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Item 9A. Controls and Procedures

2023-03-23 compared with 2022-03-24 · 301 added, 418 removed, 655 unchanged (52% of the section changed)

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Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities and Exchange Act of 1934 is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our President and Chief Executive Officer, who is our principal executive officer, and Chief Financial Officer, who is also our principal financial and accounting officer, to allow timely decisions regarding required disclosure.

Our management recognizes that any 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.

As of December 31, 2021, our management, with the participation of our principal executive officer and principal financial and accounting officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934).

Our principal executive officer and principal financial and accounting officer have concluded based upon the evaluation described above that, as of December 31, 2021, our disclosure controls and procedures were effective at the reasonable assurance level.

Remediation of Material Weaknesses

Based on our prior assessment as of December 31, 2020, management concluded that our internal control over financial reporting was not effective due to material weaknesses relating to the lack of maintaining a sufficient complement of personnel commensurate with the accounting and financial reporting requirements in order to have adequate segregation of key duties and responsibilities.

There were no changes to any of our previously released financial statements.

Based on these material weaknesses, our management concluded that at December 31, 2020, our internal control over financial reporting was not effective.

During the year ended December 31, 2021, we have implemented measures designed to improve internal control over financial reporting to remediate the control deficiencies that led to our material weaknesses.

Among other things, we have hired qualified personnel with appropriate expertise to perform specific functions and ensure adequate segregation of key duties and responsibilities.

We hired a full-time chief financial officer in early February 2021, and additional finance personnel during 2021.

We continue to utilize financial consultants to assist with the financial statement close process and the evaluation and documentation of technical accounting matters.

Additionally, we engaged third-party internal control specialists to assist in our design and implementation of improved processes and internal controls, including ongoing senior management review and audit committee oversight, and implemented financial systems with sufficient reporting and internal control capabilities to support our operations as a public company.

We tested the effectiveness of the procedures and controls related to our remediation.

As a result, management has concluded that, as of December 31, 2021, we had remediated the previously reported material weaknesses.

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022.

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 the 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, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our 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, 2022, 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.

Management’s Annual Report on Internal Control over Financial Reporting

This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies, outside of the conclusion noted in the section above regarding the remediation of the material weaknesses identified during the fiscal year 2020.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive officer and principal financial officer, or persons performing similar functions, and effected by a company’s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of a company’s assets;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that a company’s receipts and expenditures are being made only in accordance with authorizations of the company’s management and directors;

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision of and with the participation of our principal executive officer and principal financial officer, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).

Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2022.

This Annual Report does not include an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Changes in Internal Control over Financial Reporting

Except for changes made in connection with our remediation of the material weaknesses mentioned above, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the period covered by this Annual Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the fourth quarter of the year ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information

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Directors, Executive Officers and Corporate Governance

Except to the extent provided below, the information required by this Item 10 will be included in the section captioned “Corporate Governance” and “Proposal No.

The information required by this Item 10 will be included in the section captioned “Corporate Governance” and “Proposal No.

1” in our definitive proxy statement to be filed with the Securities and Exchange Commission, or the SEC, with respect to our 2023 Annual Meeting of Stockholders within 120 days of December 31, 2022, which information is incorporated herein by reference.

Board of Directors

Board Composition and Structure

The Board of Directors is currently comprised of eight members.

Below is a list of the names, ages as of March 18, 2022, and classification of the individuals who currently serve as our directors.

Name Age Position

Luke Evnin, Ph.D.

58 Chair of the Board of Directors

Sakae Asanuma, C.F.A.

Meeta Chatterjee, Ph.D.

Derek DiRocco, Ph.D.

Hicklin, Ph.D.

(1) 58 President, Chief Executive Officer and Director

Alon Lazarus, Ph.D.

Morrison, M.D.

Mike Sherman, M.B.A.

(1) Daniel J.

Hicklin, Ph.D.

is also an executive officer and his biographical information appears below.

Director Biographies

Luke Evnin, Ph.D., is a co-founder of our company, served as our President and Chief Executive Officer from December 2017 until August 2019 and has served on our board of directors since October 2017 and as chairman of the board of directors since August 2019.

Evnin serves on the board of directors of Oncorus, Inc., a publicly traded biotechnology company, and is Chief Executive Officer of Turmeric Acquisition Corp., a publicly traded special purpose acquisition company formed by MPM Capital.

Evnin co-founded Harpoon Therapeutics, Inc., a publicly held immunotherapy company, and served as chairman of its board of directors until July 2020.

Evnin served on the board of directors of Syndax Pharmaceuticals, Inc., a publicly traded biotechnology company, from May 2012 until September 2018.

Over the past eight years, as a component of his MPM activities, Dr.

Evnin has been a co-founder and served as chairman of the board for seven MPM portfolio companies.

Evnin has also served on the board of directors of a number of public and private companies over his 28-year venture capital career and currently serves, on behalf of MPM Capital, as a director for seven private companies.

Evnin co-founded MPM Capital, an early-stage life sciences venture investing firm, in 1997, where he currently serves as Managing Director.

Prior to co-founding MPM Capital, Dr.

Evnin spent seven years as a venture capitalist at Accel Partners.

Evnin also serves as chairman of the board of directors of the Scleroderma Research Foundation, a not-for-profit entity.

Evnin holds an A.B.

in molecular biology from Princeton University and a Ph.D.

in biochemistry from the University of California, San Francisco.

We believe that Dr.

Evnin’s depth and expertise in the life sciences and venture capital industries including significant experience serving on boards of directors and his educational background provide him with the qualifications and skills to serve on our board of directors.

Sakae Asanuma, C.F.A., has served on our board of directors since August 2019.

Asanuma established and has served since April 2016 as President of Taiho Ventures, LLC, the corporate venture arm of Taiho Pharmaceutical Co., Ltd., a Japanese specialty pharmaceutical company focusing on oncology, allergy and immunology and urology.

Previously, Mr.

Asanuma was President and Chief Executive Officer at Astellas Venture Management LLC, the corporate venture capital arm of Astellas Pharma, Inc., from April 2012 until January 2016, and U.S.

Head of Astellas Innovation Management from 2013 to 2015.

Before joining Astellas, he worked for Yasuda Enterprise, a Japan/US-based venture capital firm.

Asanuma has served on the boards of directors of many private biotechnology companies and has been involved in numerous biotechnology and pharmaceutical partnering transactions.

Asanuma holds a Master of Science in Industrial Administration (MBA) from Carnegie Mellon University.

We believe Mr.

Asanuma’s experience working with and serving on the boards of directors of life sciences companies and his experience working in the venture capital industry qualifies him to serve on our board of directors.

Meeta Chatterjee, Ph.D., has served on our board of directors since October 2021.

She has served as the Senior Vice President of Global Business Development of Legend Biotech Corporation since March 2019.

From November 2007 to May 2018, she served in roles of increasing seniority and responsibility at Merck Research Laboratories, a division of Merck & Co., Inc., a multinational pharmaceutical company, most recently as Head of Strategy, Transactions, and Operations within the Business Development and Licensing (BD&L) group.

Chatterjee oversaw discovery and late-stage transactions worldwide, as well as early-stage transactions in key geographies.

She also was responsible for Merck’s BD&L governance, oversight, and control as well as out-licensing efforts.

Chaterjee has served on the board of directors of Editas Medicine, a publicly traded clinical stage biotechnology company, since December 2020.

Chatterjee has over 30 years of broad strategic and operational experience in pharmaceutical research and development, mergers and acquisition evaluation, in-licensing,

and externalization activities.

Over the course of her extensive career, Dr.

Chatterjee has led or contributed to a number of transactions or collaborations, has led research efforts in the areas of hypertension, atherosclerosis, and obesity, and was an integral contributor to the discovery of ZETIA® and ZONTIVITY®.

Chatterjee received her undergraduate education at St.

Xavier’s University in Ahmedabad, India, and Rutgers University (B.A., Hons Physics).

Chatterjee received her Doctor of Philosophy in Physiology from Rutgers University and completed a postdoctoral fellowship in the Department of Physiology at the University of Virginia School of Medicine.

Chatterjee is also active in industry and licensing focused organizations.

We believe Dr.

Chatterjee’s extensive business development experience in the biotechnology industry and serving on the board of directors of a biotechnology company qualifies her to serve on our board of directors.

Derek DiRocco, Ph.D., has served on our board of directors since December 2020.

DiRocco has been a partner at RA Capital Management, L.P.

since December 2020 and was previously a principal from December 2017 until December 2020, an analyst from June 2015 to December 2017 and an associate from July 2013 to June 2015.

DiRocco has served on the board of directors of iTeos Therapeutics, Inc.

since March 2020 and 89bio, Inc.

since April 2018, each of which is a publicly traded biotechnology company.

DiRocco also serves on the board of directors of several privately held biotechnology companies.

DiRocco holds a B.A.

in biology from College of the Holy Cross and a Ph.D.

in pharmacology from the University of Washington.

He conducted his postdoctoral research at Brigham and Women’s Hospital/Harvard Medical School.

We believe that Dr.

DiRocco is qualified to serve as a member of our board of directors because of his experience as an investor in biotechnology companies and role in early-stage companies.

Alon Lazarus, Ph.D., has served as a member of our board of directors since August 2019.

Lazarus has held the position of Biotech Investment Manager of the Pharma Division of Arkin Holdings, Ltd., an investment firm, focused in the healthcare and pharmaceutical sectors, since August 2013.

Prior to joining Arkin Holdings, Ltd., Dr.

Lazarus worked for the Healthcare Business Development Department of Yissum Research Development Company of the Hebrew University of Jerusalem from January 2012 until August 2013, and as an Analyst for Integra Holdings, Ltd., an Israel-based healthcare investment company.

Lazarus served as a member of the board of directors of Keros Therapeutics, Inc, a publicly traded biotechnology company, from April 2016 to December 2020.

Lazarus also serves as a member of the board of directors of several private life science companies.

Lazarus holds a Ph.D.

in Molecular Biology from the Hadassah Medical School of Hebrew University of Jerusalem in Israel, an M.B.A.

from the School of Business Administration of Hebrew University of Jerusalem in Israel and a B.Sc.

in Biology from Hebrew University of Jerusalem in Israel.

We believe that Dr.

Arkin’s extensive experience in the biotechnology industry and his service on numerous life sciences board of directors qualify him to serve on our board of directors.

Morrison, M.D., has served as a member of our board of directors since November 2019.

He has served as Executive Partner at MPM Capital, Inc.

since June 2015 and as President, Head of Research and Development since February 2022, and a member of the board of directors of Syndax Pharmaceuticals, Inc., a publicly traded biopharmaceutical company, since June 2015.

Morrison was previously the Chief Executive Officer of Syndax Pharmaceuticals, Inc., from June 2015 to February 2022.

Morrison has also served as a member of the board of directors of NextCure Inc.

since April 2019, Arvinas Holding Company, LLC since June 2018, Repare Therapeutics Inc.

since June 2017, and Codiak BioSciences, Inc.

since February 2018, all of which are publicly traded biopharmaceutical companies.

Before that, Dr.

Morrison was the Chief Medical Officer and Head of Global Medicines Development at AstraZeneca plc from 2012 to 2015.

Before joining AstraZeneca, he held several positions at Pfizer Inc., including Head, Medical Affairs, Safety and Regulatory Affairs for Pfizer’s human health business.

Morrison also previously held several positions at Merck Research Laboratories, a division of Merck & Co., Inc., including Vice President, Clinical Sciences, Oncology.

He was a member of the executive committee of the Clinical Trials Transformation Initiative sponsored by the FDA and is on the board of the Alliance for Clinical Research Excellence and Safety.

Morrison also serves on the board of directors for multiple private pharmaceutical companies.

Morrison has a B.S.

in biology from Georgetown University and an M.D.

from the University of Connecticut Medical School.

He completed residency training in internal medicine at Massachusetts General Hospital and a fellowship in medical oncology at the Dana-Farber Cancer Institute.

We believe Dr.

Morrison is qualified to serve as a member of our board of directors due to his extensive executive leadership experience, his medical background and training and his service on the boards of other public and private biopharmaceutical and biotechnology companies.

Mike Sherman, M.B.A.

has served as a member of our board of directors since May 2021.

He has served as the Chief Executive Officer of Chimerix Inc.

(“Chimerix”), a publicly traded biotechnology company, since April 2019.

Before joining Chimerix, Mr.

Sherman served as Chief Executive Officer of Endocyte, Inc., or Endocyte, a biopharmaceutical company, beginning in 2016, and led it to its $2.1 billion acquisition by Novartis in 2018.

Sherman joined Endocyte in 2006 and served as its Chief Financial Officer and Chief Operating Officer prior to becoming Chief Executive Officer.

Prior to joining Endocyte, Mr.

Sherman served in various executive roles, including as vice president of finance and strategic planning for Guidant Corporation, which was acquired by Boston Scientific Corporation.

Sherman holds a BA in economics from DePauw University and an MBA from the Tuck School of Business at Dartmouth, graduating as a Tuck Scholar.

Sherman currently serves on the Board of Trustees for the Children’s Museum of Indianapolis, a nonprofit organization, as past chairman.

He also served on the Boards of Directors at Biospecifics Technologies, Inc.

until its acquisition by Endo Pharmaceuticals and Mead Johnson Nutrition until its acquisition by Reckitt Benckiser.

We believe that Mr.

Sherman’s 30 years’ experience advancing therapeutics to commercial launch and driving companies to successful operations and strategic transactions in the biotechnology and medical technology industries qualifies him to serve as a member of our board of directors.

Executive Officers

The following table sets forth our executive officers as of March 18, 2022.

Name Age Position

Hicklin, Ph.D.

58 President, Chief Executive Officer and Director

Randi Isaacs, M.D.

66 Chief Medical Officer

Chulani Karunatilake, Ph.D.

63 Chief Technology Officer

Reid Leonard, Ph.D.

63 Chief Operating Officer

Ellen Lubman, M.B.A.

46 Chief Business Officer

Cynthia Seidel-Dugan, Ph.D.

63 Chief Scientific Officer

Tim Trost 64 Chief Financial Officer and Treasurer

Executive Biographies

Hicklin, Ph.D., has served as our President and Chief Executive Officer since August 2019.

Hicklin founded Werewolf Therapeutics in October 2017 and served as a consultant until his appointment as our President and Chief Executive Officer.

Previously, Dr.

Hicklin was a founder of Potenza Therapeutics, Inc., a privately held biotechnology company, and served as its President and Chief Executive Officer from April 2014 until its acquisition by Astellas Pharma Inc.

in December 2018.

From August 2013 until February 2014, Dr.

Hicklin was President and Chief Scientific Officer of CoStim Pharmaceuticals, Inc., a privately held biotechnology company that was acquired by Novartis in February 2014.

Hicklin has also served as an Executive Partner from 2014 to December 2019 and an advisor at MPM Capital since January 2020.

Prior to joining CoStim Pharmaceuticals, Dr.

Hicklin held several positions at Merck Research Laboratories (formerly the Schering-Plough Research Institute prior to its acquisition by Merck), including leading its Biologics Strategy for Oncology and the Immuno-Modulation Discovery team.

Hicklin also previously held several positions at Imclone Systems Incorporated, including Vice President, Experimental Therapeutics.

Hicklin has served as a member of the board of directors of several private biotechnology companies.

Hicklin also currently serves on the Industry Advisory Committee for The Mark Foundation for Cancer Research.

Hicklin holds an M.S.

in Microbiology and Immunology from New York Medical College, where he trained with Dr.

Soldano Ferrone, and a B.S.

from the University of Iowa.

We believe that Dr.

Hicklin’s operational and historical experience with our company gained from being a founder and serving as our President and Chief Executive Officer and member of our board of directors, combined with his extensive experience in oncology drug discovery, qualifies him to serve as a member of our board of directors.

Randi Isaacs, M.D., has served as our Chief Medical Officer since November 2020.

Previously, from May 2010 until November 2020, Dr.

Isaacs held roles of increasing responsibility as Clinical Program Leader, Deputy Site Head, and, from August 2015 to November 2020, Executive Director and Clinical Site Head of Translational Clinical Oncology at the Novartis Institutes for Biomedical Research.

She previously held executive leadership roles in oncology and clinical development at Merck, Schering Plough and Sandoz.

Prior to transitioning to the biopharmaceutical industry, Dr.

Isaacs held various academic appointments, including Assistant Professor of Medicine in the Division of Hematology/Oncology at the State University of New York Health Sciences Center and Clinical Assistant Professor of Hematology/Oncology at the University of Medicine and Dentistry of New Jersey.

Isaacs has served on the board of directors of C4 Therapeutics, Inc., a publicly traded biotechnology company, since May 2021.

Isaacs also serves on the Scientific Advisory Board of MMF Investment Fund, a not-for-profit entity, and Tornado Therapeutics, a subsidiary of Cambrian Biopharma, Inc., a privately held entity.

Isaacs earned her B.A.

in Chemistry from Wellesley College and holds an M.D.

with honors from Dartmouth Medical School.

She completed her residency and postdoctoral training at the University of California San Francisco and University of Pennsylvania and hematology/medical oncology fellowship training at the Memorial Sloan-Kettering Cancer Center.

Chulani Karunatilake, Ph.D., has served as our Chief Technology Officer since June 2021.

Previously, from July 2019 to June 2021, Dr.

Karunatilake served as Senior Vice President of Technical Operations for Maverick Therapeutics (acquired by Takeda), where he was responsible for all aspects of Chemistry and Manufacturing Controls (CMC).

Prior to Maverick, Dr.

Karunatilake was Senior Vice President of Biologics CMC and initially Vice President of Pharmaceutical Development and Manufacturing at Nektar Therapeutics, from May 2011 to May 2019.

He has also held numerous leadership positions at Amgen, Chiron/Novartis, Genentech, and Eli Lilly.

Karunatilake earned his Ph.D.

in Chemistry/Biochemistry from the University of Illinois and holds a B.S.

in Chemistry from the University of Colombo in Sri Lanka.

Reid Leonard, Ph.D., has served as our Chief Operating Officer since April 2019.

From July 2014 until December 2018, Dr.

Leonard served in various roles at Potenza Therapeutics, including Chief Operating Officer from January 2018 to December 2018, Senior Vice President of Corporate Development from January 2016 to December 2017 and Vice President of Corporate Development from July 2014 to December 2015.

Leonard served as a venture partner at MPM Capital from September 2016 until September 2017 and has also served as a consultant to several private biotechnology companies.

Leonard began his career with Merck & Co., where he served for over 25 years.

Leonard graduated from Brandeis University with an A.B.

in Biology and Psychology, holds a Ph.D.

in Biology from Purdue University and completed a postdoctoral fellowship in molecular pharmacology at Caltech with Profs.

Henry Lester and Norman Davidson.

Ellen Lubman, M.B.A., has served as our Chief Business Officer since August 2020.

From October 2018 to July 2020, Ms.

Lubman served as the Chief Business Officer at Impel NeuroPharma, Inc., a privately held biotechnology company focused on neurological diseases.

Prior to Impel, she was the Vice President of External Science & Innovation at Forest Labs, from February 2014 until its acquisition by Actavis plc in July 2014, and served in the same role at Actavis through June 2018 during which time Actavis merged with and renamed itself Allergan plc.

Prior to Allergan, Ms.

Lubman held numerous executive and leadership roles at Kadmon Pharmaceuticals, Bristol Myers Squibb, Celtic

Pharma Management, L.P., Robertson Stephens Investment Bank and Abbott Labs.

Lubman has been a member of the board of directors at Field Trip Health, a publicly traded developer of therapeutics, since June 2021.

She serves on the Advisory Board of TMRW.org.

Lubman also currently serves on the Scientific Advisory Board of the Daedalus Innovation Fund of Weill-Cornell, the board of directors of Gilda’s Club of NYC, and is the Southern California Chairwoman of Executive Women in BIO.

Lubman earned her M.B.A.

from Stanford Graduate School of Business with a focus on Global Management and her B.A.

in Biology from Rutgers College.

Cynthia Seidel-Dugan, Ph.D., has served as our Chief Scientific Officer since April 2019.

From May 2014 until December 2018, Dr.

Seidel-Dugan served in several positions at Potenza Therapeutics, including most recently Chief Scientific Officer from January 2018 to December 2018, and previously Senior Vice President of Research from January 2016 to December 2017 and Vice President of Research from May 2014 to December 2015.

Prior to joining Potenza Therapeutics, Dr.

Seidel-Dugan served as Vice President, Biology for CoStim Pharmaceuticals from May 2013 until February 2014.

Early in her career, Dr.

Seidel-Dugan served in various roles at Ariad Pharmaceuticals, Exelixis Pharmaceuticals, Schering-Plough Research Institute and (upon merger) Merck Research Laboratories.

Seidel-Dugan earned a B.S.

in Biology from the College of William and Mary and holds a Ph.D.

in Microbiology and Molecular Biology from the University of Pennsylvania.

She also completed a postdoctoral fellowship with Dr.

Joan Brugge at the University of Pennsylvania.

Trost has served as our Chief Financial Officer and Treasurer since February 2021.

Previously, Mr.

Trost served as Chief Financial Officer of Asklepios Biopharmaceutical, Inc., or AskBio, a biotechnology company, from May 2020 until it was acquired by Bayer AG in December 2020.

Prior to joining AskBio, from March 2011 until May 2019, Mr.

Trost served as Senior Vice President, Chief Financial Officer, of Chimerix, Inc., a biopharmaceutical company, and also served as its Corporate Secretary from February 2012 until May 2019.

Previously, Mr.

Trost served as Vice President and Chief Financial Officer at Argos Therapeutics, Inc., a venture-backed immunotherapy company;

Senior Vice President and Chief Financial Officer at InteCardia, Inc., a venture-backed cardiac imaging company that was acquired by Syncor International Corporation;

and as Executive Vice President and Chief Financial Officer of Coastal Physician Group, Inc., a contract provider of emergency room physicians, having joined as Vice President of Corporate Development.

Trost previously served with PricewaterhouseCoopers LLP, last serving as a Senior Manager in the Research Triangle practice.

Trost holds a B.S.

in accounting from the University of Illinois at Urbana-Champaign and is a Certified Public Accountant.

Code of Ethics

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If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.

We will provide any person, without charge, a copy of such Code of Business Conduct and Ethics upon written request, which may be mailed to 1030 Massachusetts Ave, Ste.

210, Cambridge, MA 02138, Attn:

We will provide any person, without charge, a copy of such Code of Business Conduct and Ethics upon written request, which may be mailed to 200 Talcott Ave, 2nd Floor, Watertown, MA 02472, Attn:

Corporate Secretary.

Executive Compensation

The information required by this Item 11 will be included in the section captioned “Executive Compensation” in our definitive Proxy Statement for our 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of December 31, 2021, which information is incorporated herein by reference.

The information required by this Item 11 will be included in the section captioned “Executive Compensation” in our definitive Proxy Statement for our 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of December 31, 2022, which information, other than the information required by Item 402(v) of Regulation S-K, is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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The number of shares reserved for issuance under the 2021 ESPP will be increased on each January 1 through January 1, 2032 by the least of (i) 488,000 shares, (ii) 1% of the number of shares of our common stock outstanding on the first day of such year and (iii) an amount determined by our board of directors.

On January 1, 2023, the shares under the 2021 ESPP were increased by 315,150 shares pursuant to the annual increase described above.

Certain Relationships and Related Transactions, and Director Independence

1 unchanged sentence

Principal Accountant Fees and Services

The information required by this Item 14 will be included in the section captioned “Ratification of the Appointment of Deloitte & Touche LLP As Our Independent Registered Public Accounting Firm For The Fiscal Year Ending December 31, 2022” in our definitive Proxy Statement for our 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of December 31, 2021, which information is incorporated herein by reference.

The information required by this Item 14 will be included in the section captioned “Ratification of the Appointment of Ernst & Young, LLP As Our Independent Registered Public Accounting Firm For The Fiscal Year Ending December 31, 2023” in our definitive Proxy Statement

for our 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of December 31, 2022, which information is incorporated herein by reference.

Exhibit and Financial Statement Schedules

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Report of the Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity

Consolidated Statements of Cash Flows

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Opinion on the Financial Statements

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

and its subsidiary (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, redeemable convertible preferred stock and stockholders’ (deficit) equity, and cash flows, for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of Werewolf Therapeutics, Inc.

(the Company) as of December 31, 2022, the related consolidated statement of operations, consolidated statement of redeemable convertible preferred stock and stockholders’ (deficit) equity, and cash flows for the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for the period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

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 audit 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 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 audit, 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 Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the 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 financial statements.

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

We believe that our audit provides a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2022.

Boston, Massachusetts

March 23, 2023

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Werewolf Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Werewolf Therapeutics, Inc.

and its subsidiary (the “Company”) as of December 31, 2021, the related consolidated statements of operations, redeemable convertible preferred stock and stockholders’ (deficit) equity, and cash flows, for the year then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

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

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

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

We believe that our audit provides a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

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March 24, 2022

We have served as the Company’s auditor since 2020.

We began serving as the Company’s auditor in 2020.

In 2022, we became the predecessor auditor.

Werewolf Therapeutics, Inc.

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(amounts in thousands, except par value amounts)

2021 December 31,

Current assets:

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Prepaid expenses and other current assets

Other receivables (due from collaborations) 6,928 —

Total current assets

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Operating lease right of use asset

Deferred financing costs

Other non-current assets

$ 160,245 $ 179,250

Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Equity (Deficit):

Liabilities and stockholders’ equity:

Current liabilities:

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Operating lease liability, current

Deferred revenue, current 6,532 —

Total current liabilities

23,989 11,874

Operating lease liability, net of current portion

12,600 14,589

Deferred revenue, net of current portion 1,128 —

Other liabilities

Total liabilities

37,908 26,463

Commitments and contingencies

Redeemable convertible preferred stock:

Series A redeemable convertible preferred stock, par value $ 0.0001 per share, no shares and 80,247 shares authorized, issued and outstanding at December 31, 2021 and December 31, 2020, respectively;

liquidation preference of $ 69,012 at December 31, 2020

Series B redeemable convertible preferred stock, par value $ 0.0001 per share, no shares and 78,222 shares authorized, issued and outstanding at December 31, 2021 and December 31, 2020, respectively;

liquidation preference of $ 72,070 at December 31, 2020

Stockholders’ equity (deficit):

Preferred stock, $ 0.0001 par value, 5,000 shares and no shares authorized at December 31, 2021 and December 31, 2020, respectively;

Stockholders’ equity:

Preferred stock, $ 0.0001 par value, 5,000 shares authorized as of December 31, 2022 and December 31, 2021;

no shares issued or outstanding as of December 31, 2022 or December 31, 2021

Common stock, $ 0.0001 par value, 200,000 shares and 193,500 shares authorized as of December 31, 2021 and December 31, 2020, respectively;

Common stock, $ 0.0001 par value, 200,000 shares authorized as of December 31, 2022 and December 31, 2021;

31,515 and 27,608 shares issued as of December 31, 2022 and December 31, 2021, respectively;

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Additional paid-in capital

429,039 405,680

Accumulated deficit

( 306,705 ) ( 252,895 )

Total stockholders’ equity (deficit)

Total stockholders’ equity

122,337 152,787

Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)

Total liabilities and stockholders’ equity

$ 160,245 $ 179,250

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Year Ended December 31,

Collaboration revenue $ 16,401 $ —

Operating expenses:

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General and administrative

18,696 14,818

Total operating expenses

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Other income:

Change in fair value of preferred stock tranche liability

Interest income, net

Other income, net

Interest income

Total other income

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Weighted-average common shares outstanding, basic and diluted

28,864 18,455

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

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Balance at December 31, 2020 80,247 $ 69,012 78,222 $ 72,070 1,746 $ 2 $ — $ ( 51,865 ) $ ( 51,863 )

Issuance of Series A Preferred Stock, net of issuance costs of $ 31

31,572 22,069 — — — — — — —

Issuance of Series B Preferred Stock, net of issuance costs of $ 307

Issuance of common stock from initial public offering, net of issuance costs of $ 2,379

— — — — 7,500 — 109,221 — 109,221

Accretion of redeemable convertible preferred stock to redemption value — 79,372 — 72,570 — — ( 895 ) ( 151,047 ) ( 151,942 )

Conversion of redeemable convertible preferred stock to common stock upon closing of initial public offering ( 80,247 ) ( 148,384 ) ( 78,222 ) ( 144,640 ) 18,280 — 293,024 — 293,024

Stock-based compensation expense — — — — — — 4,095 — 4,095

Stock option exercises — — — — 82 — 235 — 235

Repurchases of restricted stock — — — — ( 7 ) — — — —

— — — — — — — ( 49,983 ) ( 49,983 )

Balance at December 31, 2021 — — — — 27,608 2 405,680 ( 252,895 ) 152,787

Issuance of common stock from initial public offering, net of issuance costs of $ 2,379

Issuance of common stock from at the market offering, net of issuance costs of $ 455

— — — — 3,827 1 15,735 — 15,736

Accretion of redeemable convertible preferred stock to redemption value — 79,372 — 72,570 — — ( 895 ) ( 151,047 ) ( 151,942 )

Conversion of redeemable convertible preferred stock to common stock upon closing of initial public offering ( 80,247 ) ( 148,384 ) ( 78,222 ) ( 144,640 ) 18,280 — 293,024 — 293,024

Stock-based compensation expense — — — — — — 7,400 — 7,400

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Non-cash lease expense

Change in fair value of preferred stock tranche liability

Change in fair value of success payment liability 555 —

Amortization of debt issuance costs 203 —

Loss on disposal of property and equipment 7 —

Changes in operating assets and liabilities:

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( 541 ) ( 3,072 )

Other receivables ( 6,928 ) —

Other non-current assets

Accounts payable

( 883 ) 1,007

Accrued expenses and other current liabilities

Deferred revenue 7,660 —

Right of use assets and operating lease liability

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Financing activities:

Deferred financing costs

Proceeds from issuance of Series A redeemable convertible preferred stock — 22,100

Proceeds from issuance of Series B redeemable convertible preferred stock — 72,070

Proceeds from at the market offering of common stock 16,191 —

Proceeds from initial public offering of common stock — 111,600

Payment of equity issuance costs ( 451 ) ( 2,378 )

Deferred financing costs ( 88 ) —

Proceeds from stock option exercises

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15,906 109,427

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

( 28,301 ) 66,053

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Right of use assets obtained in exchange for lease liabilities $ — $ 13,658

Non-cash accretion of Series A and Series B redeemable convertible preferred stock

Accretion of Series A and Series B redeemable convertible preferred stock

$ — $ 151,942

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The Company is an innovative biopharmaceutical company pioneering the development of therapeutics engineered to stimulate the body’s immune system for the treatment of cancer.

The Company’s headquarters are located in Cambridge, Massachusetts.

The Company’s headquarters are located in Watertown, Massachusetts.

Since inception, the Company has devoted substantially all of its time and efforts to performing research and development activities, raising capital and recruiting management and technical staff to support these operations.

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

On May 4, 2021, the Company closed its initial public offering (“IPO”) of 7,500,000 shares of the Company’s common stock at a public offering price of $ 16.00 per share.

The gross proceeds from the IPO were $ 120.0 million and the net proceeds were approximately $ 109.2 million, after deducting underwriting discounts and commissions and other offering expenses payable by the Company.

Upon completion of the Company’s IPO, all of the Company’s then outstanding preferred stock was automatically converted into an aggregate of 18,279,712 shares of common stock.

The Company had cash and cash equivalents of $ 129.3 million at December 31, 2022.

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

On an ongoing basis, the Company’s management evaluates its estimates which include, but are not limited to, the fair values of common stock and redeemable convertible preferred stock and the fair value of the preferred stock tranche rights.

Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, estimates related to the application of Revenue from Contracts with Customers (Topic 606) (“ASC 606”) to the Company’s collaboration agreement with Jazz Pharmaceuticals Ireland Limited, the accrual of research and development expenses, the expected future lives of property and equipment, the valuation of stock-based awards, and the success based fee associated with the Company’s debt agreement.

Actual results could differ from those estimates.

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Long-lived assets consist of property and equipment.

The Company reviews its property and equipment whenever events or changes in circumstances indicate that the carrying value of certain assets might not be recoverable and recognizes an impairment loss when it is probable that an asset’s realizable value is less than the carrying value.

The Company reviews its property and equipment whenever events or changes in circumstances indicate that the carrying value of certain assets might not be recoverable.

If such events or changes in circumstances arise, the Company compares the carrying amount of the long-lived assets to the estimated future undiscounted cash flows expected to be generated by the long-lived assets.

If the estimated aggregate undiscounted cash flows are less than the carrying amount of the long-lived assets, an impairment charge, calculated as the amount by which the carrying amount of the assets exceeds the fair value of the assets, is recorded.

The fair value of the long-lived assets is determined based on the estimated discounted cash flows expected to be generated from the long-lived assets.

The Company has not recorded any material impairment charges during the years presented.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement.

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Net Loss per Common Share

Basic net loss per share is computed using the “two-class” method, which includes the weighted average number of shares of common stock outstanding during the period and other securities that participate in undistributed earnings (a participating security).

The Company’s redeemable convertible preferred stock and restricted stock awards are participating securities as defined by ASU No.

2017-10, Earnings per Share (Topic 260) (“ASC 260-10”).

During the periods where the Company incurs net losses, the Company allocates no loss to participating securities because these securities have no contractual obligation to share in the losses of the Company.

Under the two-class method, basic net loss per share applicable to common stockholders is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period.

Diluted net loss per share is computed similar to basic net loss per share except that the denominator is increased to include the number of additional shares for the potential dilutive effects of warrants, redeemable convertible preferred stock and stock options outstanding during the period calculated in accordance with the treasury stock method, or the two-class method, whichever is more dilutive.

The Company allocates net earnings on a pari passu (equal) basis to both common and preferred stockholders.

Net losses are not allocated to preferred stockholders as they do not have an obligation to share in the Company’s net losses.

For all periods presented, basic and diluted net loss per share are the same, as any additional share equivalents would be anti-dilutive.

Basic net loss per share is calculated based upon the weighted-average number of common shares outstanding during the period, excluding outstanding stock options and RSUs that have been issued but are not yet vested.

Diluted net loss per share is calculated based upon the weighted-average number of common shares outstanding during the period plus the dilutive impact of weighted-average common equivalent shares outstanding during the period.

The potentially dilutive shares of common stock resulting from the assumed exercise of outstanding stock options and the assumed vesting of RSUs are determined under the treasury stock method.

Concentration of Credit Risk and Off-Balance Sheet Risk

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Recent Accounting Pronouncements

In October 2020, the FASB issued ASU No.

2020-10, Codification Improvements (“ASU 2020-10”), which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations.

The Company adopted ASU 2020-10 as of the reporting period beginning January 1, 2021 and the adoption did not have material impact on the Company’s consolidated balance sheets, consolidated statements of operations or related disclosures.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments .

This guidance amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income.

The Company has adopted the new guidance effective January 1, 2021 and the adoption did not have any material impact on the Company’s consolidated balance sheets, consolidated statements of operations or related disclosures.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various areas related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application.

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

The Company adopted the standard effective January 1, 2021 and the adoption did not have a material impact on the Company’s consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.

Subsequent Events

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Other than as described in these financial statements, the Company did not identify any subsequent events that would have required adjustment to or disclosure in the financial statements .

Jazz Collaboration and License Agreement

In April 2022, the Company entered into an exclusive global collaboration and license agreement (the “Collaboration Agreement”) with Jazz Pharmaceuticals Ireland Limited (“Jazz”) pursuant to which the Company granted Jazz certain licenses to develop and commercialize products containing the Company’s Interferon alpha (“IFNα”) INDUKINE™ molecule, JZP898 (formerly WTX-613), as well as products containing certain isolated recombinant polypeptides comprising IFNα that meet specified criteria (each such product, a “Licensed Product”).

Under the Collaboration Agreement, the Company is responsible for certain pre-clinical development activities with respect to JZP898 (formerly WTX-613) and other development activities specified in mutually agreed upon development plans.

Jazz will generally reimburse the Company for the cost of such activities.

Jazz will be responsible for all other development and commercialization activities conducted to exploit the Licensed Products, including submission of an investigational new drug application (“IND”) to the U.S.

Food and Drug Administration (the “FDA”).

Under the terms of the Collaboration Agreement, the Company received a non-refundable upfront cash payment of $ 15.0 million in April 2022.

Milestones and Royalties

The Company is eligible to receive up to $ 520.0 million in development and regulatory milestones, and up to $ 740.0 million in sales-based milestones for all Licensed Products.

In addition, the Company is eligible to receive tiered mid-single digit royalties based on Jazz’s, and any of its affiliates’ and sublicensees’ annual net sales of Licensed Products, subject to reduction in specified circumstances.

Accounting Analysis under ASC 606

Identification of the Contract(s)

The Company assessed the Collaboration Agreement and concluded that it represents a contract with a customer within the scope of ASC Topic 606, Revenue from Contracts with Customers .

Identification of Promises and Performance Obligations

The Company has concluded that the exclusive license to its intellectual property, JZP898 (formerly WTX-613), and the non-exclusive corresponding “know-how” are not capable of being distinct from the other promises within the contract, and as such, the Company has determined that the license and “know-how” combined with the other research and development services and supply represent a single combined performance obligation.

Determination of Transaction Price

The overall transaction price as of the inception of the contract was determined to be $ 33.5 million, which is comprised of the nonrefundable upfront payment of $ 15.0 million and the estimated costs for research services of $ 18.5 million.

Outside of the estimated costs for research services, there is no other variable consideration included in the transaction price at inception.

The Company used the most likely amount method to estimate variable consideration and estimated that the most likely amount for each potential development and regulatory milestone payment under this agreement is zero, as achievement of those milestones is uncertain and highly susceptible to factors outside the Company’s control.

Accordingly, all such milestone payments were excluded from the transaction price.

Management will reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, will adjust the transaction price as necessary.

Sales based royalties, including milestones based on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the royalties relate.

The Company will recognize such revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

The upfront payment of $ 15.0 million was recorded as deferred revenue and, along with payments related to the Company’s conduct of research services under the Collaboration Agreement, will be recognized as revenue over approximately 3.7 years using an input-based measurement of actual costs incurred as a percentage of the estimated total costs expected to be incurred over the expected term of conduct of the research services.

The Company believes this input-based method to recognize revenue best reflects the transfer of value to Jazz.

Recognition of Revenue

For the year ended December 31, 2022, using the cost-to-cost input method, which best depicts the research services performed for the customer, the Company recognized $ 16.4 million of revenue related to the Collaboration Agreement, of which $ 7.3 million related to the upfront payment and $ 9.1 million related to costs incurred for research services.

As of December 31, 2022, there is $ 6.5 million and $ 1.1 million of current and long-term deferred revenue, respectively, related to the Collaboration Agreement.

All costs associated with the Collaboration Agreement are recorded in research and development expense in the consolidated statements of operations.

“Unbilled receivables” of $4.1 million was included within “Other receivables” in the accompanying consolidated balance sheets as of December 31, 2022.

The following table presents changes in the Company’s contract liabilities during the year ended December 31, 2022 (in thousands):

Balance as of Balance as of

December 31, 2021 Additions Reductions December 31, 2022

Contract liabilities:

Deferred revenue $ — $ 15,000 $ ( 7,340 ) $ 7,660

Totals $ — $ 15,000 $ ( 7,340 ) $ 7,660

As of December 31, 2022, the Company had not received any milestone or royalty payments under the Collaboration Agreement.

Financial Instruments and Fair Value Measurements

The Company measures the fair value of money market funds based on quoted prices in active markets for identical securities.

The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds and a success payment liability pursuant to an amended and restated loan and security agreement (the “Loan Agreement”) with Pacific Western Bank (“PWB”) (see Note 8, Term Loan ).

The carrying amounts reflected in the consolidated balance sheets for cash, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values, due to their short-term nature.

Assets measured at fair value on a recurring basis as of December 31, 2021 were as follows (in thousands):

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 were as follows (in thousands):

Quoted Price in

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$ 128,812 $ — $ — $ 128,812

Assets measured at fair value on a recurring basis as of December 31, 2020 were as follows (in thousands):

Success payment liability $ — $ — $ 570 $ 570

Total liabilities $ — $ — $ 570 $ 570

The success payment liability was included within “Accrued expenses and other current liabilities” in the accompanying consolidated balance sheets as of December 31, 2022.

There were no changes in valuation techniques during the year ended December 31, 2022.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 were as follows (in thousands):

Quoted Price in

6 unchanged sentences

$ 157,531 $ — $ — $ 157,531

There were no changes in valuation techniques during the years ended December 31, 2021 and 2020.

There were no liabilities measured at fair value on a recurring basis as of December 31, 2021 or 2020.

Preferred Stock Tranche Liability — During 2019, the Company issued 48,675,140 shares of Series A redeemable convertible preferred stock (“Series A Preferred Stock”) which contained the preferred stock tranche liability.

The fair value of the preferred stock tranche liability was $ 7.8 million upon issuance and was remeasured to $ 7.3 million as of December 31, 2019.

The preferred stock tranche liability was settled in June 2020 upon the closing of the second tranche of the Series A Preferred Stock.

There were no liabilities measured at fair value on a recurring basis as of December 31, 2021.

Success Payment Liability

The Company is obligated to pay to PWB a one-time success payment upon the occurrence of the Company achieving certain conditions defined in the Loan Agreement.

The maximum aggregate success payment that could be payable by the Company is $ 1.6 million.

The following table reconciles the change in fair value of the success payment liability during the year ended December 31, 2022 based on Level 3 inputs (in thousands):

December 31, 2022

Balance at December 31, 2021 $ —

Additions 1,125

Change in fair value ( 555 )

Balance at December 31, 2022 $ 570

The success payment liability is stated at fair value and is considered Level 3 because its fair value measurement is based, in part, on significant inputs not observed in the market.

The Company models the value of the liability based on several key variables, including probability of event occurrence and timing of event occurrence.

The fair value of the success payment liability was determined using a probability weighted expected return method, in which the probability and timing of potential future events is considered in order to estimate the fair value of the success payment liability as of each valuation date.

Management determined the fair value of the success payment liability as of December 31, 2022 using the following significant unobservable inputs:

As of December 31, 2022

Probability of Success Fee Event 75 %

Expected term (in years) 0.33 - 0.75

Discount rate 7.1 %

Significant increases (decreases) in these inputs could result in a significantly lower or higher fair value measurement.

The Company remeasured the liability at fair value with a corresponding decrease of $ 0.6 million recorded to other income, net for the year ended December 31, 2022.

Restricted Cash

The Company maintained restricted cash of $ 1.2 million and $ 1.3 million at December 31, 2022 and December 31, 2021, respectively.

At December 31, 2021, $ 0.1 million of the Company’s restricted cash balance is included within “Prepaid expenses and other current assets” in the accompanying consolidated balance sheets.

At December 31, 2021, $ 0.1 million of the Company’s restricted cash balance was included within “Prepaid expenses and other current assets” in the accompanying consolidated balance sheets.

These amounts are comprised solely of letters of credit required pursuant to the Company’s leased office spaces.

Year Ended December 31, 2022 Year Ended December 31, 2021

Beginning of Period End of Period Beginning of Period End of Period

Cash and cash equivalents $ 157,531 $ 129,315 $ 92,570 $ 157,531

Restricted cash 1,299 1,214 207 1,299

Cash, cash equivalents and restricted cash $ 158,830 $ 130,529 $ 92,777 $ 158,830

Property and Equipment, Net

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Total property and equipment, net $ 8,988 $ 2,913

Depreciation expense for the years ended December 31, 2021 and 2020 was $ 216,000 and $ 150,000 , respectively.

Depreciation expense for the years ended December 31, 2022 and 2021 was $ 1.1 million and $ 0.2 million, respectively.

Accrued Expenses and Other Current Liabilities

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Contract research

Success payment liability 570 —

Total accrued expenses and other current liabilities

$ 14,152 $ 8,765

In May 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Pacific Western Bank (“PWB”).

Under the terms of the Loan Agreement, PWB made available a term loan up to $ 6.0 million (“Term Loan A”).

Based on the satisfaction of certain conditions defined in the Loan Agreement, PWB was also obligated to make available an additional term loan in the amount of up to $ 8.0 million until November 29, 2021 (“Term Loan B”, or collectively with Term Loan A, the “Term Loans”).

The Company satisfied the conditions to draw Term Loan B in June 2020.

Although Term Loan A was made available to the Company at the closing date, the Company elected to forgo making a draw, thereby incurring a delayed draw fee of $ 25,000 with PWB.

The Term Loans would have borne interest on the outstanding daily balance at a floating annual rate equal to greater of:

In April 2022, the Company entered into the Loan Agreement with PWB.

Under the terms of the Loan Agreement, PWB made available a term loan in an aggregate principal amount of up to $ 20.0 million (“Tranche I Loan”) available at any time after the closing date until February 28, 2024 as extended to August 31, 2024 upon the satisfaction of certain conditions set forth in the Loan Agreement (such date, the “Amortization Date”).

Based on the satisfaction of certain conditions defined in the Loan Agreement, PWB is also obligated to make available an additional term loan in the aggregate principal amount of up to $ 20.0 million (“Tranche II Loan”, or collectively with the Tranche I Loan, the “Term Loans”) available at any time after the closing date until the Amortization Date upon the acceptance by the U.S.

Food and Drug Administration (the “FDA”) of two investigational new drug (“IND”) submissions on or before March 31, 2023.

Although the Tranche I Loan and Tranche II Loan are now available to the Company, as of December 31, 2022, the Company has elected to defer making a draw.

As of December 31, 2022, the Company had not drawn down any Term Loans and had no outstanding borrowings under the Loan Agreement.

The Term Loans will bear interest on the outstanding daily balance at a floating annual rate equal to greater of:

(i) 0.5 % above the prime rate then in effect or (ii) 4.5 %.

If the prime rate changed throughout the term, the interest rate would have been adjusted effective on the date of the prime rate change.

All interest chargeable under the Loan Agreement would have been computed on a 360-day year for the actual number of days elapsed, with interest payable monthly.

The Company would have been obligated to pay PWB a fee of 5.00 % of the amount drawn under the Term Loans upon the occurrence of the Company achieving certain conditions defined in the Loan Agreement (the “Success Fee”).

The Success Fee would have survived ten years from the date of payment of the Term Loan in full, such that, if the Loan Agreement was terminated prior to the payment of the Success Fee, the Company would have remained obligated to pay the Success Fee upon the occurrence of a Success Fee Event (as described in the Loan Agreement).

The Company determined that the Success Fee constituted a freestanding financial instrument that should be accounted for as a liability in connection with ASC 480— Distinguishing Liabilities from Equity.

The Company determined that the fair value of the Success Fee was immaterial at both issuance and through the expiration of the Loan Agreement.

Borrowings under the Loan Agreement would have been secured by the Company’s personal property (exclusive of any intellectual property) and were subject to acceleration in the event of default.

In the event of a late payment or default, the Company would have been obligated to pay a fee equal to 5.0 % of such unpaid amounts.

In connection with the Loan Agreement, the Company was required to comply with certain covenants, which among other things, restricted the Company from (i) effectuating a merger or consolidation with or into any other business organization, (ii) paying dividends or making certain other distributions and (iii) making investments in any entities or instruments other than certain investments specified in the Loan Agreement.

In addition, the Loan Agreement contained standard affirmative covenants, including with respect to the issuance of audited consolidated financial statements, insurance, and maintenance of good standing and government compliance in the Company’s state of formation.

The Company was also required to maintain unrestricted cash balances of at least 2.5 times its monthly cash burn, and had covenanted not to make any capital expenditures in excess of $ 0.4 million in the aggregate in any fiscal year without the prior written consent of PWB.

In December 2020, the Loan Agreement was amended to allow the Company to make investments in its subsidiary, Werewolf Therapeutics Mass Securities, Inc., subject to certain conditions described in the Loan Agreement.

In February 2021, the Loan Agreement was amended such that the Company may not make any capital expenditures in excess of $ 2.0 million in the aggregate in 2021 and $ 0.5 million in the aggregate in any fiscal year thereafter without the prior written consent of PWB.

PWB would have had the right to accelerate all obligations of the Company in the event of a material adverse effect on (i) the operations, business or financial condition of the Company, (ii) the Company’s ability to repay any portion of the Term Loans or perform any of its other obligations under the Loan Agreement and (iii) the Company’s interest in, or the value, perfection or priority of PWB’s security interest in the collateral.

The Company did no t draw down any Term Loans, and as a result, the Loan Agreement expired on November 29, 2021.

If the prime rate changes throughout the term, the interest rate will be adjusted effective on the date of the prime rate change.

All interest chargeable under the Loan Agreement is computed on a 360-day year for the actual number of days elapsed, with interest payable monthly.

The Company is obligated to pay PWB a fee in the event of certain corporate transactions equal to either (i) the greater of (a) $ 0.2 million and (b) 2.0 % of the amount drawn under the Term Loans, for a transaction occurring on or before March 31, 2023, or (ii) for any transaction occurring thereafter, the greater of (a) $ 0.4 million and (b) 4.0 % of the amount drawn under the Term Loans (the “Success Fee”).

The Success Fee will survive ten years from the date of payment of the Term Loans in full, such that, if the Loan Agreement is terminated prior to the payment of the Success Fee the Company will remain obligated to pay the Success Fee upon the occurrence of a Success Fee Event (as defined in the Loan Agreement) during such ten-year period.

The Company determined that the Success Fee constitutes a freestanding financial instrument and should be accounted for as a liability in connection with ASC 815, Derivatives and Hedging .

The Company determined the fair value of the Success Fee upon the closing date of the Loan Agreement and then marked to market the fair value of the Success Fee as of December 31, 2022.

All outstanding obligations under the Loan Agreement are secured by the Company’s personal property (exclusive of any intellectual property) and are subject to acceleration in the event of default.

In the event of a late payment or default, the Company is obligated to pay a fee equal to 5.0 % of such unpaid amounts.

In connection with the Loan Agreement, the Company is required to comply with certain negative covenants, which among other things, restrict the Company from (i) incurring future debt or granting liens, (ii) effectuating a merger or consolidation with or into any other business organization, (iii) paying dividends or making certain other distributions, (iv) selling or

otherwise transferring its assets, (v) making investments in any entities or instruments other than certain investments specified in the Loan Agreement and (vi) making capitalized expenditures in excess of 125 % of the amount provided for in the annual budget approved by the board of directors.

The Loan Agreement also contains standard affirmative covenants, including with respect to the issuance of audited consolidated financial statements, insurance, and maintenance of good standing and government compliance in the Company’s state of formation.

On or before September 30, 2023, the Company is required to raise aggregate gross cash process of at least $ 50.0 million from the sale or issuance of its equity or from strategic partnerships or any similar transaction.

From after receipt of those proceeds, the Company is required to maintain at all times at least $ 20.0 million of unrestricted cash in accounts with PWB.

PWB has the right to accelerate all outstanding obligations of the Company under the Loan Agreement or terminate any remaining Term Loan commitments in the event of a material adverse effect on (i) the operations, business or financial condition of the Company, (ii) the Company’s ability to repay any portion of the Term Loans or perform any of its other obligations under the Loan Agreement, and (iii) the Company’s interest in, or the value, perfection or priority of PWB’s security interest in the collateral.

As of December 31, 2022, the Company had $ 40.0 million available to draw on the Term Loans and had no outstanding principal.

In connection with the Loan Agreement, the Company recorded a total of $ 1.1 million as a success fee liability that is contingent upon the occurrence of future events and will be payable to PWB upon the occurrence of those events.

The initial valuation of the success fee recorded in connection with the Loan Agreement was recorded as a deferred asset on the Company’s balance sheet until the Company draws down on the Term Loans.

Upon drawdown of the Term Loans the initial value of the success fee will be reclassified as a discount to the term loan payable.

The unamortized balance of the success fee will be charged to interest expense over the remainder of the borrowing term.

Common and Preferred Stock

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As of December 31, 2022, no dividends on common stock had been declared by the Company.

On May 10, 2022, the Company entered into a Sales Agreement (the “Sales Agreement”) with SVB Securities LLC (“SVB”), pursuant to which the Company may offer and sell shares of its common stock with an aggregate offering price of up to $ 50.0 million (the “ATM Offering”).

The Sales Agreement provides that SVB will be entitled to a sales commission equal to 3.0 % of the gross sales price per share of all shares sold under the ATM Offering.

As of December 31, 2022, the Company had sold an aggregate of 3,827,567 shares under the ATM Offering at an average price of $ 4.36 per share for net proceeds of $ 15.7 million after deducting sales commissions and offering expenses.

The Company had reserved shares of common stock for issuance as follows (in thousands):

As of December 31,

Redeemable convertible preferred stock outstanding

Options issued and outstanding

Warrants issued and outstanding

Redeemable Convertible Preferred Stock

The Company’s Series A and Series B redeemable convertible preferred stock, together referred to as “Preferred Stock,” was classified as temporary equity on the accompanying consolidated balance sheets in accordance with authoritative guidance for the classification and measurement of redeemable securities as the preferred stock was redeemable upon the occurrence of a deemed liquidation event.

Upon completion of the Company’s IPO, all of the Company’s then outstanding preferred stock was automatically converted into an aggregate of 18.3 million shares of common stock.

Series A Preferred Stock

The Series A Preferred Stock shares were issued at various closing dates between 2019 and 2020 for a purchase price of $ 0.70 per share.

The shares were issued in exchange for cash proceeds of $ 44.0 million, net of issuance costs of $ 0.2 million, and the exchange of approximately $ 12.0 million in outstanding convertible notes, including accrued interest.

Tranche Rights Issued with Series A Preferred Stock

Included in the terms of the Series A Preferred Stock purchase agreement (the “Series A Stock Purchase Agreement”) were certain tranche rights (the “Tranche Rights”).

The Tranche Rights obligated the Series A Preferred Stock investors to purchase, and the Company to sell, an additional 31,571,425 shares of Series A Preferred Stock for a purchase price of $ 0.70 per share (the “Second Closing”) on November 1, 2020 or based on the election of each investor prior to the Second Closing.

On May 12, 2020, the Series A Stock Purchase Agreement was amended such that the Second Closing would occur on June 1, 2020 or on an earlier date at the election of each investor.

The Company concluded that the Tranche Rights met the definition of a freestanding financial instrument, as the Tranche Rights were legally detachable and separately exercisable from the Series A Preferred Stock.

Therefore, the Company allocated the net proceeds between the Tranche Rights and the Series A Preferred Stock.

The trigger for the Second Closing was based on the passage of time or the election of the holders of Series A Preferred Stock.

Based on the contractual terms, and the fact that the issuance was based on an event that was not within the control of the Company (i.e., written consent or passage of time), the Tranche Rights imposed an obligation on the Company to issue shares.

Since the Series A Preferred Stock was contingently redeemable, the Tranche Rights were classified as a liability under ASC 480, Distinguishing Liabilities from Equity , and were initially recorded at fair value.

The Tranche Rights were measured at fair value at each reporting period.

Since the Tranche Rights were subject to fair value accounting, the Company allocated the proceeds to the Tranche Rights based on the fair value at the date of issuance with the remaining proceeds being allocated to the Series A Preferred Stock.

The estimated fair value of the Tranche Rights was determined using a probability-weighted present value model that considered the probability of closing a tranche, the estimated future value of Series A redeemable convertible preferred stock at each closing and the investment required at each closing.

Future values were converted to present value using a discount rate appropriate for probability-adjusted cash flows.

The Tranche Rights were initially recorded as a liability of $ 7.8 million.

The Company remeasured the liability on each subsequent balance sheet date and prior to settlement and issuance of shares in connection with the Second Closing, which occurred on June 1, 2020.

Series B Preferred Stock

The Series B Preferred Stock shares were issued for a purchase price of $ 0.92 per share.

The issuance resulted in cash proceeds of $ 71.8 million, net of issuance costs of $ 0.3 million.

Upon certain change in control events that are outside of the Company’s control, including liquidation, sale or transfer of control of the Company, the Preferred Stock was contingently redeemable.

In addition, the Preferred Stock was redeemable at any time on or after the fifth anniversary of the original issue date.

The Preferred Stock was redeemable at a price equal to the greater of (i) the original issue price of $ 0.70 per share for Series A Preferred stock and the original issue price of $ 0.92 per share for Series B Preferred Stock, respectively, or (ii) the fair market value of the Series A Preferred Stock and Series B Preferred Stock, as applicable, as of the redemption request date.

As the Preferred Stock approached becoming redeemable due to the passage of time, the Company recorded changes in the redemption value and accreted the Preferred Stock immediately to redemption value as it occurred.

Shares reserved for exercises of outstanding stock options 5,244 3,266

Shares reserved for vesting of restricted stock units 323 —

Shares reserved for exercises of warrants 59 59

Shares reserved for future issuance under the 2021 Stock Incentive Plan 939 1,939

Total shares reserved for future issuance 6,565 5,264

Preferred Stock

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In December 2017, the Company adopted the 2017 Stock Incentive Plan (the “2017 Plan”), as amended and restated, under which it could grant incentive stock options (“ISOs”), non-qualified stock options, RSAs, RSUs, stock appreciation rights and other stock-based awards to eligible employees, officers, directors and consultants.

The terms of stock options and restricted stock awards, including vesting requirements, are determined by the board of directors, subject to the provisions of the Plan.

The terms of stock options and RSAs, including vesting requirements, are determined by the board of directors, subject to the provisions of the 2017 Plan.

2021 Stock Incentive Plan

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The terms of awards, including vesting requirements, are determined by the board of directors, subject to the provisions of the 2021 Plan.

The Company initially registered 3,352,725 shares of common stock under the 2021 Plan, pursuant to a Registration Statement on Form S-8 filed with the SEC on April 30, 2021, which was comprised of (i) 2,843,116 shares of common stock reserved for issuance under the 2021 Plan, (ii) 31,884 shares of common stock originally reserved for issuance under the 2017 Plan that became available for issuance under the

2021 Plan upon the completion of the Company’s IPO, and (iii) 477,725 shares of unvested restricted stock subject to repurchase by us that may become issuable under the 2021 Stock Incentive Plan following such repurchase.

may become issuable under the 2021 Stock Incentive Plan following such repurchase.

The 2021 Plan also provides that an additional number of shares will be added annually to the shares authorized for issuance under the 2021 Plan on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2022 and continuing until, and including, the fiscal year ended December 31, 2031.

The number of shares added each year will be equal to the lesser of (i) 5 % of the number of outstanding common stock on such date and (ii) such amount as determined by the board of directors.

Effective January 1, 2022, 1,380,397 additional shares were automatically added to the shares authorized for issuance under the 2021 Plan.

As of December 31, 2022, there were 938,587 shares available for future issuance under the 2021 Plan.

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The number of shares added each year will be equal to the lowest of (i) 488,000 shares of common stock, (ii) 1 % of the number of shares of outstanding common stock on such date, and (iii) such amount as determined by the board of directors.

The Company had not initiated any offering periods under the 2021 ESPP as of December 31, 2021.

The Company initiated its first offering period under the 2021 ESPP in December 2022.

The 2021 ESPP provides that eligible employees may contribute up to 15 % of their eligible earnings toward the semi-annual purchase of the Company’s common stock.

The 2021 ESPP is qualified under Section 423 of the Internal Revenue Code.

The employee’s purchase price is derived from a formula based on the closing price of the common stock on the first day of the offering period versus the closing price on the last date of purchase (or, if not a trading day, on the immediately preceding trading day).

The offering period under the 2021 ESPP has a duration of six months , and the purchase price with respect to each offering period beginning on or after such date is, until otherwise amended, equal to 85 % of the lesser of (i) the fair market value of the Company’s common stock at the commencement of the applicable six-month offering period or (ii) the fair market value of the Company’s common stock on the purchase date.

The Company estimate the fair value of the common stock under the 2021 ESPP using a Black-Scholes valuation model.

The fair value was estimate on the date of grant using the Black-Scholes option valuation model and the straight-line attribution approach with the following assumptions:

risk-free interest rate ( 4.7 %);

expected term ( 0.5 years);

expected volatility ( 77.0 %);

and an expected dividend yield ( 0 %).

The Company recorded less than $ 0.1 million of stock-based compensation under the 2021 ESPP for the year ended December 31, 2022.

As of December 31, 2022, there was unrecognized stock-based compensation expense of less than $ 0.1 million related to the current ESPP offering period, which ends May 31, 2023.

Stock-Based Compensation Expense

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$ 7,400 $ 4,095

Restricted Stock Activity

The Company may, at its discretion, repurchase unvested shares of restricted stock issued pursuant to the 2017 Plan at the initial purchase price if the employees or non-employees terminate their service relationship with the Company.

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The aggregate fair value of restricted stock awards that vested during the years ended December 31, 2022 and 2021, based upon the fair values of the stock underlying the restricted stock awards on the day of vesting, was $ 1.2 million and $ 3.6 million, respectively.

The Company has also granted RSUs to its employees under the 2021 Plan.

The following table summarizes RSU activity during the year ended December 31, 2022 (in thousands, except per share amounts):

Shares/Units Weighted-Average

Grant Date Fair

Value Per Share

Unvested at December 31, 2021 — $ —

( 41 ) $ 4.97

Unvested at December 31, 2022 323 $ 4.32

As of December 31, 2022, there was unrecognized stock-based compensation expense related to unvested RSUs of $ 1.0 million, which the Company expects to recognize over a weighted-average period of approximately 1.24 years.

No RSUs vested during the years ended December 31, 2022 or 2021.

Stock Option Activity

During the year ended December 31, 2022, the Company granted performance-based stock options to certain executive officers for the purchase of an aggregate of 883,352 shares of common stock with a grant date fair value of $ 3.36 per share.

These stock options vest only upon achievement of specified performance targets related to certain business objectives.

As of December 31, 2022, none of these options were vested because none of the specified performance targets had been achieved.

Because achievement of the specified performance targets was not deemed probable as of December 31, 2022, the Company did not record any expense for these stock options from the date of issuance through December 31, 2022.

The fair value of stock options granted during the years ended December 31, 2022 and 2021 was calculated on the date of grant using the following weighted-average assumptions:

Year Ended December 31,

Risk-free interest rate

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( 125 ) $ 8.55

( 94 ) $ 5.58

Outstanding, December 31, 2022 5,244 $ 7.86 8.34

Exercisable at December 31, 2022 1,683 $ 8.00 8.09

The aggregate intrinsic fair value of stock options exercised during the years ended December 31, 2021 and 2020 was $ 0.8 million and less than $ 0.1 million, respectively.

The aggregate intrinsic fair value of stock options exercised during the years ended December 31, 2022 and 2021 was $ 0.4 million and $ 0.8 million, respectively.

As of December 31, 2022, there was unrecognized stock-based compensation expense related to unvested stock options of $ 18.3 million, which the Company expects to recognize over a weighted-average period of approximately 2.2 years.

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The lease is subject to fixed-rate rent escalations and provided for a term extension option, which was not reasonably certain of exercise.

• A March 2021 short-term lease for approximately 7,500 square feet of office and laboratory space which commenced in April 2021 and terminates in May 2022.

In May 2022, the Company entered into a sublease agreement with Crossbow Therapeutics, Inc.

(“Crossbow”), to sublease the entirety of this space.

The annual rent for the subleased premises will be approximately $ 1.1 million in the first year and $ 1.0 million in the second year, which is greater than the annual rent paid by the Company to the landlord for the leased premises.

Crossbow is obligated to pay all real estate taxes and costs related to the subleased premises, including cost of operations, maintenance, repair, replacement, and property management.

• A March 2021 short-term lease for approximately 7,500 square feet of office and laboratory space which commenced in April 2021 and terminated in May 2022.

The Company did not recognize an operating lease right of use asset or a lease liability upon lease commencement.

Rent expense for our short-term lease is recognized as incurred.

• A June 2021 operating lease for approximately 25,778 square feet of office and laboratory space which is targeted for occupancy in April 2022 and terminates in April 2030.

The lease is subject to fixed-rate rent escalations and provided for $ 5.7 million in tenant improvements and a term extension option, which was not reasonably certain of exercise.

Rent expense for the short-term lease was recognized as incurred.

• A June 2021 operating lease for approximately 25,778 square feet of office and laboratory space, which commenced in May 2022 and terminates in May 2030.

The lease is subject to fixed-rate rent escalations and provided for $ 5.7 million in tenant improvements, which the Company fully utilized, and a term extension option, which was not reasonably certain of exercise.

The Company provided the landlord with a security deposit in the form of a letter of credit in the amount of $ 1.0 million upon signing, which is included in restricted cash as of December 31, 2022.

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Short-term lease costs 228 411

Sublease income ( 834 ) —

Total $ 2,768 $ 2,121

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The non-refundable payment was recorded immediately as research and development expense in the consolidated statements of operations.

In July 2021, the Company and Adimab entered into the First Amended and Restated Development and Option Agreement to extend the target selection time period and to allow for the Company to add additional antibody discovery programs to be covered under the agreement, but otherwise retaining all other material provisions of the Adimab License.

Under the terms of the Adimab License, the Company must pay both an upfront fee and final fee of $ 200,000 for all research programs.

The Company must also pay Adimab milestone fees with respect to each research program ranging from $ 150,000 to $ 200,000 based on the

achievement of technical milestones by Adimab for the applicable research program.

The Company must also pay Adimab milestone fees with respect to each research program ranging from $ 150,000 to $ 200,000 based on the achievement of technical milestones by Adimab for the applicable research program.

In order to exercise any options in the Adimab Agreement, the Company must pay a $ 500,000 fee for each target option exercised.

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The Adimab Agreement will expire upon the expiration of any options or if an option is exercised, on a country-by-country and licensed product-by-licensed product basis on the expiration of the last royalty term for a licensed product in the particular country.

As of December 31, 2021, the Company exercised one target option, but has not recorded any milestone or royalty payments pursuant to the Adimab Agreement.

Clinical Trial Collaboration and Supply Agreement

In August 2021, the Company entered into a Clinical Trial Collaboration and Supply Agreement, or Clinical Supply Agreement, with Merck & Co., Inc., or Merck, to evaluate WTX-124 in combination with KEYTRUDA® (pembrolizumab), Merck’s anti-PD-1 therapy.

The planned clinical trial will be conducted by the Company and is designed to evaluate the safety and preliminary efficacy of WTX-124 as a monotherapy and in combination with pembrolizumab in patients with solid tumors.

Under the terms of the Clinical Supply Agreement, the Company will sponsor the study and Merck will supply the Company with pembrolizumab in exchange for jointly owning any inventions or discoveries relative to the combined use of WTX-124 and pembrolizumab.

Each party is responsible for its own internal costs and expenses to support the trial.

As of December 31, 2022, the Company has not exercised any target options or recorded any milestone or royalty payments for exercised options pursuant to the Adimab Agreement.

Adimab 2022 Collaboration

In November 2022, the Company entered into a Collaboration Agreement (the “Adimab Collaboration Agreement”) with Adimab.

Under the terms of the Adimab Collaboration Agreement, Adimab has agreed to provide the Company with services to help discover, generate, optimize and/or engineer specified proteins.

In addition, Adimab will provide the Company with a license to certain Adimab core technologies, patents and products applicable to certain targets (“Adimab Collaboration License”), separate from those provided in the 2018 Adimab Agreement.

Under the terms of the Adimab Collaboration Agreement, the Company must pay Adimab milestone fees with respect to each research program ranging from $ 500,000 to $ 1.5 million based on the achievement of certain clinical milestones by the Company.

The Adimab Collaboration Agreement provides the Company with an option to obtain any development and commercialization licenses from Adimab used in products.

To exercise an option, the Company must pay a $ 500,000 fee for each product option exercised.

For each product sold, the Company is also obligated to pay certain milestones ranging from $ 1.0 million to $ 2.0 million based on the achievement of the first commercial sale in certain countries.

Additionally, for licensed products sold during the applicable royalty term, the Company must pay Adimab royalties at percentages in the low-to-mid single digits.

The Adimab Collaboration Agreement will expire upon the expiration of any options or if an option is exercised, on a country-by-country and licensed product-by-licensed product basis on the expiration of the last royalty term for a licensed product in the particular country.

As of December 31, 2022, the Company has not exercised any options and has not made any payments for clinical or sales-based milestones or royalties pursuant to the Adimab Collaboration Agreement.

During the years ended December 31, 2022 and 2021, the Company recorded no current or deferred income tax expenses or benefits as the Company has incurred losses since inception and has provided a full valuation allowance against its deferred tax assets.

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Income tax computed at federal statutory rate 21.0 % 21.0 %

State taxes, net of federal benefit 5.7 9.9

State taxes 8.3 5.7

Change in valuation allowance ( 30.4 ) ( 27.2 )

R&D credit carryovers 2.4 1.8

Interest expense 0.0 0.0

Stock-based compensation ( 1.5 ) ( 0.9 )

Cancellation of tranche rights 0.0 10.2

Permanent differences 0.2 ( 0.4 )

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Lease liability 4,180 4,393

Capitalized costs—net of amortization 111 124

Other capitalized costs—net of amortization 103 111

Reserves and accruals 950 658

Stock-based compensation 1,448 500

Capitalized research and experimental expenditures—net of amortization 9,474 —

Deferred tax assets 46,208 30,411

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Construction in progress — ( 533 )

Other — ( 4 )

Deferred tax liabilities ( 3,791 ) ( 4,301 )

Net deferred tax assets $ — $ —

The Tax Cuts and Jobs Act (“TCJA”) requires taxpayers to capitalize and amortize research and experimental (“R&E”) expenditures under Section 174 for tax years beginning after December 31, 2021.

This rule became effective for the Company during 2022 and resulted in the capitalization of R&E expenditures of $ 36.1 million.

The Company will amortize these costs for tax purposes over 5 years if the research and development (“R&D”) was performed in the U.S.

and over 15 years if the R&D was performed outside the U.S.

The Company evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets as of December 31, 2022 and 2021.

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The TCJA enacted on December 22, 2017 limits a taxpayer’s ability to utilize NOL deduction in a year to 80% taxable income for federal net operating losses arising in tax years beginning after 2017.

The Coronavirus Aid, Relief, and Economic Security Act enacted on March 27, 2020 removes the 80% taxable income limitation for NOL deductions in taxable years beginning prior to January 1, 2021.

As of December 31, 2022 and 2021, the Company had state net operating loss carryforwards of $ 86.1 million and $ 74.5 million, respectively, available to reduce future state taxable income, which expire at various dates beginning in 2037.

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In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period.

The Company is in the process of performing a Section 382 study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception.

If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, 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 development tax credit carryforwards before utilization.

Further, until the Section 382 study is completed, and any limitation is known, no amounts are being presented as an uncertain tax position.

The Company is in the process of completing a Section 382 study for the period of January 22, 2018, through December 31, 2022.

As part of the first phase in the study, the Company completed testing date analysis through December 31, 2022, and identified three ownership changes that occurred on June 10, 2019, August 2, 2019, and August 31, 2022 for Section 382 purposes.

As the Company experienced these ownership changes, all pre-change net operating loss and research and development tax credit carryforwards are subject to limitation.

Due to the unlimited carryover period for post-2017 generated net operating losses, none of the Company’s net operating losses will expire unused.

A portion of the Company’s research and development tax credits will expire unused.

The exact amount of the research and development tax credits that will expire unused will be determined upon the completion of the Section 382 study.

The Company is currently in a full valuation allowance and will not make any limitation adjustment to the net operating loss and research and development tax credit carryforwards until the Section 382 study is completed.

Further, until the Section 382 study is completed, no amounts are being presented as an uncertain tax position.

The Company has not recorded any reserves for uncertain tax positions as of December 31, 2022 and 2021.

The Company has conducted a study of research and development tax credit.

The Company has conducted a study of research and development tax credit for tax years 2018 - 2020.

The amounts of federal and state research and development tax credit carryforwards presented above have reflected the results from the study.

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Related Parties

During the year ended December 31, 2020, the Company recorded $ 31,000 of general and administrative expense in the accompanying consolidated statements of operations related to management services provided by MPM Capital.

Additionally, as of December 31, 2020, the Company recorded $ 8,000 in accounts payable in the accompanying consolidated balance sheets related to the provision of management services by MPM Capital.

The Company did no t incur any expense with MPM Capital for the year ended December 31, 2021.

In December 2019, the Company entered into a consulting agreement with Briggs Morrison, M.D., a member of the Company’s board of directors, for the provision of consulting, advisory and related services.

Pursuant to the consulting agreement, in December 2019, the Company issued Dr.

Morrison a stock option grant for 46,570 shares of common stock at an aggregate grant date fair value of $ 50,000 , and agreed to reimburse certain of Dr.

Morrison’s expenses in connection with the performance of services under the agreement.

The stock options have an exercise price of $ 1.56 per share and are scheduled to vest with respect to 2.0833 % of the shares underlying the grant in equal monthly installments over four years following November 2019, subject to continuous service.

The Company recognized $ 13,000 of expense related to this award in the research and development line in the consolidated statements of operations for each of the years ended December 31, 2021 and 2020.

In May 2022, the Company entered into a sublease agreement with Crossbow, for which entities affiliated with MPM Capital (“MPM Capital”) are also beneficial owners, to sublease the entirety of its office and laboratory space in Cambridge, Massachusetts.

Luke Evnin, Ph.D., the chair of the Company’s board of directors, co-founded MPM Capital and serves as Managing Director of MPM Capital.

Briggs Morrison, who serves on the Company’s board of directors, serves as Executive Partner of MPM Capital.

The term of the sublease agreement commenced in June 2022 and ends in March 2024, with no option to extend (see Note 11, Commitments and Contingencies ).

The Company received cash payments under its sublease of approximately $ 0.8 million during the year ended December 31, 2022.

In addition, the Company received $ 0.2 million from Crossbow in June 2022 as a security deposit that is included within “Other liabilities” in the accompanying consolidated balance sheets as of December 31, 2022.

401(k) Savings Plan

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The 401(k) Plan covers all employees who meet defined minimum age and service requirements, and allows participants to defer a portion of their annual compensation on a pretax basis.

As currently established, the Company is not required to make and has not made any contributions to the 401(k) Plan to date.

Beginning in 2022, the Company will match 50 % of each participant’s contribution up to a maximum of 6 % of the participant’s eligible compensation paid during the period.

During the year ended December 31, 2022, the Company recognized expense of $ 0.2 million related to matching contributions.

Net Loss Attributable to Common Stockholders per Share

For purposes of the diluted net loss attributable to common stockholders per share calculation, redeemable convertible preferred stock, outstanding stock options, unvested restricted stock awards and warrants to purchase common stock are considered to be potentially dilutive

securities, however the following weighted-average amounts were excluded from the calculation of diluted net loss attributable to common stockholders per share because their effect would be anti-dilutive (in thousands):

Redeemable convertible preferred stock (as converted)

For purposes of the diluted net loss attributable to common stockholders per share calculation, outstanding stock options, unvested RSAs, unvested RSUs and warrants to purchase common stock are considered to be potentially dilutive securities, however the following weighted-average amounts were excluded from the calculation of diluted net loss attributable to common stockholders per share because their effect would be anti-dilutive (in thousands):

Outstanding stock options

Unvested restricted common stock 295 562

Unvested RSAs 81 295

Unvested RSUs 323 —

Warrants to purchase common stock

Subsequent Events

On March 15, 2023, the Company borrowed an aggregate principal amount of $ 40.0 million as a term loan under the Loan Agreement with PWB.

The draw was made in accordance with the initial terms and conditions of the Loan Agreement.

The Company will begin to repay the principal in twenty-four equal monthly payments beginning on September 1, 2024.

Refer to Note 8, Term Loan , for additional details on the Term Loan.

During the period beginning January 1, 2023 and ending March 23, 2023, the Company issued and sold approximately 3.8 million shares of its common stock in connection with the ATM Offering, resulting in gross proceeds of approximately $ 8.8 million before deducting sales commissions and offering expenses.

Refer to Note 9, Common and Preferred Stock , for additional details on the ATM Offering.

EXHIBIT INDEX

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1 to the Registrant’s Registration Statement on Form S-1, filed with the Securities and Exchange Commission on April 26, 2021, File No.

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 of the Registrant.

Description of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 24, 2022).

2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Amendment No.

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Employment Agreement dated as of April 30, 2021 by and between the Registrant and Chulani Karunatilake (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 10, 2021, File No.

Collaboration and License Agreement, dated as of April 6, 2022, by and between the Registrant and Jazz Pharmaceuticals Ireland Limited (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2022).

Amended and Restated Loan and Security Agreement dated as of April 12, 2022, by and between the Registrant and Pacific Western Bank (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 15, 2022).

Sales Agreement, dated as of May 10, 2022, by and between the Registrant and SVB Securities LLC (incorporated by reference to Exhibit 1.2 to the Registrant’s Registration Statement on Form S-3, filed with the Securities and Exchange Commission on May 10, 2022).

Letter from Deloitte & Touche LLP, dated September 7, 2022 (incorporated by reference to Exhibit 16.1 to the Registrant’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 7, 2022).

Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to Amendment No.

1 to the Registrant’s Registration Statement on Form S-1, filed with the Securities and Exchange Commission on April 26, 2021, Registration No.

Consent of Ernst & Young LLP, Independent Registered Accounting Firm.

Consent of Deloitte & Touche LLP, Independent Registered Accounting Firm.

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Financial and Accounting Officer) March 23, 2023

/s/ Luke Evnin Chair of the Board of Directors March 24, 2022

Chair of the Board of Directors

Luke Evnin, Ph.D.

/s/ Sakae Asanuma Director March 24, 2022

Sakae Asanuma, C.F.A.

/s/ Meeta Chatterjee Director March 23, 2023

11 unchanged sentences

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 9A. Controls and Procedures