Common Stock |
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||
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| Common Stock | Common Stock Underwritten Offering On May 26, 2026, the Company completed the Offering of 55,555,556 shares (the “Underwritten Shares”) of the Company’s common stock, $0.0001 par value per share, and accompanying common stock warrants to purchase up to 55,555,556 shares of common stock (or pre-funded warrants to purchase shares of common stock in lieu thereof). Each Underwritten Share was offered and sold together with an accompanying common stock warrant at a combined public offering price of $2.25. The underwriters agreed to purchase each Underwritten Share and accompanying common stock warrant from the Company pursuant to the Underwriting Agreement at a combined price of $2.115. The Offering closed on May 27, 2026. Each common stock warrant has an exercise price per share of $3.50 (or $3.4999 if the common stock warrant is being exercised for pre-funded warrants) and the common stock warrants are immediately exercisable from the date of issuance until the earlier of (i) the date that is 30 days following the first public announcement by the Company of Phase 1 clinical data for EDIT-401 that discloses at least three patients in the trial that each demonstrated greater than 80% reduction in LDL-C as compared to baseline with at least one month of follow-up and (ii) May 27, 2029, the third anniversary of the date of issuance. Gross proceeds from the Offering were $125.0 million. Net proceeds were $116.9 million after deducting underwriting discounts and commissions and estimated Offering expenses payable by the Company. The Company intends to use the net proceeds for the progression of EDIT-401, including clinical development and manufacturing, and for working capital and other general corporate purposes. Common Stock Warrants Under the terms of the common stock warrants issued in the Offering, the warrant is settled, at the holder's election, in shares of common stock or in a pre-funded warrant to purchase an identical number of shares of common stock as it would have received if it had exercised the warrant for shares of common stock. If the warrant is exercised for a pre-funded warrant, the applicable exercise price for the common stock warrant would be the exercise price of $3.4999 rather than $3.50. The resulting issued pre-funded warrant shall have an exercise price of $0.0001 per share. In addition, if the common stock warrants are exercised for shares, the Company will settle the exercises by delivering registered shares or, if a registration statement covering the underlying shares is unavailable, legended or restricted shares. The common stock warrants may not be settled in cash other than a cash payment in lieu of fractional shares and a customary buy-in remedy for a failure to timely deliver shares. The warrants are subject to customary anti-dilution adjustments for stock dividends and splits, pro rata distributions, and purchase rights, and to adjustment upon specified fundamental transactions. They contain no down-round or other price-based anti-dilution feature. No common stock warrants have been exercised as of July 31, 2026. The Company determined that the common stock warrants are freestanding financial instruments that are legally detachable and separately exercisable from the common stock. The Company evaluated the common stock warrants under Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”), and concluded that they are not within the scope of ASC 480. The warrants do not embody an unconditional obligation to redeem by transferring assets, an obligation to repurchase the Company's shares by transferring assets, or an obligation to issue a variable number of shares with a monetary value based predominantly on a fixed amount, on variations in something other than the fair value of the Company's shares, or on variations inversely related to the Company's share price. The Company then evaluated the common stock warrants under ASC 815-40, Derivatives and Hedging — Contracts in Entity's Own Equity (“ASC 815-40”). The warrants are indexed to the Company's own stock. Under the two-step framework in ASC 815-40-15, neither the exercise contingencies nor the settlement provisions preclude indexation, and the warrants provide for settlement of a fixed number of shares at a fixed exercise price. The warrants also meet the conditions for equity classification in ASC 815-40-25, including that settlement is in the Company's shares, the Company has a sufficient number of authorized and unissued shares to settle the warrants, and the Company controls settlement. Accordingly, the common stock warrants were classified as a component of permanent stockholders' equity within additional paid-in capital. The common stock warrants outstanding at June 30, 2026 are summarized in the table below:
Common Stock Warrants Valuation and Allocation of Proceeds The fair value of the common stock warrants was measured at issuance for the purpose of allocating the proceeds of the Offering and is a Level 3 measurement within the fair value hierarchy under ASC 820, Fair Value Measurement. The Company estimated the fair value of each warrant at $1.33 using a probability-weighted Black-Scholes option pricing model that reflected two scenarios: (i) a shorter-term scenario running to the expected date of the EDIT-401 Phase 1 data announcement and (ii) a scenario running to the three-year contractual term. The inputs to the option pricing model were the underlying common stock price of $3.08, the exercise price of $3.50, expected volatility of approximately 94.5% to 94.8% based on the Company's historical equity volatility, an expected term reflecting the probability-weighted scenarios, a risk-free interest rate derived from the U.S. Treasury yield curve, and an expected dividend yield of 0%. The measurement is classified as Level 3 because of the significant unobservable inputs, principally the expected term, which depends on the estimated probability and timing of the EDIT-401 Phase 1 data announcement, and the expected volatility. The Company allocated the proceeds between the common stock and the accompanying common stock warrants based on their relative fair values at the pricing date. The fair value of the common stock was its closing price of $3.08 per share, and the fair value of each accompanying common stock warrant was $1.33. The amounts allocated to the common stock and to the warrants are recorded within additional paid-in capital. The Company allocated $87.3 million to the common stock and $37.7 million to the warrants before issuance costs. Issuance costs of $8.1 million were allocated between the common stock and the warrants on the same basis and recorded as a reduction of additional paid-in capital, with no amount expensed because both instruments are classified in equity. The net amount recognized in additional paid-in capital equals $116.9 million of net proceeds, less the par value of the common stock shares issued.
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