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Item 2. Management’s Discussion and Analysis

2023-11-07 compared with 2023-08-08 · 109 added, 100 removed, 289 unchanged (42% of the section changed)

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

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes included in Part I, Item 1, of this Quarterly Report on Form 10-Q (“Form 10-Q”) and with the audited consolidated financial statements and the related notes for the fiscal year ended December 31, 2022 included in our Annual Report on Form 10-K (“Form 10-K”) filed with the U.S.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes included in Part I, Item 1, of this Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2023 (“Form 10-Q”) and with the audited consolidated financial statements and the related notes for the fiscal year ended December 31, 2022 included in our Annual Report on Form 10-K (“Form 10-K”) filed with the U.S.

Securities and Exchange Commission (“SEC”) on March 9, 2023.

Special Note Regarding Forward-Looking Statements

This Form 10-Q contains forward-looking statements.

This Form 10-Q contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

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;

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 and safety, efficacy, and potential advantages of our product candidates;

expectations regarding our clinical and preclinical development programs, including our expectations about the timing of such programs;

the expected timing of disclosure of clinical data from such programs;

the safety, efficacy, and potential advantages of our product candidates;

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.

and plans and objectives of management for future operations.

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.

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risks caused by public health crises such as the COVID-19 pandemic 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.

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.

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

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We are a clinical-stage C lustered R egularly I nterspaced S hort P alindromic R epeats (“CRISPR”) genome-editing biopharmaceutical company dedicated to developing transformative therapies for patients with devastating diseases.

Our genome-editing platform, including our novel chRDNA ( C RISPR h ybrid R NA- DNA , or “chRDNA,” pronounced “chardonnay”) technologies, enables superior editing precision to develop cell therapies that are armored to improve antitumor activity.

Our genome-editing platform, including our novel chRDNA ( C RISPR h ybrid R NA- DNA , or “chRDNA,” pronounced “chardonnay”) technology, enables superior editing precision to develop cell therapies that are armored to improve antitumor activity.

We are advancing a pipeline of allogeneic, or off-the-shelf, cell therapies from our chimeric antigen receptor (“CAR”) T (“CAR-T”) cell and CAR-natural killer (“CAR-NK”) cell platforms as readily available therapeutic treatments for patients.

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Our therapies are directed at established tumor cell surface targets for which autologous CAR-T cell therapeutics have already demonstrated clinical proof of concept, including CD19 and B cell maturation antigen (“BCMA”), as well as targets such as C-type lectin-like molecule-1 (“CLL-1,” also known as CD371).

We use our chRDNA technologies to armor our cell therapies by using multiple genome-editing strategies, such as checkpoint disruption, immune cloaking, or a combination of these two strategies to enhance their antitumor activity.

chRDNA technologies to armor our cell therapies by using multiple genome-editing strategies, such as checkpoint disruption, immune cloaking, or a combination of these two strategies to enhance their antitumor activity.

Our lead product candidate, CB-010, to our knowledge, is the first clinical-stage allogeneic anti-CD19 CAR-T cell therapy with programmed cell death protein 1 (“PD-1”) removed from the CAR-T cell surface by a genome-edited knockout of the PDCD1 gene.

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Food and Drug Administration (“FDA”).

Additionally, CB-010 has received orphan drug designation from the FDA for follicular lymphoma.

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 plan to meet with the FDA by year end 2023 to discuss a potential pivotal clinical trial for CB-010 in second-line LBCL patients, and we plan to share FDA feedback by year-end 2023.

CB-010 is, to our knowledge, the first anti-CD19 allogeneic CAR-T cell therapy to be evaluated in second-line LBCL patients.

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.

To our knowledge, it is the first anti-BCMA CAR-T cell therapy incorporating an immune cloaking approach that includes both the removal of the endogenous beta-2 microglobulin (“B2M”) protein by a genome-edited knockout of the B2M gene and insertion of a B2M–human-leukocyte-antigen-E–peptide transgene (“B2M–HLA-E”), enabling expression of HLA-E on the CAR-T cell surface.

CB-011 is, to our knowledge, the first anti-BCMA CAR-T cell therapy incorporating an immune cloaking approach that includes both the removal of the endogenous beta-2 microglobulin (“B2M”) protein by a genome-edited knockout of the B2M gene and insertion of a B2M–human-leukocyte-antigen-E–peptide transgene (“B2M–HLA-E”), enabling expression of HLA-E on the CAR-T cell surface.

This strategy is designed to reduce CAR-T cell rejection by both patient T cells and natural killer (“NK”) cells to potentially enable more durable antitumor activity.

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We plan to provide updates on dose escalation as the CaMMouflage phase 1 trial advances.

Our third product candidate, CB-012, is an allogeneic CAR-T cell therapy targeting CLL-1, currently in preclinical development for the treatment of relapsed or refractory acute myeloid leukemia (“r/r AML”).

Our third product candidate, CB-012, is an allogeneic CAR-T cell therapy targeting CLL-1.

CB-012 is, to our knowledge, the first allogeneic CAR-T cell therapy with both checkpoint disruption and immune cloaking strategies.

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”)-enabling studies to support a planned IND application submission for r/r AML in the second half of 2023.

We have received clearance of our CB-012 investigational new drug application (“IND”) from the FDA.

CB-012 will be evaluated in the AMpLify phase 1 clinical trial for patients with relapsed or refractory AML (“ r/r AML”).

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

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(“Intellia”) common stock.

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 for the three months ended September 30, 2023, and 2022 were $10.0 million and $26.6 million, respectively.

Our net losses for the nine months ended September 30, 2023, and 2022 were $67.6 million and $72.4 million, respectively.

We had an accumulated deficit of $264.8 million as of September 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.

We anticipate that our expenses will increase substantially if and as we:

• progress our ANTLER phase 1 clinical trial for our CB-010 product candidate and our CaMMouflage phase 1 clinical trial for our CB-011 product candidate;

• continue our current research programs and our preclinical and clinical development of our other current product candidates, including CB-012, CB-020, and any other product candidates we identify and choose to develop;

• advance the ANTLER phase 1 clinical trial for our CB-010 product candidate, the CaMMouflage phase 1 clinical trial for our CB-011 product candidate, and the AMpLify phase 1 clinical trial for our CB-012 product candidate;

• continue our current research programs and our preclinical and clinical development of our other current product candidates, including CB-020 and any other product candidates we identify and choose to develop;

• hire additional clinical, quality control, regulatory, technical operations, and scientific personnel;

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• add operational, legal, financial, and management information systems and personnel;

• experience any delays, challenges, or other issues associated with any of the above, including the failure of clinical trials meeting endpoints, the generation of unanticipated preclinical results or clinical trial data subject to differing interpretations, or the occurrence of potential safety issues or other development or regulatory challenges;

• experience any delays, challenges, or other issues associated with any of the above, including the failure of clinical trials meeting endpoints, unanticipated preclinical results or clinical trial data subject to differing interpretations, or the occurrence of potential safety issues or other development or regulatory challenges;

• make royalty, milestone, or other payments under current, and any future, in-license or assignment agreements;

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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 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 cell therapy product candidates as well as the CAR-T and CAR-NK cell therapy product candidates themselves.

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.

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

Because of the numerous risks and uncertainties associated with therapeutic product development, 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.

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Each of these payments results in licensing and collaboration revenue.

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.

Revenue under such licensing and collaboration agreements was $23.7 million and $3.3 million for the three months ended September 30, 2023, and 2022, respectively, and $30.9 million and $10.2 million for the nine months ended September 30, 2023, and 2022, respectively.

See Notes 4, 5, and 7 to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.

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However, payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized as prepaid expenses and other current assets on our condensed consolidated balance sheets.

The capitalized amounts are recognized as expense as the goods are delivered or as related services are performed.

The capitalized amounts are recognized as expenses as the goods are delivered or as related services are performed.

We separately track certain external costs on a program-by-program basis;

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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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 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.

During the three months ended September 30, 2023, and 2022, we recorded $0.2 million and $1.0 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense.

During the nine months ended September 30, 2023, and 2022, we recorded $1.3 million and $3.1 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 June 30, 2023, and 2022

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

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

Three Months Ended June 30,

Three Months Ended September 30,

2023 2022 Change

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Other income, net 4,774 1,466 3,308

Total other income 3,349 1,734 1,615

Total other income (expense) 4,631 (110) 4,741

Net loss $ (10,002) $ (26,647) $ 16,645

Licensing and Collaboration Revenue

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.

Licensing and collaboration revenue increased by $20.4 million to $23.7 million for the three months ended September 30, 2023, from $3.3 million for the three months ended September 30, 2022.

This increase was primarily related to an increase of $19.8 million recognized under the Collaboration and License Agreement (as amended, the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”), which includes the recognition of the previously deferred revenue that was recognized in full upon termination of the AbbVie Agreement.

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

Three Months Ended June 30,

Three Months Ended September 30,

2023 2022 Change

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AbbVie $ 21,476 $ 1,709 $ 19,767

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

Pfizer, related party

Other licensees 1,564 1,594 (30)

Total licensing revenue $ 3,755 $ 4,192 $ (437)

Total licensing and collaboration revenue

$ 23,662 $ 3,303 $ 20,359

Research and Development Expenses

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.

Research and development expenses increased by $8.6 million to $28.6 million for the three months ended September 30, 2023, from $20.0 million for the three months ended September 30, 2022.

This increase was primarily related to increases of $5.4 million of net increase in external CMO and CRO activities for our clinical CAR-T cell therapy product candidates, driven by an increases of $3.2 million due to timing of CMO activities, and $2.2 million in CRO activities for clinical trials;

$2.5 million in personnel-related expenses, including stock-based compensation, due to headcount increases;

$1.5 million in other facilities and allocated expenses;

and $0.5 million in expenses related to licenses, sublicensing revenue, and milestones;

partially offset by a decrease of $1.3 million in other research and development expenses.

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.

General and administrative expenses decreased by $0.1 million to $9.7 million for the three months ended September 30, 2023, from $9.8 million for the three months ended September 30, 2022.

This decrease was primarily related to decreases of $1 million in patent prosecution and maintenance costs;

and $0.4 million in director and officer insurance, accounting, and other service related expenses;

partially offset by an increase of $1.1 million in personnel-related expenses, including stock-based compensation, due to headcount increases.

Total Other Income (Expense)

Total other income (expense) increased by $4.7 million for three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

We recognized a loss related to the change in the fair value of the MSKCC success payments liability in the amount of $0.1 million and $1.6 million, for the three months ended September 30, 2023, and 2022, respectively.

Other income, net increased by $3.3 million during the three months ended September 30, 2023, compared to September 30, 2022.

The increase primarily relates to a $3.3 million increase in interest income earned from marketable securities.

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

Comparison of the Nine Months Ended September 30, 2023, and 2022

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

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 Change

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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.

Licensing and collaboration revenue increased by $20.8 million to $30.9 million for the nine months ended September 30, 2023, from $10.2 million for the nine months ended September 30, 2022.

This increase was primarily related to increases of $19.0 million recognized under the AbbVie Agreement with AbbVie, which includes the recognition of the previously deferred revenue that was recognized in full upon termination of the AbbVie Agreement, and $1.2 million related to the Edge Cas9 License Agreement.

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

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 Change

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

Pfizer, related party 622 — 622

Other licensees 4,689 4,653 36

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

Total licensing and collaboration revenue

$ 30,919 $ 10,159 $ 20,760

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;

Research and development expenses increased by $24.3 million to $80.8 million for the nine months ended September 30, 2023, from $56.5 million for the nine months ended September 30, 2022.

This increase was primarily related to increases of $12.2 million of net increase in external CMO and CRO activities for our clinical CAR-T cell therapy product candidates, driven by an increases of $5.3 million due to timing of CMO activities, and $6.8 million in CRO activities for clinical trials;

$8.4 million in personnel-related expenses, including stock-based compensation, due to headcount increases;

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

$2.6 million in other facilities and allocated expenses;

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General and Administrative Expenses

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;

General and administrative expenses decreased by $0.7 million to $28.7 million for the nine months ended September 30, 2023, from $29.5 million for the nine months ended September 30, 2022.

This decrease was primarily related to decreases of $2.5 million in director and officer insurance, legal, accounting, and other service-related expenses;

and $0.9 million in expenses related to licenses, sublicensing revenue, and milestones partially;

offset by increases of $2 million in personnel-related expenses, including stock-based compensation, due to headcount increases;

and $0.6 million in other facilities and allocated expenses.

Total Other Income

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.

Total other income increased by $7.7 million for nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

We recognized a gain related to the change in the fair value of the MSKCC success payments liability in the amount of $0.4 million and $1.0 million, respectively, for the nine months ended September 30, 2023, and 2022, respectively.

Other income, net increased by $8.2 million during the nine months ended September 30, 2023, compared to September 30, 2022.

The increase primarily relates to a $8.2 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 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 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;

from our initial public offering (“IPO”) in 2021, which generated approximately $321.0 million in net proceeds;

and from an underwritten follow-on public offering in 2023, which generated approximately $134.4 million in net proceeds.

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

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

Additionally, we received a $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.

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).

Further, through September 30, 2023, we received approximately $90.9 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.

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).

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

As of September 30, 2023, we had sold securities in an aggregate amount of $144.9 million under the Shelf Registration Statement.

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 (the “Securities Act”).

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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.

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.

During the nine months ended September 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 follow-on public offering at a price to the public of $6.50 per share, which included the full exercise of the underwriters’ right to purchase 2,884,615 additional shares of our common stock.

The total net proceeds from the offering were approximately $134.4 million, after deducting underwriting discounts and commissions and offering expenses.

The shares were sold under the Shelf Registration Statement.

As of September 30, 2023, we had cash, cash equivalents, and marketable securities of $396.7 million.

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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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.

We granted certain registration rights to Pfizer under the Securities Purchase Agreement covering 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.

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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.

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.

If 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.

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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.

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.

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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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.

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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 Six Months Ended June 30, 2023, and 2022

Comparison of the Nine Months Ended September 30, 2023, and 2022

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

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 Change

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Cash used in operating activities $ (71,912) $ (65,922) $ (5,990)

Cash provided by (used in) investing activities 31,767 (86,080) 117,847

Cash used in investing activities (36,709) (94,419) 57,710

Cash provided by financing activities 154,341 2,006 152,335

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Cash Used in Operating Activities

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 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 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.

Net cash used in operating activities was $71.9 million and $65.9 million for the nine months ended September 30, 2023, and 2022, respectively.

Cash used in operating activities for the nine months ended September 30, 2023, was primarily due to our net loss of $67.6 million, adjusted by non-cash charges of $8.0 million and net changes in our operating assets and liabilities of $12.3 million.

Our non-cash charges were primarily comprised of $10.2 million of stock-based compensation, $2.8 million of depreciation and amortization expense, and non-cash lease expense of $1.6 million, which were partially offset by accretion of discounts on investments of $6.0 million, and change in the fair value of the MSKCC success payments liability of $0.4 million.

The changes in our operating assets and liabilities were primarily due to an increase in accounts receivable of $0.9 million and decreases of $16.3 million in deferred revenue, current and long-term, and $0.3 million in operating lease liabilities, partially offset by decreases in prepaid expenses and other current assets of $0.9 million, contract assets of $0.6 million, and increases of $2.8 million in accrued expenses and other current liabilities, and $1.1 million in accounts payable.

Cash used in operating activities for the nine months ended September 30, 2022, was primarily due to our net loss of $72.4 million, adjusted by non-cash charges of $10.6 million and net changes in our operating assets and liabilities of

$4.1 million.

Our non-cash charges were primarily comprised of $8.6 million of stock-based compensation, non-cash lease expense of $1.6 million, $1.1 million of depreciation and amortization expense, 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 $1.0 million.

The changes in our operating assets and liabilities were due to increases of $1.6 million in prepaid expenses and other current assets, $0.4 million in contract assets, $0.4 million in other assets, and decreases of $2.6 million in accounts payable, $3.3 million in deferred revenue, and $0.3 million in operating lease liabilities, partially offset by decreases of $0.8 million in accounts receivable and $2.8 million in other receivables, an increase of $0.9 million in accrued expenses and other current liabilities.

Cash Used in Investing Activities

During the nine months ended September 30, 2023, cash used in investing activities was $36.7 million, and during the nine months ended September 30, 2022, cash used in investing activities was $94.4 million.

Cash used in investing activities for the nine months ended September 30, 2023, was primarily due purchases of marketable securities of $310.6 million and property and equipment of $9.3 million, partially offset by proceeds from the sales and maturities of marketable securities of $283.2 million.

Cash used in investing activities for the nine months ended September 30, 2022, was primarily due to purchases of marketable securities of $252.6 million, property and equipment of $4.7 million, and in-process research and development of $0.3 million, partially offset by the proceeds from maturities of marketable securities of $163.1 million.

Cash Provided by Financing Activities

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.

During the nine months ended September 30, 2023, and 2022, cash provided by financing activities was $154.3 million and $2.0 million, respectively.

Cash provided by financing activities for the nine months ended September 30, 2023, was primarily due to $134.5 million of net proceeds from our follow-on public offering, $17.3 million of net 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 $1.5 million.

Cash provided by financing activities for the nine months ended September 30, 2022, was due to the exercise of stock options and purchases of common stock under the 2021 ESPP of $2.0 million.

Critical Accounting Policies and Significant Judgments and Estimates

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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 June 30, 2023.

Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of September 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 (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.

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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Quantitative and Qualitative Disclosures about Market Risk.

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

There have been no material changes to our market risk during the nine months ended September 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