Segment Reporting

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 9: SEGMENT REPORTING

The Company has developed a genome editing platform and performed related research for human therapeutic and agricultural applications. The Company’s Chief Operating Decision Maker (“CODM”) evaluates the Company’s financial performance based on two reportable segments: Therapeutics and Food. The Therapeutics segment is focused on the development of products in the field of immuno-oncology and of novel products outside immuno-oncology to treat human diseases. The Food segment is focused on applying ARCUS to develop food and nutrition products through collaboration agreements with consumer-facing companies. The CODM reviews segment performance and allocates resources based upon segment revenue and segment operating loss of the Therapeutics and Food reportable segments.

Segment operating loss is derived by deducting operational cash expenditures, net, from GAAP revenue. Operational cash expenditures are cash disbursements made that are directly attributable to the reportable segment (including directly attributable research and development and property, equipment, and software expenditures). The Company previously allocated centralized research and development expenditures for early stage research, nuclease development and the purchase of general laboratory supplies to the Therapeutics and Food segments based on headcount and presented such allocated expenditures separately from segment operational cash expenditures. Beginning January 1, 2020, such allocated expenditures are included within segment operational cash expenditures. Prior period information was presented consistent with the current period presentation.  In January 2019, the Food segment moved into a new leased facility at Research Triangle Park, North Carolina. The Company determined that the Food segment is no longer deriving benefit from the Company’s centralized research and development expenditures for early stage research, nuclease development and the purchase of general laboratory supplies and, as such, all these expenditures are allocated to the Therapeutics segment. Certain reclassifications have been made to the presentation of reportable segments as centralized research and development expenditures are no longer reported separately. The reportable segment operational cash expenditures include cash disbursements for compensation, laboratory supplies, purchases of property, equipment and software and procuring services from CROs, CMOs and research organizations.

Certain cost items are not allocated to the Company’s reportable segments. These cost items primarily consist of compensation and general operational expenses associated with the Company’s executive, business development, finance, operations, human resources and legal functions. The Company does not allocate non-cash income statement amounts to its reportable segments, such as share based compensation, depreciation and amortization, intangible asset impairment charges, non-cash interest expense and losses on the disposal of assets. When reconciling segment operating loss to consolidated loss from operations, the Company makes an adjustment to convert the cash expenditures to the accrual basis to reflect GAAP.

All segment revenue is earned in the United States and there are no intersegment revenues. Additionally, the Company reports assets on a consolidated basis and does not allocate assets to its reportable segments for purposes of assessing segment performance or allocating resources.

Presented below is the financial information with respect to the Company’s reportable segments:

	Three Months Ended June 30,
(in thousands)	2020			2019			Change
Revenue:
Therapeutics	$	1,020		$	4,819		$	(3,799	)
Food		58			570			(512	)
Total segment revenue		1,078			5,389			(4,311	)
Segment operational cash expenditures:
Therapeutics		19,117			17,990			1,127
Food		1,588			2,077			(489	)
Total segment operational cash expenditures		20,705			20,067			638
Segment operating loss:
Therapeutics		(18,097	)		(13,171	)		(4,926	)
Food		(1,530	)		(1,507	)		(23	)
Total segment operating loss		(19,627	)		(14,678	)		(4,949	)
Adjustments to reconcile segment operating loss to consolidated    loss from operations:
Corporate general and administrative cash expenditures		(10,714	)		(11,123	)		409
Interest income received		(107	)		(1,485	)		1,378
Depreciation and amortization		(2,203	)		(1,168	)		(1,035	)
Amortization of right-of-use asset		(250	)		—			(250	)
Share-based compensation		(3,118	)		(2,279	)		(839	)
Loss on disposal of assets		—			(22	)		22
Changes in prepaid expenses, accounts payable and accrued expenses		3,211			6,884			(3,673	)
Total consolidated loss from operations	$	(32,808	)	$	(23,871	)	$	(8,937	)

	Six Months Ended June 30,
(in thousands)	2020			2019			Change
Revenue:
Therapeutics	$	6,493		$	9,638		$	(3,145	)
Food		1,583			1,213			370
Total segment revenue		8,076			10,851			(2,775	)
Segment operational cash expenditures:
Therapeutics	$	38,374		$	34,653		$	3,721
Food		4,406			4,184			222
Total segment operational cash expenditures		42,780			38,837			3,943
Segment operating loss:
Therapeutics	$	(31,881	)	$	(25,015	)	$	(6,866	)
Food		(2,823	)		(2,971	)		148
Total segment operating loss		(34,704	)		(27,986	)		(6,718	)
Adjustments to reconcile segment operating loss to consolidated    loss from operations:
Corporate general and administrative cash expenditures	$	(16,617	)	$	(18,145	)	$	1,528
Interest income received		(767	)		(2,086	)		1,319
Depreciation and amortization		(4,358	)		(2,107	)		(2,251	)
Amortization of right-of-use asset		(485	)		—			(485	)
Share-based compensation		(6,223	)		(3,828	)		(2,395	)
Loss on disposal of assets		—			(22	)		22
Changes in prepaid expenses, accounts payable and accrued expenses		2,850			10,809			(7,959	)
Total consolidated loss from operations	$	(60,304	)	$	(43,365	)	$	(16,939	)