development plans and business could be significantly harmed. For the reasons described above, among others, regulatory authorities, particularly the FDA, have requested, and may request in the future, additional preclinical studies for genome editing products, such as additional studies related to toxicology, biodistribution or reproductive health, and/or preclinical studies earlier in clinical development compared to other therapeutic modalities. Although to date the FDA has cleared the INDs that we have submitted for certain of our clinical trials, including CTX112 and CTX131, it is possible that the FDA may impose requirements that result in a delay of any of our programs or their regulatory approval. If we are unable to complete any required studies satisfactorily, the FDA or other regulatory authorities could require that we exclude certain patient populations from clinical studies, place our clinical studies on hold, or require us to cease further clinical studies or deny approval of such product candidates. Further, competitors that are developing ex vivo or in vivo products with similar technology may experience problems with their product candidates or programs that could in turn cause us to identify problems with our product candidates and programs, or cause the FDA or other regulatory authorities to impose additional requirements, that could cause us to delay or pause development of our product candidates. Any of these occurrences may harm our ability to identify and develop product candidates, and may harm our business, financial condition, results of operations and prospects significantly. We cannot guarantee that the FDA or other regulatory authorities will not change their requirements in the future or approve amendments to our INDs or equivalent regulatory filings on the timelines we expect.

Our collaborators or strategic partners may adopt alternative technologies, which could decrease the marketability of our CRISPR/Cas9 gene editing technology. Additionally, because our current collaborators or strategic partners are and we anticipate that any future collaborators or strategic partners will be working on more than one development project, they could choose to shift their resources to projects other than those they are working on with us. If they do so, this would delay our ability to test our technology and would delay or terminate the development of potential products based on our CRISPR/Cas9 gene editing technology. Further, our collaborators and strategic partners may elect not to develop products arising out of our collaborative and strategic partnering arrangements or to devote sufficient resources to the development, manufacturing, marketing or sale of these products. For example, ViaCyte (a wholly owned subsidiary of Vertex) elected to opt-out of our diabetes collaboration in 2023. As a result, following such opt-out, we are solely responsible for the costs associated with our diabetes program and we will owe ViaCyte certain opt-out royalties pursuant to the ViaCyte JDCA, which will increase our expenses. Furthermore, the failure to develop and commercialize a product candidate pursuant to our agreements with our current or future collaborators would prevent us from receiving future milestone and royalty payments which would negatively impact our financial results.

We plan to seek approval for some of our product candidates under the FDA's accelerated approval pathway. A product may be eligible for accelerated approval if it is designed to treat a serious or life-threatening disease or condition and generally provides a meaningful advantage over available therapies upon a determination that the product candidate has an effect on a surrogate endpoint or intermediate clinical endpoint that is reasonably likely to predict clinical benefit or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, or IMM, that is reasonably likely to predict an effect on IMM or other clinical benefit. For more information, see the section of this report entitled "Business-Government Regulation-Licensure and Regulation of Biologics in the United States-Accelerated Approval Pathway. There can be no assurance that the FDA would allow any of the product candidates we may develop to proceed on an accelerated approval pathway, and even if the FDA did allow such pathway, there can be no assurance that such submission or application will be accepted or that any expedited development, review or approval will be granted on a timely basis, or at all.. Moreover, the FDA is empowered to take action, such as issuing fines, against companies that fail to conduct with due diligence any post-approval confirmatory study or submit timely reports to the agency on their progress. The FDA may further withdraw approval of a drug or biologic granted accelerated approval on an expedited basis if the sponsor fails to conduct such studies in a timely manner, send the necessary updates to the FDA, or if such post-approval studies fail to verify the drug's predicted clinical benefit. Accordingly, even if we received accelerated approval, any post-approval studies required to confirm and verify clinical benefit may not show such benefit, which could lead to withdrawal of any approvals we have obtained. Receiving accelerated approval does not assure that the product's accelerated approval will eventually be converted to a traditional approval.