What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-09 · 145 added, 74 removed, 244 unchanged (47% of the section changed)

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This Form 10-Q contains forward-looking statements.

All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding our business strategy, plans, and objectives;

expectations regarding our clinical and preclinical development programs, including our timing expectations with respect to such programs and the expected timing of disclosure of clinical data from such programs;

future regulatory filings;

All statements other than statements of historical facts contained in this Form 10-Q are forward-looking statements, including statements regarding our business strategy, plans, and objectives;

future regulatory filings and interactions with regulatory authorities;

our results of operations and financial position;

plans and objectives of management for future operations;

and the like, are forward-looking statements.

and the like.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.

As a result of many factors, including but not limited to risks related to our limited operating history, history of net operating losses, financial position and our ability to raise additional capital as needed to fund our operations and product candidate development;

risks inherent in the development of cell therapy products;

risks associated with the initiation, cost, timing, progress, and results of current and future research and development programs, preclinical studies, and clinical trials;

the risk that initial or interim clinical trial data will not ultimately be predictive of the safety and efficacy of our product candidates or that clinical outcomes may differ as more clinical data becomes available;

the risk that initial, preliminary, or interim clinical trial data will not ultimately be predictive of the safety and efficacy of our product candidates or that clinical outcomes may differ as patient enrollment continues and as more clinical data becomes available or different conclusions or considerations are reached once additional data have been received and fully evaluated;

the risk that preclinical study results will not be borne out in human patients;

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risks related to our reliance on third parties to conduct our clinical trials and manufacture our product candidates;

risks caused by the impact of the COVID-19 pandemic and other public health crises or geopolitical events on our business and operations;

and other risks described in greater detail in the section of our Form 10-K titled “Risk Factors,” and in other filings we make with the SEC, the events and circumstances reflected in our forward-looking statements may not be achieved or may not occur, and actual results could differ materially from those described in or implied by the forward-looking statements contained in the following discussion and analysis.

risks caused by public health crises such as the COVID-19 pandemic or geopolitical events on our business and operations;

As a result of these risks, you should not place undue reliance on these forward-looking statements.

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CB-010 is being evaluated in our ongoing ANTLER phase 1 clinical trial in patients with relapsed or refractory B cell non-Hodgkin lymphoma (“r/r B-NHL”).

We completed the dose escalation portion of the ANTLER trial and advanced into the dose expansion portion, enrolling second-line large B cell lymphoma (“LBCL”) patients to determine the recommended phase 2 dose.

We completed the dose escalation portion of the ANTLER trial and advanced into the dose expansion portion, and we are enrolling second-line large B cell lymphoma (“LBCL”) patients to determine the recommended phase 2 dose.

CB-010 has received Regenerative Medicine Advanced Therapy (“RMAT”) designation for r/r LBCL and fast track designation for r/r B-NHL from the U.S.

Food and Drug Administration (“FDA”).

We plan to provide a safety and efficacy update in the second half of 2023 from the ongoing ANTLER trial, including data from at least 15 patients from dose escalation with a minimum of six months of follow up.

On July 13, 2023, we announced results of the long-term follow-up from the dose escalation portion of the ongoing ANTLER Phase 1 trial evaluating our CB-010 product candidate.

We plan to meet with the FDA in the second half of 2023 to discuss a potential pivotal clinical trial in second-line LBCL patients, and we plan to share FDA feedback by year-end 2023.

We also plan to report initial dose expansion data in second-line LBCL patients from the ongoing ANTLER trial in the first half of 2024.

Our second product candidate, CB-011, is an allogeneic CAR-T cell therapy that targets BCMA.

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We believe that CLL-1 is an attractive target for acute myeloid leukemia (“AML”) due to its expression on myeloid cancer cells, its enrichment in leukemic stem cells, and its absence on hematopoietic stem cells (“HSCs”).

CB-012 is being evaluated in investigational new drug (“IND”) application-enabling studies to support a planned IND application submission for r/r AML in the second half of 2023.

CB-012 is being evaluated in investigational new drug (“IND”)-enabling studies to support a planned IND application submission for r/r AML in the second half of 2023.

We are developing allogeneic CAR-NK cell therapies derived from genome-edited induced pluripotent stem cells (“iPSCs”) for the treatment of solid tumors.

CB-020 is our first CAR-NK product candidate from our CAR-NK platform and we have selected receptor tyrosine kinase like orphan receptor 1 (“ROR1”) as the tumor cell-surface target for CB-020.

CB-020 and potential future CAR-NK cell therapy product candidates will contain genome edits designed to overcome some of the challenges of targeting solid tumors, such as trafficking, tumor infiltration, heterogeneity, and the immunosuppressive tumor microenvironment.

CB-020 and potential future CAR-NK cell therapy product candidates will contain genome edits designed to overcome some of the challenges of targeting solid tumors, such as trafficking, tumor infiltration, tumor heterogeneity, and the immunosuppressive tumor microenvironment.

Since our founding in 2011, we have devoted substantially all of our resources to organizing and staffing, business planning, raising capital, expanding our genome-editing platform technologies, developing our product candidates and building our pipeline, creating and maintaining our intellectual property portfolio, and establishing arrangements with third parties for the manufacture, testing, and clinical trial evaluations of our product candidates.

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We have incurred net losses since commencement of our operations.

To date, we have primarily funded our operations through revenue from our license and collaboration agreements;

the sale of shares of Intellia Therapeutics, Inc.

To date, we have primarily funded our operations through proceeds from the sales of our capital stock, revenue from our license and collaboration agreements, and proceeds from the sale of shares of Intellia Therapeutics, Inc.

(“Intellia”) common stock.

the sale of our convertible preferred stock in private placements before our initial public offering (“IPO”) in 2021;

and proceeds from our IPO.

Our net losses for the three months ended March 31, 2023 and 2022 were $28.0 million and $19.1 million, respectively.

We had an accumulated deficit of $225.3 million as of March 31, 2023.

Our net losses for the three months ended June 30, 2023, and 2022 were $29.5 million and $26.7 million, respectively.

Our net losses for the six months ended June 30, 2023, and 2022 were $57.6 million and $45.8 million, respectively.

We had an accumulated deficit of $254.8 million as of June 30, 2023.

Our net losses and operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of expenses associated with our clinical trials and nonclinical studies and our other research and development expenses.

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• continue to operate as a public company.

We do not own or operate any manufacturing facilities and we outsource a substantial portion of our clinical trial studies to third parties.

We do not own or operate any manufacturing facilities.

We use multiple contract manufacturing organizations (“CMOs”) to individually manufacture, under current good manufacturing processes, chRDNA guides, Cas9 and Cas12a proteins, plasmids, and adeno-associated virus serotype 6 vectors used in the manufacture of our CAR-T cells as well as our CAR-NK cell therapy product candidates.

We expect to rely on our CMOs for the manufacturing of our product candidates to expedite readiness for future clinical trials, and most of these CMOs have capabilities for commercial manufacturing.

We expect to continue to rely on our CMOs for the manufacturing of our preclinical study and clinical trial materials, and most of these CMOs have capabilities for commercial manufacturing.

Additionally, we may decide to build our own manufacturing facility in the future to provide us greater flexibility and control over our clinical or commercial manufacturing needs.

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annual maintenance fees;

regulatory and/or

commercial milestone payments;

regulatory and/or commercial milestone payments;

research and development payments;

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Each of these payments results in licensing and collaboration revenue.

Revenue under such licensing and collaboration agreements was $3.5 million and $2.7 million for the three months ended March 31, 2023 and 2022, respectively.

See Notes 4 and 5 to our condensed consolidated financial statements included elsewhere in this Form 10-Q.

For additional information about our revenue recognition policy related to our licensing and collaboration agreements, see Note 2 to the annual consolidated financial statements included in our Form 10-K.

Revenue under such licensing and collaboration agreements was $3.8 million and $4.2 million for the three months ended June 30, 2023, and 2022, respectively, and $7.3 million and $6.9 million for the six months ended June 30, 2023, and 2022, respectively.

See Notes 4 and 5 to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.

For additional information about our revenue recognition policy related to our licensing and collaboration agreements, see Note 2 to the consolidated financial statements included in our Form 10-K.

For the foreseeable future we expect substantially all of our revenue will be generated from licensing and collaboration agreements.

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Accordingly, at this time, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the development of our product candidates.

We are also unable to predict when, if ever, we will generate revenue and material net cash inflows from the commercialization and sale of any of our product candidates for which we may obtain marketing approval.

We are also unable to predict when, if ever, we will generate revenue and material net cash inflows from the

commercialization and sale of any of our product candidates for which we may obtain marketing approval.

We may never succeed in achieving regulatory approval for any of our product candidates.

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The following table summarizes our research and development expenses for the periods indicated:

Three Months Ended March 31,

(in thousands)

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(in thousands) (in thousands)

External costs:

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We accrue for these reimbursements as the respective expenses are incurred and classify such reimbursements as a reduction of general and administrative expenses.

During the three months ended March 31, 2023 and 2022, we recorded $0.4 million and $1.5 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense.

During each of the three months ended June 30, 2023, and 2022, we recorded $0.7 million of patent cost reimbursements as a reduction to general and administrative expense.

During the six months ended June 30, 2023, and 2022, we recorded $1.1 million and $2.1 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense.

We expect that our general and administrative expenses may increase in the future as a result of expanding our operations, including hiring personnel, preparing for potential commercialization of our product candidates, and additional facility occupancy costs, as well as other expenses necessary to support the growth and operations of a clinical-stage public company.

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Results of Operations

Comparison of the Three Months Ended March 31, 2023 and 2022

Comparison of the Three Months Ended June 30, 2023, and 2022

The following table summarizes our results of operations for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

2023 2022 Change

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Licensing and Collaboration Revenue

Licensing and collaboration revenue increased by $0.8 million to $3.5 million for the three months ended March 31, 2023 from $2.7 million for the three months ended March 31, 2022.

This increase was primarily related to increases of $0.7 million related to recognition of revenue under the Collaboration and License Agreement (as amended, the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”) and $0.2 million related to other license agreements with various licensees.

Licensing and collaboration revenue decreased by $0.4 million to $3.8 million for the three months ended June 30, 2023, from $4.2 million for the three months ended June 30, 2022.

This decrease was primarily related to decrease of $1.5 million related to recognition of revenue under the Collaboration and License Agreement (as amended, the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”), partially offset by an increase of $1.2 million related to the Exclusive License Agreement for Veterinary Therapeutics (CRISPR-Cas9) (the “Edge Cas9 License Agreement”) with Edge Animal Health.

The following table summarizes our revenue by licensee for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

2023 2022 Change

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AbbVie $ 1,374 $ 2,864 $ (1,490)

Edge Animal Health, related party 1,150 — 1,150

Other licensees 1,231 1,328 (97)

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Research and Development Expenses

Research and development expenses increased by $11.8 million to $25.7 million for the three months ended March 31, 2023 from $13.9 million for the three months ended March 31, 2022.

This increase was primarily related to increases of $6.3 million in external CMO and CRO activities, driven by increases of $4.8 million due to timing of CMO activities for our product candidates, and $1.5 million in CRO activities primarily to advance our CB-010 ANTLER phase 1 trial;

$2.4 million in other research and development expenses to advance CB-012 investigational new drug (“IND”) application-enabling studies and other preclinical research, as well as other outside services related to research and development;

Research and development expenses increased by $3.9 million to $26.5 million for the three months ended June 30, 2023, from $22.6 million for the three months ended June 30, 2022.

This increase was primarily related to increases of $3.6 million in personnel-related expenses, including stock-based compensation, due to headcount increases;

$0.5 million of net increase in external CMO and CRO activities for our CAR-T cell therapy product candidates, driven by an increase of $3.1 million in CRO activities for clinical trials, partially offset by a decrease of $2.6 million due to timing of CMO activities;

and $0.5 million in other facilities and allocated expenses;

partially offset by a decrease of $0.9 million in other research and development expenses, as well as other outside services related to research and development.

General and Administrative Expenses

General and administrative expenses increased by $0.1 million to $10.1 million for the three months ended June 30, 2023, from $10.0 million for the three months ended June 30, 2022.

This increase was primarily related to

increases of $0.5 million in other facilities and allocated expenses;

$0.5 million in patent prosecution and maintenance costs;

and $0.4 million in personnel-related expenses, including stock-based compensation, due to headcount increases;

partially offset by a decrease of $1.3 million in director and officer insurance and legal expenses.

Total Other Income

Total other income increased by $1.6 million for three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

We recognized a gain related to the change in the fair value of the MSKCC success payments liability in the amount of $0.3 million and $1.1 million, for the three months ended June 30, 2023, and 2022, respectively.

Other income, net increased by $2.4 million during the three months ended June 30, 2023, compared to June 30, 2022.

The increase primarily relates to a $2.4 million increase in interest income earned from marketable securities.

Comparison of the Six Months Ended June 30, 2023, and 2022

The following table summarizes our results of operations for the periods indicated:

Six Months Ended June 30,

2023 2022 Change

(in thousands)

Licensing and collaboration revenue $ 7,257 $ 6,856 $ 401

Operating expenses:

Research and development 52,212 36,503 15,709

General and administrative 19,029 19,637 (608)

Total operating expenses 71,241 56,140 15,101

Loss from operations (63,984) (49,284) (14,700)

Other income (expense):

Change in fair value of equity securities 7 (104) 111

Change in fair value of the MSKCC success payments liability 534 2,648 (2,114)

Other income, net 5,880 955 4,925

Total other income 6,421 3,499 2,922

Net loss $ (57,563) $ (45,785) $ (11,778)

Licensing and Collaboration Revenue

Licensing and collaboration revenue increased by $0.4 million to $7.3 million for the six months ended June 30, 2023, from $6.9 million for the six months ended June 30, 2022.

This increase was primarily related to an increase of $1.2 million related to the Edge Cas9 License Agreement, partially offset by a decrease of $0.8 million related to recognition of revenue under the AbbVie Agreement.

The following table summarizes our revenue by licensee for the periods indicated:

Six Months Ended June 30,

2023 2022 Change

(in thousands)

AbbVie $ 2,983 $ 3,797 $ (814)

Edge Animal Health, related party 1,150 — 1,150

Other licensees 3,124 3,059 65

Total licensing revenue $ 7,257 $ 6,856 $ 401

Research and Development Expenses

Research and development expenses increased by $15.7 million to $52.2 million for the six months ended June 30, 2023, from $36.5 million for the six months ended June 30, 2022.

This increase was primarily related to increases of $6.8 million in external CMO and CRO activities for our CAR-T cell therapy product candidates, driven by increases of $4.6 million in CRO activities for clinical trials and $2.2 million due to timing of CMO activities;

$6.0 million in personnel-related expenses, including stock-based compensation, due to headcount increases;

and $0.7 million in facilities and other allocated expenses.

$1.5 million in other research and development expenses, as well as other consulting services related to research and development;

$1.1 million in other facilities and allocated expenses;

and $0.3 million in expenses related to licenses, sublicensing revenue, and milestones.

General and Administrative Expenses

General and administrative expenses decreased by $0.7 million to $8.9 million for the three months ended March 31, 2023 from $9.6 million for the three months ended March 31, 2022.

This decrease was primarily related to decreases of $0.8 million in director and officer insurance and legal expenses;

and $0.4 million in patent prosecution and maintenance costs;

partially offset by an increase of $0.5 million in personnel-related expenses, including stock-based compensation, due to headcount increases.

General and administrative expenses decreased by $0.6 million to $19.0 million for the six months ended June 30, 2023, from $19.6 million for the six months ended June 30, 2022.

This decrease was primarily related to a decrease of $2.1 million in director and officer insurance and legal, accounting, and recruiting expenses;

partially offset by increases of $0.9 million in personnel-related expenses, including stock-based compensation, due to headcount increases;

and $0.5 million in other facilities and allocated expenses.

Total Other Income

Total other income increased by $1.3 million for three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

We recognized a gain related to the change in the fair value of the MSKCC success payments liability in the amount of $0.3 million and $1.6 million, respectively, for the three months ended March 31, 2023 and 2022, respectively.

Other income, net increased by $2.6 million during the three months ended March 31, 2023 compared to March 31, 2022.

Total other income increased by $2.9 million for six months ended June 30, 2023, as compared to the six months ended June 30, 2022.

We recognized a gain related to the change in the fair value of the MSKCC success payments liability in the amount of $0.5 million and $2.6 million, respectively, for the six months ended June 30, 2023, and 2022, respectively.

Other income, net increased by $4.9 million during the six months ended June 30, 2023, compared to June 30, 2022.

The increase primarily relates to a $4.9 million increase in interest income earned from marketable securities.

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Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations.

We have funded our operations through sales of our convertible preferred stock, which generated approximately $150.1 million in aggregate net proceeds, and from our IPO, which generated approximately $321.0 million in net proceeds.

We have funded our operations through sales of our capital stock, including sales of our convertible preferred stock, which generated approximately $150.1 million in aggregate net proceeds, and from our initial public offering (“IPO”) in 2021, which generated approximately $321.0 million in net proceeds.

We have also received approximately $88.4 million in net proceeds from the sale of Intellia common stock.

Additionally, through March 31, 2023, we received approximately $85.9 million from licensing agreements, licensing and collaboration agreements, a service agreement, patent assignments, and government grants, including $33.8 million that was received from AbbVie under the AbbVie Agreement.

In order to assist in funding our future operations, including our planned clinical trials, on August 9, 2022, we filed a universal shelf registration statement on Form S-3 (the “Shelf Registration Statement”) with the SEC, which allows us to, from time to time, sell up to $400.0 million of common stock, preferred stock, debt securities, warrants, rights, or units comprised of any combination thereof (including the $100.0 million of common stock reserved for our at-the-market

equity offering program described below).

Additionally, we received $25.0 million equity investment from Pfizer Inc.

(“Pfizer”) through a private placement transaction in June 2023.

Further, through June 30, 2023, we received approximately $89.4 million from licensing agreements, licensing and collaboration agreements, a service agreement, patent assignments, and government grants, including $34.6 million that was received from AbbVie under the AbbVie Agreement.

The Shelf Registration Statement was declared effective by the SEC on August 16, 2022.

On August 9, 2022, we entered into an Open Market Sale Agreement SM (the “ ATM Sales Agreement”) with Jefferies LLC (“Jefferies”), pursuant to which, upon the terms and subject to the conditions and limitations set forth in the ATM Sales Agreement, we may, from time to time, in our sole discretion, issue and sell, through Jefferies, acting as sales agent, up to $100.0 million of our shares of common stock, by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended.

Jefferies uses commercially reasonable efforts consistent with its normal sales and trading practices to sell shares from time to time, based upon our instructions (including any price or size limits or other customary parameters or conditions we may impose).

We pay Jefferies a commission equal to 3.0% of the aggregate gross proceeds of any shares sold through Jefferies pursuant to the ATM Sales Agreement.

As of March 31, 2023, we have sold 168,635 shares of our common stock under the ATM Sales Agreement at an average price per share of $7.32 for aggregate gross proceeds of $1.2 million ($1.0 million net of offering expenses).

As of March 31, 2023, we had cash, cash equivalents, and marketable securities of $291.0 million.

During the six months ended June 30, 2023, we sold 168,635 shares of our

common stock under the ATM Sales Agreement at an average price per share of $7.32 for aggregate gross proceeds of $1.2 million ($1.0 million net of offering expenses).

In July and August 2023, we issued and sold a total of 22,115,384 shares of our common stock in an underwritten public offering at a price to the public of $6.50 per share, which included the full exercise of the underwriters’ over-allotment option.

The total net proceeds from the offering were approximately $134.6 million, after deducting underwriting discounts and commissions and estimated offering expenses.

The shares were issued pursuant to the Shelf Registration Statement.

As of June 30, 2023, we had cash, cash equivalents, and marketable securities of $292.5 million, which does not include the net proceeds from our July and August 2023 underwritten public offering under the Shelf Registration Statement.

We will continue to be dependent upon equity financing, debt financing, collaboration and licensing arrangements, and/or other forms of capital raises at least until we are able to generate significant positive cash flows from our operations.

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We have based these estimates on our current assumptions, which may require future adjustments based on our ongoing business decisions.

Strategic Investment

On June 29, 2023, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Pfizer, pursuant to which we, in a private placement transaction (the “Pfizer Investment”), agreed to issue and sell to Pfizer 4,690,431 shares of our common stock, par value $0.0001 per share, at a purchase price of $5.33 per share, for aggregate gross proceeds of approximately $25.0 million.

The issuance and sale of the shares to Pfizer closed on June 30, 2023.

We granted certain registration rights to Pfizer under the Securities Purchase Agreement with regard to the resale of the shares.

Unless otherwise agreed by Pfizer, we have agreed to use the proceeds from the Pfizer Investment solely in connection with (i) the development program for our allogeneic anti-BCMA CAR-T cell therapy known as CB-011 product candidate that is being evaluated in the CaMMouflage clinical trial and/or (ii) any other single-targeted anti-BCMA CAR-T cell therapy using an anti-BCMA single-chain variable fragment owned or controlled by us (collectively, cell therapies described in clauses (i) and (ii) are referred to as a “BCMA Product Candidate”), for 36 months beginning on June 29, 2023.

On June 29, 2023, in connection with the Pfizer Investment, we and Pfizer also entered into an Information Rights Agreement (the “Information Rights Agreement ”), having a thirty-six (36)-month term.

Under the Information Rights Agreement, we granted Pfizer a thirty (30)-calendar day right of first negotiation (“ROFN”) if we commence or engage with any third party with respect to a potential grant of rights to develop and/or commercialize a BCMA Product Candidate, including, without limitation, a license agreement, a co-promotion/co-commercialization agreement, a profit share agreement, a joint venture agreement, or an asset sale agreement (a “Grant of Program Rights”).

If we and Pfizer do not reach an agreement with respect to a Grant of Program Rights within the 30-day period, then we may pursue negotiations and enter into an agreement with any third party.

In the event that we and such third party do not reach agreement on the Grant of Program Rights within a specified time period, Pfizer’s right of first negotiation would be reinstated.

Under the Information Rights Agreement, we also agreed to grant Pfizer the right to designate one representative to serve on our scientific advisory board.

Through an information sharing committee, we will provide calendar quarter updates to Pfizer regarding the development program for a BCMA Product Candidate.

Additionally, we agreed to provide Pfizer access to any preclinical or interim or final clinical data (including raw data) and results generated as part of the development program for a BCMA Product Candidate at the same time that we provide such data to a third party (other than to our service providers or the FDA or other regulatory authorities), subject to certain confidentiality exceptions.

On June 29, 2023, we and Pfizer also entered into a Voting Agreement, pursuant to which, for a period of 12 months, Pfizer agreed to cause our voting securities that Pfizer beneficially owns (within the meaning of Rules 13d-3 or 13d-5 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) in excess of 4.99% of our then issued and outstanding voting securities to be voted (i) with respect to any matter directly relating to remuneration of directors,

directors’ insurance, or indemnification or release from liability of directors, in a manner proportionally consistent with the votes properly cast for and against by holders of voting securities not beneficially owned by Pfizer, and (ii) with respect to any other matter in which Pfizer shall have the right to vote such voting securities, in accordance with the recommendation of our board of directors or any applicable committee thereof.

Funding Requirements

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• the costs associated with being a public company.

Furthermore, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures.

If we need to raise additional capital to fund our operations, funding may not be available to us on acceptable terms, or at all.

Furthermore, our operating plans may change, and we expect to need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures.

Because of the numerous risks and uncertainties associated with the development of human therapeutics, we may never achieve profitability and, unless and until we are able to develop and commercialize our product candidates, we will

need to continue to raise additional capital;

however, funding may not be available to us on acceptable terms, or at all.

If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or suspend one or more of our preclinical studies, clinical trials, research and development programs, and/or commercialization efforts.

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If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties or other sources, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams, or research programs or grant licenses on terms that may not be favorable to us.

Comparison of the Three Months Ended March 31, 2023 and 2022

Comparison of the Six Months Ended June 30, 2023, and 2022

The following table summarizes our cash flows for the periods indicated:

Three Months Ended March 31,

Six Months Ended June 30,

2023 2022 Change

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Cash provided by financing activities 19,213 1,352 17,861

Net decrease in cash and cash equivalents $ (5,594) $ (92,790) $ 87,196

Net increase (decrease) in cash, cash equivalents, and restricted cash $ 7,856 $ (128,274) $ 136,130

Cash Used in Operating Activities

Net cash used in operating activities was $27.9 million and $21.7 million for the three months ended March 31, 2023 and 2022, respectively.

Cash used in operating activities for the three months ended March 31, 2023 was primarily due to our net loss of $28.0 million, adjusted by non-cash charges of $2.5 million and net changes in our operating assets and liabilities of $2.4 million.

Net cash used in operating activities was $43.1 million and $43.5 million for the six months ended June 30, 2023, and 2022, respectively.

Cash used in operating activities for the six months ended June 30, 2023, was primarily due to our net loss of $57.6 million, adjusted by non-cash charges of $4.7 million and net changes in our operating assets and liabilities of $9.7 million.

Our non-cash charges were primarily comprised of $6.7 million of stock-based compensation, $1.2 million of depreciation and amortization expense, and non-cash lease expense of $1.0 million, which were partially offset by amortization of investment premiums of $3.6 million, and change in the fair value of the MSKCC success payments liability of $0.5 million.

The changes in our operating assets and liabilities were due to increases of $1.3 million in

accounts receivable, and decreases of $4.1 million in accrued expenses and other current liabilities, $1.1 million in deferred revenue, and $0.3 million in operating lease liabilities, partially offset by decreases in prepaid expenses and other current assets of $1.8 million, contract assets of $0.6 million, and other receivables of $0.5 million, and an increase of $1.5 million in accounts payable.

Cash used in operating activities in the three months ended March 31, 2022 was primarily due to our net loss of $19.1 million, adjusted by non-cash charges of $2.5 million and net changes in our operating assets and liabilities of $5.1 million.

Our non-cash charges were primarily comprised of $3.0 million of stock-based compensation, non-cash lease expense of $0.5 million, amortization of investment premiums of $0.3 million, and $0.3 million of depreciation and amortization expense, which were partially offset by the change in the fair value of the MSKCC success payments liability of $1.6 million.

The changes in our operating assets and liabilities were due to decreases of $0.8 million in accounts receivable and $1.3 million in other receivables, offset by increases in prepaid expenses and other current assets of $1.3 million, other assets of $0.5 million, and increases of $1.9 million in accounts payable, $2.8 million in accrued expenses and other current liabilities, $0.6 million in deferred revenue, and $0.1 million in operating lease liabilities.

The changes in our operating assets and liabilities were due to decreases in prepaid expenses and other current assets of $2.4 million, contract assets of $0.8 million, and other receivables of $0.7 million, and an increase of $5.2 million in deferred revenue (including $7.5 million related to the Pfizer transaction), and $2.0 million in accounts payable, partially offset by increases of $0.6 million in accounts receivable, and decreases of $0.5 million in operating lease liabilities, and $0.4 million in accrued expenses and other current liabilities.

Cash used in operating activities in the six months ended June 30, 2022, was primarily due to our net loss of $45.8 million, adjusted by non-cash charges of $5.6 million and net changes in our operating assets and liabilities of $3.4 million.

Our non-cash charges were primarily comprised of $5.9 million of stock-based compensation, non-cash lease expense of $1.0 million, $0.7 million of depreciation and amortization expense, amortization of investment premiums of $0.4 million, and acquired in-process research and development of $0.3 million, which were partially offset by the change in the fair value of the MSKCC success payments liability of $2.6 million.

The changes in our operating assets and liabilities were due to decreases of $0.6 million in accounts receivable and $2.4 million in other receivables, and an increase of $1.1 million in accrued expenses and other current liabilities, offset by increases in contract assets of $0.6 million, prepaid expenses and other current assets of $0.3 million, other assets of $0.3 million, and decreases of $3.6 million in accounts payable, $2.5 million in deferred revenue, and $0.2 million in operating lease liabilities..

Cash Provided by (Used in) Investing Activities

During the three months ended March 31, 2023 cash provided by investing activities was $20.7 million, and during the three months ended March 31, 2022 cash used in investing activities was $72.1 million.

Cash provided by investing activities for the three months ended March 31, 2023, was primarily due to proceeds from the sales and maturities of marketable securities of $98.7 million, partially offset by purchases of marketable securities of $75.9 million and property and equipment of $2.0 million.

Cash used in investing activities for the three months ended March 31, 2022 was primarily due to purchases of marketable securities of $110.7 million and property and equipment of $0.7 million, partially offset by the proceeds from maturities of marketable securities of $39.3 million.

During the six months ended June 30, 2023, cash provided by investing activities was $31.8 million, and during the six months ended June 30, 2022, cash used in investing activities was $86.1 million.

Cash provided by investing activities for the six months ended June 30, 2023, was primarily due to proceeds from the sales and maturities of marketable securities of $171.0 million, partially offset by purchases of marketable securities of $134.7 million and property and equipment of $4.6 million.

Cash used in investing activities for the six months ended June 30, 2022, was primarily due to purchases of marketable securities of $181.8 million and property and equipment of $3.3 million, partially offset by the proceeds from maturities of marketable securities of $99.0 million.

Cash Provided by Financing Activities

During the three months ended March 31, 2023 and 2022, cash provided by financing activities was $1.6 million and $1.0 million, respectively.

Cash provided by financing activities for the three months ended March 31, 2023 was due to net proceeds from our at-the-market equity offering program of $1.1 million and the exercise of stock options and purchases of common stock under the 2021 Employee Stock Purchase Plan of $0.5 million.

Cash provided by financing activities for the three months ended March 31, 2022 was primarily due to exercise of stock options and purchases of common stock under the 2021 ESPP plan of $1.0 million.

During the six months ended June 30, 2023, and 2022, cash provided by financing activities was $19.2 million and $1.4 million, respectively.

Cash provided by financing activities for the six months ended June 30, 2023, was primarily due to $17.5 million of gross proceeds allocated to the issuance of common stock in a private placement transaction with Pfizer, net proceeds from our at-the-market equity offering program of $1.0 million, and the exercise of stock options and purchases of common stock under the 2021 Employee Stock Purchase Plan (“2021 ESPP”) of $0.8 million.

Cash provided by financing activities for the six months ended June 30, 2022, was due to the exercise of stock options and purchases of common stock under the 2021 ESPP plan of $1.4 million.

Critical Accounting Policies and Significant Judgments and Estimates

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Recently Issued Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements included elsewhere in this Form 10-Q for more information regarding recently issued accounting pronouncements.

See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for more information regarding recently issued accounting pronouncements.

Indemnification Agreements

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We believe the fair value of the indemnification rights and agreements is minimal.

Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of March 31, 2023.

Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of June 30, 2023.

Emerging Growth Company and Smaller Reporting Company Status

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Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (a) are no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

As a result, our condensed consolidated financial statements may not be comparable to those of companies that comply with the new or revised accounting pronouncements as of public company effective dates.

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We are also a “smaller reporting company.” If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited consolidated financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited consolidated financial statements in our Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes to our market risk during the three months ended March 31, 2023.

There have been no material changes to our market risk during the six months ended June 30, 2023.

For a discussion of our exposure to market risk, refer to the section titled “Quantitative and Qualitative Disclosures About Market Risk” in our Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis