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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2021-03-03 compared with 2020-03-03 · 466 added, 543 removed, 279 unchanged (78% of the section changed)

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our cash, cash equivalents, and marketable securities as of December 31, 2019 consisted of cash, money market funds, agency bonds and U.S.

government securities.

We are exposed to market risk related to changes in interest rates.

Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S.

interest rates.

However, because

of the short-term nature of the investments in our portfolio, an immediate 10% change in market interest rates would not have a material impact on the fair market value of our investment portfolio or on our financial position or results of

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates;

have contracted with and may continue to contract with foreign vendors that are located in Europe.

Our operations may be subject to fluctuations in foreign currency exchange rates in the future.

Inflation generally affects us by increasing our cost of labor.

We do not believe that inflation had a material effect on our business,

financial condition or results of operations during the years ended December 31, 2019, 2018 and 2017.

We are a smaller reporting company, as defined in Rule 12b-2 under

the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide the information required under this item.

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders

Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

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To the Stockholders and Board of Directors

Therapeutics, Inc.:

Magenta Therapeutics, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Magenta Therapeutics, Inc.

and subsidiary

(the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive loss, redeemable convertible preferred stock and stockholders equity (deficit), and cash flows for each of the years in

the three year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position

of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three year period ended December 31, 2019, in conformity with U.S.

and subsidiary (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, consolidated statements of stockholders’ equity, and consolidated statements of cash flows for each of the years then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years then ended, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These consolidated

financial statements are the responsibility of the Companys management.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the

audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal

control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys internal

control over financial reporting.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

that our audits provide a reasonable basis for our opinion.

We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2017.

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150,000,000 shares authorized;

shares and 34,327,554 shares issued and 39,260,532 shares and 33,305,033

shares outstanding as of December 31, 2019 and 2018, respectively

Additional paid-in capital

48,541,601 shares and 39,466,254 shares issued and 48,533,135 shares and 39,260,532 shares outstanding as of December 31, 2020 and 2019, respectively

Additional paid-in

Accumulated other comprehensive income (loss)

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Interest and other income, net

Accretion of redeemable convertible preferred stock to

redemption value

Cumulative dividends on redeemable convertible

preferred stock

Reversal of cumulative dividends on redeemable

convertible preferred stock

Net loss attributable to common stockholders

Net loss per share attributable to common stockholders,

basic and diluted

Net loss per share, basic and diluted

Weighted average common shares outstanding, basic and diluted

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MAGENTA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND

STOCKHOLDERS EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

Series A, B and C

Preferred Stock

Comprehensive

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Balances at December 31, 2018

Issuance of Series A redeemable convertible preferred stock

Issuance of Series B redeemable convertible preferred stock, net of issuance costs of $213

Issuance of Series A and B redeemable convertible preferred stock in connection with a license

Vesting of restricted stock

Issuance of common stock in connection with payment of consultant fees

Accretion of Series B redeemable convertible preferred stock to redemption value

Cumulative dividends on Series A redeemable convertible preferred stock

Reversal of Series A redeemable convertible preferred stock dividend

Stock-based compensation expense

Balances at December 31, 2017

Issuance of Series C redeemable convertible preferred stock, net of issuance cost of $88

Accretion of Series C redeemable convertible preferred stock to redemption value

Conversion of preferred stock to common stock

Issuance of common stock upon initial public offering net of underwriting discounts, commissions

and offering costs

Issuance of common stock upon public offering net of underwriting discounts, commissions and offering costs

Vesting of restricted stock

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Stock-based compensation expense

Unrealized losses on marketable securities

Unrealized gains on marketable securities

Balances at December 31, 2019

Issuance of common stock upon public offering net of underwriting discounts, commissions and

offering costs

Issuance of common stock upon public offering net of underwriting discounts, commissions and offering costs

Vesting of restricted stock

Issuance of common stock upon exercise of stock options

Issuance of common stock under Employee Stock Purchase Plan

Stock-based compensation expense

Unrealized gains (losses) on marketable securities

Unrealized losses on marketable securities

Balances at December 31, 2020

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Loss on disposal of property and equipment

Net accretion of discounts on marketable securities

License fees paid in common and preferred stock

Net amortization (accretion) of premiums (discounts) on marketable securities

Changes in operating assets and liabilities:

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Purchases of property and equipment

Proceeds from sale of property and equipment

Purchases of marketable securities

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Proceeds from public offerings, net of underwriting discounts and commissions

Proceeds from issuance of redeemable convertible preferred stock

Payments of public offering costs

Payments of redeemable convertible preferred stock issuance costs

Proceeds from issuance of common and restricted stock

Proceeds from exercise of common stock options

Proceeds from issuance of common stock under Employee Stock Purchase Plan

Net cash provided by financing activities

Net increase in cash, cash equivalents and restricted cash

in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Supplemental disclosure of non-cash investing and

financing activities:

Purchase of property and equipment included in accounts payable and accrued expenses

Conversion of redeemable convertible preferred stock to common stock

Accretion of redeemable convertible preferred stock to redemption value

Cumulative dividends on Series A redeemable convertible preferred stock

Reversal of cumulative dividends on Series A redeemable convertible preferred stock

The accompanying notes are an integral part of these consolidated financial statements.

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Magenta Therapeutics, Inc.

(the Company) is a clinical-stage biotechnology company developing novel medicines to bring the curative

power of immune reset to more patients with autoimmune diseases, blood cancers and genetic diseases.

(the “Company”) is a clinical-stage biotechnology company developing novel medicines to bring the curative power of stem cell transplants to more patients with blood cancers, genetic diseases and autoimmune diseases.

The Company was incorporated under the laws of the State of Delaware in June 2015 as HSCTCo Therapeutics, Inc.

In February 2016, the Company changed

its name to Magenta Therapeutics, Inc.

The Company is subject to risks and uncertainties common to early-stage companies in the

biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure

additional capital to fund operations.

Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to

commercialization.

In February 2016, the Company changed its name to Magenta Therapeutics, Inc.

and in June 2018 the Company completed its initial public offering of common stock .

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, the continuing impact of the novel coronavirus (“COVID-19”)

pandemic and the ability to secure additional capital to fund operations.

These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities.

Even if the Companys development efforts are successful, it is uncertain

when, if ever, the Company will realize significant revenue from product sales.

In June 2018, the Company completed its initial public

offering (IPO) pursuant to which it issued and sold 6,666,667 shares of common stock at a public offering price of $15.00 per share, resulting in net proceeds of $89.9 million, after deducting underwriting discounts and commissions

and other offering expenses.

Upon the closing of the IPO, the Companys outstanding redeemable convertible preferred stock automatically converted into shares of common stock.

In May 2019, the Company issued and sold 4,887,500 shares of its common stock, including the underwriters exercise in full of their

option to purchase additional shares of common stock, in a follow-on public offering at a public offering price of $13.25 per share, resulting in net proceeds of $60.3 million after underwriting discounts

and commission and other offering expenses.

The Company has incurred recurring losses since inception, including net losses of

$76.8 million and $57.5 million for the years ended December 31, 2019 and 2018, respectively.

Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

In May 2019, the Company issued and sold 4,887,500 shares of its common stock, including the underwriters’ exercise in full of their option to purchase additional shares of common stock, in a follow-on

public offering at a public offering price of $ 13.25 per share, resulting in net proceeds of $ 60.3 million after underwriting discounts and commissions and other offering expenses.

In June 2020, the Company issued and sold

8,625,000 shares of its common stock, including the underwriters’ exercise in full of their option to purchase additional shares of common stock, in a

public offering at a public offering price of $

8.00 per share, resulting in net proceeds of $

64.6 million after underwriting discounts and commissions and other offering expenses.

The Company has a shelf registration statement on Form S-3

(the “Shelf”) on file with the Securities and Exchange Commission (the “SEC”), which covers the offering, issuance and sale of up to an aggregate of $ 350.0 million of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof.

The Company simultaneously entered into a sales agreement with Cowen and Company, LLC, as sales agent, to provide for the issuance and sale by the Company of up to $ 100.0 million of common stock from time to time in “at-the-market”

offerings under the Shelf (the “ATM Program”).

The Shelf was declared effective by the SEC on August 19, 2019.

As of December 31, 2020, no sales have been made pursuant to the ATM Program.

The Company has incurred recurring losses since inception, including net losses of $ 74.9 million and $ 76.8 million for the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, the Company had an accumulated deficit of $ 254.4 million.

The Company expects to continue to generate

operating losses for the foreseeable future.

The Company expects that its cash, cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the

issuance date of these consolidated financial statements.

The Company expects to continue to generate operating losses for the foreseeable future.

The future viability of the Company beyond that point is dependent on its ability to raise additional capital to fund its operations.

The Company expects its expenses to increase substantially in connection with ongoing activities, particularly as the Company advances its

preclinical activities and clinical trials for its product candidates in development.

The Company expects its expenses to increase substantially in connection with ongoing activities, particularly as the Company advances its preclinical activities and clinical trials for its product candidates in development.

Accordingly, the Company will need to obtain substantial additional funding in connection with continuing operations.

If the Company is unable to raise capital

when needed, or on attractive terms, it could be forced to delay, reduce or eliminate its research or drug development programs or any future commercialization efforts.

Although management continues to pursue these plans, there is no assurance that

the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

If the Company is unable to raise capital when needed, or on attractive terms, it could be forced to delay, reduce or eliminate its research or drug development programs or any future commercialization

Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary.

All intercompany balances and

transactions have been eliminated.

The consolidated financial statements have been prepared in accordance with accounting

principles generally accepted in the United States of America (GAAP).

All intercompany balances and transactions have been eliminated.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods.

Significant estimates and assumptions reflected in

these financial statements include, but are not limited to, the accrual for research and development expenses and the valuation of stock-based awards.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods.

Significant estimates and assumptions reflected in these financial statements include, but are not limited to, the accrual for research and development expenses and the valuation of stock-based awards.

Estimates are periodically reviewed in light of changes in circumstances, facts and experience.

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Concentrations of Credit Risk and of Significant Suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and

marketable securities.

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities.

The Company maintains all cash, cash equivalents and marketable securities at two accredited financial institutions in amounts that exceed federally insured limits.

The Company does not believe that it is subject to unusual

credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company is dependent on third-party

manufacturers to supply products for research and development activities in its programs.

In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active

pharmaceutical ingredients and formulated drugs related to these programs.

The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company is dependent on third-party manufacturers to supply products for research and development activities in its programs.

In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs.

These programs could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Marketable Securities

The Companys marketable securities are classified

as available-for-sale and are carried at fair value with the unrealized gains and losses reported as a component of accumulated other comprehensive income

(loss) in stockholders equity.

The Company’s marketable securities are classified as available-for-sale and

are carried at fair value with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity.

Realized gains and losses and declines in value judged to be other than temporary are included as a component of interest and other income, net based on the specific identification method.

The Company classifies

its marketable securities with maturities beyond one year as short-term, based on their highly liquid nature and because such marketable securities are available for current operations.

The Company classifies its marketable securities with maturities beyond one year as short-term, based on their highly liquid nature and because such marketable securities are available for current operations.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization.

Depreciation and amortization expense is recognized

using the straight-line method over the estimated useful life of each asset as follows:

Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset as follows:

Estimated Useful Life

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or estimated useful life

Upon retirement or sale, the cost of assets disposed of and the related accumulated

depreciation and amortization are removed from the accounts and any resulting gain or loss is included in loss from operations.

Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in loss from operations.

Expenditures for repairs and maintenance are charged to expense as incurred.

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Long-lived assets consist of property and equipment.

Long-lived assets to be held and used are tested for recoverability whenever events or

changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.

Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business

in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets.

If an impairment review is performed to evaluate a long-lived asset group for recoverability, the

Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value.

An impairment loss would be recognized when estimated undiscounted future cash flows

expected to result from the use of an asset group are less than its carrying amount.

Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.

Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets.

If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value.

An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount.

The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows.

The Company did not record any impairment losses on long-lived assets during the years ended December 31, 2019, 2018 or 2017.

The Company did no t record any impairment losses on long-lived assets during the years ended December 31, 2020 or 2019.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP.

Fair value is defined as the exchange price that would be received for an

asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair

value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy,

of which the first two are considered observable and the last is considered unobservable:

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets

for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3Unobservable inputs that are supported by little or no market activity and that are significant to

determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Companys cash equivalents and marketable securities are carried at fair value, determined according to the fair value hierarchy

described above (see Note 3).

The carrying values of the Companys accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s cash equivalents and marketable securities are carried at fair value, determined according to the fair value hierarchy described above (see Note 3).

The carrying values of the Company’s accounts payable and

accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

Deferred Rent

Companys lease agreements include payment escalations and lease incentives, which are accrued or deferred as appropriate such that rent expense for each lease is recognized on a straight-line basis over the respective lease term.

for such items, consisting primarily of tenant improvement allowances and payment escalations, are recorded as deferred rent and amortized over the lease term.

Classification and Accretion of Redeemable Convertible Preferred Stock

Prior to the conversion of the redeemable convertible preferred stock to common stock in connection with the IPO, the Company had classified

redeemable convertible preferred stock outside of stockholders equity (deficit)

because the shares contained certain redemption features that were not solely within the control of the Company.

The Company immediately accreted the carrying value of its redeemable convertible

preferred stock to redemption value at the end of each reporting period as if the end of the reporting period were the redemption date.

The Company’s lease agreements include payment escalations and lease incentives, which are accrued or deferred as appropriate such that rent expense for each lease is recognized on a straight-line basis over the respective lease term.

Adjustments for such items, consisting primarily of tenant improvement allowances and payment escalations, are recorded as deferred rent and amortized over the lease term.

Segment Information

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

Companys tangible assets are held in the U.S.

All of the Company’s tangible assets are held in the

United States

Research and Development Costs

Research and development costs are expensed as incurred.

Research and development expenses are comprised of costs incurred in performing

research and development activities, including salaries, stock-based compensation and benefits, facilities costs, depreciation, manufacturing expenses and external costs of outside vendors engaged to conduct preclinical development activities and

clinical trials as well as the cost of licensing technology.

Upfront payments and milestone payments made for the licensing of technology

are expensed as research and development in the period in which they are incurred.

Research and development expenses are comprised of costs incurred in performing research and development activities, including salaries, stock-based compensation and benefits, facilities costs, depreciation, manufacturing expenses and external costs of outside vendors engaged to conduct preclinical development activities and clinical trials as well as the cost of licensing technology.

Upfront payments and milestone payments made for the licensing of technology are expensed as research and development in the period in which they are incurred.

Advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses.

amounts are expensed as the related goods are delivered or the services are performed.

The prepaid amounts are expensed as the related goods are delivered or the services are performed.

Research Contract Costs and Accruals

The Company has entered into various research and development contracts with research institutions and other companies both inside

and outside of the U.S.

The Company has entered into various research and development contracts with research institutions and other companies both inside and outside of the

United States

These agreements are generally cancelable, and related payments are recorded as research and development expenses as incurred.

The Company records accruals for estimated ongoing research costs.

When evaluating the adequacy of

the accrued liabilities, the Company analyzes progress of the studies or trials, including the phase or completion of events, invoices received and contracted costs.

Significant judgments and estimates are made in determining the accrued balances at

the end of any reporting period.

When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or trials, including the phase or completion of events, invoices received and contracted costs.

Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period.

Actual results could differ from the Company’s estimates.

The Company’s historical accrual estimates have not been materially different from the actual costs.

patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure.

Amounts incurred are classified as general and administrative

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure.

Amounts incurred are classified as general and administrative expenses.

Stock-Based Compensation

The Company measures all stock-based awards granted to employees and directors and, commencing January 1, 2019, to non-employees based on the fair value on the date of grant.

The Company measures all stock-based awards granted to employees, directors and non-employees

based on the fair value on the date of grant.

Compensation expense of those awards is recognized over the requisite service period, which is generally the vesting period of the respective award.

Generally, the Company issues awards with either service-only vesting conditions and records the expense using the straight-line method or service and performance vesting conditions and records the expense using the graded-vesting method.

Company accounts for forfeitures as they occur.

Prior to the adoption of Accounting Standards Update (ASU) 2018-07 on January 1, 2019, the Company measured the fair value of stock-based awards granted to non-employees on the date at which the related service was complete.

Compensation expense was recognized over the period during which services were rendered by such non-employee consultants until completed.

At the end of each financial reporting period prior to completion

of the service, the fair value of these awards was remeasured using the then-current fair value of the Companys common stock and updated assumption inputs in the Black-Scholes

option-pricing model for options.

Upon the adoption of ASU 2018-07, the Company valued the remaining unvested restricted stock and options issued to non-employees as of

January 1, 2019 and is recognizing stock-based compensation over the remaining vesting period.

The fair value of stock option grants

is estimated using the Black-Scholes option-pricing model.

The Company historically has been a private company and lacks company-specific historical and implied volatility information.

Therefore, the Company estimates its expected stock volatility

based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price.

For options with service-based

vesting conditions, the expected term of the Companys stock options has been determined utilizing the simplified method for awards that qualify as plain-vanilla options.

The risk-free interest rate is determined by

reference to the U.S.

The Company accounts for forfeitures as they occur.

The fair value of stock option grants is estimated using the Black-Scholes option-pricing model.

The Company historically has been a private company and lacks company-specific historical and implied volatility

Therefore, the Company estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies along with the volatility of its own stock and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price.

For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options.

The risk-free interest rate is determined by reference to the U.S.

Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.

Expected dividend yield is based on the fact that the Company has never paid cash

dividends and does not expect to pay any cash dividends in the foreseeable future.

The Company classifies stock-based compensation

expense in its statements of operations and comprehensive loss in the same manner in which the award recipients payroll costs are classified or in which the award recipients service payments are classified.

Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial

statements or in the Companys tax returns.

Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences

are expected to reverse.

Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The Company classifies stock-based compensation expense in its statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns.

Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

Changes in deferred tax assets and liabilities are recorded in the provision for income taxes.

The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent

it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense.

Potential for

recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

The Company accounts for uncertainty in income taxes recognized in its consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized.

First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing

If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements.

amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement.

The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized

tax benefits, that are considered appropriate as well as the related net interest and penalties.

The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense.

Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

The Company accounts for uncertainty in income taxes recognized in its consolidated financial statements by applying a two-step

process to determine the amount of tax benefit to be recognized.

First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities.

If the tax position is deemed more-likely-than-not

to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements.

The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement.

The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders equity (deficit) that result from transactions and economic

events other than those with stockholders.

For the years ended December 31, 2019 and 2018, the Companys only element of other comprehensive loss was unrealized gain (loss) on marketable securities.

For the year ended December 31,

2017, there was no difference between net loss and comprehensive loss for the period presented in the accompanying consolidated financial statements.

Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders.

For the years ended December 31, 2020 and 2019, the Company’s only element of other comprehensive loss was unrealized gain s

) on marketable securities.

Net Loss per Share

Prior to the closing of its IPO, the Company followed the two-class method when computing net income

(loss) per share, as the Company had issued shares that met the definition of participating securities.

The two-class method determines net income (loss) per share for each class of common and participating

securities according to dividends declared or accumulated and participation rights in undistributed earnings.

The two-class method requires income available to common stockholders for the period to be

allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

The Companys redeemable convertible preferred stock contractually entitled the

holders of such shares to participate in dividends but did not contractually require the holders of such shares to participate in losses of the Company.

Accordingly, in periods in which the Company reported a net loss, such losses were not allocated

to such participating securities, and as a result, basic and diluted net loss per share were the same.

In June 2018, upon the closing of

the IPO, all outstanding shares of the Companys redeemable convertible preferred stock automatically converted into 23,375,405 shares of the Companys common stock.

Subsequent to the IPO, basic net income (loss) per common share is

computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period.

Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of

common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock options.

For periods in which the Company has reported net losses, diluted net loss per common share is the

same as basic net loss per common share, since dilutive common shares are not assumed to have been issued if their affect is anti-dilutive.

The Company reported a net loss attributable to common stockholders for the years ended December 31, 2019, 2018 and 2017.

Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period.

Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock options.

For periods in which the Company has reported net losses, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not assumed to have been issued if their affect is anti-dilutive.

The Company reported a net loss for the years ended December 31, 2020 and 2019.

The following potential dilutive securities presented based on amounts outstanding at each period end, have been excluded from the calculation of diluted net loss per share because including them would have had an anti-dilutive impact:

As of December 31,

Stock options to purchase common stock

Unvested restricted common stock and units

Shares of common stock issuable under Employee Stock Purchase Plan

Recently Adopted Accounting Pronouncements

In June 2018, the Financing Accounting Standards Board (the FASB) issued ASU No.

2018-07, Compensation Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting (ASU

For public entities, ASU 2018-07 is required to be adopted for annual periods beginning after December 15, 2018, including interim periods within

those fiscal years.

For non-public entities and emerging growth companies that choose to take advantage of the extended transition period, ASU 2018-07 is effective for

annual periods beginning after December 15, 2019.

Early adoption is permitted for all entities but no earlier than the Companys adoption of ASU No.

2014-09, Revenue from Contracts with

Customers (Topic 606) , which supersedes existing revenue recognition guidance under GAAP and which the Company adopted on January 1, 2019.

The Company early adopted ASU 2018-07 effective

January 1, 2019 by remeasuring outstanding equity-classified awards issued to non-employees for which a measurement date had not been established as of January 1, 2019.

The adoption of ASU 2018-07 did not have a material impact on the Companys consolidated financial statements.

The Company elected to estimate the expected term of options utilizing the simplified method for non-employee options that qualify as plain-vanilla options.

The Company elected to account for forfeitures for non-employee options as they occur rather than apply an

estimated forfeiture rate to stock-based compensation expense.

In December 2019, the Financing Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes

(“ASU 2019-12”).

includes several provisions to simplify the accounting for income taxes and removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods.

For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2020 and for interim periods within those fiscal years.

For nonpublic entities and emerging growth companies that choose to take advantage of the extended transition period, the guidance is effective for annual reporting periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022.

Early adoption is permitted for all entities.

The Company early adopted ASU 2019-12

prospectively effective January 1, 2020 and the adoption did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No.

2016-02, Leases (ASU 2016-02).

ASU 2016-02 will require lessees to recognize most leases on their balance sheet as a

right-of-use asset and a lease liability.

Leases will be classified as either operating or finance, and classification will be based on criteria similar to current lease

accounting, but without explicit bright lines.

(“ASU 2016-02”).

will require lessees to recognize most leases on their balance sheet as a right-of-use

asset and a lease liability.

Leases will be classified as either operating or finance, and classification will be based on criteria similar to current lease accounting, but without explicit bright lines.

For public entities, the guidance was effective for annual reporting periods beginning after December 15, 2018 and for interim periods within those fiscal years.

non-public entities and emerging growth companies that choose to take advantage of the extended transition period, the

guidance was effective for annual reporting periods beginning after December 15, 2019.

For nonpublic entities and emerging growth companies that choose to take advantage of the extended transition period, the guidance was effective for annual reporting periods beginning after December 15, 2019.

In June 2020, the FASB issued ASU No.

which further deferred the effective date for nonpublic entities to annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

Early adoption is permitted for all entities.

In November 2019, the FASB issued ASU No.

2019-10, which deferred the effective date for nonpublic entities to annual reporting periods beginning after December 15, 2020, and interim periods within fiscal years beginning after

December 15, 2021.

Early application continues to be allowed.

ASU 2016-02 initially required adoption using a modified retrospective approach, under which all years presented in the

financial statements would be prepared under the revised guidance.

initially required adoption using a modified retrospective approach, under which all years presented in the financial statements would be prepared under the revised guidance.

In July 2018, the FASB issued ASU No.

2018-11, Leases (Topic 842) Targeted Improvements , which added an optional transition

method to the existing requirements whereby an entity could adopt the provisions of ASU 2016-02 by recognizing a cumulative-effective adjustment to the opening balance of retained earnings in the period of

adoption without adjustment to the financial statements for periods prior to adoption.

The Company expects that the adoption of the new leasing standards will result in the recognition of material right-of-use assets and lease liabilities on the consolidated balance sheets but does not expect it to have a material impact on its results of operations or cash flows.

Leases (Topic 842) Targeted Improvements

, which added an optional transition method to the existing requirements whereby an entity could adopt the provisions of ASU 2016-02

by recognizing a cumulative-effective adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption.

The Company expects that the adoption of the new leasing standards will result in the recognition of material right-of-use

assets and lease liabilities on the consolidated balance sheets but does not expect it to have a material impact on its results of operations or cash flows.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments Credit Losses

(Topic 326) .

Financial Instruments – Credit Losses (Topic 326)

The new standard adjusts the accounting for assets held at amortized costs basis, including marketable securities accounted for as available for sale.

The standard eliminates the probable initial recognition threshold and

requires an entity to reflect its current estimate of all expected credit losses.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected

to be collected.

For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2019 and for interim periods within those fiscal years.

For nonpublic entities and emerging growth companies that choose

to take advantage of the extended transition period, the guidance was effective for annual reporting periods beginning after December 15, 2020.

The standard eliminates the probable initial recognition threshold and requires an entity to reflect its current estimate of all expected credit losses.

The allowance for credit losses is a valuation

account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected.

For public entities, the guidance was effective for annual reporting periods beginning after December 15, 2019 and for interim periods within those fiscal years.

Early adoption is permitted for all entities.

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which deferred the effective date for nonpublic entities to annual reporting periods beginning after December 15, 2022, including interim periods within those fiscal years.

The Company does

not believe the guidance will have a material impact on its consolidated financial statements.

The Company does not believe the guidance will have a material impact on its consolidated financial statements.

Marketable Securities and Fair Value Measurements

As of December 31, 2020, marketable securities by security type consisted of (in thousands):

United States Treasury Notes (due within one year)

Agency Bonds (due within one year)

treasury notes (due within one year)

As of December 31, 2019, marketable securities by security type consisted of (in thousands):

United States Treasury Notes (due within one year)

treasury notes (due within one year)

Agency bonds (due within one year)

The following tables present information about the Companys financial assets measured

at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

Fair Value Measurements at December 31, 2020 Using:

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Money market funds

treasury notes

Marketable securities:

United States Treasury Notes

treasury notes

Fair Value Measurements at December 31, 2019 Using:

1 unchanged sentence

Money market funds

United States Treasury Notes

Marketable securities:

United States Treasury Notes

During the years ended December 31, 2019 and 2018, there were no transfers between Level 1,

Level 2 and Level 3.

treasury notes

Property and Equipment, Net

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Accumulated depreciation and amortization

Depreciation and amortization expense was $1.8 million, $0.9 million and $0.4 million for the

years ended December 31, 2019, 2018 and 2017, respectively.

Depreciation and amortization expense was $ 2.0 million and $ 1.8 million for the years ended December 31, 2020 and 2019, respectively.

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

Accrued external research and development expenses

Accrued payroll and related expenses

Accrued external research and development expenses

Deferred rent, current portion

Accrued professional fees

Accrued property and equipment

Accrued other

Redeemable Convertible Preferred Stock

Prior to the completion of its IPO in June 2018 (Note 1), the Company had outstanding shares of Series A redeemable convertible preferred stock

(the Series A Preferred Stock), Series B redeemable convertible preferred stock (the Series B Preferred Stock) and Series C redeemable convertible preferred stock (the Series C Preferred Stock).

closing of the IPO, the Companys outstanding redeemable convertible preferred stock (the Preferred Stock) automatically converted into 23,375,405 shares of common stock on a 2.58398-for-one basis.

In April 2017, in connection with the Series A Preferred Stock purchase

agreement, the Company received gross proceeds of $15.4 million for the issuance and sale of 15,445,000 shares of Series A Preferred Stock in a second closing.

In April 2017, the Company entered into a Series B Preferred Stock purchase agreement and issued and sold 12,871,003 shares of Series B

Preferred Stock at $3.8847 per share for gross proceeds of $50.0 million in two separate closings.

The Company incurred issuance costs of $0.2 million in connection with the issuance and sale of the Series B Preferred Stock.

In April 2018, the Company entered into a Series C Preferred Stock purchase agreement, pursuant to which the Company issued and sold

11,223,102 shares of Series C redeemable convertible Preferred Stock at a price of $4.66 per share for total gross proceeds of $52.3 million.

The Company incurred issuance costs of $0.1 million in connection with the issuance and sale of

the Series C Preferred Stock.

In April 2018, in consideration for the grant of rights to the Company pursuant to a license agreement

between the Company and Novartis International Pharmaceutical Ltd.

(Novartis), dated April 3, 2017, the Company issued 2,500,000 shares of Series A Preferred Stock and 643,550 shares of Series B Preferred Stock to

June 25, 2018, the Company completed its IPO pursuant to which it issued and sold 6,666,667 shares of common stock at a public offering price of $15.00 per share, resulting in net proceeds of $89.9 million, after deducting underwriting

discounts and commissions and other offering expenses.

Upon the closing of the IPO, the Companys outstanding redeemable convertible preferred stock automatically converted into shares of common stock.

In June 2018, the Company effected a one-for-2.58398 reverse stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each series of the

Preferred Stock.

On May 6, 2019, the Company issued and sold 4,887,500 shares of its common stock, including the underwriters

exercise in full of their option to purchase additional shares of common stock, in a follow-on public offering at a public offering price of $13.25 per share, resulting in net proceeds of $60.3 million

after underwriting discounts and commission and other offering expenses.

On August 8, 2019, the Company filed a shelf registration

statement on Form S-3 (the Shelf) with the Securities and Exchange Commission (the SEC), which covers the offering, issuance and sale of up to an aggregate of $350.0 million of

common stock, preferred stock, debt securities, warrants and/or units of any combination thereof.

The Company simultaneously entered into a Sales Agreement with Cowen and Company, LLC, as sales agent, to provide for the issuance and sale by the

Company of up to $100.0 million of common stock from time to time in at-the-market offerings under the Shelf (the ATM Program).

was declared effective by the SEC on August 19, 2019.

On May 6, 2019, the Company issued and sold 4,887,500 shares of its common stock, including the underwriters’ exercise in full of their option to purchase additional shares of common stock, in a follow-on

public offering at a public offering price of $ 13.25 per share, resulting in net proceeds of $ 60.3 million after underwriting discounts and commission and other offering expenses.

In June 2020, the Company issued and sold 8,625,000 shares of its common stock, including the underwriters’ exercise in full of their option to purchase additional shares of common stock, in a follow-on

public offering at a public offering price of $ 8.00 per share, resulting in net proceeds of $ 64.6 million after underwriting discounts and commissions and other offering expenses.

In August 2019, the Company filed a shelf registration statement on Form S-3

(the “Shelf”) with the Securities and Exchange Commission (the “SEC”), which covers the offering, issuance and sale of up to an aggregate of $ 350.0 million of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof.

The Company simultaneously entered into a Sales Agreement with Cowen and Company, LLC, as sales agent, to provide for the issuance and sale by the Company of up to $ 100.0 million of common stock from time to time in “at-the-market”

offerings under the Shelf (the “ATM Program”).

The Shelf was declared effective by the SEC on August 19, 2019.

As of December 31, 2020, no sales have been made pursuant to the ATM Program.

Each share of common stock entitles the holder to one vote on all matters submitted to a

vote of the Companys stockholders.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.

Common stockholders are not entitled to receive dividends unless declared by the board of directors.

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The Magenta Therapeutics, Inc.

2018 Stock Option and Incentive Plan (the 2018 Plan) provides for the grant of incentive stock

options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to employees, directors and consultants.

Shares of common

stock underlying any awards under the 2018 Plan and the Magenta Therapeutics, Inc.

2016 Stock Option and Grant Plan (the 2016 Plan) that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise

price or tax withholding, reacquired by the Company prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) will be available for future awards under the 2018 Plan.

December 31, 2019, 2,596,626 shares remained available for future grants under the 2018 Plan.

The 2018 Plan provides that the number

of shares reserved and available for issuance under the 2018 Plan will automatically increase each January 1, beginning on January 1, 2019, by 4% of the outstanding number of shares of the Companys common stock on the immediately

preceding December 31 or such lesser number of shares as determined by the Companys compensation committee.

2018 Stock Option and Incentive Plan (the “2018 Plan”) provides for the grant of incentive stock options, non-statutory

stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to employees, directors and consultants.

Shares of common stock underlying any awards under the 2018 Plan and the Magenta Therapeutics, Inc.

2016 Stock Option and Grant Plan (the “2016 Plan”) that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) will be available for future awards under the 2018 Plan.

As of December 31, 2020, 2,432,666 shares remained available for future grants under the 2018 Plan.

The 2018 Plan provides that the number of shares reserved and available for issuance under the 2018 Plan will automatically increase each January 1 by 4 % of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Company’s compensation committee.

This number is subject to adjustment in the event of a stock split, stock dividend or other change in capitalization.

of shares reserved for issuance under the 2018 Plan was increased by 1,570,421 shares effective January 1, 2020.

Option and Grant Plan

The Company also has outstanding stock options and restricted stock awards under the 2016 Plan, but is no

longer granting awards under this plan.

Both the 2016 Plan and the 2018 Plan are administered by the board of directors, or at the

discretion of the board of directors, by a committee of the board.

The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or their committee if so delegated, except that the term of awards may

not be greater than ten years.

The number of shares reserved for issuance under the 2018 Plan was increased by 1,941,325 shares effective January 1, 2021.

2016 Stock Option and Grant Plan

The Company also has outstanding stock options and restricted stock awards under the 2016 Plan, but is no longer granting awards under this plan.

he 2018 Plan is

administered by the board of directors, or at the discretion of the board of directors, by a committee of the board.

The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or their committee if so delegated, except that the term of awards may not be greater than ten years .

Vesting periods are determined at the discretion of the board of directors.

Awards typically vest over three or four years .

The exercise price for stock options granted may not be less than the fair value of common

stock as of the date of grant.

Subsequent to the IPO, the fair value of common stock is based on quoted market prices.

Prior to the IPO, the Companys board of directors valued the Companys common stock, taking into consideration its most

recently available valuation of common stock performed by third parties as well as additional factors which may have changed since the date of the most recent contemporaneous valuation through the date of grant.

The exercise price for stock options granted may not be less than the fair value of common stock as of the date of grant.

The fair value of common stock is based on quoted market prices.

2019 Employee Stock Purchase Plan

The Magenta Therapeutics, Inc.

2019 Employee Stock Purchase Plan (the ESPP) was adopted by the Company on April 18, 2019 and

became effective following stockholder approval on June 7, 2019.

2019 Employee Stock Purchase Plan (the “ESPP”) became effective in June 2019.

An aggregate of 166,525 shares were reserved for issuance under the ESPP.

In addition, on January 1, 2020 and each January 1 thereafter through January 1, 2029, the

number of shares available for issuance shall be cumulatively increased by the lesser of (i) 1% of the number of shares issued and outstanding on the immediately preceding December 31, (ii) 1,000,000 shares and (iii) such number of

shares as determined by the compensation committee of the Companys board of directors.

In addition, on January 1, 2020 and each January 1 thereafter through January 1, 2029, the number of shares available for issuance shall be cumulatively increased by the lesser of (i) 1 % of the number of shares issued and outstanding on the immediately preceding December 31, (ii) 1,000,000 shares and (iii) such number of shares as determined by the compensation committee of the Company’s board of directors.

The offering periods begin in December and June of each year, with the initial offering period commencing on December 1, 2019.

purchase price of common stock under the ESPP is equal to 85% of the lower of the fair market value of the common stock on the offering date or the

exercise date.

As of December 31, 2019, no shares have been issued under the ESPP and 166,525 shares remained available for issuance.

The Company recognized less than $0.1 million of

stock- based compensation during the year ended December 31, 2019 related to the ESPP.

The purchase price of common stock under the ESPP is equal to 85 % of the lower of the fair market value of the common stock on the offering date or the exercise date.

During the year ended December 31, 2020, 15,701 shares of common stock were purchased under the ESPP at a weighted average purchase price of $ 6.59 per share.

During the year ended December 31, 2019, no shares were purchased under the ESPP.

As of December 31, 2020, 150,824 shares remained available for issuance under the ESPP.

The Company recognized less than $ 0.1 million of stock-based compensation during each of the years ended December 31, 2020 and 2019 related to the ESPP.

The number of shares reserved for issuance under the ESPP did not increase on January 1, 2021.

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The assumptions that the Company used to determine the fair value of options granted were as follows, presented on a weighted average basis:

Year Ended December 31,

Risk-free interest rate

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Options exercisable as of December 31, 2020

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the

options and the fair value of the Companys common stock for those options that had exercise prices lower than the fair value of the Companys common stock.

The aggregate intrinsic value of options exercised during the years ended

December 31, 2019 and 2018 was $2.3 million and less than $0.1 million, respectively.

There were no options exercised during the year ended December 31, 2017.

The weighted average grant-date fair value per share of stock options granted during the years ended December 31, 2019, 2018 and 2017 was

$6.05, $6.56 and $3.31, respectively.

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock.

The aggregate intrinsic value of options exercised during the years ended December 31, 2020 and 2019 was $ 1.1 million and $ 2.3 million, respectively.

The weighted average grant-date fair value per share of stock options granted during the years ended December 31, 2020 and 2019 was $ 6.90 and $ 6.05 , respectively.

Restricted Stock Activity

Unvested shares of restricted stock may not be sold or transferred by the holder.

These restrictions lapse according to the time-based vesting

conditions of each award.

The table below summarizes the Companys restricted stock activity for grants issued

under the 2016 Plan since December 31, 2018:

These restrictions lapse according to the time-based vesting conditions of each award.

The table below summarizes the Company’s restricted stock activity for grants issued under the 2016 Plan since December 31, 2019:

Outstanding as of December 31, 2019

Outstanding as of December 31, 2020

The total fair value of restricted stock vested during the years ended December 31, 2019, 2018 and 2017

was $9.3 million, $9.3 million and $1.9 million, respectively.

The total fair value of restricted stock vested during the years ended December 31, 2020 and 2019 was $ 1.7 million and $ 9.3 million, respectively.

Restricted Stock Units

During the year ended December 31, 2020, the Company granted service-based restricted stock units to certain employees.

Upon vesting, each restricted stock unit entitles the holder to a specified number of shares of common stock.

The table below summarizes the Company’s restricted stock unit activity since December 31, 2019:

Outstanding as of December 31, 2019

Outstanding as of December 31, 2020

Performance Restricted Stock Units

During the year ended December 31, 2020, the Company granted performance-based restricted stock units to certain senior employees which vest upon the occurrence of certain operational and financial events.

At the achievement of the performance-based vesting criteria, each performance-based restricted stock unit entitles the holder to a specified number of shares of common stock.

The table below summarizes the Company’s performance restricted stock unit activity since December 31, 2019:

Outstanding as of December 31, 2019

Outstanding as of December 31, 2020

Stock-Based Compensation

Stock-based compensation expense was classified in the statements of operations and comprehensive loss as follows (in thousands):

Year Ended December 31,

Stock-based compensation expense was classified in the consolidated

statements of operations and comprehensive loss as follows (in thousands):

Research and development expenses

General and administrative expenses

As of December 31, 2019, total unrecognized compensation cost related to the unvested stock-based awards

was $15.7 million, which is expected to be recognized over a weighted average period of 2.3 years.

Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share

Year Ended December 31,

Accretion of redeemable convertible preferred stock to redemption value

Cumulative dividends on redeemable convertible preferred stock

Reversal of cumulative dividends on redeemable convertible preferred stock

Net loss attributable to common stockholders

Weighted average common shares outstanding, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

Common Stock Equivalents

The following common stock equivalents presented based on amounts outstanding at each period end, have been excluded from the calculation of

diluted net loss per share because including them would have had an anti-dilutive impact:

As of December 31,

Stock options to purchase common stock

Unvested restricted common stock

Shares issuable under the ESPP

Redeemable convertible preferred stock (as converted to common stock)

As of December 31, 2020, total unrecognized compensation cost related to the unvested stock-based awards was $ 18.7 million, which is expected to be recognized over a weighted average period of 2.6 years.

This amount excludes unrecognized

compensation cost of $ 1.1 million

related to the performance restricted stock units as the performance conditions are not considered probable of achievement as of December 31, 2020.

Commitments and Contingencies

2018, the Company entered into a sublease for up to approximately 69,000 square feet of office and laboratory space in Cambridge, Massachusetts.

The sublease was amended effective March 2019 to increase the lease payments over the lease term and to

increase the sublandlord-funded tenant improvements.

In May 2018, the Company entered into a sublease for up to approximately 69,000 square feet of office and laboratory space in Cambridge, Massachusetts.

The sublease was amended effective March 2019 to increase the lease payments over the lease term and to increase the sublandlord-funded tenant improvements.

The sublease is subject and subordinate to a prime lease between the sublandlord and the prime landlord.

The term of the sublease commenced in June 2018 and expires in February 2028 .

sublandlord has the right to terminate the sublease after five years.

The sublandlord has the right to terminate the sublease after five years .

The Company is also obligated to pay real estate taxes and other costs related to the premises, including costs of operations and management of the leased premises.

In connection

with the sublease, as amended, the sublandlord agreed to fund up to $5.5 million in tenant improvements to the leased facility, of which $5.2 million has been paid as of December 31, 2019.

The Company is required to maintain a

cash balance of $1.8 million to secure a letter of credit associated with the sublease.

In connection with the sublease, as amended, the sublandlord funded $ 5.2 million in tenant improvements to the leased facility during 2019.

The Company is required to maintain a cash balance of $ 1.8 million to secure a letter of credit associated with the sublease.

This amount was classified as noncurrent restricted cash in the consolidated balance sheets at December 31, 2020 and 2019.

As of December 31, 2019 and 2018, the Company had long-term deferred rent of $6.2 million and $1.2 million, respectively,

related to lease incentives and payment escalations.

As of December 31, 2019 and 2018, the short-term portion of deferred rent of $0.6 million and $0.1 million, respectively, was included in accrued expenses and other current

The Company recorded rent expense of $6.1 million, $4.4 million and $1.1 million during the years ended December 31, 2019, 2018 and 2017, respectively.

In the fourth quarter of 2018, with the landlords consent, the Company entered into two two-year

sub-subleases of approximately 27,000 square feet of office space in Cambridge, Massachusetts.

As of December 31, 2019, the remaining rent payments due under the

sub-subleases was $2.0 million.

As of December 31, 2019, the future minimum lease

payments due under the noncancelable operating lease is as follows (in thousands):

As of December 31, 2020 and 2019, the Company had long-term deferred rent of $ 6.3 million and $ 6.2 million, respectively, related to lease incentives and payment escalations.

As of December 31, 2020 and 2019, the short-term portion of deferred rent of $ 0.6 million for each period was included in accrued expenses and other current liabilities.

The Company recorded rent expense of $ 6.2 million and $ 6.1 million, respectively, during the years ended December 31, 2020 and 2019.

As of December 31, 2020, the future minimum lease payments due under the noncancelable operating lease is as follows (in thousands):

In the fourth quarter of 2018, the Company entered into two two-year

sub-subleases

of approximately 27,000 square feet of office space in Cambridge, Massachusetts which were both set to expire in the fourth quarter of 2020.

In the third quarter of 2020, the Company amended each of the sub-subleases

to extend their expirations to July 2021 and April 2022, respectively.

As of December 31, 2020, the remaining rent payments due to the Company under the amended sub-subleases

was $ 2.3 million.

The Company recorded other income of $ 2.9 million and $ 2.8 million during the years ended December 31, 2020 and 2019, respectively, related to these sub-subleases.

Collaboration Agreement

In March 2018, the Company entered into a collaboration agreement with Heidelberg Pharma Research GmbH (HDPR) whereby the parties

agreed to combine the Companys stem cell platform with proprietary antibodies across up to four exclusive targets with HDPRs proprietary Antibody Targeted Amanitin Conjugates platform.

Under the agreement, the Company may pay upfront

technology access fees, research exclusivity fees and payment for research support.

Additionally, upon the exercise of certain license rights, the Company may be obligated to pay HDPR development, regulatory and commercial milestone payments of up

to $83.5 million per target as well as royalties on net sales of products licensed under the agreement.

During the years ended December 31, 2019 and 2018, the Company recorded $1.9 million and $1.7 million, respectively, of

research and development expense related to this agreement for upfront technology access fees, research exclusivity fees and research support.

In March 2018, the Company entered into a collaboration agreement with Heidelberg Pharma Research GmbH (“HDPR”) whereby the parties agreed to combine the Company’s stem cell platform with proprietary antibodies across up to four exclusive targets with HDPR’s proprietary Antibody Targeted Amanitin Conjugates platform.

Under the agreement, the Company may pay upfront technology access fees, research exclusivity fees and payment for research support.

Additionally, upon the exercise of certain license rights, the Company may be obligated to pay HDPR development, regulatory and commercial milestone payments of up to $ 83.5 million per target as well as royalties on net sales of products licensed under the agreement.

During the years ended December 31, 2020 and 2019, the Company recorded $ 0.7 million and $ 1.9 million, respectively, of research and development expense related to this agreement for upfront technology access fees, research exclusivity fees and research support.

Intellectual Property Licenses

In November 2016, the Company entered into a license agreement with the President and Fellows of Harvard College (Harvard) for

an exclusive, worldwide, royalty-bearing license for certain technologies related to conditioning and mobilization.

In consideration for these rights the Company paid Harvard an upfront fee of $0.1 million and reimbursed Harvard

$0.3 million for costs incurred by Harvard related to the patented technology.

The Company also issued 385,063 shares of common stock with a fair value of the shares of $0.3 million as of the issuance date in connection with the license

The Company is obligated to pay Harvard maintenance fees of less than $0.1 million annually through 2019 and $0.1 million annually thereafter and to reimburse qualified expenses related to the patents.

The Company is also

obligated to pay milestone payments of up to $7.4 million for the first two licensed products upon the achievement of certain development and regulatory milestones and to pay royalties on a product-by-product and country-by-country basis on net sales of products licensed under the agreement.

During the year ended

December 31, 2019, the Company recorded $0.1 million of research and development expenses related to the achievement of one of these milestones.

In April 2017, the Company entered into a license agreement with Novartis International Pharmaceutical Ltd.

(Novartis) to use and

develop certain patent rights (the Novartis License).

Under the Novartis License, the Company was granted an exclusive, worldwide, sublicensable license to research, develop and commercialize certain licensed products that contain

Novartis compounds for the expansion of cord blood derived non-gene-edited/-modified hematopoietic stem cells.

In consideration for these rights, the Company issued 2,500,000 shares of Series A redeemable

convertible preferred stock and 643,550 shares of Series B redeemable convertible preferred stock to Novartis.

The total fair value of the shares of $9.3 million as of the issuance date was recorded as research and development expense during

the year ended December 31, 2017.

The Company is obligated to make payments of up to $177.0 million upon the achievement of specified clinical and regulatory milestones and up to $125.0 million upon the achievement of specified

commercial milestones and to pay tiered royalties, on a product-by-product and

country-by-country basis, up to a maximum of 20% on net sales of products licensed under the agreement.

As of December 31, 2019, no milestones related to the

Novartis License have been met.

The Company has agreements with third parties in the normal course of business, under which it can

license certain developed technologies.

The Company has a license agreement with the President and Fellows of Harvard College (“Harvard”), entered into in November 2016, for an exclusive, worldwide, royalty-bearing license for certain technologies related to conditioning and mobilization.

The Company is obligated to pay Harvard maintenance fees of $ 0.1 million annually and to reimburse qualified expenses related to the patents.

The Company is also obligated to pay milestone payments of up to $ 7.4 million for the first two

licensed products upon the achievement of certain development and regulatory milestones and to pay royalties on a product-by-product

and country-by-country

basis on net sales of products licensed under the agreement.

During each of the years ended December 31, 2020 and 2019, the Company recorded $ 0.1 million of research and development expenses related to the achievement of two

of these milestones.

The Company has a license agreement with Novartis International Pharmaceutical Ltd.

(“Novartis”), entered into in April 2017, to use and develop certain patent rights (the “Novartis License”).

Under the Novartis License, the Company was granted an exclusive, worldwide, sublicensable license to research, develop and commercialize certain licensed products that contain Novartis compounds for the expansion of cord blood derived non-gene-edited/-modified

hematopoietic stem cells.

The Company is obligated to make payments of up to $ 177.0 million upon the achievement of specified clinical and regulatory milestones and up to $ 125.0 million upon the achievement of specified commercial milestones and to pay tiered royalties, on a product-by-product

and country-by-country

basis, up to a maximum of 20 % on net sales of products licensed under the agreement.

As of December 31, 2020, no milestones related to the Novartis License have been met.

The Company has agreements with third parties in the normal course of business, under which it can license certain developed technologies.

If the Company exercises its rights to license the respective technologies, it may be subject to additional fees and milestone payments.

During the year ended December 31, 2018, the Company recorded

research and development expense of $0.8 million related to the license of certain developed technologies under these agreements.

During the year ended December 31, 2020, the Company recorded research and development expense of $ 0.8

million related to the license of certain developed technologies under these agreements.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners

and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third

In addition, the Company has entered into indemnification agreements with members of its board of directors and senior management that will require the Company, among other things, to

indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers.

The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is,

in many cases, unlimited.

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties.

In addition, the Company has entered into indemnification agreements with members of its board of directors and senior management that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers.

The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited.

To date, the Company has not incurred any material costs as a result of such indemnifications.

The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to

such obligations in its consolidated financial statements as of December 31, 2019 or 2018.

The Company is not aware of any claims under indemnification arrangements, and it has no

t accrued any liabilities related to such obligations in its consolidated financial statements as of December 31, 2020 or 2019.

Legal Proceedings

The Company is not currently a party to any material legal proceedings.

At each reporting date, the Company evaluates whether or not a

potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.

The Company expenses the costs related to its legal proceedings

as they are incurred.

At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.

The Company expenses the costs related to its legal proceedings as they are incurred.

401(k) Savings Plan

The Company has a 401(k) available for participating employees who meet certain eligibility requirements.

Eligible employees may defer a

portion of their salary as defined by the plan.

Eligible employees may defer a portion of their salary as defined by the plan.

Company contributions to the plan may be made at the discretion of the board of directors of the Company.

To date, the Company has not made any contributions to the plan.

During the years ended

December 31, 2019, 2018 and 2017, the Company recorded no income tax benefits for the net operating losses incurred or for the research and orphan drug tax credits generated in each year, due to its uncertainty of realizing a benefit from those

During the years ended December 31, 2020 and 2019, the Company recorded no income tax benefits for the net operating losses incurred or for the research and orphan drug tax credits generated in each year, due to its uncertainty of realizing a benefit from those items.

A reconciliation of the U.S.

4 unchanged sentences

Research and orphan drug tax credits

Impact of 2018 tax rate change on temporary differences

Increase in deferred tax asset valuation allowance

Effective income tax rate

Net deferred tax assets as of December 31, 2019 and 2018 consisted of the following (in

Net deferred tax assets as of December 31, 2020 and 2019 consisted of the following (in thousands):

Deferred tax assets:

11 unchanged sentences

Net deferred tax assets and liabilities

On December 22, 2017, the Tax Cuts and Jobs Act (the TCJA) was signed into U.S.

included a number of changes to existing tax law, including, among other things, a permanent reduction in the federal corporate income tax rate from 35% to 21%, effective as of January 1, 2018, as well as limitation of the deduction for net

operating losses to 80% of annual taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such net operating losses may be carried forward

indefinitely).

The tax rate change resulted in (i) a reduction in the gross amount of the Companys deferred tax assets recorded as of December 31, 2017, without an impact on the net amount of its deferred tax assets, which are

recorded with a full valuation allowance, and (ii) no income tax expense or benefit being recognized as of the enactment date of the TCJA.

In connection with the TCJA, the Company remeasured its deferred tax assets and liabilities based on the

rates at which they are expected to reverse in the future, which is generally 21% for federal tax purposes.

The remeasurement of the Companys deferred tax assets and liabilities resulted in a provision of $4.8 million to income tax

expense which was offset by a corresponding decrease in the valuation allowance.

As of December 31, 2019, the Company had net

operating loss carryforwards for federal income tax purposes of $75.7 million, of which $17.5 million begin to expire in 2035 and $58.2 million can be carried forward indefinitely.

As of December 31, 2019, the Company had net

operating loss carryforwards for state income tax purposes of $78.1 million which begin to expire in 2035.

As of December 31, 2019, the Company also had available research and orphan drug tax credit carryforwards for federal and state

income tax purposes of $6.2 million and $1.6 million, respectively, which begin to expire in 2035 and 2030, respectively.

Utilization of the net operating loss carryforwards and research and orphan drug tax credit carryforwards may be

subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended (the Code) due to ownership changes that have occurred previously or that could occur in the future.

These ownership

changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income.

The Company has not conducted a formal study to assess whether a change of control has occurred or whether there have been multiple changes

of control since inception due to the significant complexity and cost associated with such a study.

If the Company has experienced a change of control, as defined by Section 382 and 383 of the Code, at any time since inception, utilization of

the net operating loss carryforwards or research and orphan drug tax credit carryforwards may be subject to an annual limitation under Section 382 and 383 of the Code, which is

determined by first multiplying the value of the Companys stock at the time of the ownership change by the applicable

long-term tax-exempt rate, and then could be subject to additional adjustments, as required.

Any limitation may result in expiration of a portion of the net operating loss carryforwards or research

and orphan drug tax credit carryforwards before utilization.

The Company has evaluated the positive and negative evidence bearing upon

its ability to realize the deferred tax assets.

The Company considered its history of cumulative net losses incurred since inception and its lack of commercialization of any products since inception and has concluded that it is more likely than not

that the Company will not realize the benefits of the deferred tax assets.

As of December 31, 2020, the Company had net operating loss carryforwards for federal income tax purposes of $ 182.3 million, of which $ 17.5 million begin to expire in

2035 and $ 164.8 million can be carried forward indefinitely.

As of December 31, 2020, the Company had net operating loss carryforwards for state income tax purposes of $ 184.6 million which begin to expire in 2035 .

As of December 31, 2020, the Company also had available research and orphan drug tax credit carryforwards for federal and state income tax purposes of $ 8.4 million and $ 2.0 million, respectively, which begin to expire in 2035 and 2030 , respectively.

Utilization of the net operating loss carryforwards and research and orphan drug tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) due to ownership changes that have occurred previously or that could occur in the future.

These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income.

The Company has not conducted a formal study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study.

If the Company has experienced a change of control, as defined by Section 382 and 383 of the Code, at any time since inception, utilization of the net operating loss carryforwards or research and orphan drug tax credit carryforwards may be subject to an annual limitation under Section 382 and 383 of the Code, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate,

and then could be subject to additional adjustments, as required.

Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and orphan drug tax credit carryforwards before utilization.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets.

Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2020 and 2019.

The Company reevaluates the positive and

negative evidence at each reporting period.

Changes in the valuation allowance for deferred tax assets during the years ended

December 31, 2019, 2018 and 2017 related primarily to the increase in net operating loss carryforwards, capitalized research and development expenses and research and orphan drug tax credit carryforwards, partially offset in 2017 by a decrease

in deferred tax assets resulting from the decreased federal corporate tax rate, and were as follows (in thousands):

Year Ended December 31,

The Company reevaluates the positive and negative evidence at each reporting period.

Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2020 and 2019 related primarily to the increase in net operating loss carryforwards, capitalized research and development expenses and research and orphan drug tax credit carryforwards and were as follows (in thousands):

Valuation allowance as of beginning of year

1 unchanged sentence

Valuation allowance as of end of year

The Company has not recorded any amounts for unrecognized tax benefits as of December 31, 2019 or 2018.

The Company has no t recorded any amounts for unrecognized tax benefits as of December 31, 2020 or 2019.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates.

In the normal course of business,

the Company is subject to examination by federal and state jurisdictions, where applicable.

In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable.

There are currently no pending income tax examinations.

The Companys tax years are open under statute from 2016, the inception of the Company, to the

The Company’s tax years are open under statute from 201 7

to the present.

The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision.

Related Parties

National Marrow Donor Program (as successor in interest to Be The Match BioTherapies, LLC)

Effective March 2018, the President of Be The Match BioTherapies, LLC became a member of the Companys board of directors.

The Company has

a collaboration agreement with the National Marrow Donor Program (as successor in interest to Be The Match BioTherapies, LLC) and a research agreement with an affiliated organization, Center for International Blood and Marrow Transplant Research.

For the years ended December 31, 2019 and 2018, the Company recorded $0.4 million and $0.8 million of expense related to these agreements.

As of December 31, 2019 and 2018, amounts on the balance sheet related to these agreements

was $0.2 million and $0.4 million, respectively, which were included in accounts payable and accrued expenses and other current liabilities.

In April 2018, the Company sold 246,781 shares of Series C Preferred Stock to Be The Match Bio Therapies, LLC for $1.1 million (see

Atlas Venture Life Science Advisors, LLC and Third Rock Ventures LLC

During the year ended December 31, 2017, the Company received consulting, advisory and related services from Atlas Venture Life Science

Advisors, LLC and Third Rock Ventures LLC, holders, together with their

affiliates, of more than 5% of the Companys common stock outstanding.

For the year ended December 31, 2017, the Company recorded $0.2 million of general and administrative

expenses for management and advisory services and other related services provided by these investors.

There were no services provided during the years ended December 31, 2019 and 2018.

Selected Quarterly Financial Data (Unaudited)

The following information has been derived from unaudited consolidated financial statements that, in the opinion of management, include all

recurring adjustments necessary for a fair statement of such information (in thousands except per share data):

Three Months Ended

Statements of Operations Data:

Loss from operations

Net loss attributable to common stockholders

Net loss per share attributable to common stockholders, basic and diluted

Effective March 2018, the President of Be The Match BioTherapies, LLC became a member of the Company’s board of directors and subsequently was appointed Chief Executive Officer of the National Marrow Donor Program/Be The Match, or NMDP/Be The Match, organization in June 2020.

The Company has collaboration agreements with the National Marrow Donor Program (as successor in interest to Be The Match BioTherapies, LLC) and a research agreement with an affiliated organization, Center for International Blood and Marrow Transplant Research.

In addition, in June 2020, the Company entered into a clinical collaboration agreement with NMDP/Be The Match to evaluate the potential utility of MGTA-145

for mobilizing and collecting hematopoietic stem cells from donors in a single day and then using them for allogeneic transplants in patients.

Under the terms of this agreement, the Company shall fund up to fifty percent of NMDP/Be The Match clinical trial costs and provide the trial drugs which will be included in research and development expense.

During each of the years ended December 31, 2020 and 2019, the Company recorded $ 0.4 million of expense related to these agreements.

As of December 31, 2020 and 2019, amounts on the balance sheet related to these agreements was less than $ 0.1 million and $ 0.2 million, respectively, which were included in accounts payable and accrued expenses and as of December 31, 2020, less than $ 0.1 million was

included in prepaid and other current assets.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Principal Executive Officer (our Chief Executive Officer) and Principal Financial Officer (our Chief Financial and Operating Officer), has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e)

and 15d-15(e)

under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2020, our Principal Executive Officer and Principal Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Internal Control Over Financial Reporting

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f)

under the Exchange Act.

Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organization of the Treadway Commission.

Based on this assessment, management concluded that, as of December 31, 2020, our internal control over financial reporting was effective.

This Annual Report on Form 10-K

does not include an attestation report of our independent registered public accounting firm on internal control over financial reporting due to an exemption established by the JOBS Act for “emerging growth companies.”

Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f)

and 15d-15(f)

under the Exchange Act) occurred during the three months ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item 10 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.

EXECUTIVE COMPENSATION

The information required by this Item 11 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item 12 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item 13 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item 14 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Financial Statements

For a list of the financial statements included herein, see Index to the Consolidated Financial Statements on page 144 of this Annual Report on Form 10-K,

incorporated into this Item by reference.

Financial Statement Schedules

Financial statement schedules have been omitted because they are either not required or not applicable or the information is included in the consolidated financial statements or the notes thereto.

The exhibits required by Item 601 of Regulation S-K

and Item 15(b) of this Annual Report on Form 10-K

are listed in the Exhibit Index immediately preceding the signature page of this Annual Report on Form 10-K.

The exhibits listed in the Exhibit Index are incorporated by reference herein.

Exhibit Index

Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38541) filed with the Securities and Exchange Commission on June 25, 2018).

Amended and Restated By-laws of the Registrant (Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No.

001-38541) filed with the Securities and Exchange Commission on June 25, 2018).

Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1/A (File No.

333-225178) filed with the Securities and Exchange Commission on June 8, 2018).

Second Amended and Restated Investors’ Rights Agreement by and among the Registrant and certain of its stockholders dated April 2, 2018 (Incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1 (File No.

333-225178) filed with the Securities and Exchange Commission on May 24, 2018).

Description of Securities of the Registrant (Incorporated by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form 10-K (File No.

001-38541) filed with the Securities and Exchange Commission on March 3, 2020).

2016 Stock Option and Grant Plan, as amended, and forms of award agreements thereunder (Incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 (File No.

333-225178) filed with the Securities and Exchange Commission on May 24, 2018).

2018 Stock Option and Incentive Plan and forms of award agreements thereunder (Incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1/A (File No.

333-225178) filed with the Securities and Exchange Commission on June 8, 2018).

Senior Executive Cash Incentive Bonus Plan (Incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1 (File No.

333-225178) filed with the Securities and Exchange Commission on May 24, 2018).

Form of Employment Agreement (Incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1 (File No.

333-225178) filed with the Securities and Exchange Commission on May 24, 2018).

Employment Agreement by and between the Registrant and Jason Ryan, effective January 1, 2019 (Incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38541) filed with the Securities and Exchange Commission on November 19, 2018).

Form of Director and Officer Indemnification Agreement (Incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 (File No.

333-225178) filed with the Securities and Exchange Commission on May 24, 2018).

2019 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-38541) filed with the Securities and Exchange Commission on June 11, 2019).

License Agreement by and between the Registrant and President and Fellows of Harvard College, dated as of November 2, 2016 (Incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 (File No.

333-225178) filed with the Securities and Exchange Commission on May 24, 2018).

License Agreement by and between the Registrant and Novartis International Pharmaceutical Ltd., dated as of April 3, 2017 (Incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1 (File No.

333-225178) filed with the Securities and Exchange Commission on May 24, 2018).

Collaboration Agreement by and between the Registrant and National Marrow Donor Program d/b/a Be The Match BioTherapies, dated as of November 10, 2017 (Incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 (File No.

333-225178) filed with the Securities and Exchange Commission on May 24, 2018).

Project Rider #2, effective as of June 26, 2018, pursuant to the Collaboration Agreement by and between the Registrant and National Marrow Donor Program d/b/a Be The Match BioTherapies, dated as of November 10, 2017 (Incorporated by reference to Exhibit 10.9.1 to the Registrant’s Annual Report on Form 10-K (File No.

001-38541) filed with the Securities and Exchange Commission on March 19, 2019).

Project Rider #3, effective as of September 6, 2018, pursuant to the Collaboration Agreement by and between the Registrant and National Marrow Donor Program d/b/a Be The Match BioTherapies, dated as of November 10, 2017 (Incorporated by reference to Exhibit 10.9.2 to the Registrant’s Annual Report on Form 10-K (File No.

001-38541) filed with the Securities and Exchange Commission on March 19, 2019).

Amendment #1 to Project Rider #1, effective as of December 6, 2018, pursuant to the Collaboration Agreement by and between the Registrant and National Marrow Donor Program d/b/a Be The Match BioTherapies, dated as of November 10, 2017 (Incorporated by reference to Exhibit 10.9.3 to the Registrant’s Annual Report on Form 10-K (File No.

001-38541) filed with the Securities and Exchange Commission on March 19, 2019).

Amendment #2 to Project Rider #1, effective as of November 13, 2019, pursuant to the Collaboration Agreement by and between the Registrant and National Marrow Donor Program d/b/a Be The Match BioTherapies, dated as of November 10, 2017.

Amendment #3 to Project Rider #1, effective as of December 16, 2020, pursuant to the Collaboration Agreement by and between the Registrant and National Marrow Donor Program d/b/a Be The Match BioTherapies, dated as of November 10, 2017.

Amendment #1 to Project Rider #3, effective as of August 26, 2019, pursuant to the Collaboration Agreement by and between the Registrant and National Marrow Donor Program d/b/a Be The Match BioTherapies, dated as of November 10, 2017 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-38541) filed with the Securities and Exchange Commission on November 13, 2019).

Amendment #1 to Collaboration Agreement, effective as of December 31, 2020, pursuant to the Collaboration Agreement by and between the Registrant and National Marrow Donor Program d/b/a Be The Match BioTherapies, dated as of November 10, 2017.

Clinical Trial Agreement by and between the Registrant and Regents of the University of Minnesota, dated as of January 22, 2018 (Incorporated by reference to Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1 (File No.

333-225178) filed with the Securities and Exchange Commission on May 24, 2018).

Master Development and Manufacturing Agreement by and between the Registrant and Bachem Americas, Inc., dated as of February 13, 2018 (Incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1/A (File No.

333-225178) filed with the Securities and Exchange Commission on June 18, 2018).

Exclusive Research, Development Option and License Agreement by and between the Registrant and Heidelberg Pharma Research GmbH, dated as of March 1, 2018 (Incorporated by reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form S-1 (File No.

333-225178) filed with the Securities and Exchange Commission on May 24, 2018).

Letter Agreement, effective as of February 28, 2019, by and between the Registrant and Heidelberg Pharma Research GmbH, relating to the Exclusive Research, Development Option and License Agreement by and between the Registrant and Heidelberg Pharma Research GmbH, dated as of March 1, 2018 (Incorporated by reference to Exhibit 10.12.1 to the Registrant’s Registration Statement on Form S-1 (File No.

333-231097) filed with the Securities and Exchange Commission on April 29, 2019).

Amendment, effective as of July 4, 2019, pursuant to the Exclusive Research, Development Option and License Agreement by and between the Registrant and Heidelberg Pharma Research GmbH, dated as of March 1, 2018 (Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-38541) filed with the Securities and Exchange Commission on November 13, 2019).

Sublease by and between the Registrant and Novartis Institutes for BioMedical Research, Inc., dated as of May 4, 2018 (Incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 (File No.

333-225178) filed with the Securities and Exchange Commission on May 24, 2018).

First Amendment to Sublease Agreement, dated as of December 13, 2018, by and between the Registrant and Novartis Institutes for BioMedical Research, Inc.

(Incorporated by reference to Exhibit 10.14.1 to the Registrant’s Registration Statement on Form S-1 (File No.

333-231097) filed with the Securities and Exchange Commission on April 29, 2019).

Second Amendment to Sublease Agreement, dated as of August 19, 2020, by and between the Registrant and Novartis Institutes for BioMedical Research, Inc.

First Amendment to Employment Agreement, executed as of October 14, 2020, by and between the Registrant and John C.

Davis, Jr., M.D.

(Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-38541) filed with the Securities and Exchange Commission on November 5, 2020).

List of Subsidiaries of the Registrant.

Consent of KPMG LLP, independent registered public accounting firm.

Power of Attorney (included on signature page to this Annual Report on Form 10-K).

Certification of Principal Executive Officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Financial Officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)

Inline XBRL Instance Document.

Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Labels Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Filed herewith.

Furnished herewith.

Represents management compensation plan, contract or arrangement.

Application has been made to the Securities and Exchange Commission for confidential treatment of certain provisions.

Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MAGENTA THERAPEUTICS, INC.

March 3, 2021

/s/ Stephen Mahoney

Stephen Mahoney

Chief Financial and Operating Officer

(Principal Financial and Accounting Officer)

POWER OF ATTORNEY

Each person whose individual signature appears below hereby authorizes and appoints Jason Gardner and Stephen Mahoney, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact

and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this annual report on Form 10-K

and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact

and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact

and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Jason Gardner, D.Phil.

President, Chief Executive Officer and Director

(Principal Executive Officer)

March 3, 2021

Jason Gardner, D.Phil.

/s/ Stephen Mahoney

Chief Financial and Operating Officer

(Principal Financial and Accounting Officer)

March 3, 2021

Stephen Mahoney

/s/ Jeffrey Albers

March 3, 2021

Jeffrey Albers

/s/ Michael W.

March 3, 2021

/s/ Bruce Booth, D.Phil.

March 3, 2021

Bruce Booth, D.Phil.

/s/ Alexis A.

March 3, 2021

/s/ Blake Byers, Ph.D

March 3, 2021

Blake Byers, Ph.D

/s/ Thomas O.

March 3, 2021

/s/ Alison F.

March 3, 2021

Scadden, M.D.

March 3, 2021

Scadden, M.D.

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-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk